TheChek News Flow

Potential sale of coatings business to US investment group would be one of Germany’s largest transactions this year

BASF, the world’s largest chemicals group, is nearing a roughly €7bn deal to sell its coatings business to the US investment group Carlyle in one of Germany’s largest transactions this year.

Carlyle topped other private capital groups in an auction for the business unit and is now in exclusive talks with BASF, according to people familiar with the matter. The people cautioned that a deal had not been finalised.

A sale of the division would provide new funds for BASF, which has faced its worst crisis in years due to sharp increases in energy prices since Russia invaded Ukraine.

Last year the company slashed its dividend by a third. BASF stock has traded roughly flat this year but remains down significantly since the start of the war.

The BASF coatings business counts Germany’s struggling carmakers among its most important clients. The unit has more than 10,300 employees and generates €3.8bn in annual sales, according to its website.

European chemicals businesses have broadly struggled and are in a prolonged industry downturn, due to overcapacity, weaker than expected demand, and tough competition from Chinese rivals.

Groups including ExxonMobil and Saudi Arabia’s Sabic are considering exiting some of their European chemical operations, while earlier this year LyondellBasell sold four European plants.

Ludwigshafen-based BASF had been running an auction process for the coatings unit that drew interest from other private equity groups including KPS Capital Partners.

BASF last week closed the sale of its decorative paints unit in Brazil to Sherwin Williams for $1.15bn and said it was also eyeing up the sale of its feed enzymes business.

BASF also confirmed its intention to part with a minority stake in its agrochemicals division, as it continues to spin off or sell industry-specific business areas. The company said it aimed to have the agrichemicals division ready to be listed in 2027.

Carlyle has invested in other assets, notably acquiring the chemicals division of Dutch conglomerate AkzoNobel for €10.1bn in what remains Carlyle’s biggest European deal.

It has since renamed that business Nouryon and spun out salt and chemicals producer Nobian as a separate business in 2021.

BASF and Carlyle declined to comment.

The founder of Pershing Square Holdings opens up about his mistakes, his anti-DEI crusades and why he still hates to pay for parking

IT’S SAFE TO SAY Bill Ackman isn’t afraid of getting canceled. No matter how you view his posts about DEI, antisemitism or free speech—either as articulate counterpoints or as rambling, impolitic screeds—no one can deny that they’ve resonated far beyond his 1.8 million followers on X.

Being loud comes naturally to Ackman, the son of the commercial real estate broker Larry Ackman, who was known for being the outspoken parent at PTA meetings. Born in Manhattan, Bill grew up in Chappaqua, N.Y., in a $56,000 home that was a “stretch” for his father. Ackman credits his drive in part to his dad making it clear not to expect a penny’s inheritance from him.

When he was still in his 20s, Ackman launched Gotham Partners with $3.1 million in funds. He quickly pivoted to activist investing. As CEO of Pershing Square Capital Management, he’s seen some spectacular highs (the restructuring of mall operator General Growth Properties and Canadian Pacific Railway) and crushing lows (a hefty position in Valeant Pharmaceuticals cost him an estimated $4 billion when the stock plummeted). Of the losses, Ackman now says, “That would have been the end, but no f—king way was I going to let them liquidate me.”

Ackman has recently turned his megaphone to social issues, cementing his place among a brotocracy of the nation’s wealthiest men trying to dictate policy. He was Harvard’s most vociferous critic for its handling of pro-Palestinian student protests. Some saw his efforts contributing to the resignation of the university’s president, Claudine Gay, as laudable, while others found them deplorable. Asked why he’s the rare Wall Street executive to comment on polarizing issues, he says, “Everyone is afraid of losing business. If you don’t want to buy more stock, you know, don’t buy my stock. Who cares?”

Do you consider yourself self-made?

I got a big head start. If you are born to parents in New York’s Midtown, like me, instead of tough areas of the South Bronx, there’s a different outcome. I don’t know exactly how much personal credit I can take for that.

Tell me why you had an advantage.

I lived in a house that my dad paid $56,000 for in 1965, which was a big stretch for him. I went to a good school. We were comfortable. But there were things I could order on the menu, and certain things I wasn’t allowed to order. I never got the CB jacket I wanted or the Nike shoes. I never got an allowance. I had to work to have spending money.

Did you ever feel your parents were being too strict with you to make a point?

