As forecast, the Merger and Acquisition trend which we have been long reporting would peak when the Federal Reserve would aggressively raise interest rates and cut off the cheap money supply, has indeed peaked. Indeed, they “slowed to a trickle”… and here are the latest “trickles.”

However, as economies decline and over-leveraged companies go bust, the Bigs will again be on a buying spree… as we will see in the Banking sector.

PFIZER MAKES ANOTHER MULTI-BILLION-DOLLAR BUY

Pfizer continues to expand its drug industry footprint with another hefty acquisition.

Pfizer will pay $229 a share, or about $43 billion, to buy Seagen and its pioneering line of anti-cancer drugs. Cancer treatment is also a Pfizer specialty.

Seagen’s new drugs could bring $31 billion in sales by 2028, market research firm Evaluate said. The company booked $2.2 billion in revenue last year.

The Seagen deal is part of a new wave of industry takeovers as companies near the expiration of patents on many of their own workhorse pharmaceuticals, The Wall Street Journal said.

Pfizer is projected to lose $17 billion in sales by 2030 as its Eliquis blood thinner and Ibrance breast-cancer drug become public property. 

Also, Pfizer piled up a $25-billion shopping fund as a result of its COVID vaccine sales, which it plans to use to buy its way to continued growth.

In picking up Seagen, “we are not buying golden eggs,” Pfizer CEO Albert Bourla told the WSJ. “We are buying the goose that lays the golden eggs.”

The two companies’ combination will save Pfizer $1 billion a year in costs, Bourla predicted, by allowing them to combine sales forces and other operations.

Pfizer’s share price rose 2.7 percent on news of the deal; Seagen’s jumped 16 percent.

TWO RAILROADS MERGE TO FORM TRANSCONTINENTAL RAIL LINE

U.S. regulators have approved the merger of Canadian Pacific and Kansas City Southern railways, clearing the track for the creation of a freight railroad linking Canada, the U.S., and Mexico.

The new railway includes 20,000 miles of track, of which about 8,600 miles run through portions of Canada and to northern U.S. cities, including Buffalo, Chicago, and Detroit.

Kansas City Southern’s rails connect from those northern locales south through the U.S. Midwest and into northern Mexico.

The combination will “improve the overall quality and availability of rail transportation services,” the regulators’ ruling said, and will more strongly compete with the BNSF, Canadian National, and Union Pacific railroads.

The two merged railroads were the smallest among the seven largest railroads by revenue serving the U.S.; the merged rail line is still the smallest.

The regulatory approval requires CPKC, the new company, to keep its tracks open to competitors as needed and to be able to justify freight rate increases above a certain level.

Some critics of the merger warned that it would increase the transport, and possible release, of hazardous materials through large U.S. population centers. 

Regulators conducted an environmental impact study of the proposed deal and found that such dangers remained low.

The new company committed to improving its track network to accommodate more rail traffic.

PRIVATE EQUITY FIRM BUYS UNIVAR CHEMICAL COMPANY

Apollo Global Management and the Abu Dhabi Investment Authority together will pay $8.1 billion for Univar Solutions, a global chemical firm supplying ingredients for foods, cleaning products, and pharmaceuticals, among other industries.

The purchase was financed by $4 billion in loans by a consortium of nine banks.

Univar had been in discussions with German firm Brenntag SE about merging but those talks ended in January.

Apollo has been padding its portfolio in recent months, making a bid for Arconic last month that valued the manufacturer at $2.6 billion, as we reported in “Apollo Wants to Buy Arconic” (7 Mar 2023).

Last August, Apollo led a group that paid $3.2 billion to take over Atlas Air Worldwide Holdings.