Mergers & Acquisitions

Qatar dodges shareholder duty on Glenstrata

19 Nov 2012

The emirate may be confident of Glencore’s ability to retain Xstrata’s top talent. But abstaining from the vote on retention bonuses in the merger after pushing aggressively for better terms leaves a job half done and makes the sovereign fund look inconsistent at best.

Reckitt enters vitamin wars with a Bang

16 Nov 2012

The consumer powerhouse behind Cillit Bang has gatecrashed Bayer’s bid for U.S. vitamin maker Schiff. At a 23.5 pct premium and 16.5 times EBITDA, the $1.4 bln counterbid is potent stuff. But trust Reckitt to extract big synergies, as it did in previous punchy deals.

Law firms face same merger risks as their clients

15 Nov 2012

There may be sensible reasons for Norton Rose and Fulbright & Jaworski to unite and for SNR Denton to seek a three-way tie-up. Cross-border deals can help serve companies going global. But culture, pay and conflicts are hard to manage. The danger is sacrificing quality for scale.

"No" vote on Glenstrata pay creates little value

15 Nov 2012

Glencore’s $32 bln Xstrata offer will probably succeed now lead shareholder Qatar is backing it. A $220 mln retention plan for top staff may fail. But paying up to keep talent, while unpalatable, makes sense. The enlarged company will struggle to hold on to the savings.

Prokhorov’s RenCap grab likely prelude to a sale

15 Nov 2012

The Russian oligarch has had it with propping up RenCap. He is taking control after the investment bank, hit by sluggish emerging economies, slipped in its domestic core market. For the now politically-focused billionaire, a quick turnaround-and-sale is the order of the day.

Sherwin-Williams deal colors Latam green

12 Nov 2012

The U.S. paint maker is splashing out $2.3 bln for Mexican rival Comex. Expected cost savings are worth about $500 million, and yet the market added almost twice as much to Sherwin-Williams’ value. It’s a testament to optimism about the region despite some signs of sluggishness.

Naguib Sawiris shakes up stagnant Telecom Italia

12 Nov 2012

The Egyptian mobile tycoon wants back into Italian telecoms. Investing in TI would be a Carlos Slim-style bet on low valuations and an old-world telco’s turnaround potential. The target’s top shareholders may balk. But the miserable status quo at TI is unlikely to hold.

AT&T is all dressed up with nowhere to go

12 Nov 2012

The telecom company had a $93 bln bid for Telefonica blocked by Madrid, according to a Spanish newspaper. The target has denied the story. But it’s a sign of the problem AT&T faces: a lofty stock multiple makes M&A tempting, but it seems shut out of both domestic and foreign deals.

Jefferies deal is clever if industrially illogical

12 Nov 2012

The Wall Street firm’s $3.8 bln merger with Leucadia combines a Wall Street securities firm with … wait for it … a beef processor and Hard Rock Hotel and casino operator. Loony as it sounds, the deal allows Leucadia to utilize a valuable tax asset and solve a succession problem.

Not all internet investors are irrational fools

9 Nov 2012

The reaction to Priceline’s $1.8 bln deal for rival travel website Kayak is a case in point. With no synergies or obvious industrial logic, it’s nice to see Priceline owners thwack the shares for the company’s adventurism. Internet stocks shouldn’t be a free pass to get stupid.

Diageo pays heady price for Indian spirits

9 Nov 2012

The UK drinks group will get up to 53.4 pct of United Spirits for $2 bln. Despite a weakened seller, that’s 20 times historic EBITDA with few synergies. But the long-term logic adds up if it helps CEO Paul Walsh position Diageo as the leader in giving emerging markets a buzz.

U.S. deal lawyers not as valuable as they may think

8 Nov 2012

Financial markets are indifferent to the legal terms of U.S. public company mergers, new research shows. That may be because most transactions close regardless of the fine print. M&A attorneys have uses, but agonizing over detailed wording isn’t the best way to serve clients.

Vodafone-Verizon fantasy M&A may stay just that

7 Nov 2012

Merger speculation always follows U.S. mobile giant Verizon Wireless. But 55 pct owner Verizon Communications would find buying out partner Vodafone a stretch. A full merger of the parents wouldn’t fly with Europe-averse investors either. The status quo looks pretty secure.

Room for rollups as big investment banks shrink

5 Nov 2012

With large groups like UBS getting smaller, pint-size Stifel keeps expanding. Its latest deal is to buy financial institutions specialist KBW for $575 mln. No matter how bad things get in the industry, there are always gaps to fill and an abundance of ambition.

Pearson should "show, not tell" with Penguin books

5 Nov 2012

Merging Penguin with Random House may well beat selling the publisher for cash to Rupert Murdoch. Still, parent Pearson wants investors to take this largely on trust. It’s not a huge transaction - but if the venture struggles later, Pearson’s fuzzy assurances will be worthless.

Israel may give Canada taste of own M&A medicine

31 Oct 2012

Potash wants to buy the rest of Israel Chemicals it doesn’t own. That would give a foreign firm control over one of the country’s few natural resources and a big role in the iconic Dead Sea. Canada has nixed such overseas takeovers for less - and may now be on the receiving end.

Uniting Calvin Klein’s top and bottom excites

31 Oct 2012

PVH shares surged on its $2.9 bln deal to acquire Warnaco, unifying the clothing designer’s licenses. But the  $100 mln of annual cost savings alone don’t justify investors’ titillation. They don’t even cover the premium. Investors are counting on more to come.

Disney puts faith and $4 bln in power of the Force

31 Oct 2012

That’s what CEO Bob Iger is paying for Lucasfilm - his latest attempt to purchase the creativity that Disney can’t seem to cultivate in-house. Like Marvel and Pixar, Lucasfilm’s returns remain on the dark side. But making at least three more Star Wars films may win over skeptics.

UK nuclear deal a step forward in challenging slog

30 Oct 2012

Hitachi’s $1.1 billion purchase of a big nuclear power project is a victory for the UK government. The Japanese group is an attractive partner, with a reputation for delivering on time and on budget. But policymakers need to deliver in three big areas for the project to succeed.

Petronas return may herald Canada M&A clarity

30 Oct 2012

Ottawa botched its initial veto of the Malaysian oil group’s $5.2 bln bid for gas producer Progress. Nerves over CNOOC’s bigger offer for Nexen played a part. Petronas is back, but if the government wants the benefit of the doubt next time it needs to make the rules less fuzzy.