Mergers & Acquisitions

Pearson plays long game with Penguin

29 Oct 2012

Merging Penguin with Bertelsmann’s Random House to create a publishing giant makes sense. And Pearson, which will own 47 pct, has carefully built in a range of exit options. Investors may need convincing, but this complex setup could plausibly be better than taking hard cash now.

Random Penguin could fly

26 Oct 2012

Consolidation makes sense as publishers swap paper and ink for bits and bytes. Hence Bertelsmann and Pearson’s talks to combine Random House and Penguin. The $3.4 bln tie-up could significantly cut costs, while gaining heft to take on the industry’s new digital kingmakers.

Rosneft buy may leave Russian oil industry wanting

24 Oct 2012

The country needs to enhance the efficiency of its lucrative oil business. Rosneft’s $55 bln swoop on Russia’s number-three producer might help, if TNK-BP’s superior oilfield know-how rubs off on the lumbering state-dominated giant. More likely, the deal will stifle competition.

Can Barclays old boys make the Irish play pay?

24 Oct 2012

Barclays alumni made millions helping their ex-employer offload subprime assets in 2009. Now they have taken a 17 pct stake in Ireland’s 74 bln euro bad bank. The terms aren’t public. But the arrangement seems to need leverage, or a discount, or both if history is to be repeated with this new punt.

Canada banks give local M&A advisers hope

23 Oct 2012

Zealous watchdogs have nixed several deals, or talked of doing so. While Chinese buyers face the heaviest fire, locals aren’t immune. But the risk should be low for RBC’s $4 bln purchase of Ally’s Canadian auto finance arm and TD’s of Target’s credit card business for $6 bln.

Experian sees gold in Brazil’s blind credit boom

23 Oct 2012

The credit bureau’s $1.5 bln purchase of the rest of Serasa brings Experian’s total outlay since 2007 to below nine times EBITDA for a business that has tripled. As Brazil’s banks lend aggressively with little information on a rising middle class, there’s further growth to harvest.

Russian resolution helps put BP in play

22 Oct 2012

The UK oil major is exiting its fractious Russian JV for $12 bln in cash and 19 pct of state-backed Rosneft. If a settlement for the Gulf of Mexico disaster follows then BP will be free of poison pills. Factor in weak shares and wounded management and it’s an enticing bid target.

Is everything sacred in Canada?

20 Oct 2012

At first it was a hole in the ground - then the stock exchange and a DIY chain. Now the government has blocked a $5.2 bln shale gas deal - signalling to investors that the market for corporate control is effectively shut.

ArcelorMittal uses iron ore to dodge the junkyard

19 Oct 2012

The world’s biggest steelmaker is on the edge of full relegation to “junk” credit status. A rights issue would be one - painful - solution. It’s easier to sell a minority stake in its Canadian iron ore unit for $2 bln or so, even though Arcelor likes to feed its own steel mills.

Rosneft offer could give BP cash flow headache

18 Oct 2012

The Russian state-owned group is about to make an offer for BP’s stake in TNK-BP. The UK oil major would lose access to the cash flows from its Russian joint venture. It would be better if Rosneft bought out BP’s oligarch partners. But Russian energy politics could preclude that.

No need to dress up Exxon gas deal as an oil play

17 Oct 2012

The energy titan says it is buying Celtic to spur crude production. But the Canadian firm’s assets are 75 pct gas. The feint is understandable, given investor grumbling over Exxon’s splurge on gas producer XTO. With exports to Asia looking up, though, the $2.6 bln deal makes sense.

Oligarchs and BP would both score in Rosneft deal

17 Oct 2012

Rosneft has agreed to pay four billionaires $28 bln for half of TNK-BP, Russia’s third-biggest oil producer. It’s a good price, although the mix of cash and shares on offer is unclear. And the state giant would be doing a big favour for the oligarchs’ joint-venture partner BP too.

ASML pays up for tighter control of new technology

17 Oct 2012

The Dutch semiconductor-equipment maker will pay $2.5 bln, mostly in stock, to buy out U.S. partner Cymer. A 61 pct premium looks steep, and valuation details are scant. But synergies should follow. And ASML smoothes the shift to a new generation of chip technology.

Failed China Gas bid leaves business unfinished

16 Oct 2012

Sinopec dropped its $2 billion offer for the Chinese gas supplier. As a state-owned bidder, the political sensitivities of running a hostile takeover were too great, and the market suggested the price was too low. Yet China’s fragmented gas industry still needs to consolidate. 

Sprint shareholders have most to smile about

15 Oct 2012

Softbank’s $20 bln deal to buy 70 pct of the U.S. cellphone operator hands them a premium of about 30 pct. The Japanese group’s owners aren’t keen. Meanwhile, Sprint’s mountain of debt will shrink thanks to an $8 bln cash injection. But it will still be weak compared to rivals.

RBS’s branch sale snafu merits Brussels sympathy

15 Oct 2012

The UK bank’s EU-mandated disposal of 316 branches to Santander has collapsed, apparently due to problems with technology. It hurts RBS’s recovery. But given other banks have had state aid penalties tweaked, an extension to the branch sale deadline is reasonable.

BAE needs a new chairman

12 Oct 2012

The UK defence company had to embrace the EADS deal because it was too weak to go it alone. Dick Olver, the chairman, must carry the can both for allowing BAE to slide and for poor management of the attempt to secure salvation-by-merger. Fresh leadership is required.

Softbank-Sprint tie-up gets bad signal from market

12 Oct 2012

Investors wiped $6.9 bln off the Japanese telco’s value on Oct. 12, three times the boost to its U.S. target. The deal would stretch Softbank financially, and may preclude smaller purchases closer to home. CEO Masayoshi Son has shown chutzpah; he must show discipline too.

Softbank catches Japanese overseas M&A bug

11 Oct 2012

The $40 bln group may take control of $17 bln Sprint Nextel. Aside from pooling iPhone purchases, combining the No. 3 cellphone carriers in the U.S. and Japan has little industrial logic. It looks like another “get out of Japan” deal fueled by cheap money and docile shareholders.

Chilean lender gets tasty-looking Colombian rollup

10 Oct 2012

CorpGroup is building on its purchase of Santander’s Colombian business with a $1.3 bln offer for Helm Bank, probably the last bank of any size available in the hot market. Though the headline price is no steal at 1.7 times book value, possible synergies make it look a bargain.