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Each week, we report instances where the money junky hedge funds, private equity groups and the already big companies swallow another piece of the global economy. Here are some more of what the BIGS have been gobbling up and how the Bigs keep getting bigger and the rich keep getting richer.
DRUG MAKERS COLLECT HUGE COVID WINDFALLS
Pfizer and Moderna together sold $79 billion in COVID vaccines and treatments in 2021, The Wall Street Journal reported, with Abbott Laboratories collecting $7.7 billion in sales of materials for COVID lab tests.
Corporate forecasts and a WSJ analysis indicate the drug makers’ COVID-related 2022 sales could reach $90 billion.
Moderna sold $17.7 billion worth of its vaccine last year and foresees $19 billion this year.
Its vaccine has lofted Moderna from start-up to a leading pharmaceutical firm in a little more than a year.
Sales have been sliding for less-effective COVID treatments developed by Eli Lilly and Regeneron Pharmaceuticals, the WSJ found.
Companies that have done well now have huge cash reserves and are deploying them to become an even larger presence in their industry.
Moderna reported $17.6 billion in liquidity, 13 times more than it had before the COVID War.
Pfizer, which had $27.7 billion in cash last October, is on a shopping spree, bagging other companies developing or marketing drugs that align with its own plans, as we noted in “Pfizer Buys Cancer Biotech Firm for $2.26 Billion” (14 Sep 2021) and “Pfizer Buys Arena Pharmaceuticals for $6.7 Billion” (21 Dec 2021).
Public health organizations have accused pharma firms of profiteering from the COVID War and have urged them to make more vaccines available at low or no cost to poor nations.
PRIVATE EQUITY FIRMS PLANNING BIDS FOR STAKE IN FRENCH SOCCER LEAGUE
After a season of financial disasters, France’s Ligue 1 soccer league is spinning off a new company that will own the league’s broadcast rights.
The new entity is auctioning as much as 15 percent of its ownership and at least 10 private equity groups—including Hellman & Friedman, Silver Lake, and Oaktree Capital—formally expressed interest in December.
That group has been distilled to a few select bidders who will make their final offers by 9 March.
The sale could value the league as highly as €13 billion, about 13 times its 2019 earnings, the Financial Times reported.
Silver Lake owns part of City Football Group, which owns England’s Manchester City team and a part of Ligue 1’s ES Troyes club. Oaktree owns Caen, a team in France’s Ligue 2, and also has financed Italy’s Inter Milan soccer team.
BARCLAYS FOURTH-QUARTER PROFITS GROW FIVEFOLD
Barclays saw fourth-quarter net income balloon to €1.1 billion from €220 million a year earlier due to roaring business in its investment banking division, the London-based bank announced.
Analysts had expected a more modest €643 million, the Financial Times noted.
Revenues rose to €5.2 billion, up 4.4 percent on the strength of consumers’ credit card use during the post-COVID recovery.
The profit gains were aided by the bank’s release of €31 million in cash it had set aside to cover bad loans but did not need for that purpose.
Last year’s boom in mergers and acquisitions brought the bank windfall profits from its advisory services. However, the M&A market’s frenzy is now fading, the FT said.
HEALTHCARE REAL ESTATE LANDLORDS TO COMBINE IN $10-BILLION DEAL
Healthcare Trust of America and the smaller Healthcare Realty Trust are set to combine into a single company worth about $10 billion, The Wall Street Journal reported.
Both companies own medical office buildings.
Healthcare Trust of American owns about 25 million square feet of space and had a market value of $6.6 billion on 24 February. Healthcare Realty Trust holds about 18 million square feet and is worth about $4.4 billion.
STANDARD GENERAL LANDS TEGNA FOR $8.6 BILLION
Hedge fund Standard General has ended years of negotiations by inking an $8.6-billion agreement to take over Tegna, a television broadcaster and digital media company.
The fund owned 4.8 percent of Tegna at the end of 2021, according to regulatory filings.
Tegna owns 64 television stations in 51 U.S. markets and also owns the Quest, True Crime, and Twist networks.
Standard General will pay $24 a share for Tegna stock, a 39-percent premium to its 14 September closing price, the day news of the deal broke.
Private equity firm Apollo Global Management took part in the deal and will own an unspecified number of non-voting shares in the new entity, The Wall Street Journal reported.
In January, Standard General offered $2.07 billion to buy the balance of the Bally’s casino chain it does not already own, according to the WSJ.
CARVANA BUYS CAR AUCTION BUSINESS FOR $2.2 BILLION
Online used-car dealer Carvana will pay $2.2 billion for ADESA U.S., America’s second-largest vehicle auctioneer, giving the young company greater access to the used cars dealers take as trade-ins.
Carvana will spend $1 billion to improve ADESA’s 56 locations, the company said.
Carvana also has expanded to 15 the number of centers where it inspects and reconditions cars and plans to add another six centers this year, it announced.
Carvana sold 113,000 cars in 2021’s fourth quarter, barely more than the 110,000 it sold in the third. Its sales last year totaled about 425,000 cars.
The company lost $462 million in 2020 but trimmed that figure to $287 million in red ink last year, including $182 million it vaporized in 2021’s final quarter.
SOFI BUYS TECHNISYS FOR $1.1 BILLION
Sofi Technologies, an online lender and financial services company, will take over Technisys SA, trading $1.1 billion worth of Sofi stock for the banking software maker.
The deal gives Sofi greater control over its “back room” operations that run online apps and manage customers’ accounts.
The purchase also will add as much as $800 million in new revenue to Sofi through 2025 and trim $85 million in costs from the two companies, Sofi said in announcing the purchase.
Sofi will use Technisys technology to expand services to its customers and will allow other financial services firms to use the platform, which now is available largely in only Latin America.
In February, Sofi moved from being a lender to being a bank when it acquired California-based community lender Golden Pacific Bancorp.
In 2020, Sofi spent $1.2 billion to buy Galileo Financial Technologies, a company making software to manage debit cards.
Sofi went public last year through a merger with a special-purpose acquisition company (SPAC). Its share price has slumped 35 percent so far this year.