No, not at all. My father said very clearly to me that no matter how successful I am, “You’re not going to inherit any money from me. You’ve got to make it on your own.”

Besides family happiness, how do you judge success?

Based on the returns I generate for our investors. Warren Buffett had a 60-plus-year track record—my ambition is to best it. Our industry is a phenomenal industry, and we get paid extremely well if we do a good job. But I don’t see people ranking themselves on how much money. I’m not competitive, in a way.

It’s so interesting that you believe you’re not competitive with your peers.

At my stage of the game, what am I focused on? I’m focused on my success in my business; it’s based on my track record.

Say Dan Loeb or Carl Icahn, or another peer, does better for five years. That doesn’t rankle you?

It would only motivate me. It certainly wouldn’t rankle me. Good for them, you know, whatever.

I’m not sure I believe you. Do you think people see you as tougher than you are in real life?

How am I seen? Tell me.

For starters, you’re an activist investor, tough as hell, with an insane drive to beat others. Maybe to a pulp.

I told my dad that I was going to be a millionaire by 30, have $100 million by 40 and a billion by 50. I told him this when I was 18 or 19, and I was always ahead of my goals. I didn’t adjust for the inflation or the depreciation of the dollar, but I was always ahead. I was always optimistic, generally and about myself, and that carried me a long way.

Lots of people peak in high school. But when they get to real life, they’re not as quick on their feet or as talented as they think they are.

So I was lucky.

Is that hard work or luck? You went to Harvard with lots of smart people. What made you believe you had a comparative advantage? And what was your comparative advantage?

My comparative advantage is that the things I set myself to achieve as a kid, I achieved, and that built confidence that I could do the next thing I set myself to achieve. That’s it. Simple.

Some people make a lot of money and love to spend it. Others, like Warren Buffett, are not interested in “balling out,” as my kids say. Do you look down on huge planes and boats and Beyoncé birthday parties?

I’m not judgey. To each his own.

Are you neurotic about your own money?

No.

You sure? I also don’t believe that.

All right—I don’t like wasting money.

I knew it was something.

If I don’t like the price of the garage, I’ll go to a different one. It’s funny. I don’t like paying for parking, and I used to own a parking company. Or it really upsets me if the gas grill was running over the weekend—which it was, and it pissed me off. I really don’t like wasting money. I wouldn’t call it a neurosis, but it’s something that I care about.

I find most of those things are patterned in childhood.

Dad was very big on not wasting things. If I left my light on in my room, he’d get really upset. Now I go around the house turning off every light.

How do you talk about money with your kids?

I’m still working on that.

I’m for setting a good example. Kids do what you do, not what you say. I’m for being realistic and not hypocritical. I think it’s confusing for kids who grow up a certain way, and their parents are like, “You can’t have a cappuccino.”

I totally understand that. If you’re in a position to help, I think the best thing you can do for your kids is create the opportunity to pursue the thing they’re most passionate about. If they want to be a teacher, you don’t want them to be an investment banker just so that they can afford to live in New York City. If you have the ability to help them with an apartment so they can be a teacher and still live a nice life, that’s a wonderful thing a parent can do for a child, and I don’t think it poisons them.

Tell me about your biggest bump in the road.

I wrote this white paper questioning the AAA rating of a company called MBIA, and they went after me very aggressively. I found myself in a really bad place, under investigation by [Eliot] Spitzer, the New York AG, and then the SEC. And some guy on crutches comes over and says, “Ackman, what the f— is going on?” It’s Ian Cumming, the chairman of Leucadia National. He goes, “I told you this s— was going to hit the fan. But, look, we really believe in you. You’ll get through this, and when you’re ready, we’re going to back you in a significant way.”

It doesn’t sound like luck to me. Sounds like life and grit.

Success comes from how you deal with failures. I dealt with that failure well, and I launched Pershing Square in January 2004. My investment was $4 million. And I had to borrow a million against my house, OK? In 2004 I probably had $10 million net worth, plus an apartment. I wasn’t worth that much.

Comparatively speaking you weren’t worth that much. How many times are you up from that now?

A lot. A lot.

What’s a lot?

A thousand times. When I was 50, I brought the whole firm together and I said, “Look, we don’t have to raise money anymore. We’re out of the hedge-fund business. We have what Buffett had.” I looked it up: When Buffett was 50, Berkshire had $400 million of capital, and our public vehicle had $3.9 billion. We have a vehicle 10 times as large—not adjusted for inflation, but still.

