M&A wrap: Merck, Tilos, Salesforce, Tableau, United Technologies, Raytheon, The Prom

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Merck & Co. (NYSE: MRK) is buying Tilos Therapeutics, a biopharmaceutical company that focuses on developing therapeutics for potential cancer treatments, fibrosis and autoimmune diseases, for up to $773 million. The target was founded by Boehringer Ingelheim Venture Fund, Partners Innovation Fund and received an additional investment from ShangPharma Innovation Fund. “At Merck we continue to enhance our robust pipeline through active execution of our business development strategy," says Dean Li, senior vice president, discovery and translational medicine, Merck Research Laboratories. Earlier in 2019, Merck announced plans to buy immunotherapy research company Immune Design (Nasdaq: IMDZ) for $300 million. The target develops technologies that are designed to activate the immune system's natural ability to fight against potential cancer cells. Pharmaceutical companies are replenishing their pipelines by going after cancer research and treatmnt companies. Amgen (Nasdaq: AMGN) is acquiring Copenhagen-based biopharma company Nuevolution for 1.61 billion Swedish kronor ($167 million). Nuevolution has a patent protected drug research platform to identify small-molecule drug candidates to be taken as pills to potentially treat cancer, and Varian Medical Systems is acquiring Cancer Treatment Services International from TPG Growth for $283 million. The target owns and operates a network of cancer treatment facilities across India and South Asia.

Salesforce.com Inc. (NYSE: CRM) agreed to buy Tableau Software Inc. (NYSE: DATA) in an all-stock deal valued at $15.3 billion in a major bid to build its analytics offering. The takeover of Tableau will be Salesforce’s largest deal to date, according to Bloomberg. Tableau has been broadening its product line to include data cleanup and machine learning tools, enabling it to compete in the wider data-warehousing. Salesforce co-CEOS Marc Benioff and Keith Block have been chasing new markets to reach an annual revenue goal of $26 billion to $28 billion by 2023. Read the full story by Bloomberg News: Salesforce buys Tableau in data push.

DEAL NEWS
United Technologies Corp. (NYSE: UTX) agreed to buy Raytheon Co. (NYSE: RTN) in an all-stock deal, forming an aerospace and defense giant with $74 billion in sales in one of the industry’s biggest transactions ever. The new entity will be called Raytheon Technologies Corp. when the deal closes in the first half of 2020, after United Technologies completes the separation of its Otis elevator and Carrier air-conditioner businesses. Read the full story by Bloomberg News: United Technologies acquires Raytheon.

Gryphon Investors-backed Water’s Edge Dermatology, a provider of comprehensive dermatology services through 37 Florida locations, has acquired a controlling interest in Coast Dermatology, a medical and cosmetic dermatology practice in Venice, Florida.

H.I.G. Capital has purchased transportation and logistics company Cardinal Logistics. Harris WIlliams advised Cardinal.

For more deal announcements, see Weekly wrap: Google, Genstar, Infineon.

For more on PE fundraising, see PE fundraising scorecard: Aurora, Nav Capital, Pawson, QL.

PEOPLE MOVES
Sunil Kothari has joined alternative investment firm Angelo, Gordon & Co., as a managing director where he is responsible for originating and executing on residential and consumer debt investment opportunities across Europe. He was previously with Pimco Europe Ltd.

FEATURED CONTENT
The Tony Awards ceremony, held at Radio City Musical Hall in New York and hosted by The Late Late Show’s James Corden, aired live on CBS on June 9. Hadestown won the award for Best Musical. Ali Stroker made history as the first wheelchair user to win a performing Tony in a milestone for representation on stage. The Glee Project alum won Best Performance by an Actress in a Featured Role in a Musical for her performance as Ado Annie in the Oklahoma revival. Former financial services executive Jane Dubin, a co-producer of The Prom, which was nominated for seven Tony Awards, including Best Musical, discusses investing in Broadway plays in this Q&A with Mergers & Acquisitions. Read the full story: Investing in Broadway: Jane Dubin on backing the Tony nominated musical The Prom.

Healthcare companies are spending more on information technology than ever before. Private equity firms including: Bain Capital, GTCR, Great Hill Partners, The Riverside Co. and New Heritage Capital, are investing in the innovations most in demand, including big data, SaaS and artificial intelligence, as we explore in depth in Mergers & Acquisitions' feature, Healthcare's must-have technologies. “Healthcare IT is the largest cottage industry in the world,” says Sam Hendler, who leads healthcare IT deals at Harris Williams.“Healthcare IT is a highly fragmented, multi-billion-dollar market with thousands of companies focused on different $250 million to $500 million sub-markets. Savvy investors see there is an opportunity to aggregate assets and build platforms of scale. It’s an incredibly exciting time in healthcare IT.” For recent transactions that showcase the trends, see 5 private equity-backed healthcare IT deals.

