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Weekly M&A Digest - August 25, 2017

John Shipman, Senior Financial Writer | August 25, 2017

A compendium of highlights and observations from the week’s notable M&A news, compiled by Merrill Corporation which facilitates the sharing and disclosure of financial information in transactions such as these.

France’s Total Buys Maersk Oil Business for $5 Billion

French oil giant Total SA agreed to buy Maersk’s oil unit for $4.95 billion, as the Danish shipping company sheds some of its non-core assets. Total said it will produce 3 million barrels a day of oil and gas by 2019.

The deal shows consolidation continues in the oil patch, helped by signs of stabilizing crude prices. ”The purchase also signals some oil majors are prepared to invest to replenish reserves and boost production, anticipating an oil price recovery,” Reuters wrote.

Sempra Energy Outbids Buffett’s Berkshire for Oncor

Sempra Energy won with a $9.45 billion cash bid to buy Oncor Electric, beating out a $9 billion offer from Berkshire Hathaway that had drawn derision from hedge fund Elliott Management Corp. When faced with Elliott’s scorn and its move to block the deal, Warren Buffett's Berkshire indicated it wouldn’t raise its offer.

Elliott said it would back the Sempra deal. Two earlier agreements -- prior to the pact with Berkshire – to purchase Oncor from its bankrupt parent, Energy Future Holdings Inc., were shot down by regulators. The Wall Street Journal noted the Berkshire deal had a $270 million breakup fee, which Elliott has challenged in bankruptcy court.

Bayer’s $57 Billion Monsanto Deal Draws Deeper Scrutiny From EU

European antitrust regulators are scrutinizing more closely Bayer AG’s $57 billion buyout of Monsanto, with officials indicating concern that combining the crop seed and pesticide giants will cut competition, placing added financial strain on farmers already dealing with declines in crop prices.

It’s been nearly a year since the German and American companies announced their deal, and they had hoped to close it before the end of 2017. Resistance from US regulators last year contributed to the highest volume of M&A deal withdrawals since the financial crisis. Investors early this year had wagered that Trump administration pledges to rollback regulations and other policy changes would goose M&A activity, but so far such action has been slow to develop. The extended deliberations now by European officials indicate mega deals will continue to get a thorough vetting before approval.

Separately, regulators gave the OK to Amazon.com’s $14 billion deal to acquire Whole Foods, the internet retailing behemoth’s largest acquisition. The companies announced the buyout in June, and said the deal will close on Aug. 28. Amazon said it would immediately begin cutting prices at the grocer, which has garnered a reputation for being pricey.

Great Wall Motor Eyes Fiat Chrysler’s Jeep Brand

Following reports that a “well-known” Chinese automaker had offered to buy Fiat Chrysler Automobiles, China’s Great Wall Motor Co. confirmed an interest in the Jeep brand parent, though the company was cagey on its exact intentions. A Great Wall spokeswoman said on Aug. 21 it was interested in all or part of Fiat Chrysler, specifically the Jeep business, but said a day later that there was still uncertainty over whether it would make a bid, according to Reuters.

This offers evidence that China remains intent on staying active in outbound M&A, which has been an important pillar in North American deal activity during the past couple of years. Automotive News said Chinese companies are “under government pressure” to acquire foreign entities. Fiat Chrysler CEO Sergio Marchionne has been streamlining its operations, which some observers regard as a prelude to a possible sale or spinoff. The company said Monday it had not been approached by potential acquirers, according to reports. 

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