What was the scariest moment of the past few decades?

The only scary moment was the day my new girlfriend, Neri Oxman, called me and said, “Brad Pitt is at the [MIT] lab visiting our students.” Neri and I usually text and talk all day, but with Brad Pitt there, it’s like radio silence from 10 in the morning to 10 at night; she doesn’t respond. I say to myself, “OK, I’m going to lose this woman. Brad’s going to steal my girlfriend, and then I’ll get wiped out.” So you tell me, how much did luck play a role? A lot.

I’m still not convinced it was luck.

My father always said to me, “Bill, in life, you have to keep your antennae up. Opportunities present themselves. You’ve got to take advantage of them.”

I’m curious about the psychology of people who make it to the tippy top. CEOs are often energized from some deep interior place. Was there anything sad in your childhood?

No.

Why are you so driven then? You wanted to please your parents? What do you credit it to?

I didn’t like that my parents could decide stuff for me. I wanted to do whatever I wanted, say whatever I wanted. I’m very motivated to speak freely. That’s why I’m so active on Twitter.

Have you ever felt concerned about your image?

I hate it when people have an inaccurate perception of who I am.

What’s the most annoying instance of that? Generally speaking.

Something about private-jet, hedge-fund guy.

You do have a private jet, and you’ve been a hedge-fund guy for years. How much money are you giving away—or what percentage are you planning to give away?

A substantial majority.

Giving effectively can be difficult. How are you going to do it?

I don’t know exactly. I’ve given away over $900 million. My other foundation still has almost a billion dollars. I’m going to come up with a thoughtful way to distribute the resources.

OK, let’s talk about the Twitter madness, because sometimes it is pure madness. Explain what you are doing.

I’m doing what I was motivated to do from the time I was a kid: I wanted to be able to say what I thought. One of my best friends said, “Bill, you know, the way you should live your life is pretend you’re dead. Your best friend gets up at your funeral. What do you want them to say?” You should work your life in reverse, right? I figured out I’m going to die. I want a significant life. I want to have the greatest beneficent impact on the largest number of people.

Isn’t giving your money away going to have the greatest beneficent impact on the most people?

I thought originally, business was about making money, philanthropy was about doing good, and that’s how I was going to save the world. I fairly quickly concluded that business actually can do enormous good—way more good than any nonprofit. In fact, many nonprofits are a complete disaster, the governance structure, everything’s terrible. Philanthropy should be saved for capital market failures, where there isn’t a for-profit answer, something no venture capital will back.

Give me examples on how philanthropy can do things businesses can’t.

They can fund early-stage scientific research. You can solve poverty in Africa with philanthropy, or reduce hunger. But the other way you can have an impact is having a voice.

Some people would say your voice is loud, but they don’t believe it’s made the world better.

Well, they should look at all the various issues I’ve taken on. Look at the Pornhub people: I got them to take down 85 percent of videos that were nonconsensual, or under 18, sexual abuse. We achieved that in part by shaming Visa, MasterCard. That’s a very powerful thing. So I like Twitter.

You’re political on Twitter.

Look, I helped Trump get elected. I was a very “out there” voice supporting him. Not everyone, including some people in my family and some friends, agrees with me on Trump.

Have you ever pulled down a Twitter post?

Sure.

Because it embarrassed you or someone pointed out something false?

The latter. I learned something that caused me to realize I was wrong, but not often. My whole Twitter history is up there, pretty much, except for a couple.

Do you even get embarrassed?

No, because I’m not afraid to admit my mistakes, which in my business is really important. I do it very publicly, which very few people do in my industry.

Are you cocky?

I don’t think so. When I was a kid, people thought I was cocky, but I was just confident.

What’s the difference?

Cocky is being very confident with no basis for it, or an inadequate basis. Confidence is when you believe in yourself because you’ve proven you can do what you say you’re going to do.

Let’s talk about the demonstrations at Harvard. You were the most vocal alum. Do you wish you’d done anything differently?

Nope. I wish Harvard had opened the kimono and listened. From the very beginning, Claudine Gay never responded to my letters. I wanted the opportunity to meet with the board, but I wasn’t given that. That’s why I ended up going public. That was the catalyst. They were afraid of me because I had a Twitter account.

