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Weekly M&A Digest - October 27, 2017

John Shipman | October 27, 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.

CVS Health reportedly in talks to buy Aetna

Consolidation efforts in the healthcare sector are on the burner once again, with the Wall Street Journal reporting drugstore chain CVS Health is in talks to buy insurer Aetna for as much as $66 billion.

The WSJ notes it's an opportunity for CVS to "lock in a huge volume of new members for its pharmacy-benefit management arm, as well as customers for its drugstores." Also, it may, in part, be a defensive maneuver as signals a potential entrance into the business of selling drugs. Earlier this year, Aetna and Humana called off a $34 billion merger after a judge blocked the deal on antitrust grounds. Regulators this year also blocked a proposed takeover of Cigna by Anthem on the same grounds.   

Merrill Corp Weekly Digest October 27, 2017

Cisco Systems diversifies further with BroadSoft deal

Cisco Systems is taking another step to decrease its reliance on networking hardware sales with the purchase of BroadSoft for $1.7 billion. Cisco agreed to pay cash for the maker of software used in telecommunications applications.  

Reuters said the offer price was 25 percent higher than where BroadSoft shares traded before the news organization reported in late August the company was considering a sale. Technology firms continue to gravitate toward business models that emphasize software as a service in an embrace of the recurring streams of revenue brought by that approach. The Wall Street Journal noted this is Cisco’s seventh acquisition this year, and the second-largest after a $3.7 billion deal for software maker AppDynamics.

Hartford Financial bolsters employee benefits business with Aetna unit

It pales in comparison to reports of CVS's bid for all of Aetna, but Hartford Financial agree to pay $1.45 billion for Aetna's unit that provides life and disability insurance to employer benefits plans in the US, making Hartford one of the top two in sales for providers of group benefits products, according to Chief Executive Christopher Swift.

Aetna President Karen Lynch said the sale of the unit allows the company “to have a stronger focus on our strategy of creating a personalized approach to improving member health.” Meanwhile, Hartford investors were more likely expecting the firm’s next deal to be a sale rather than a purchase, Bloomberg said, amid reports it was in talks to sell its annuity business. Hartford’s size and valuation also make it “a logical target if its peers consolidate further,” Bloomberg added. 

Delphi Automotive buys startup to boost autonomous driving efforts  

The M&A market for autonomous driving technology remains active, with Delphi Automotive the latest to make a purchase. It’s buying Boston software startup nuTonomy for up to $450 million, which the auto-parts maker said will double the size of its autonomous driving team, including the addition of 70 engineers and scientists.

General Motors earlier this month bought Strobe Inc., which makes sensors to assist in self-driving navigation. That followed a 2016 acquisition of Cruise Automation to ramp up GM's initiatives on driverless vehicles. Ford recently teamed up with Lyft in a move to speed up the introduction of self-driving cars to the masses, and will take advantage of Lyft’s technology to test autonomous vehicles. The automaker also said in February it’s investing $1 billion in Argo AI to advance its self-driving efforts.

Hess sells Norwegian, Equatorial Guinea assets

Hess is selling its Norwegian oil assets for $2 billion to Aker BP, a move that the energy company says continues its strategy of dispensing higher-cost assets, and will help fund development of its offshore Guyana exploration.

Reuters noted Hess is “the latest global oil company to abandon or scale back its presence in Norway, following partial divestment by BP and Exxon Mobil in 2016 and 2017, respectively.” Amid low crude prices, major oil companies have moved to decrease their exposure to regions where the commodity is more expensive to extract and production is waning, including the deep waters of the North and Norwegian Seas.

Singapore’s Equis Energy acquired in largest renewable energy generation deal

Investment firm Global Infrastructure Partners and other investors will buy Singapore’s Equis Energy for $5 billion, including debt, the largest deal so far in renewable energy generation, according to the companies.

Investors alongside GIP include Canada’s Public Sector Pension Investment Board and China's CIC Capital Corp. Equis has developed and operates solar and wind energy assets throughout the Asia-Pacific region, and is building one of the largest solar plants in Australia. GIP’s current holdings include Gatwick and Edinburgh Airport in the UK, and the Port of Melbourne in Australia. The Equis transaction positions it "as a dominant renewable energy developer” in Australia, Japan, India and the rest of Southeast Asia, The Deal writes.

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