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Weekly M&A Digest - October 13, 2017

John Shipman, Senior Financial Writer | October 13, 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.

Express Scripts Buying eviCore Healthcare for $3.6 Billion

Express Scripts agreed to purchase eviCore Healthcare – a company that acts as an intermediary between medical services and insurance companies -- for $3.6 billion.

The deal helps diversify the pharmacy benefit manager’s business away from its core focus on prescription drugs. It comes amid recent speculation that Amazon may be talking to PBMs with an intent to potentially create a presence in pharmacy benefits. Backed by private equity, EviCore offers strategies and services “that reduce and control costs” for its clients, the company says on its website. The move could help fill an anticipated sales void at Express Scripts, as it currently stands to lose Anthem, its biggest client, in 2019 after a squabble over drug prices.

Merrill Corp Weekly Digest October 13, 2017

Honeywell Plans to Spin Off Home, Transportation Businesses

Honeywell said it will spin off two businesses into separate publicly-traded entities. The plans follow a portfolio review by new CEO Darius Adamczyk, and comes amid prodding from activist investor Dan Loeb.

The company predicts the Homes and Global Distribution business – which provides HVAC controls and security systems – will have annual revenue of roughly $4.5 billion. The Transportation Systems business – which makes turbochargers – is forecast to have $3 billion in annual sales. Loeb’s Third Point had urged Honeywell to spin off its entire aerospace business.

Pfizer Considers Options for Consumer Healthcare Unit

Pfizer said it’s reviewing alternatives for its Consumer Healthcare business, including a “spin-off, sale or other transaction.” The unit had sales of $3.4 billion last year with brands that include Advil, Robitussin and ChapStick. Reuters said analysts estimate the unit could sell for four times that amount.

The drug maker isn’t shy about making attempts to transform itself. Last year it considered splitting into two companies following a failed attempt at a $160 billion merger deal with Allergan. Discussions to buy AstraZeneca failed in 2014, with that deal worth about $120 billion.

Belgium’s Bpost Purchases Logistics Firm Radial

Demand for providers of logistics technology remains hot, as Belgium’s bpost purchased US-based Radial for $820 million. Radial was once eBay’s fulfillment arm, and it “pitches itself to retailers as a tool to compete with the online giant Amazon.com Inc.,” the Wall Street Journal wrote. Sterling Partners and co-investor Longview Asset Management are selling Radial after acquiring the business from eBay a little more than two years ago, according to The Deal.

This is the latest in a spate of deal activity focused on logistics tech companies, as the e-commerce world outside of Amazon attempts to remain competitive with the retailing behemoth. Bpost CEO Koen Van Gerven told WSJ that e-commerce offers new opportunities as the company’s mail volumes decline. “Historical players with disrupted business, they have to reach out,” he said. “Their iceberg is melting.”

Goldman Sachs Acquires House-Flipper Financier

One of the more blatant symbols of the housing market’s mid-decade, boom-years excess was the prominence of home flippers. They were often ordinary folk who found fortune – and in some cases TV fame -- buying and fixing up rundown houses to “flip” back into a scorching hot real-estate market. It ended badly for many when the market crashed, financing evaporated and foreclosures surged.

But the housing market has recovered, flippers have returned and Goldman Sachs is stepping up to boost those entrepreneurs. The firm agreed to buy specialty lender Genesis Capital, which provides financing to “professional residential real estate developers” for an undisclosed amount. The seller was Oaktree Capital. “Wall Street firms’ appetite for ‘fix-and-flip loans has been growing,” the Wall Street Journal said. “Volumes last year were at their highest level in a decade.” The deal reflects "the buoyancy of the housing market," and Goldman's interest in "diversifying its businesses as its core trading engines remain stuck in a postcrisis slump," WSJ added.

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