Mergers & Acquisitions

Liberty’s tilt at Virgin shows cautious deal fever

5 Feb 2013

The U.S. cable group’s renewed interest in UK-based peer Virgin Media comes as Dell nears a jumbo buyout. The structure of any Virgin deal is unclear. But there’s logic in using debt to fund a $20 bln bid for a stable UK cable firm, whether by Liberty or private equity.

HSBC/Ping An compromise saves face all round

1 Feb 2013

Chinese regulators have approved a Thai tycoon’s $7 bln purchase of HSBC’s stake in insurer Ping An. But the financing had to be rejigged. The Thais have rescued a juicy deal and the UK bank has avoided an embarrassing flop. The seemingly happy ending leaves much to be explained.

AB InBev setback may hasten last round of beer M&A

1 Feb 2013

U.S. government opposition to AB InBev’s $20 bln buyout of Grupo Modelo may speed up a last bout of sector consolidation. The world’s biggest brewer may yet find a workable compromise with trustbusters. But an obvious plan B is pouncing on emerging-markets focused SABMiller.

New U.S. trustbuster sprays cold brew on AB InBev

31 Jan 2013

William Baer, the DoJ’s antitrust chief, sued to stop the giant brewer’s $20 bln purchase of 50 pct of Modelo. AB InBev had tried to allay competition fears with the deal’s structure. Baer’s surprise move suggests a thirst for tough enforcement - or at least a tough reputation.

Activist exposes Hess as latest governance villain

29 Jan 2013

Hedge fund Elliott reckons the U.S. oil company could be worth more than double its current $20 bln-plus value. But as at other energy groups, like Chesapeake and SandRidge, a too-cozy board has brought waste and strategic blunders. New broom directors would help change that.

Glencore Xstrata needs governance champ in chair

24 Jan 2013

The commodity trader’s board is already stuffed with operational expertise. CEO Ivan Glasenberg should resist the temptation to go for more of the same. The board needs a chairman with impeccable governance credentials. One former UK government minister fits the bill.

Toothless MACs giving way to deal terms with bite

23 Jan 2013

Exceptions have all but neutered material adverse change clauses. That’s why some recent transactions like Freeport-McMoRan’s purchase of Plains Exploration spell out specifically when a buyer can bail. Change may not come easily to dealmakers, but they should welcome clarity.

Maroc Telecom bidders defy unrest in $6 bln sale

23 Jan 2013

Vivendi’s 53 pct stake in Morocco’s leading telecom operator is on the block and generating much interest. Maroc’s slight premium to peers, weakness in its home market and regional tensions are not deterring the would-be buyers keen to capitalise on political ties.

Pfizer spins, but not completely off

22 Jan 2013

The pharma giant’s $2.2 bln IPO of its animal health unit, Zoetis, should cheer investors. Those contemplating buying the stock, however, will want to read the warning labels closely. Super-voting shares could mean Pfizer retains board control even if its stake goes below 50 pct.

Third airport sale may give London a lift

22 Jan 2013

Manchester airport’s owners are paying a surprisingly lofty $2.4 bln for Stansted, Heathrow’s neglected little sister. The bet hinges on utilising spare capacity. If passenger numbers double, as they could, the transformation would also ease London’s air traffic squeeze.

F&N takeover saga reaches mostly happy ending

22 Jan 2013

The bid battle for the Singaporean conglomerate ended without fireworks. Even so, the $11.2 bln valuation leaves investors with a 40 pct return over seven months, and loser OUE with a $41 mln break fee. The pressure is now on the victorious Thai bidder to prove the numbers work.

Abu Dhabi property merger mixed bag for minorities

21 Jan 2013

Factoring in a surprise cash sweetener from Abu Dhabi, it looks like well-run Sorouh is paying a premium to troubled state-controlled rival Aldar. But the $2.9 bln state-backed merger of Abu Dhabi’s leading developers will help smooth the emirate’s property mess.

Caterpillar’s Chinese lesson: dig below top line

21 Jan 2013

Getting stung by accounting fraud is unfortunate. But Caterpillar’s $580 mln write-down - three-quarters of the price it paid for ERA Mining just last year - suggests a bigger misjudgment. The Chinese machine maker’s potential was clear, but so was the low quality of its growth.

McMoRan flop makes Freeport bid more like bailout

18 Jan 2013

The U.S. explorer is bleeding cash after plowing $1 bln into a failing deep gas well. That makes the 74 pct premium offered by miner Freeport, whose chairman also runs McMoRan, look even richer - especially with gas cheap and abundant. Freeport’s shareholders are the losers.

AT&T should beware a value trap across the pond

17 Jan 2013

The U.S. telco is reportedly eyeing deals in Europe. With valuations at their current low, running numbers makes sense. But cross-border tie-ups offer limited cost savings, and operators are only cheap because markets are tough. AT&T would need to spot some serious hidden value.

$20 bln Dell LBO could be worth the stretch

16 Jan 2013

It’s too big for one buyout firm, and club deals are infamous – think TXU. Moreover, the computer maker’s shrinking business doesn’t look that attractive. But an LBO could still deliver high returns because – unlike bubble-era targets – Dell is cheap.

Size matters for London’s newest M&A boutique

16 Jan 2013

Simon Robey’s decision to link up with fellow M&A hotshot Simon Robertson looks like a merger with synergy aplenty. Both have pedigree and could work well in partnership. But with a crowd of boutiques now fighting for mandates, the firm may need to stay small to retain beauty.

Gazprom bid for Greek gas puts EU in a bind

15 Jan 2013

Brussels might not like that Gazprom and a little-known Russian power group are lead contenders in a Greek gas privatisation. But with Grexit fears lurking, it’s no wonder the sale hasn’t attracted more buyers. An unusual example of self-defeating policies at work.

M&A machines can’t live off debt forever

14 Jan 2013

Privately held Ardagh has grown sevenfold since 2007 through deals bankrolled by high-yield investors. Now the Irish packager is buying a Saint-Gobain unit for $1.7 bln. Debt-funded M&A sprees needn’t end in tears. But Ardagh will one day need the support of equity investors too.

Europe brings the pain for UPS and TNT

14 Jan 2013

Competition watchdogs are barking again, after killing DB-NYSE last year. A likely EU veto has led the U.S. courier to drop a $7 bln bid for its Dutch peer. TNT’s stock is down 50 pct. If the group’s strategy since its demerger has been to get bought, it needs to think again.