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Mubadala-backed M42 would buy the operator of 440 dialysis clinics from buyout firm Bridgepoint

A Mubadala Investment Co.-backed healthcare company is nearing a deal to acquire kidney-care provider Diaverum for more than $2 billion including debt, according to people familiar with the matter, extending the Abu Dhabi sovereign-wealth fund’s bet on healthcare.

M42, a newly launched healthcare operator owned by Mubadala and a partner company, G42, is planning to acquire Diaverum from U.K.-based buyout firm Bridgepoint Group BPT 2.47% PLC. A deal is expected to be announced later this week, assuming talks don’t break down, the people said.

The deal would help bolster M42’s existing operations in the Middle East while accelerating its stated ambition to expand its healthcare services globally. Its existing holdings include Amana Healthcare, a U.A.E. provider of rehabilitation and other services, and Imperial College London Diabetes Centre, a partnership set up with the U.K. university to treat the growing demand for diabetes care in the Emirates.

Diaverum, based in Sweden, oversees a global network of 440 dialysis clinics, almost triple the 155 facilities Bridgepoint inherited when it bought the business in 2007 for an undisclosed amount. Diaverum has also expanded geographically over that period, operating in 23 countries, up from 15.

Dialysis is a procedure to remove waste products and excess fluid from the blood when the kidneys stop working properly. It often involves diverting blood to a machine to be cleaned. The size of the dialysis market globally is expected to grow in coming years because of aging populations and the increased incidence of kidney disease related to diabetes and other conditions.

Diaverum’s operations include 40 dialysis facilities in Saudi Arabia where Diaverum operates under a five-year contract with the Saudi Ministry of Health, according to the company’s website. Confidence in winning renewal of the license in 2024 was key to the deal, which gave M42 an advantage over other bidders because of its existing base in the region and Mubadala’s backing, said some bankers following the sale process.

Mubadala is the investment arm for the Abu Dhabi government. It oversees $284 billion in assets and invests across a range of industries including business services, energy, financials, healthcare and industrials.

Bridgepoint manages more than €37 billion, equivalent to about $40.6 billion of assets, focusing its investments in industrials, business and financial services, consumer and healthcare, according to the firm’s website.

Bridgepoint attempted to list Diaverum in an initial public offering in 2020. It withdrew the IPO after not achieving a high-enough valuation.

The owner of ad agencies including BBDO and TBWA predicts continued growth throughout 2023 as clients spend on performance- and event-based marketing services

Omnicom Group Inc. said it will significantly reduce its real-estate footprint and formalize return-to-office requirements for all U.S. employees as the company said it expects growth to continue through 2023, an indication that executives believe marketers’ continued spending will help the advertising giant largely avoid the economic headwinds that have hit the tech and finance industries.

Omnicom, which owns agencies such as BBDO, OMD and TBWA, will require all U.S. employees to return to the office at least three days per week, Chief Executive John Wren said on a call to discuss the company’s first-quarter earnings.

“The great resignation is over,” said Mr. Wren. “Naturally, there will be individual cases where people won’t want to come back, and they’ll seek other alternatives. But in the scheme of things, it is not going to be significant.”

Organic revenue grew 5.2% year-over-year in the first quarter, beating analysts’ consensus estimates of 3.9%, according to Wells Fargo. Total revenue for the quarter was $3.44 billion, a 1% increase over the first quarter of 2022, and Omnicom is on track to meet its own predictions of 3% to 5% organic growth for the year, said Mr. Wren.

Organic revenue is a metric that removes the effects of currency fluctuations, acquisitions and disposals.

Omnicom was the first of the major ad holding companies to report its earnings for the first quarter. Its share price hit a 52-week high of $96.78 before the market closed Tuesday and continued to rise in after-hours trading.

Omnicom plans to reduce its global real-estate holdings by more than 1.6 million square feet, said Mr. Wren. Since 2018, the company’s total headcount has increased by approximately 4,000 while office space decreased by 35%, he said.

Mr. Wren acknowledged that Omnicom would spend more money in the short-term to reintroduce employees to in-office requirements. In order to facilitate the transition, Omnicom has also invested in U.S. satellite offices such as locations in Connecticut, New Jersey and Long Island, N.Y., designed to reduce New York-area employees’ commutes, he said.

The company reported $119.2 million in pretax real-estate repositioning costs for the quarter, but this upfront payment will significantly reduce rent and occupancy expenses in the long term, said Chief Financial Officer Philip Angelastro.

Mr. Wren noted continued uncertainty related to the war in Ukraine and rising instability in the Middle East, as well as the collapse of several banks that served the tech industry.

“Clients are getting cautious, and they’re trying where they can to avoid long-term commitments and create as much flexibility in their spending as possible,” said Mr. Wren. “Therefore we’re doing the same.”

One way Omnicom will try to control costs is by opening three company campuses in India as hiring and offshoring operations in that country continue to grow, he said.

The company’s strongest revenue growth came from so-called precision marketing services, which allow advertisers to target consumers directly by using behavioral data, as well as experiential, or event-based, marketing, with the latter seeing especially strong growth outside the U.S., Mr. Wren said.

The company will also increase its investment in AI tools, primarily through a partnership with Microsoft Corp. Clients that want to participate in related projects will combine their data with Omnicom’s own database in order to find new ways to target consumers, according to Mr. Wren.

“There’s a lot of ethical questions as well as privacy questions,” he said. “We’re testing it, playing with it, but certainly not deploying it to the full extent of the power that it has.”

Property values in prime areas of the UK capital declined 5% in March on a year earlier

Central London property prices dropped almost 5 per cent in the 12 months to March, the largest annual fall in three and a half years, as the UK’s poor economic outlook and fears of a further decline in the housing market stopped wealthy buyers from committing to deals.

