Notable Mergers and Acquisitions 11/28: (EW) (CDEV) (VRSK) (CTLT)

November 28, 2016 9:50 AM EST

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*** Edwards Lifesciences Corporation (NYSE: EW) announced that it has agreed to acquire Valtech Cardio Ltd., a privately held company based in Israel and developer of the Cardioband System for transcatheter repair of the mitral and tricuspid valves.

The Cardioband System combines a reconstruction implant, similar to a surgical annuloplasty mitral valve repair device, with a transcatheter approach. The system utilizes a catheter inserted into the femoral vein and delivered through a transseptal approach across the septum of the heart. The direct annuloplasty system features a unique segmental deployment that conforms to each patient's specific annular geometry, addressing the needs of patients with functional mitral regurgitation. In 2015, the Cardioband transseptal mitral repair system received CE Mark approval for European sales. Valtech has also initiated a CE Mark trial for the tricuspid application of a similar version of this device, which is intended to reduce tricuspid regurgitation.

"As we continue to pursue multiple therapies to address the diverse needs of patients affected by heart valve disease, we saw an important opportunity to incorporate Valtech's technologies into our comprehensive heart valve repair and replacement portfolio," said Michael A. Mussallem, Edwards' chairman and CEO. "We recognize that physicians will likely need a toolbox of options to treat their patients most effectively. We are very pleased with the progress and future prospects of the multiple internal programs we have underway, and we believe the addition of Valtech's talented team and mitral and tricuspid technologies will present even more opportunities to help patients."

The purchase price of Valtech is $340 million in stock and cash at closing, with the potential for up to $350 million in additional pre-specified milestone-driven payments over the next 10 years. Prior to the close of the transaction, which remains subject to customary closing conditions and is expected in early 2017, Valtech will spin off its early-stage transseptal mitral valve replacement technology program. Edwards will retain an option to acquire that program and its associated intellectual property.

Separately, Edwards' Board of Directors has authorized a new share repurchase program to acquire up to an additional $1 billion of the company's outstanding common shares. Edwards also has $277 million remaining of its current $750 million share repurchase program, which was authorized in July 2014. This authorization enables the company to repurchase shares to offset the dilution of the Valtech transaction, and continue executing its share repurchase strategies.

Edwards will provide financial guidance for 2017 and discuss the Valtech transaction further at its annual Investor Conference on Dec. 8.

The Cardioband System is not approved for sale in the United States.

*** Centennial Resource Development, Inc. together with its affiliates (Nasdaq: CDEV) announced that it has agreed to acquire 100% of the leasehold interests and related upstream assets in Reeves County from Silverback Exploration, LLC (“Silverback”). On November 21, 2016, an affiliate of Riverstone Holdings LLC (“Riverstone”) entered into a purchase agreement with Silverback to acquire 100% of its leasehold interests and related upstream assets in Reeves County for an aggregate purchase price of $855 million in cash, subject to certain adjustments. On November 27, 2016, Riverstone and Centennial entered into an agreement to assign, under which the Riverstone affiliate has agreed to assign, and Centennial has agreed to assume, Riverstone’s right to purchase such Silverback assets, subject to the satisfaction of certain conditions. The acquisition is expected to close on December 30, 2016.

Acquisition Highlights

  • ~35,000 net acres directly offsetting existing Centennial acreage in Reeves County (95% operated, ~88% average working interest)
  • Approximately 3,500 Boe/d of current net production
  • At least 600 horizontal drilling locations assuming 880’ spacing prospective for the Upper Wolfcamp A (~210 locations), Lower Wolfcamp A (~180 locations) and Wolfcamp B (~220 locations)
  • Estimated undeveloped resource potential of over 600 MMBoe from the Wolfcamp A and Wolfcamp B formations with additional upside potential from the Wolfcamp C, Avalon and Bone Spring formations
  • Contiguous position supports extended lateral development (acquisition increases operated extended lateral locations by 136%)

Mark Papa, Chief Executive Officer of Centennial commented, "We are very excited to announce our agreement to acquire the Silverback assets. While we did not expect to make such a significant acquisition so quickly, we could not pass up the opportunity to accretively add core acreage offsetting our existing Centennial assets at such a compelling price. Pro forma for the transaction, Centennial will be one of the largest operators in the Delaware Basin, with over 77,000 contiguous net acres. This transaction increases our horizontal drilling inventory by 44% and more than doubles our inventory of extended length laterals, which we believe provides the most capital efficient development. Furthermore, this transaction allows us to increase our 2020 oil production goal from 30,000 Bo/d to 50,000 Bo/d, all the while maintaining one of the lowest debt levels in the industry. Finally, we appreciate the continued support of our institutional shareholders, including Riverstone, and look forward to developing this high-quality asset base.”