You’ve been outspoken about antisemitism, anti-DEI and pro–free speech. Why do you feel you need to comment on everything? Your peers are so cautious.

Why do people not speak up? They’re afraid of getting canceled, afraid of being accused of being a racist, of losing business. One of the most important things I’ve been willing to do is speak what I believe to be the truth, regardless of what other people think. That’s one of the benefits of being independent financially. I’m unafraid. Yeah, if you don’t want to buy more stock, you know, don’t buy the stock. Who cares?

Have you ever been canceled by a group?

No. I’m uncancelable.

AstraZeneca signs $555mn AI deal to develop gene-editing therapies

Pharmaceutical company is latest to invest in artificial intelligence to speed drug development

AstraZeneca has signed a $555mn deal with a San Francisco-based biotech business that specialises in artificial intelligence — the latest pharmaceutical company to seek an AI partner for drug development. 

The agreement with Algen Biotechnologies gives AstraZeneca exclusive rights to develop and commercialise therapies from the gene-editing technology known as Crispr. Algen was spun out of the Berkeley lab where Jennifer Doudna developed the technology, for which she won the Nobel Prize for chemistry in 2020. Doudna is an adviser to Algen.

Algen will receive up to $555mn for hitting regulatory and commercial milestones in collaboration with AstraZeneca, which is not taking an equity stake. It has previously raised $11mn and received a $350,000 grant from the National Institutes of Health in 2021 for cancer research.

While AI has the potential to speed up successful drug testing, there are few AI-discovered drugs in late-stage clinical trials, and not one has been approved. Meanwhile, the amount of cash flooding into all AI investments is seen by many as a bubble. 

With AI, “I think we are definitely in a period of hype at the moment,” Jim Weatherall, AstraZeneca’s chief data scientist, said. “Today, I think our way of controlling the hype is to carefully introduce AI as a tool” for the company’s scientists, he added.

“To be sure, [AI] is no magic bullet for drug development. While sometimes it is overhyped, you don’t want to downplay it either because the potential of this technology is huge.”

New AI tools are increasingly sought by big pharma companies to save on costs and time. In 2023, Roche partnered with Nvidia to work on drug development. AstraZeneca in 2019 started a collaboration with BenevolentAI for lung and kidney diseases. But UK-based Benevolent’s shares plunged more than 99 per cent before it delisted in March. 

AstraZeneca says it still has a partnership with Benevolent.

Algen, which has previously applied machine learning to oncology treatments, will be working for AstraZeneca on immune system diseases.

“We are not just analysing data using AI,” said Chun-Hao Huang, Algen’s co-founder. Rather, AI and Crispr are being paired together to generate solutions, he said.

New drugs fail up to 90 per cent of the time when they reach clinical trials. For AI to be successful, pharmaceutical companies need to do a better job at benchmarking how the technology is performing versus conventional methods, said Alex Zhavoronkov, chief executive of AI for drug discovery company Insilico.

For now, “the role of the pharma industry in AI is very limited when it comes to early stage drug discovery,” he said.

Bain Capital says buyout firms must be more cautious as growth slows

US private equity group bucks industry trend of missed fundraising targets with conservative strategy

Bain Capital has warned buyout firms need to adapt to an era of lower growth as the conditions that fuelled the industry’s rise, such as cheap credit and rising valuations, are fading.

While many private capital groups aim to raise as much money as possible, some of the older privately held buyout firms such as Bain Capital are instead limiting growth.

“There have been a lot of positive tailwinds over the course of the last decade or more in private equity investing,” Chris Gordon, Bain’s global co-head of private equity, told the Financial Times. “But I think there’s a lot of caution out there in the market as to which strategies are really going to work going forward.”

Bain Capital believes a slower investment regime, in which it invests funds over three to four years instead of half that duration, could lead to stronger returns in the coming years as PE buyers grapple with a possible recession and the impact of artificial intelligence on their portfolios and financing costs.

The firm’s latest fundraising signals that investors are warming to these more steady investment approaches. Bain has just raised $12bn in fee-paying outside capital for its latest US buyout fund, beating an initial target of $10bn set earlier this year. When more than $2bn committed by the firm and its partners is included, Bain raised $14bn for the US buyout, representing a nearly 18 per cent increase from its prior fund.

