STB approves $31bn railways acquisition

BY Fraser Tennant

Giving the green light to the first major railroad merger in 20 years, the US Surface Transportation Board (STB) has approved the $31bn merger of Canadian Pacific (CP) and Kansas City Southern (KCS).

The STB’s decision is effective as of 14 April 2023, at or after which point the two railways combine to create the new CPKC – the first single-line railway connecting the US, Mexico and Canada.

Among the core conclusions reached by the STB regarding the public and pro-competitive benefits of the CP-KCS combination are that the combination should ultimately enhance safety and benefit the environment.

The regulator also stated that the transaction will make possible improved single-line service for many shippers and will result in merger synergies that are likely to allow CPKC to be a vigorous competitor to other Class I carriers by providing improved service at lower cost.

“The STB’s decision clearly recognises the many benefits of this historic combination,” said Keith Creel, president and chief executive of CP. “As the regulator found, it will stimulate new competition, create jobs, lead to new investment in our rail network and drive economic growth.

“These benefits are unparalleled for our employees, rail customers, communities and the North American economy at a time when the supply chains of these three great nations have never needed it more,” he continued. “A combined CPKC will connect North America through a unique rail network able to enhance competition, provide improved reliable rail service, take trucks off public roads and improve rail safety by expanding CP’s industry-leading safety practices.”

Headquartered in Calgary, Canada, CPKC will operate approximately 20,000 miles of rail, employing close to 20,000 people. Once combined, full integration of CP and KCS is expected to happen over the next three years, unlocking the benefits of the combination.

“This important milestone is the catalyst for realising the benefits of a North American railroad for all of our stakeholders,” said Patrick J. Ottensmeyer, president and chief executive of KCS. “The KCS board of directors and management team are very proud of the many contributions and achievements of the people who have made KCS what it is today.”

Mr Ottensmeyer concluded: “We are excited for the boundless possibilities as we move forward into the next chapter as CPKC.”

News: US regulator approves Canadian Pacific purchase of Kansas City Southern

Blackstone acquires Cvent in $4.6bn transaction

BY Fraser Tennant

In a transaction which takes the company private, event-software provider Cvent Holding Corp. is to be acquired by Blackstone for approximately $4.6bn.

Under the terms of the definitive agreement, Cvent stockholders will receive $8.50 per share in cash, representing a premium of 52 percent to the volume weighted average share price over the 90 days prior to 30 January 2023 – the day before media reports of a potential transaction were published.

Upon completion of the transaction – which involves Blackstone receiving a fully committed $1bn credit facility as part of its financing – Cvent’s common stock will no longer be publicly listed, and Cvent will become a privately held company.

Founded in 1999, Cvent’s comprehensive suite of technology solutions powers the entire event management process to maximise the impact of events. The company has approximately 22,000 customers globally in the corporate, non-profit, higher education and hospitality sectors.

“The continued events and travel recovery is one of Blackstone’s highest-conviction investment themes,” said David Schwartz, a senior managing director at Blackstone. “Given our extensive experience in the hospitality, events and real estate sectors, we believe Blackstone is well-positioned as a growth partner for this exceptional business.”

Following the recommendation of a special committee composed entirely of independent and disinterested directors, the Cvent board of directors unanimously approved the merger agreement.

“We are excited to share this announcement and look forward to our next chapter alongside the Blackstone team,” said Reggie Aggarwal, founder and chief executive of Cvent. “As one of the world’s largest private equity firms, Blackstone brings deep expertise in the event and hospitality industry, and with their backing, we plan to continue to invest in our business and deliver the innovative solutions that meet our customers’ needs and power the meetings and events ecosystem.”

The transaction is expected to close mid-year 2023, subject to the satisfaction of customary closing conditions, including receipt of approval by Cvent’s stockholders and required regulatory approvals.

Martin Brand, head of North America private equity and global co-head of technology investing at Blackstone, concluded: “Cvent is an industry leader, and we are excited to partner with their management team to continue the firm’s innovation and deliver world-class technology solutions to customers in the event and hospitality space.”

News: Events software provider Cvent accepts Blackstone's $4.6 bln deal

Pfizer agrees $43bn Seagen acquisition

BY Richard Summerfield

In a transaction that will boost its cancer treatments portfolio, Pfizer Inc has agreed to acquire biotech firm Seagen Inc in a $43bn deal.

Under the terms of the deal, Pfizer will pay $229 in cash per share to buy Seagen, funding the transaction through $31bn of new long-term debt, as well as short-term financing and cash. The company is paying a premium of about 35 percent to Seagen’s closing price on Friday, the last day of trading before the deal was announced. The deal is expected to complete in late 2023 or early 2024.

The move for Seagen comes as Pfizer looks to refill its drugs pipeline and pivot away from its coronavirus (COVID-19) products, which have experienced a sharp fall in sales of late. Pfizer already has 24 approved cancer medicines, and 33 programmes in clinical development, and the acquisition of Seagen will see it add an additional four approved cancer therapies which had combined sales of nearly $2bn in 2022.

“Pfizer is deploying its financial resources to advance the battle against cancer, a leading cause of death worldwide with a significant impact on public health,” said Albert Bourla, chairman and chief executive of Pfizer. “Together, Pfizer and Seagen seek to accelerate the next generation of cancer breakthroughs and bring new solutions to patients by combining the power of Seagen’s antibody-drug conjugate (ADC) technology with the scale and strength of Pfizer’s capabilities and expertise. Oncology continues to be the largest growth driver in global medicine, and this acquisition will enhance Pfizer’s position in this important space and contribute meaningfully to the achievement of Pfizer’s near- and long-term financial goals.”