The price of property in prime areas of the capital dropped to £1,261 per square foot last month, down from £1,326 a year earlier — the lowest level since mid-2021, according to data provider LonRes, as values continued the decline that began in late 2022 after a buoyant 18 months.

“The steam has come out of the market. It was a bit inflated last year,” said Anthony Payne, managing director at LonRes.

Property values in high-end areas of the city, such as Mayfair and Kensington, tend to be less susceptible to the recent rise in mortgage costs as the market relies on cash-rich foreign buyers. But Payne said buyers had become more cautious over concerns that prices could still fall further as the result of a combination of factors, including concerns over the economic outlook and rising interest rates.

The discretionary nature of the central London markets has meant buyers and sellers can afford to remain in a stand-off, Payne added. Wealthy buyers with multiple homes are under less pressure to make a purchase, while sellers are often in a better position to wait out the downturn.

“The vendors are still in yesteryear,” Payne said, adding: “We’re just in that void at the moment where the two are not meeting.” 

Transaction numbers in March were down by a fifth on the same month last year, while prices per square foot dipped below the three year pre-pandemic average for the first time in nearly two years, according to the data.

“Across the market, I hear that a lot of agents are quieter,” said James Forbes, director at high-end London estate agency Forbes Gilbert-Green. “My longer-term concern would be: do we maintain our position as a global financial centre? The concern for all of us in prime central London is ‘brand London’ and ‘brand UK’ remaining positive. That drives our market.” 

The central London market enjoyed a boost between mid-2021 and autumn last year, sparked by the easing of Covid-19 travel restriction and foreign buyers taking advantage of the weak pound and low interest rates.

The chaos triggered by the “mini” Budget of shortlived prime minister Liz Truss last September marked a turning point as investors’ confidence in the UK fell sharply and a large number of home sales fell through.

“To invest in London you want economic and political stability,” said Richard Donnell, executive director at property search website Zoopla.

The wider UK housing market has so far defied predictions that higher mortgage costs could knock 10 per cent off house prices, with relatively small declines registered in recent months.

G7 statement raises hopes for exception to emissions legislation

At a meeting in Japan last weekend, the environment ministers of the G7 countries gave Italy’s big biofuels industry a boost.

The EU last month passed decade-in-the-making legislation to ban combustion-engine cars from 2035, including those running on biofuels made from plant or animal waste. The goal is to make all European cars run on non-polluting electric engines, a blow to Italian and German makers of cars and components as well as companies investing heavily in fuels made from renewable energy sources.

But Italian hopes of securing an exception to the ban for cars run on biofuels have been raised by the statement from G7 ministers in Japan that mentioned both e-fuels and biofuels as a climate-friendly alternatives to petrol and diesel.

Already one big exception has been made by the EU. After a last-minute negotiation, Brussels and Berlin struck a controversial deal to exclude from the ban cars running on electrofuels — synthetic fuels created by combining hydrogen extracted from water with carbon taken from the air.

German carmakers, such as Porsche, have heavily invested in e-fuels following the industry’s diesel emissions scandal. The last-minute compromise meant Brussels could finally pass the emissions legislation with Germany’s support, despite opposition from a group of countries, including Italy.

The exception obtained by Berlin has drawn criticism in Italy that it was made to help German companies. “It is simply intolerable,” said Italian lawmaker Luca Squeri, of Silvio Berlusconi’s Forza Italia party. One veteran Italian car executive added: “Germany is hawkish when it comes to EU rules implementation unless the rules have the potential to negatively impact their own economic interests.”

But some Italian autos and energy executives see the EU’s e-fuels decision as good news because it “effectively opens the door to exceptions”. Readily available biofuels, which are also cheaper than e-fuels, can be another such exception, they say.

Neither e-fuels nor biofuels are technically compliant with the EU’s zero emissions legislation. And there’s an open debate between scientists and experts as to whether e-fuels and biofuels can be considered carbon-neutral.

But Italian sector experts have long championed the principle of “technological neutrality” when it comes to climate targets, under which the EU should limit itself to setting the targets, leaving member states free as to how to achieve them.

“It is mandatory to strongly defend the principle of technological neutrality based on which emission targets can be achieved through biofuels too . . . we need a scientific and non-ideological approach,” said MEP Carlo Fidanza, who heads the Brothers of Italy — the senior coalition partner in the Italian government — delegation at the European parliament.

Italian energy group Eni currently produces 1.1mn tonnes of biofuels per year, after having converted two of its domestic oil refineries into biofuels makers. Another bio-refinery is being built. Eni has also vertically integrated its supply chain by importing vegetable oils (excluding palm oil) for biofuel production from its African plants.

The group said it aimed to ramp up production to reach 5mn tonnes per year by the end of the decade. Eni is also the leading European producer of hydrotreated vegetable oil, or HVO, a type of diesel entirely produced from renewable energy sources.

Industry experts say Berlin sees e-fuels as a potential option to avoid having to convert its whole car industry, Europe’s largest, to electric vehicles. But analysts and lawmakers described the Commission’s concession as a red herring. A paper published by the Potsdam Institute for Climate Research says e-fuels are likely to be in short supply for a long time to come. “Even if the market ramp-up happens . . . the global supply in 2035 would not even be sufficient to cover the indispensable German needs for aviation, shipping and chemicals,” said researcher Falko Ueckerdt.

After next year’s European parliament elections, officials in Rome and Milan are hoping to reopen the negotiations with a new Commission following the e-fuels concession. Italy’s environment minister Gilberto Pichetto Fratin said at the weekend: “We must restart the dialogue with European countries to reach the best data-based solutions [to meet emissions targets].

“Biofuels will be able to replace petrol and diesel and save Italy’s automotive industry.”