Bausch + Lomb acquires Novartis’ eyecare portfolio

BY Fraser Tennant

In a deal designed to boost its eyecare portfolio, global eye health company Bausch + Lomb Corporation has acquired a number of the ophthalmology assets of Swiss multinational pharmaceutical corporation Novartis.

Under the terms of the definitive agreement, Canada-based Bausch + Lomb will acquire Novartis’ assets for up to $2.5bn, including an upfront payment of $1.75bn in cash, with potential milestone obligations up to $750m based on sales thresholds and pipeline commercialisation.

Novartis’ ophthalmology assets include its anti-inflammation eye drop Xiidra, experimental drug libvatrep for chronic ocular surface pain and the rights to use the Swiss pharma company's AcuStream dry-eye drug delivery device.

“This acquisition is a prime example of our strategy in action, as it provides needed scale for the company and transforms our pharmaceuticals business by making us a leader in ocular surface diseases,” said Brent Saunders, chairman and chief executive of Bausch + Lomb. “The deal is also expected to accelerate margin expansion through a larger mix of pharmaceutical products in our portfolio, provide strong and immediate earnings accretion and presents a clear path to deleverage, making it financially compelling.”

Founded in 1853, Bausch + Lomb has a significant global R&D, manufacturing and commercial footprint with approximately 13,000 employees and a presence in nearly 100 countries. Likewise, in its quest to find new medicines, Novartis consistently ranks among the world’s top companies investing in R&D.

“This transaction will enhance our focus on prioritised innovative medicines to alleviate society’s greatest disease burdens, achieve the greatest patient impact and drive our growth strategy,” said Ronny Gal, chief strategy & growth officer at Novartis. “Our ongoing portfolio refinement enables us to best deploy our scientific expertise and resources towards priority programmes and therapeutic areas, while remaining open to opportunistic development for additional high impact conditions leveraging our advanced technology platforms.

The transaction – which is expected to close in the second half of 2023 – has been approved by the board of directors of each company and is subject to receipt of regulatory approval and other customary closing conditions.

Mr Gal concluded: “We believe that Bausch + Lomb has the capabilities, scale and commitment to continue the work of Novartis in delivering and developing much needed therapies for patients suffering from dry eye and related conditions.”

News: Bausch + Lomb buys Novartis drugs for $1.75 billion to boost eye-care portfolio

Electric truck maker Lordstown files for Chapter 11

BY Fraser Tennant

Amid accusations that its investment partner Foxconn has reneged on its commitments, struggling US electric truck manufacturer Lordstown Motors Corp. has filed for Chapter 11 bankruptcy.

As part of the bankruptcy process, Lordstown has filed litigation detailing its description of Foxconn’s fraud and wilful and consistent failure to live up to its commercial and financial commitments to Lordstown, arguing that Foxconn’s actions led to material damage to Lordstown as well as its future prospects.

Under the partnership, Lordstown had agreed to divest its most valuable assets to Foxconn, namely its Lordstown, Ohio manufacturing facility, which is one of the largest in North America, along with its highly talented and experienced manufacturing and operational employees.

The Chapter 11 filing will also allow Lordstown to commence a comprehensive marketing and sale process for the Endurance all-electric vehicle (EV) and related assets, as well as provide a prospective buyer with a going concern asset that is free and clear of any legacy issues.

“As one of the early entrants to the EV industry, we have delivered the Endurance, an innovative and highly-capable EV with significant commercial and retail potential,” said Edward Hightower, chief executive and president of Lordstown. “We  subsequently engaged with Foxconn in a purposeful, strategic partnership to leverage this expertise into a broader EV development platform.”

“However, despite our best efforts and earnest commitment to the partnership, Foxconn wilfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximise the value of Lordstown's assets for the benefit of our stakeholders. We will vigorously pursue our litigation claims against Foxconn accordingly.”

To ensure a smooth transition into Chapter 11, the company filed with the bankruptcy court a series of customary ‘first day’ motions to continue operating the business and uphold its commitments to stakeholders during the process. Lordstown enters Chapter 11 with significant cash on hand and is debt-free.

“While in Chapter 11, Lordstown will continue to support our customers,” concluded Mr Hightower. “We are grateful for the Lordstown team for their commitment and dedication to our vision and to our customers, suppliers and business partners.”

News: Lordstown Motors files for bankruptcy, sues Foxconn

UnitedHealth Group to acquire Amedisys in $3.3bn deal

BY Richard Summerfield

UnitedHealth Group has agreed to acquire home health and hospice caregiver Amedisys in a deal worth $3.3bn.

Under terms of the deal, Optum, the diversified health care services arm of UnitedHealth Group, will acquire Amedisys in an all-cash transaction for $101 per share. Optum previously made a bid to buy Amedisys for $100 per share. The agreed price represents a 10.7 percent premium to Friday’s closing price of $91.21.

“The combination of Amedisys with Optum unites two organizations dedicated to providing compassionate, value-based comprehensive care to patients and their families”, Amedisys wrote in a statement announcing the deal.

Once the deal closes Amedisys will become a wholly-owned subsidiary of UnitedHealth.

“Amedisys’ commitment to quality and care innovation within the home, and the patient-first culture of its people, combined with Optum’s deep value-based care expertise can drive meaningful improvement in the health outcomes and experiences of more patients at lower costs, leading to continued growth,” said Patrick Conway, chief executive of Optum Care Solutions.

The deal for Amedisys also led to the cancellation of an all-stock deal between Amedisys and Option Care Health. As part of the mutual termination agreement, Option Care Health will receive a $106m termination fee. Consistent with Option Care Health’s commitment to creating shareholder value, the company will incorporate the termination fee into its established capital allocation strategy, it noted in a statement.

