A note to our followers

As many of you know, we’ve been sending a monthly summary of joint venture transaction activity for years. These past two months have been different. The coronavirus has upended corporate M&A departments, and we expect the number of joint venture transactions – both the creation of new and the restructuring of existing – to decline as companies work to figure out how an economic downturn will impact them and their potential partners.

However, if history is a guide, JV transaction volumes will decline less severely than M&A activity, and the number of JV transactions will increase sharply in the early stages of the recovery. We hope that recovery isn’t too far off. In the meantime, we will continue sending monthly updates, and we will remain available if you would like to chat about a JV transaction or restructuring that is ahead of you.

Renault quits its main China venture after weak sales

April 14, 2020 | Reuters

PARIS/BEIJING (Reuters) - French automaker Renault SA (RENA.PA) is ditching its main passenger car business in China following poor sales at the loss-making venture with Dongfeng Motor Group (0489.HK).

A slowdown in Chinese automotive sales, which is expected to worsen this year due to the coronavirus crisis, has heaped pressure on carmakers that were already struggling to establish a big presence in China, the world’s biggest vehicle market.

Related Water Street Insight: 3 Steps to Negotiating Joint Ventures in China

Shell greenlights $6.4 billion Australia natural gas project

April 16, 2020 | Reuters

SYDNEY (Reuters) - Royal Dutch Shell said on Friday it had taken a final investment decision to develop the first phase of Australia’s biggest coal seam gas resource in Queensland state.

The first phase of the Surat Gas Project would bring as much as 90 billion cubic feet per year of new natural gas to market at peak production, Shell said in a statement.

Related Water Street Insight: Innovation in Joint Ventures: Do or Die?

Tata Power completes sale of joint venture, Cennergi

April 16, 2020 | ESI Africa

Khopoli Investments, a subsidiary of Tata Power, has completed the sale of the company’s entire stake in Cennergi, a South African joint venture of Exxaro Resources, for an amount of R1,550 million.

Cennergi was a 50:50 joint venture between South Africa’s coal producer Exxaro Resources and Khopoli Investments.

After this sale Exxaro will now have 100% ownership of the company.

Related Water Street Insight: Joint Venture Dealmaking: Pathways to Negotiating a 50-50 Ownership Split

Mexico’s Pemex Makes Unusual Move With Call For Joint Venture Opportunities

April 17, 2020 | Oil Price

Mexico’s Pemex is looking for joint venture opportunities, the country’s energy regulator said. That’s despite the president’s decision to suspend all new bidding rounds and review all contracts with foreign oil companies signed by the previous government.

In an interview with Reuters, the head of the National Hydrocarbons Commission, Rogelio Hernandez, said, regarding the joint ventures, “I think it will happen during this government. In fact, I see it as imminent.”

Related Water Street Insight: How to Shape Joint Venture Strategy

ConocoPhillips to cut oil production in Alberta, cites weak prices, COVID-19

April 19, 2020 | Energy Now

CALGARY — ConocoPhillips says it plans to cut production at its Surmont oilsands operation in northern Alberta due to low oil prices until market conditions improve.

The Houston-based company said in a release that it expects to reduce production at Surmont by approximately 100,000 barrels of oil per day to 35,000 by May.

It said given ongoing uncertainty and continued market volatility, the company’s previous 2020 guidance items should not be relied upon.

Total suspends works in Mozambique LNG project

April 20, 2020 | Kallanish Energy

Construction works have been halted at the Total led Mozambique LNG project, the country’s first onshore liquefaction plant, due to an outbreak of coronavirus.

According to Mozambique’s national health institute INS, roughly two-thirds of the country’s confirmed Covid-19 cases have been traced back to the project. As of Thursday last week, there were 31 confirmed cases in Mozambique and at least 19 cases originating from Total’s site in Afungi.

Related Water Street Webinar: Dealmaking in a Downturn - Pitfalls and Best Practices

Volvo, Daimler to found truck fuel cell joint venture

April 21, 2020 | AP News

BERLIN (AP) — Volvo and the truck division of Daimler have agreed to set up a joint venture to develop and produce fuel cell systems for heavy vehicles, the Swedish and German companies said Tuesday.

The two firms said that they will be equal partners in the new enterprise. Daimler Truck will put all its current fuel cell activities into the joint venture, and the Volvo Group will buy a 50% stake in the venture for around 600 million euros ($652 million).

The joint venture will be independent and autonomous, with Daimler Truck and Volvo continuing to compete in all other business areas, the companies said. They hope that joining forces on fuel cells will lower development costs and bring forward the introduction of fuel cells for heavy transport.

Etihad, Air Arabia joint venture secures operating license

April 23, 2020 | Reuters

DUBAI (Reuters) - Air Arabia Abu Dhabi, a joint venture between United Arab Emirates carriers Etihad Airways and Air Arabia (AIRA.DU), has received its air operating license, it said on Thursday.

The launch of operations, which had been planned for this quarter, will depend on market conditions, it said in a statement.

Related Water Street Insight: The Joint Venture Operating Model Blueprint

Tullow agrees sale of its entire stake in the Lake Albert Development Project in Uganda to Total

April 23, 2020 | Tullow

Tullow and Total E&P Uganda B.V. (Total Uganda) have signed a Sale and Purchase Agreement (SPA), with an effective date of 1 January 2020 (the Effective Date), in which Tullow has agreed to transfer its entire interests in Blocks 1, 1A, 2 and 3A in Uganda and the proposed East African Crude Oil Pipeline (EACOP) System (the Uganda Interests) to Total Uganda for cash consideration of US$575 million (the Cash Consideration) plus potential contingent payments after first oil (the Transaction). Tullow is currently the operator of Block 2. Total Uganda is currently operator of Block 1 and Block 1A and CNOOC Uganda Limited (CNOOC) is operator of Block 3A.Tullow Oil plc (Tullow) is pleased to announce that it has agreed the sale of its assets in Uganda to Total for US$575 million in cash plus post first oil contingent payments with an effective date of 1 January 2020.

Related Water Street Insights: How to Sctructure a Joint Venture: 5 Essential Elements

SNC-Lavalin PAE Joint Venture supporting Government of Canada's health preparedness efforts

April 24, 2020 | Yahoo Finance

SNC-Lavalin (SNC.TO), through the SNC-Lavalin PAE Joint Venture, has been chosen to provide a range of services in support of the Government of Canada's effort, to provide design expertise and to help deliver up to ten, 100-bed Mobile Health Units.

"As a proud Canadian, fully integrated professional services and project management company, we are honoured to be able to assist the federal government in this endeavor—that is to help ensure the health and safety of Canadians during this critical and unprecedented time," said Ian L. Edwards , President and CEO, SNC-Lavalin. "Safety is at the heart of our work at SNC-Lavalin, and it is a privilege to continue to provide our expertise to help support Canadian efforts as we have done for government agencies around the world."

Related Water Street Webinar: Dealmaking in a Downturn - Pitfalls and Best Practices

Boeing Backs Out of $4.2 Billion Embraer Joint Venture Deal

April 26, 2020 | Yahoo Finance

Boeing Co (BA) has pulled out of a $4.2 billion agreement to purchase Embraer SA’s (ERJ) commercial aviation business.

The aerospace company announced on Saturday that it has terminated its Master Transaction Agreement (MTA) with Embraer, after the latter did not satisfy the necessary conditions. The two companies had planned to create a joint venture with Embraer's commercial jets unit and a second joint venture to develop new markets for the C-390 Millennium medium airlift and air mobility aircraft.

Under the terms of the agreement Boeing had an option to terminate the agreement until April 24.

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