IFF to sell pharma unit for $2.85bn

BY Richard Summerfield

Roquette has agreed to acquire IFF Pharma Solutions, a worldwide producer of excipients for oral dosage solutions, from International Flavors & Fragrances (IFF) in a deal worth $2.85bn.

IFF and Roquette expect to close the transaction in the first half of 2025, subject to customary closing conditions, including regulatory approvals. The agreed price represents an enterprise value to earnings before interest, taxes, depreciation and amortisation (EBITDA) multiple of approximately 13 times.

“We are pleased to reach an agreement with Roquette that will support Pharma Solutions’ next chapter of growth as a trusted partner for the pharmaceutical industry,” said Erik Fyrwald, chief executive of IFF. “An important next step in our portfolio optimization strategy, the sale of Pharma Solutions, along with other recent actions such as our dividend rightsizing, represents a significant step towards our commitment to reducing debt leverage to 3.0x or below. This also enables us to increase focus on the core drivers of long-term profitable growth and maximize value for our shareholders.”

“We are excited to enter into this partnership with the talented Pharma Solutions team at IFF, which has grown into the go-to partner in the pharmaceutical excipients and specialty solutions markets globally,” said Pierre Courduroux, chief executive of Roquette. “The combination of our excipients expertise with IFF Pharma is a fantastic opportunity to become a true global specialist of drug delivery and oral dosage solutions, responding to the needs of our customers and to the demands of patients who are looking for continuously better treatments.”

IFF is headquartered in New York, and its pharmaceutical division is a world-class producer of excipients for oral dosage solutions, with revenues of approximately $1bn. The unit has 10 research and development or production sites globally, and around 1100 employees.

IFF has undertaken a programme of divesting its ‘non-core’ business units over the past few years as it attempts to reduce its outstanding debt load and improve its organisational structure. In mid-2021, the company struck a deal to sell its microbial control business to German specialty chemicals company Lanxess for $1.3bn. And, in late 2022, the IFF sold its savoury solutions group to PAI Partners, a private equity firm focused primarily on the food and consumer industries, for $900m.

Roquette, on the other hand, has been seeking to expand its pharmaceutical footprint in recent years. In July 2023, the company said it would acquire hard capsule maker Qualicaps, which has manufacturing and R&D sites in Japan, Spain, Romania, Canada, Brazil and the US.

News: IFF to sell pharma unit to France's Roquette in $2.85 bln deal

Telcos consolidate: Swisscom buys Vodafone Italia in €8.7bn deal

BY Fraser Tennant

In the latest round of telecommunications sector consolidation in Europe, Swisscom AG is to acquire 100 percent of Vodafone’s Italian business in a transaction valued at €8bn.

The Swiss government-controlled Swisscom intends to merge Vodafone Italia with Fastweb, Swisscom’s Milan-based subsidiary. The deal will create Italy’s second-biggest fixed-line broadband operator behind Telecom Italia Mobile.  

The acquisition is a key step for Swisscom to achieve its strategic objective of profitable growth in Italy, bringing together complementary high-quality mobile and fixed infrastructures, competencies and capabilities to create a leading converged challenger in a market with material growth opportunities.

The deal follows the merger of French mobile operator Orange’s Spanish business with rival MasMovil in February 2024 and Vodafone selling its Spanish unit to Zegona Communications in October 2023.

“Through this transaction, Swisscom significantly reinforces its presence in Italy, where it has been operating successfully since 2007 through Fastweb,” said Christoph Aeschlimann, chief executive of Swisscom. “Fastweb has grown by over 50 percent in terms of customers, revenue and adjusted earnings before interest, taxes, depreciation and amortisation over the past 10 years, and has established itself as a leading challenger in Europe’s fourth largest broadband market.”

Swisscom has targeted €600m in annual savings mainly from migrating mobile customers from Fastweb to the Vodafone network, enabling the combined entity to unlock significant value for all stakeholders, sustain investments in the Italian telecommunication market and offer innovative, competitively priced converged services.