Gordon said that while Bain’s fund was big enough to chase “the largest transactions,” it was small enough for his investment team to also consider investments in smaller, faster-growing companies.

Bain’s fundraising bucks a trend in which many blue-chip PE firms have fallen short on investment targets set for funds closed between 2022 and 2025.

Private equity fundraising hit record levels in 2021, but has shrunk by nearly a third since then. Many firms raised too much money and invested too quickly at high valuations, but are now struggling to exit investments and their investors are refusing to back new funds.

Rivals such as Blackstone, KKR, Apollo and Carlyle went public and have grown far bigger in size over the past decade. But Bain and other large privately held players have had a stronger reception from investors.

In 2023, Warburg Pincus, among the oldest US PE firms with a history tracing to the 1960s, bucked a weak fundraising market to raise $17.3bn, beating a target of $16bn, as investors embraced its more steady investment approach. CD&R, another old line buyout firm, also significantly exceeded its targets when it raised a $23bn fund that year, the FT reported.

Bain is one of the industry’s largest independent PE firms and manages nearly $200bn in overall assets. It has generated $12.5bn in asset sales, twice what it has invested since the start of 2024. In September, it sold a majority stake in German healthcare group Stada at a $10bn valuation to another PE firm.

David Humphrey, co-head of Bain’s private equity operations in North America, said the firm is closely monitoring the impact of AI on corporate bottom lines.

Humphrey said businesses with labour-intensive industries that employ white-collar professions faced new risks from AI in which large language models could replace their products. Companies that “have some truly proprietary data that nobody else has” or could “drive productivity with AI” stood to succeed, he said.

Deal is latest in busy stretch for private equity-backed software and healthcare-focused technology companies

Qualtrics, the customer service software company owned by private equity group Silver Lake, has struck a deal to buy healthcare-focused technology firm Press Ganey Forsta for $6.75bn including debt, according to people familiar with the matter.

The deal, which is set to be announced on Monday, will help to extend Qualtrics’ artificial intelligence technologies to healthcare clients as it attempts to apply AI to complex, highly regulated industries.

Qualtrics provides everything from automated chat widgets to tools that sift customer feedback to more than 20,000 companies and organisations globally, including Delta Air Lines and Hilton Worldwide.

Press Ganey, meanwhile, is used by over 41,000 hospital systems and healthcare companies to compile feedback from patients and doctors in manual, verbal and digital surveys.

The companies are betting that the combination of Qualtrics’ artificial intelligence technologies with Press Ganey’s reach in the healthcare industry will give rise to new AI-powered tools and services, said people familiar with the matter.

Industry experts have predicted that so-called “vertical” technology companies such as Press Ganey will become increasingly valuable as acquisition targets for AI platforms, given their access to sets of data to train learning algorithms.

Press Ganey’s combination with Qualtrics, a pioneer in applying AI to handle customer services like ordering food online, or rebooking flights and hotel stays, is also meant to bolster its technology offerings as large tech giants such as Palantir and Oracle expand into healthcare, said a person briefed on the matter.

Under the terms of the deal, Press Ganey’s owners — Ares Management and Los Angeles-based private equity group Leonard Green & Partners — will be paid in a combination of cash and privately held Qualtrics stock.

A consortium of 11 banks and private capital firms in total are providing the debt financing for the deal, the sources said.

The takeover is the latest acquisition in a busy stretch for private equity-backed software and health-tech deals, a bright spot in a market where many sponsors have been slow to exit investments for fear of poor returns.

The value private equity-backed software and health-tech deals globally was $571bn worldwide this year to the end of September, the third highest on record, according to data from the London Stock Exchange Group.

The deal, which values Press Ganey at an enterprise value of $6.75bn, marks Qualtrics’ biggest acquisition in its two-decade history. Silver Lake and Canada Pension Plan Investment Board teamed up in 2023 to take Qualtrics private in a $12.5bn buyout.

Qualtrics under chief executive Zig Serafin has turned profitable, generating over $500mn in free cash flow over the past 12 months, the people said.

Silver Lake — which last week agreed to take video games maker Electronic Arts private in the largest leveraged buyout of all time, valued at $55bn — is known as one of the leading private equity investors in technology companies.

It often uses its largest investments like Dell and entertainment company Endeavor as a beachhead for industry consolidation.