Mergers & Acquisitions

EADS/BAE merger risks hitting political wall

1 Oct 2012

Lagardere, the media group owning 7.5 pct of EADS, adds to the uncertainty of the aerospace and defence merger by deeming it “unsatisfactory”. But the real obstacles are political. France and Germany must convince the UK, the three in turn have to win over the U.S. No small feat.

Buyout firms risk conflicts in cosying up to SWFs

27 Sep 2012

CVC and Providence are the latest private equity houses to sell slivers of themselves to big sovereign and pension funds. A part-sale brings capital to expand, or to plough back into the group’s own funds. But it could alienate other stakeholders.

Nixing China’s oil bid may create Canada discount

26 Sep 2012

The market reckons there’s a one-in-four chance politicians will scupper CNOOC’s offer for Nexen. Takeovers by state-owned companies raise tricky questions. But hoisting the Canadian flag over a company of little strategic importance risks further alienating outside investors.

Franco-German politics first hurdle for BAE/EADS

25 Sep 2012

The two European defence and aerospace companies can’t merge unless Paris and Berlin settle their differences over governance and shareholdings. The tension is typical of EADS’ own complex political and economic history. The BAE deal offers a golden opportunity to clear the air.

Deal lawyers deserve rewards for sound judgment

20 Sep 2012

Delaware’s top court upheld a whopping $304 mln payout to attorneys who won $2 bln from Grupo Mexico over a dodgy transaction. The company wants a fresh hearing on the fees, but judges should demur. With weak M&A lawsuits on the rise, carrots should encourage stronger ones.

Exxon picks right place at wrong time for U.S. oil

20 Sep 2012

A $1.6 bln purchase of North Dakota assets could herald more deals to come for the energy titan. The state is America’s fastest-growing producer, but its low jobless rate means oil production costs are soaring. Exxon’s renewed if belated interest in domestic crude cuts both ways.

Big scores inspire participation in sports M&A

20 Sep 2012

Billionaire Philip Anschutz is shopping an empire that includes the Stanley Cup champs, the NBA’s Lakers and David Beckham’s U.S. soccer club. After the eye-popping $2.2 bln Dodgers sale price and Manchester United’s IPO, it’s no wonder if owners get off the sidelines.

Markets struggle with true values for Xstrata, BAE

20 Sep 2012

Shareholders try to find the right price in deals, but their perspective is too financial and short term. Besides, no price is right if a tie-up is basically wrong - overleveraged, undermanaged or self-destructive. Both Glencore-Xstrata and EADS-BAE might fail this basic test.

BSkyB should start to build in new bid premium

20 Sep 2012

The UK media watchdog has savaged James Murdoch for mishandling the phone-hacking affair, but affirmed that News Corp is fit to be a big shareholder in BSkyB. News Corp is changing. But the logic of taking full control of Sky before the next UK election is strong.

Tiger beer sale lobs Thai ball into F&N’s court

19 Sep 2012

Bangkok moguls have blessed Heineken’s bid for Asia Pacific Breweries, clearing the way for a large cash payout to 40 pct shareholder Fraser & Neave. But the Thais still want to buy the rest of the Singaporean conglomerate. Its board needs to convince investors to hold out.

Dual listing may hinder bets on BAE-EADS

18 Sep 2012

If the duo can agree on a $45 billion tie-up, that should be a godsend for thumb-twiddling merger arbitrageurs. But political and security hurdles abound. Moreover, plans to create a “dual-listed” successor add an extra layer of risk for any arbs backing the deal.

Key ingredient missing for M&A revival

17 Sep 2012

Glencore-Xstrata and BAE-EADS might set bankers’ hearts racing. Bulls have financial fuel: QE3 makes debt cheap. They have economic logic: revenue pressure from sluggish growth makes scale more valuable. But a wave of mergers won’t come until confidence rises too.

BAE could find a plan B

14 Sep 2012

The UK defence giant has options if shareholders or governments torpedo its planned deal with EADS. A merger with Rolls Royce sounds implausible. But signs that the EADS union really is faltering could tempt a handful of U.S. defence heavyweights to try a transatlantic tie-up.

American bank mergers will be a messy affair

13 Sep 2012

Mid-market consolidation is a no-brainer in a post-crisis world. Bulking up against cheaply-financed too big to fail banks is an existential necessity. But as FirstMerit’s $1 bln-plus takeover of Citizens Republic suggests, the going will be rough on shareholders.

Markets hit EADS for straying off-target with BAE

13 Sep 2012

Investors seem to think EADS plus BAE is worth $4 bln less than the two companies alone. That’s not how mergers should work. That reaction may be punishment for springing a surprise - and one that will create a major stock overhang. An already complex merger is getting trickier.

BEADS politics ain’t as bad as they used to be

13 Sep 2012

Europe’s three largest powers are involved in the proposed jumbo merger between EADS and BAE, yet there’s a hope politics might play a limited role. Governments have other things on their minds, and EADS isn’t the political mess it was five years ago. But the risk still exists.

Old dogs of war get mega M&A deal

13 Sep 2012

Bankers often say they are in the relationship business. With the proposed EADS/BAE tie-up, this sales patter is actually true. Advisers such as Evercore’s Bernard Taylor and Gleacher Shacklock’s Tim Shacklock have been counselling these companies for donkey’s years.

Thais hope for third time lucky with $10bn F&N bid

13 Sep 2012

The Bangkok beer moguls twice failed to get their hands on Asia Pacific Breweries, but prodded Heineken into a higher bid. Now they’re offering to buy the 70 pct of parent company Fraser & Neave they don’t own. At S$8.88 per share, every extra share they get looks a bargain.

Euro defence monster flies out of crisis

12 Sep 2012

Civil aviation and defence both are cyclical businesses. But marrying EADS, the continental outfit behind Airbus, with UK defence giant BAE should yield a stronger combined group. Cost savings will be limited, and the terms favour BAE. But EADS becomes a less political animal.

Banks big winners from Chesapeake $6.9 bln sale

12 Sep 2012

Selling another batch of family silver helps close the gas group’s cash gap. That makes a liquidity meltdown less likely. But the broadest smiles ought to be at Goldman Sachs, which continues to get fat fees from Chesapeake’s rolling sales and will be repaid on a $4 bln loan.