“While we are disappointed in this outcome, Option Care Health has a long track record of delivering value for our shareholders,” said John C. Rademacher, president and chief executive of Option Care Health. “We take a disciplined approach to acquisitions and, as we evaluated our options, we applied this discipline to ensure we continue to create value for all of our key stakeholders.

“Option Care Health benefits from a leading platform in home and alternate site infusion services and a proven track record of execution,” he continued. “We remain confident in our growth trajectory, which is underpinned by current industry trends and market forces as well as our strong financial position. Our team is committed to serving all our stakeholders by providing unsurpassed care and superior clinical outcomes in the home or ambulatory setting, and we will continue to identify ways to increase the value we can deliver.”

In-home medical services are becoming an area of focus for healthcare companies, with several notable deal occurring in the space in the US. Earlier this year, CVS Health spent $8bn on Signify Health as part of its effort to add a home care provider and boost its healthcare and technology platform.

News: Amedisys agrees to $3.3 bln UnitedHealth offer, scraps Option Care deal

Civitas strikes $4.7bn Permian basin deals

BY Richard Summerfield

Civitas Resources has agreed to acquire oil & gas operations in the Permian Basin managed by private equity firm NGP Energy Capital Management for $4.7bn.

The deals will see Civitas acquire oil producing assets in the Midland and Delaware Basins of west Texas and New Mexico. The agreements were signed with affiliates of Hibernia Energy III, LLC and Tap Rock Resources, LLC. Under the terms of the deal, Civitas has agreed to acquire a portion of Tap Rock Resources’ assets and all of Hibernia Energy III’s operations. The company will pay cash, using a mix of existing reserves and debt, and issue 13.5 million shares to NGP.

The deals are expected to close in the third quarter of 2023. The two definitive agreements will see Civitas acquire oil producing assets from Hibernia Energy’s Midlands area of west Texas for $2.25bn in cash, and from Tap Rock Resources for Delaware area assets in New Mexico for $2.45bn, which includes $1.5bin in cash.

“These accretive and transformative transactions will immediately create a stronger, more balanced and sustainable Civitas,” said Chris Doyle, president and chief executive of Civitas. “By acquiring attractively priced, scaled assets in the heart of the Permian Basin, we advance our strategic pillars through increased free cash flow and enhanced shareholder returns. We will soon have nearly a decade of price-resilient, high-return drilling inventory. Our strong capital structure allowed us to capture these transformational assets, and, importantly, behind the strength of the pro forma business, we have a clear path to reduce leverage and maintain long-term balance sheet strength.”

The combined transactions will add 68,000 net acres in the Midland and Delaware basins and will add combined proved reserves of 335 million barrels of oil equivalent (boe), as at the end of 2022. The assets will increase Civitas’ existing production by 60 percent, adding 100,000 boe per day of current production. At present, Denver-based Civitas currently operates on more than 500,000 net acres and produces roughly 160,000 boe per day.

Civitas said the cash flow generated by the assets was a significant factor in its pursuit of a deal. The assets will allow Civitas’ dividend payments in 2024 to be boosted by around 20 percent. To help the company repay the debt it will be using to fund the acquisitions, Civitas also announced that it would have to halve its $1bn share buyback target, which was initially announced in February and was set to run to the end of 2024.

NGP provided Tap Rock with capital in 2016 and backed Hibernia with $250m of equity in 2017.

News: Civitas Resources enters Permian basin in $4.7 billion deals

Merger of equals: Patterson-UTI and NexTier combine in $5.4bn deal

BY Fraser Tennant

In a merger that creates an industry-leading drilling and completions services provider, Patterson-UTI Energy, Inc. is to combine with NexTier Oilfield Solutions Inc. in an all-stock transaction valued at approximately $5.4bn.

Under the terms of the definitive agreement, NexTier shareholders will receive 0.7520 shares of Patterson-UTI common stock for each share of NexTier common stock owned.

Moreover, upon closing of the transaction, Patterson-UTI shareholders will own approximately 55 percent and NexTier shareholders will own approximately 45 percent of the combined company on a fully diluted basis. The merger is expected to be tax-free to shareholders of both companies.

Patterson-UTI is a leading provider of oilfield services and products to oil and natural gas exploration and production companies in the US and other select countries. NexTier is an industry-leading US land oilfield service company, with a diverse set of well completion and production services across active and demanding basins.

The combined company will operate under the name Patterson-UTI Energy, Inc.

"This merger unites two top-tier and technology-driven drilling and well completions businesses, creating a leading platform at the forefront of innovation,” said Andy Hendricks, chief executive of Patterson-UTI. “As one company, we will have a significantly expanded, comprehensive portfolio of oilfield services offerings across the most active producing basins in the United States, along with operations in Latin America.”

The transaction has been unanimously approved by the boards of directors of both companies.

“We believe offering a comprehensive suite of solutions on one integrated platform will position the combined company as the partner of choice for a greater number of customers across geographies and throughout the full well lifecycle,” said Robert Drummond, president and chief executive of NexTier. “We are confident that together, we will be able to drive efficiencies across the portfolio and unlock more value for shareholders and customers than either organisation could achieve on its own.”

The merger is expected to close in the fourth quarter of 2023, following Patterson-UTI and NexTier shareholder approval, regulatory approvals and satisfaction of other customary closing conditions.

“Together, we will better serve our employees, shareholders, customers, suppliers and the communities in which we operate,” concluded Mr Hendricks. “We look forward to working with the NexTier team to successfully bring our two companies together.”

News: Patterson-UTI, NexTier merge to form $5.4 billion oilfield services firm