“The sale creates significant value for Vodafone and ensures the business maintains its leading position in Italy, which has been built through the dedicated commitment of our colleagues to serving our customers over many years,” said Margherita Della Valle, group chief executive of Vodafone. “Our transactions in Italy and Spain will deliver €12bn of upfront cash proceeds and we intend to return €4bn to shareholders via buybacks, as part of our broader capital allocation review.”

The transaction, which is expected to close in the first quarter of 2025 and does not require a shareholder vote, is subject to regulatory and other customary approvals.

Mr Aeschlimann concluded: “By combining Fastweb’s strengths in fixed connectivity with Vodafone Italia’s leading position in mobile services, the new entity stands to deliver substantial benefits to Italian consumers, businesses and the country.”

News: Swisscom buys Vodafone Italia for $8.7 billion as telcos consolidate

Enviva files for Chapter 11 to implement RSAs

BY Fraser Tennant

Aiming to reduce its debt by approximately $1bn, wood-based biomass producer Enviva Inc. has filed for Chapter 11 bankruptcy so that it may implement two restructuring support agreements (RSAs) with its creditors.

The RSAs have broad support across the company’s capital structure and are designed to improve profitability, strengthen liquidity and better position the business for long-term success as the world’s largest producer of industrial wood pellets.

The restructuring is targeted to be completed during the fourth quarter of 2024.

Enviva has also secured commitments for $500m in debtor-in-possession (DIP) financing and other financing accommodations, a portion of which will be allocated by the company to eligible stockholders in accordance with a syndication process that is subject to court approval.

The DIP facility is expected to provide, subject to court approval, sufficient liquidity to support continued operations across Enviva’s business throughout the restructuring process.

“These agreements represent a significant milestone in the ongoing process to transform our business, as we focus on improving profitability, reducing costs, enhancing asset productivity and optimising our capital structure,” said Glenn Nunziata, interim chief executive and chief financial officer at Enviva. “We look forward to emerging from this process as a stronger company with a solid financial foundation and better positioned to be a leader in the future growth of the wood-based biomass industry.”

The world’s largest producer of industrial wood pellets, Enviva owns and operates 10 plants with annual production of approximately 5 million metric tonnes in Virginia, North Carolina, South Carolina, Georgia, Florida and Mississippi, and is constructing its 11th plant in Epes, Alabama.

The company sells most of its wood pellets to customers located primarily in the UK, the European Union and Japan, helping to accelerate the energy transition away from conventional energy sources and reduce greenhouse gas emissions on a lifecycle basis in hard to abate sectors such as steel, cement, lime, chemicals and aviation.

Enviva expects to continue to pay suppliers in the ordinary course for authorised goods received and services provided after the Chapter 11 filing.

Mr Nunziata concluded: “We appreciate the support of our lenders, vendors and customers, and the tremendous efforts of our entire team as we continue to execute our transformation plan.”

News: Enviva announces Restructuring Agreements amid Chapter 11 proceedings

EQT to acquire Equitrans Midstream Corp in all-stock deal

BY Richard Summerfield

EQT Corporation and Equitrans Midstream Corporation have announced a merger agreement which will create a natural gas business with an initial enterprise value over $35bn.

The deal will see leading US natural gas producer EQT acquire its former pipeline unit in an all-stock transaction that values Equitrans at around $14bn including debt.

Under the terms of the deal, each outstanding share of Equitrans common stock will be exchanged for 0.3504 shares of EQT, giving the deal an equity value of about $5.5bn. The deal is expected to close in the Q4 2023. Upon completion, EQT shareholders will own about 74 percent of the combined company and Equitrans shareholders will own the rest.

The transaction will help in facilitating lower-cost production and transportation of natural gas by adding more than 2000 miles of pipeline infrastructure, the companies said on Monday. Equitrans was spun out from EQT in 2018 when the midstream operations were separated from the gas production business.

