Mergers & Acquisitions

EADS can’t move if it doesn’t change. But can it?

10 Oct 2012

The Airbus maker couldn’t do a deal with BAE because of its skewed, politicised governance. CEO Tom Enders may have been over-optimistic in thinking the Franco-German group was a normal company. He still has work to do to convince the French and German governments to step back.

BAE must show standalone strength post-EADS

10 Oct 2012

An “in play” BAE may attract a low-ball bid. So the UK defence group must reassure investors. But there are few levers to pull. It has been cost cutting for years. And with defence budgets still shrinking, showering shareholders with cash does not look too wise.

Buyout risks laid bare by old strippers

9 Oct 2012

A $166 mln settlement resolves creditor claims that Cerberus and Sun Capital pillaged and bankrupted a retailer bought from Target in 2004. It’s a reminder of private equity’s asset-stripping reputation and shows why investors can’t afford to let their guards down.

Anti-accretive seller can also hold key to value

9 Oct 2012

The market reckons Spectrum Brands got the better end of a $1.4 bln deal for Stanley Black & Decker’s locks unit. True, it boosts the buyer’s earnings - accretive, to use the lingo. But such M&A-derived growth often hurts later. Stanley deserves credit for longer-term thinking.

UnitedHealth takes risky $4.9 bln crack at Brazil

8 Oct 2012

The U.S. health insurer is paying around 40 times earnings for Brazilian market leader Amil Participações. UnitedHealth has grown fat on the American healthcare system. But when regulations are “100 percent different” there’s a danger the results will be too.

BAE pays price for having no deal to sell

8 Oct 2012

The UK defence group’s lead investor has taken aim at the EADS merger. Finessing leaked deals is always tricky, and angry investors nowadays seem almost de rigueur for big M&A. Still, Invesco’s intervention shortens the odds on a BAE management clearout if the tie-up fails.

France’s silly stake obsession could kill BAE-EADS

8 Oct 2012

Germany, France and the UK could agree on the BAE-EADS merger if Paris didn’t insist on keeping a large stake in the joint company, confirming the fears of the deal’s opponents. The French government doesn’t seem to get that there are other ways to remain influential.

Greek banks need more than a megadeal to be a buy

8 Oct 2012

National Bank of Greece has offered to buy rival Eurobank in a share-swap. A deal with near-50 pct market share and colossal synergies is making investors salivate - the shares have rallied. But the combination’s benefits won’t easily translate into further share price gains.

UK should foster not fear BAE-EADS tie-up

5 Oct 2012

Former Chancellor Alistair Darling says UK interests may suffer if France and Germany held sway over the defence merger. Britain certainly needs safeguards to protect national security. But these can be found. And the alternative - no deal - wouldn’t be in the national interest.

Even one-sided Chinese investment has its benefits

5 Oct 2012

Canadian politicians mulling CNOOC’s $15 billion bid for Nexen want equal rights for their companies to pile into China. That seems only fair. But workers and investors in the west gain even if money flows only one way. It’s the Middle Kingdom that misses out by being closed.

FT sale would defy today’s financial times

4 Oct 2012

With the exit of the CEO of Pearson, the pink newspaper’s parent company, chances rise that the FT will change hands. But valuing it on standard industry metrics won’t reveal its worth to billionaires and media giants. The paper’s trophy status could make it a 1 bln pound asset.

Executive rewards mustn’t distort M&A decisions

4 Oct 2012

Big retention packages for Xstrata’s CEO angered investors. Now there’s confusion over whether a tie-up with EADS would trigger a bonanza for BAE’s CEO. With the shareholder spring still echoing, companies must show windfalls at the top don’t distort decision-making.

Oil industry steals page from pharma M&A playbook

3 Oct 2012

Honeywell’s purchase of Thomas Russell was the ninth oil services deal in as many days. Scavenging the deep sea and icy climes requires exploration DNA. Specialized technology is becoming to energy giants what biotech is to the drugs sector. Smaller firms are in big demand.

T-Mob-MetroPCS won’t end US telco quest for scale

3 Oct 2012

Scale brings better returns for mobile providers. But a combined T-Mobile-MetroPCS will still lack the wherewithal to compete against giants AT&T and Verizon. That means the new company as well as the likes of Leap Wireless have little choice but to dial up more deal-making.

Deutsche Telekom brightens stateside status quo

3 Oct 2012

Combining DT’s T-Mobile USA with smaller operator MetroPCS is hardly the big bang solution that a sale to AT&T once promised. But adding Metro would bolster T-Mobile’s weak market position, adding customers and spectrum. Cost savings and a stock listing would help too.

Spare a thought for the good old-fashioned merger

3 Oct 2012

Global M&A activity this year, at $1.7 trln, is even more insipid than the headline 16 pct drop implies. It’s hard to find a traditional tie-up among the 30 biggest deals amid all the spinoffs, partner buyouts and nationalizations. Bankers cannot live by such bread alone.

Xstrata is a warning on boards that give up value

2 Oct 2012

An acceptable deal with Glencore doesn’t exonerate the miner’s directors from charges they lack spine standing up for shareholders. The failure to push Glencore to the pain barrier sooner has roots in the same weakness that sanctioned excess pay for CEO Mick Davis time and again.

Evaporating goodwill raises M&A bar another notch

2 Oct 2012

European companies wrote off 76 billion euros of M&A-created intangible assets last year, five times the previous period and more even than in 2008. It may be a deck-clearing exercise. Now bitten, however, corporate boards may think harder about sanctioning future deals.

Alpha stakes claim to be least-bad Greek bank

1 Oct 2012

The Athens-based lender is close to acquiring Emporiki, Credit Agricole’s Greek unit. The terms suggest Alpha will add market share muscle and gain synergies for minimal outlay. But investors are likely to fight shy until they know how Greek banks will be recapitalised.

Xstrata reaches tidy compromise on messy deal

1 Oct 2012

The miner is right to back Glencore’s latest offer. It is getting a better premium from the commodity trader, plus board domination. Retentions for top staff make sense with Glencore’s Ivan Glasenberg running the show. The tie-up faces challenges, but shareholders should say yes.