An M&A-Filled Monday

It was a busy day for dealmaking activity, so let’s quickly review.

Regional banks were buoyed after PacWest Bancorp said it would sell a portfolio of real estate construction loans to shore up its balance sheet. The company will sell 74 loans with an aggregate principal outstanding of $2.6 billion to a unit of Kennedy-Wilson Holdings. It’s also selling them six additional loans with an aggregate balance of around $363 million. While the deal comes at a discount, investors are celebrating PacWest’s steps toward improving its liquidity position. 💵

Ironwood Pharmaceuticals is buying Switzerland-based drug developer VectivBio for $1.15 billion. The acquisition will add a promising treatment for digestive disorders to Ironwood’s portfolio. Its drug treats a type of short bowel syndrome, wherein the body cannot properly absorb nutrients. Data from a late-stage study is expected by year-end, but clearly, Ironwood feels the news will be positive. 💉

Oil giant Chevron is throwing its weight around by buying PDC Energy. The stock-and-debt deal is valued at $7.6 billion and will increase Chevron DJ basin output by roughly 260,000 barrels/day. The deal comes at a time when oil companies are trying to diversify their operations away from areas like Russia that have significant geopolitical risks. The U.S. investment should also appease the Biden administration, which has been critical of major oil players for not investing enough domestically. 🛢️

The “Big Law” industry is getting a little bigger after A&O and Shearman announced a merger. The giant global law firm will have about 4,000 lawyers and $3.4 billion in revenue across 49 offices and 29 countries. The news comes after Shearman abandoned a merger with Hogan Lovells, causing many of its senior partners to abandon ship. And the deal gives A&O the U.S. expansion it has been recently seeking. ✒️

The world’s largest alternative asset manager, Blackstone, apparently buys into the “diamonds are forever” saying. It’s fully acquiring jewelry certification firm International Gemological Institute (IGI) from China’s Fosun and the company’s founding family for about $530 million. Executives expect the acquisition to enable IGI to focus more resources on development strategies and expand beyond its main market, India. 💎

Japanese lender Mizuho is buying U.S. investment bank Greenhill & Co. in an all-cash transaction that values the firm at $550 million, including debt. It joins its Japanese competitors that have expanded their investment banking businesses to the U.S. It’s likely they feel the recent dealmaking slump gives them the opportunity to pick these firms up cheaper than they otherwise could have.  🤝

While not M&A news, the following headlines were worth noting. 👇

The world’s biggest maker of the tools used in manufacturing semiconductors, Applied Materials, says it will invest $4 billion in a new Silicon Valley chip research center. The new center will come online in 2026 and create up to 2,000 engineering jobs, hosting $25 billion of research over the next decade. 🔬

Mediterranean restaurant chain Cava filed for an initial public offering (IPO) on Friday, planning to trade on the New York Stock Exchange (NYSE) under the ticker symbol $CAVA. Its Form S-1 indicated that net sales rose 12.8% to $564.1 million in 2022, but its losses totaled $59 million. However, it’s still focused on growth through store expansions and building customer loyalty. It currently boasts more than 3.7 million loyalty members accounting for 25% of its sales, pushing same-store sales to grow 28.4% in Q1 of this year. 🥡

Lastly, some investors see SoftBank’s entrance as a contrarian signal of trouble ahead for private credit markets. Senior investors from the Japanese firm are speaking to market participants about directly lending as much as $1 billion to technology firms. The move comes as more firms, hurt by plunging valuations, turn to direct lending to get much-needed funds. On the other hand, the higher yields offered by these types of loans have attracted various new entrants into the market. 💰

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$FRG Joins Kohl’s Bidding War

Kohl’s has been feeling the heat as its activist hedge fund investors (specifically, Macellum Advisors) want the company to sell. Today, Franchise Group Inc became the fourth bidder in pursuit of a Kohl’s acquisition. 💰 🔥

Franchise Group Inc is the owner of Sylvan Learning, Pet Supplies Plus, the Vitamin Shoppe, and other popular franchised brands. The company offered Kohl’s a deal worth $9 billion, or $69/share. Kohl’s posts about 83% higher annual revenue than Franchise Group, so a successful Kohl’s acquisition could certainly stand to benefit $FRG in the long run.

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$SAVE Soars on $3.6 Billion JetBlue Offer

In early February, Frontier Airlines made a bid to combine its business with Spirit Airlines and form one gigantic discount airline. Today, JetBlue offered 40% above Frontier’s bid in an effort to acquire Spirit. ✈️ 💰

Spirit stock ($SAVE) exploded above 20% on news of JetBlue’s $3.6 billion cash and stock offer. JetBlue’s motive for the deal is likely Spirit’s fleet, as the budget airline flies all Airbus A320 planes — Airbus A320s account for most of JetBlue’s fleet as well.

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Exxon Mobil Nears Megadeal

Exxon Mobil is closing in on a blockbuster takeover of Pioneer Natural Resources, with the $60 billion acquisition potentially reshaping the U.S. oil industry. 🛢️

After posting a record profit in 2022, the oil giant has been looking for ways to put that cash to work. It’s also been eyeing the oil-rich Permian Basin of West Texas and New Mexico, a region it says is critical to its growth plans.

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