“Equitrans is the most strategic and transformational transaction EQT has ever pursued, and we see this as a once in a lifetime opportunity to vertically integrate one of the highest quality natural gas resource bases anywhere in the world,” said Toby Z. Rice, president and chief executive of EQT. “As we enter the global era of natural gas, it is imperative for US natural gas companies to evolve their business models to compete on the global stage against vertically integrated rivals.

“We have identified multiple, high confidence near-term synergies, with significant upside from future infrastructure optimization projects that we believe will drive material value creation for shareholders over time,” he continued. “Our modern, data-driven operating model, first-hand knowledge of Equitrans' operations and successful track record integrating $9 billion of acquisitions, all of which included midstream assets, gives me tremendous confidence in EQT's ability to seamlessly combine the two companies and capture synergies.”

“This strategic transaction with EQT is the culmination of an exhaustive process conducted by the ETRN board to determine the best strategic path forward for our shareholders, employees, and stakeholders,” said Thomas F. Karam, executive chairman of Equitrans Midstream. “Combining with EQT creates a premier vertically integrated natural gas business that is a game changer for the natural gas industry and Appalachian Basin. The transaction delivers full and fair value to ETRN shareholders and provides the opportunity to participate in future value growth as EQT executes on its strategy. We are proud of our employees who have worked hard to build one of the leading midstream companies in the Appalachian Basin. And we are excited for the future with EQT.”

News: EQT to Buy Mountain Valley Pipeline Owner for $5.5 Billion

Viavi to acquire Spirent Communications for $1.28bn

BY Richard Summerfield

US technology specialist Viavi Solutions has agreed to acquire the UK telecoms testing group Spirent Communications for $1.28bn.

Under the terms of the deal, Spirent shareholders will receive175 pence per share, which includes a special dividend of 2.5 pence per Spirent share in place of any final dividend for the year ended 31 December 2023. The price represents a premium of about 61.4 percent to Spirent’s closing price on 4 March, the last day of trading before the deal was announced.

The deal is expected to close during the second half of 2024, subject to shareholder approvals and other customary closing conditions, including Spirent shareholder approval and certain regulatory closing approvals. Those Spirent directors who hold shares in the company have signed irrevocable agreements in support of the deal.

The transaction will be funded by Viavi’s existing cash, an $800m loan from Wells Fargo and a $400m investment in Viavi by US private equity group Silver Lake. The acquisition will boost Viavi’s artificial intelligence, 5G and cloud-native innovation. According to a statement announcing the deal, operational efficiencies are anticipated to result in annual run-rate cost synergies of up to $75m two years after completion of the transaction.

“The Spirent Board intends to unanimously recommend this all-cash offer, which not only represents an attractive outcome for Spirent Shareholders, but also provides a significant opportunity for employees, customers and other stakeholders through what is a highly strategic and highly complementary combination,” said Sir Bill Thomas, chairman of Spirent. “With its strong management team, global scale and the cultural alignment between our businesses, we are confident that in VIAVI, we have found the right owner to take Spirent on to the next phase of its growth story.”

“Combining with VIAVI brings together a highly complementary product offering which can be marketed globally,” said Eric Updyke, chief executive of Spirent. “It will enable Spirent to build on the strategic progress we have made to date, with a partner that has the scale and resources to capitalize on the long-term growth opportunities ahead. The combination of VIAVI and Spirent creates a stronger business that will be better able to compete, and we are confident in the opportunities this will bring for our stakeholders.”

“Combining our leading communications test and measurement and optical technologies and Spirent’s high-performance testing and assurance solutions is expected to deliver enhanced product solutions and applications, accelerate growth in new markets and strengthen innovation through expanded engineering and design capabilities,” said Oleg Khaykin, president and chief executive of VIAVI. “Further, we are uniting two teams with a shared passion for developing compelling and cutting-edge offerings for customers and a commitment to technological excellence. We are pleased to welcome a strategic, long-term investment from Silver Lake in connection with the Acquisition. Silver Lake has an outstanding track record of supporting leading technology companies through both organic growth investments and scale acquisitions.”

News: US-based Viavi to buy UK's Spirent Communications for $1.28 bln