Certain third parties have the right, exercisable within 30 days of receipt of a notice of Centennial’s acquisition, to acquire up to ~80% of ~10,000 net acres within the ~35,000 net acres at the purchase price paid by Centennial.

Transaction Financing

In connection with the acquisition, Riverstone and affiliated funds have committed to invest up to $500 million in a combination of CDEV common and convertible preferred shares at the common equivalent of $14.54 per share, subject to adjustment. The preferred shares will be convertible into common shares upon the approval of the Company's stockholders of such conversion at a special meeting. Holders of the preferred shares will not be entitled to a preferred dividend, but will be entitled to participate in dividends payable on the common stock. The preferred shares will also have a liquidation preference of $0.0001 per share and holders will be entitled to participate with common stockholders in distributions upon liquidation. The Company intends to finance the remainder of the purchase price through equity and/or debt financings. Receipt of the funds necessary to effect the acquisition pursuant to financing arrangements satisfactory to CDEV is a condition to its obligation to effect the assignment.

Advisors

Weil, Gotshal & Manges LLP acted as legal counsel to Centennial. Latham & Watkins LLP acted as legal counsel to Riverstone. Tudor, Pickering, Holt & Co. acted as financial advisor to Silverback in connection with the transaction. Kelly Hart & Hallman LLP acted as legal advisor to Silverback.

*** Verisk Analytics (Nasdaq: VRSK) announced the acquisition of MarketStance, a leading provider of market intelligence data and analytics to the property/casualty insurance market. MarketStance will become part of ISO, a Verisk Analytics business and a leading source of information about property/casualty insurance risk.

"Our property/casualty customers are always looking for unique insights to help them profitably grow their business," said Beth Fitzgerald, president of ISO Solutions. "MarketStance has built a proprietary analytics model to provide actionable insights around these core needs that will enhance our ISO offerings."

"We`re excited to join ISO, a leader in innovative data solutions," said Dr. Frederick (Fritz) Yohn, chief executive officer and founder of MarketStance. "Becoming part of a larger company will expand our breadth of offerings, help strengthen our capabilities, allow us to reach new customers, and provide additional value to our customers."

"MarketStance and its unique data and analysis of property and casualty premium potential will be a valuable addition to both ISO and Verisk Analytics," added Scott Stephenson, chairman, president, and chief executive officer of Verisk Analytics.

Following the completion of the transaction, MarketStance will become part of ISO, and Dr. Fritz Yohn will continue to lead the business.

*** Catalent, Inc. (NYSE: CTLT) announced that it has agreed to acquire Accucaps Industries Limited (Accucaps), the Canada-based developer and manufacturer of Over-the-Counter (OTC), high potency and conventional pharmaceutical softgels. Financial details of the transaction have not been disclosed.

The acquisition, which is subject to Canadian governmental approval, will substantially complement Catalent’s global OTC and prescription pharmaceutical softgel capabilities and capacity with the addition of a portfolio of products supplied to pharmaceutical companies in North America, and two state-of-the-art facilities offering integrated softgel development, manufacturing and packaging, strengthening Catalent’s ability to offer customers turnkey solutions.

Commenting on the acquisition, Dr. Aris Gennadios, Catalent’s President of Softgel Technologies, said, “Significant investments already made by Accucaps align well with Catalent’s own strategic goals, to offer our customers access to more products, capacity, and integrated solutions for differentiated products and better treatments.”

Upon completion of the acquisition, Accucaps’ over 500 employees, at its two facilities in Windsor and Strathroy, Ontario, will join Catalent’s global network of 11 Softgel Technologies facilities. The Accucaps facilities house sizeable blistering, bottling and other packaging capabilities, as well as high-potency prescription softgel development and manufacturing expertise that are complementary to Catalent’s.

Catalent RP Scherer Softgel is a global leader in innovative oral and topical softgel technologies for the pharmaceutical, consumer health, and cosmetics markets. Its softgel technologies are proven to solve complex bioavailability and formulation challenges, and are preferred in a wide range of consumer health and pharmaceutical product categories. Catalent leverages more than 80 years of experience in softgel formulation, development and manufacturing, as well as its proactively developed products, to help customers bring products to market faster. With a variety of unique, innovative technologies, and highly versatile, most preferred dose forms, Catalent has a wide variety of solutions to meet its customers’ needs.

Catalent was advised by RBC Capital Markets.

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