Activity and urgency characterize the current dealmaking environment, say investment bankers and other M&A advisors interviewed by Mergers & Acquisitions. After a record-breaking 2018, forecasts for 2019 remain bullish. Advisors point to a lot of cash that must be deployed by strategic buyers and private equity firms alike; a healthy U.S. economy; and low interest rates. Competition for high-quality targets has never been more intense, especially for technology providers, they report, which means sellers are commanding high prices. It all adds up to a seller’s market. A mood of urgency prevails, as dealmakers seek to close deals quickly, while conditions remain favorable. The advisors interviewed for this story say they don’t see signs of a recession this year; however they are closely monitoring bellwethers, including corporate earnings, wage pressure, global supply chains and slowdowns abroad. They are recommending that clients be prepared for an economic slowdown in the next two years. Specialization is the name of the game, and investment bankers advise clients to seek targets with business-model stability, limited cyclical exposure and a recurring revenue business model. Technology, business services, healthcare, consumer and manufacturing are among the most promising sectors. Read the story: 8 M&A advisors urge closing deals now, while economy stays strong.

May featured deals closed by ACI Worldwide Inc. (Nasdaq; ACIW)., Genstar, Morgan Stanley (NYSE: MS) and Tesla Inc. (Nasdaq: TSLA). Read the full story: Deals that closed in May: ACI Worldwide, Genstar, Morgan Stanley, Tesla.

Today's active M&A market demands a robust set of tools and services. Enter service providers. From online marketplaces, such as Axial, led by CEO Peter Lehrman (pictured), to offerings that help private equity firms administer funds, such as Frazier & Deeter's FD Fund Administration, the service providers featured in Mergers & Acquisitions' updated annual dealmaker's guide help get transactions done. For the full guide, read: Dealmaker's guide to service providers: Accordion, Axial, BluWave, Frazier & Deeter.

Big data, Artificial Intelligence (AI), the Internet of Things (IoT) and 5G are transforming the business world. By embracing these technologies, organizations across the globe are realizing untapped potential in efficiency, customer experience, talent and profitability, and have been able to make better, more streamlined mergers and acquisitions, writes Bank of America Merrill Lynch's Robert Arth in a guest article. Read the full story: Why the middle market needs big data.

Tech dominates dealmaking. The technology, media and telecom, or TMT, sector accounted for about 40 percent of total private equity deal volume and one-third of total capital invested by PE firms over the last five years, according to EY Private Equity. Looking forward, the next five years of M&A activity will be fueled by a whole new set of developments. As one wave of technological innovation crests, another is forming. “With themes such as cloud computing and mobility now mainstream, PE firms are focusing on the next wave of disruption — technologies such as artificial intelligence and machine learning, robotic process automation (RPA), Internet of Things (IoT), robotics, drones, blockchain, augmented reality and virtual reality,” finds the April edition of EY’s quarterly PE Pulse report. Read our full coverage: Smart cities, IoT, AI, robots, edge computing will fuel next wave of tech M&A.

Excelled. Innovated. Inspired. That’s what the eight winners of Mergers & Acquisitions’ 12th Annual M&A Mid-Market Awards did in 2018. Our awards honor the leading dealmakers and deals that set the standard for transactions in the middle market. In addition to Nike, award winners include: Fortive, TA Associates, the Riverside Co., Harris Williams, Monroe Capital, Goodwin and Luminate Capital Partners' Hollie Haynes. Read our full coverage: Meet the winners of the M&A Mid-Market Awards: Nike, Fortive, TA, Harris Williams.

Mergers & Acquisitions has named 36 leaders the 2019 Most Influential Women in Mid-Market M&A, including Kainos Capital's Sarah Bradley, Kayne Anderson Capital Advisors' Nishita Cummings and Pelham S2K Managers' Venita Fields. All 36 are outstanding dealmakers both inside and outside of their firms. This year, we asked the featured dealmakers to tell their own stories through Q&As, including their advice for women. Related: Meet the 2019 Most Influential Women in Mid-Market M&A.

EVENTS
ACG Minnesota hosts the the Upper Midwest ACG Capital Connection at the Renaissance Minneapolis Hotel, The Depot, June 10-11.

ACG Boston brings together 700-plus dealmakers for DealFest Northeast and DealSource Select 2019 at the Cyclorama and the State Room, June 12-13.

Exponent Women hosts the Annual Exchange, which brings a trusted network of women dealmakers together for a focused day of robust content and networking, at Second in New York, on July 11. The Exchange provides attendees with opportunities to establish new connections, reinforce existing ones and absorb timely and relevant knowledge from industry leaders.

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