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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.
FOOD SPECIALTY COMPANIES JOIN IN €41-BILLION MERGER
DSM, a Dutch firm specializing in bioscience and nutrition, will combine with Switzerland’s Firmenich, which makes flavors and fragrances, to make a “global powerhouse” that will produce ingredients for vegan foods and manufactured meats.
The one-to-one stock swap values the new entity at about €41 billion, analysts said, but insiders said the figure was conservative.
The merger also pays €3.5 billion for some shares held by the Firmenich family, pioneers in the perfume industry. The family will retain 34.5 percent of the new company and hold a seat on the board.
The new entity, DSM-Firmenich, will operate four separate units: health and nutrition, perfume and beauty, food and beverages, and animal nutrition.
Total annual revenue among the four lines of business is now $11.2 billion.
The chemicals, fragrance, and nutrition industry is undergoing a wave of consolidation. In 2021, International Flavors & Fragrances paid $26.2 billion to acquire DuPont’s nutrition and bioscience operation.
GOLD MINING COMPANIES MERGE
Gold Fields Ltd., a South African gold miner, will buy Canada-based Yamana Gold in an all-stock deal worth about $6.7 billion, based on recent share prices.
The price is 34 percent above Yamana’s share price shortly before the takeover was announced.
The combined entity will have a market capitalization of about $15.9 billion, making it the world’s fourth largest gold-mining firm, according to The Wall Street Journal.
Gold Fields’ projects are concentrated in South Africa. The company has seen production dwindle at several sites there.
Through the purchase, Gold Fields will add sites in Australia, Ghana, Latin America, and new mines in South Africa.
BRISTOL MYERS SQUIBB PAYS $4.1 BILLION FOR CANCER DRUG FIRM
New York-based drug colossus Bristol Myers Squibb has agreed to buy Turning Point Therapeutics, which is developing a drug that will address 80 percent of U.S. lung cancer cases.
The drug has been awarded a “breakthrough designation” by the U.S. Food and Drug Administration, which will speed its review for final approval.
Bristol will pay $76 a share for Turning Point, which also has several other cancer drugs working their way toward clinical trials.
Oncology drugs are among the pharmaceutical market’s fastest-growing sectors and brought in $286 billion last year, data service Precedence Research reported.
Drug majors are engaged in a flurry of bolt-on acquisitions, attempting to add to their rosters of new drugs as patents on old ones expire.
When patents expire, drugs move from the lucrative prescription market to the far less profitable over-the-counter sales.
When drugs come off-patent, the pharma companies that developed them usually sell the formula to other firms that specialize in OTC brands.
GSK SNAGS AFFINIVAX FOR $3.3 BILLION
Drug company GSK, formerly called GlaxoSmithKline, has committed up to $3.3 billion to buy Affinivax, a Boston company that is testing a vaccine targeting 24 strains of the streptococcus bacteria that cause meningitis, pneumonia, sepsis, and other well-known illnesses.
In early trials, the vaccine has shown a stronger impact on preventing the illnesses than two drugs now in common use for the same purpose, The Wall Street Journal said.
Affinivax also is developing a new version of its vaccine that could defend against 30 different strains of the bacteria.
The market for vaccines against this family of sicknesses was worth $7.1 billion in 2021 and could grow to more than $10 billion annually by 2028, Morgan Stanley analysts have said, the WSJ reported.
GSK will pay $2.1 billion up front and has pledged up to another $1.2 billion if Affinivax meets specific performance targets.
EQT NEGOTIATING TO BUY ENVIROTAINER FOR $2.8 BILLION
Swedish private equity firm EQT is in discussions to buy Envirotainer, a medical freight company, in a deal that would value the carrier at $2.8 billion, people familiar told The Wall Street Journal.
Envirotainer operates more than 6,000 temperature-controlled air freight containers that biotech and pharmaceutical companies use to ship vaccines, drugs, and other sensitive materials.
It handles about two million doses of medicines every day, the company says.
The purchase complements EQT’s current focus on investment in healthcare and logistics.
EQT owns First Student, which operates school bus fleets in the U.S., and mobility-as-a-service company First Transit, which it bought last year in a deal worth $4.1 billion.
Envirotainer is now owned by London-based Cinvin, another private equity company, that bought it for about $1.1 billion in 2018.
This year through May, the value of private equity deals set a record at $471.2 billion for the first five months of any year, data service Refinitiv reported.
The firms are under pressure to put to work the windfall of cash investors poured into them over the last 18 months.
However, the value of deals announced in May slumped 74 percent below that in March, indicating that rising interest rates and economic volatility are making investment companies more cautious, the WSJ said.
FRANKLIN TEMPLETON WILL BUY CREDIT SPECIALIST ALCENTRA
Mutual fund giant Franklin Templeton will pay up to $700 million to buy European credit firm Alcentra from BNY Mellon, according to the Financial Times.
Franklin will pay $350 million in cash now and the same amount again if Alcentra meets a set of performance criteria over the next four years.
Alcentra, with $38 billion in assets, specializes in alternative credit, such as junk bonds, structured credit, and private debt placements.
The purchase is an attempt by Franklin Templeton to broaden its market reach after it experienced outflows of capital in 2020 when it bought brokerage Legg Mason.
In November, Franklin took over private equity firm Lexington Partners for $1.75 billion.
The company also has added investment firms focused on assets from infrastructure to real estate. Such firms generally charge clients higher fees than the more competitive mutual fund industry allows.