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Chevron's $53B Hess purchase; Western Digital's doomed merger: 5 big deal reports

EditorYael Jeanne Klempner
Published 29/10/2023, 15:20
© Reuters.

Investing.com — Here is your Pro Recap of 5 head-turning deal dispatches you may have missed last week: Chevron to buy Hess for $53 billion, Vista Equity Partners to pick up EngageSmart, Roche to buy Telavant Holdings from Roivant and Pfizer , Western Digital drops on 'scrapped' merger, and Forward Air seeks to terminate disastrous Omni merger.

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Chevron to acquire Hess for $53 billion in stock

Chevron (NYSE:CVX) last week said it struck an all-stock deal to buy Hess (NYSE:HES) for $53 billion, or $171 per share, based on Chevron's Oct. 20 closing price. As per the terms of the deal, each Hess shareholder will get 1.0250 Chevron shares for their Hess share, bringing the combined enterprise's value to $60B, including debt.

Chevron said the move aims to bolster and diversify its portfolio and drive up its production growth for the next decade, highlighting the Stabroek block in Guyana, known for its strong cash margins and low carbon intensity.

The transaction was unanimously approved by both companies' boards and is expected to be completed in the first half of 2024.

Chevron shares lost 13.5% to $144.35 for the week. Hess was off 12.1% to $143.29.

Western Digital drops 9% as Kioxia merger said 'scrapped'

Western Digital's (NASDAQ:WDC) stock lost as much as 15.6% intraday Thursday, and closed down more than 9%, after Nikkei Asia revealed that discussions concerning the company’s proposed merger with Kioxia had been "scrapped" after it failed to receive approval from large shareholders SK Hynix and Bain Capital.

This report surfaced shortly after SK Hynix said it opposes a merger between Kioxia and Western Digital, arguing that it undervalues its Kioxia investment's value.

Wolfe Research noted, "It doesn't appear that a deal can be struck without Hynix approval, frustrating efforts for NAND industry consolidation."

Western Digital shares closed the week at $38.97 after clawing back some of its losses on Friday.

Forward Air seeks to terminate disastrous Omni merger

Also on Thursday, Forward Air (NASDAQ:FWRD) said it is considering exercising its right to terminate its merger with Omni Logistics.

Forward Air shares have taken a sharp fall since the merger's announcement in August, with key shareholders, including Ancora Holdings, opposing the deal. In September, three former Forward Air executives and current shareholders filed a lawsuit to block the deal. Despite a judge dissolving a restraining order related to the merger, Forward Air accuses Omni of failing to meet certain obligations in the agreement, and said it will not be obligated to close the deal.

Omni, for its part, said it has "fully complied with all the required provisions of the Agreement and Plan of Merger" and said the merger is "legally binding" and intends to enforce it.

Forward Air stock lost some 42% of its value within a week of the August 10 merger announcement and has barely recovered since then, closing at $70.36 this past Friday - down some 36% vs. its $110 pre-merger closing price.

Ancora said it believes Forward Air’s stock can move back to $100 over the next six months if shareholders vote against the deal and the board and management are replaced, and estimates Forward Air’s value creation opportunity at $140-$145 per share.

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Two more deals

Roche Holding (OTC:RHHBY) announced a $7.1B deal to buy Telavant Holdings from Roivant Sciences (NASDAQ:ROIV) and Pfizer (NYSE:PFE), with an additional milestone payment of $150 million.

This acquisition gives Roche exclusive rights over RVT-3101's development, production, and marketing in the US and Japan. The antibody, set for Phase 3 trials, is primarily aimed at treating inflammatory bowel disease and potentially other related ailments.

Shares of EngageSmart (NYSE:ESMT) surged over 11% last Monday after the company announced a definitive agreement for its acquisition by Vista Equity Partners, an investment firm specializing in enterprise software and technology-enabled businesses. The all-cash deal is valued at approximately $4.0B, or $23.00 per share. Shares closed Friday at $22.67.

Earlier in the month, Reuters had announced that EngageSmart was exploring a sale, with advice from Goldman Sachs and Evercore.


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