A SURGE in dealmaking offered some much-needed cheer to the City yesterday as blue-chip firms brushed off fears over political uncertainty and the sovereign debt crisis.
Mobile phone giant Vodafone moved closer to sealing a hotly anticipated £1bn buyout of Cable & Wireless Worldwide on a day when corporates in baby food, pharmaceuticals, healthcare and aviation also ate into their cash piles.
Vodafone said it would become Britain’s second-largest telecoms firm after agreeing to buy struggling CWW for £1.04bn in cash. Its 38p-per-share offer was supported by the board of CWW but faces opposition from fund manager Orbis, its largest shareholder with a 19 per cent stake, which said the bid was too low.
The largest deal of the day came from Nestlé, which triumphed in the battle for Pfizer’s baby food business with an $11.85bn (£7.35bn) offer. The Swiss food group beat competition from French rival Danone to take Pfizer Nutrition, providing it secures regulatory approval.
Meanwhile AstraZeneca, Britain’s second-largest drug-maker, agreed to buy US firm Ardea Biosciences for $1.26bn, giving it access to a new drug to treat gout. The $32 per share acquisition – at a 54 per cent premium to Ardea’s closing price on Friday – is worth $1bn after deducting cash held by Ardea and is the latest in a wave of pharma buyouts.
And global media giant Thomson Reuters said it would sell its healthcare arm to private equity firm Veritas Capital for $1.25bn in cash. The business provides data and analytics to hospitals, government agencies and healthcare workers to help increase efficiency.
It came as the sale of Edinburgh Airport was finally agreed with City Airport owner Global Infrastructure Partners for £807m. BAA had been forced to sell either Edinburgh or Glasgow airport because of Competition Commission concerns but the price still surpassed analysts’ initial estimate of £500m.
The sales provided a boost to M&A activity in Europe, where 167 deals have so far reached a value of €22.8bn (£18.59bn) this month, compared to €38.27bn from 340 deals in March, according to Mergermarket.
A series of other high-profile deals are on the horizon as private equity firms look to cash in. Yesterday First Reserve, the majority shareholder in Acteon, kicked-off the £1bn sale of the oil services firm after appointing JP Morgan as an adviser, while Lion Capital is in talks to sell Weetabix to a Chinese government-owned food firm for £1bn.
Nestlé to buy Pfizer's baby food business for $11.85 billion
Vodafone nears deal for Cable & Wireless Worldwide for £1.04 billion
BAA agrees to sell Edinburgh Airport to GIP for £807 million
Thomson Reuters to sell healthcare unit to Veritas for $1.25 billion
AstraZeneca to buy Ardea Biosciences for $1.26 billion