“Pfizer shares our steadfast commitment to patients, and this combination is a testament to the passion, dedication and talent of the Seagen team to achieve our mission to discover, develop, and commercialize transformative cancer medicines that make a meaningful difference in people’s lives,” said David Epstein, chief executive of Seagen. “The proposed combination with Pfizer is the right next step for Seagen to further its strategy, and this compelling transaction will deliver significant and immediate value to our stockholders and provide new opportunities for our colleagues as part of a larger science-driven, patient-centric, global company.”

Many of the world’s largest pharmaceutical companies, including Pfizer, are sitting on significant cash piles and need to invigorate their pipelines of medicines, as key drugs go off patent before the end of the decade. Pfizer has been under pressure to do a big deal, after the company forecast that revenues would slump by a third to between $67bn to $71bn in 2023 owing to steep falls in sales of COVID-19 vaccines and treatments. In 2023, Seagen expects revenue of about $2.2bn, a 12 percent rise year on year. Pfizer believes that in 2030 Seagen could contribute more than $10bn in risk-adjusted revenues.

News: Pfizer signs $43 bln Seagen deal in cancer drug push

Permira raises €16.7bn Europe-focused fund

BY Richard Summerfield

Leading private equity firm Permira has announced the closing of its most recent flagship buyout fund, Permira VIII (P8), with total capital commitments of €16.7bn.

The fund saw strong demand from investors, closing above its target size of €15bn, which represents around a 50 percent increase in size compared to its predecessor, P7, which closed at €11bn in 2019.

The new fund has already deployed capital across four deals: Mimecast, Zendesk, Reorg and Acuity Knowledge Partners. According to Permira, the new fund will “aim to adhere to specific, fund-level targets relating to climate, gender diversity and governance”, which will be reported on annually throughout the fund’s lifecycle.

With a re-up rate of over 90 percent and over 50 new investors, P8 secured investment from a globally diversified base of leading international investors, including public and private pension funds, sovereign wealth funds, endowments and foundations, institutional fund managers and family offices of entrepreneurs.

“This fundraise is testament to the close relationships we have built with investors over nearly four decades, and an investment strategy that backs rapidly growing companies and highly resilient market leaders,” said Kurt Björklund, managing partner at Permira. “Across both P8 and PGO II, we now have committed capital of more than €20 billion to invest across both our buyout and growth equity strategies. I’d like to thank all of our investors for their continued and unwavering support."

“P8 comes at an exciting time, when we can continue to execute on our thematic, growth-focused investment strategy, whilst also applying it through the lens of values-based investing,” he continued. “We believe the four investments from P8 so far are a clear demonstration of this. We look forward to partnering with outstanding entrepreneurs and management teams to build the leading companies of tomorrow.”

The fund’s close follows the $4bn closing of Permira’s second growth equity fund, Permira Growth Opportunities II, in December 2021, which also beat its target of $2.5bn. The firm believes that the two funds will “enable Permira to invest flexibly across the most compelling investment opportunities globally, whilst leveraging the breadth of expertise available from Permira’s wide network and deep sector expertise”.

The firm has a strong track record of investing in businesses where technology is, or is expected to be, a significant part of their growth trajectory. As such, P8 is expected to see investments in the technology, consumer, healthcare and services sectors.

News: Permira raises €16.7bn for one of Europe’s biggest-ever buyout funds

Tech investment in Asia rapid in 2022, reveals new report

BY Fraser Tennant 

Tech investment has grown to represent the majority of private capital activity in Asia, even amid the global correction in 2022, according to a new report by the Global Private Capital Association (GPCA).

In its ‘2023 Trends in Global Tech’ data report – which examines some of the contours of the changing tech investment landscape with a focus on emerging trends and cross-border insights – the GPCA states that investment in tech across China, India and Southeast Asia has steadily expanded since 2017.   

“While Asia was not immune to global tech and venture corrections in 2022, tech remained a dominant theme for private capital investors in the region,” said Ethan Koh, Asia Research Director at GPCA and co-author of the report. “Despite a pullback from 2021 highs, tech investment was on par with pre-pandemic levels at $146bn in 2022.

Of all the investment activity in Asia, the GPCA notes that it is Chinese investment in deep tech that received the lion’s share of interest from investors in 2022, accounting for 71 percent of deal value (up from 40 percent in 2020).

In comparison, investment in China in other tech areas was much less prolific, with enterprise software & IT services receiving 16 percent of capital investment and consumer tech 8 percent.    

Additional key findings in the report include: (i) Western and Chinese money is moving to Southeast Asia; (ii) over half of 2022 deals include US or European investors; (iii) Chinese investors now participate in one quarter of Southeast Asian tech deals; (iv) consumer tech and FinTech dominate investment landscape in Southeast Asia; and (v) deep tech is benefitting from regulatory shifts and growing investment from local and international investors alike.

However, according to Rebecca Xu, co-founder and managing director of Asia Alternatives and a contributor to the report, despite a decisive shift toward deep tech, many investment opportunities in this key area remain untapped.

“Deep tech is underdeveloped, like consumer tech was 15 years ago,” said Ms Xu. “There are not many fund managers who have established a proven track record in deep tech. With plenty of room for development, finding professionals who have experience and specialised expertise involving science and technology is more essential than ever.”

Report: ‘2023 Trends in Global Tech’