Mergers & Acquisitions

Calculator: Market skeptical on Glencore-Xstrata

11 Sep 2012

Glencore’s new offer for Xstrata is recommendable, yet the companies’ shares are pricing in only a 60 pct chance of deal success. Uncertainty about the Qataris and anti-trust issues are big factors. But the chaotic course of the deal may have raised merger arbs’ risk aversion.

Qatar aims to expand power with corporate giants

11 Sep 2012

The Gulf state has expanded its economic and political reach with direct investments through its sovereign fund. Now bankers are licking their lips anticipating an M&A wave as Qatar is set to consolidate its influence by supporting the international expansion of homegrown firms.

PXP’s $6.1 bln BP/Shell deal quacks like an LBO

10 Sep 2012

The $4.7 bln U.S. oil minnow is leveraging up to buy Gulf oil fields from the two majors. Asset sales and cash flow should cut debt within a few years. But shareholders will come second until lenders are happy - and there are operational risks too. No wonder PXP’s stock tanked.

Xstrata should accept revised Glencore pitch

10 Sep 2012

The merger is now a $35.5 bln takeover at a modest premium. The tie-up is riskier since Xstrata CEO Mick Davis would exit after six months, although Chairman John Bond would stay. Xstrata investors will want more. But it’s hard to see a realistic alternative offering better value.

Glencore-Xstrata mess makes bankers look powerless

7 Sep 2012

The deal’s basic set-up proved surprisingly vulnerable. Pay squabbles wasted weeks. A rejig has now come at a comically late stage. The tie-up’s many banks may be giving duff advice; more likely, they are bit players in Ivan Glasenberg and Mick Davis’s CEO-led production.

Glenstrata drama is no way to do M&A

7 Sep 2012

Ivan Glasenberg’s curveball on Glencore-Xstrata shows bad form in deal making. Halting a shareholder vote after markets opened makes Glencore’s boss look more trader than statesman CEO. A solid deal may be imminent. But the messiness of it all should give investors pause.

Three-edged blade sharpens case for carve-ups

4 Sep 2012

In a 48-hour span, shares in U.S. government contractor SAIC got a lift from a decision to split the company; DuPont unloaded a slow-growing unit for a good price; and a new study found value creation from divestitures. The fresh evidence should grab the attention of more boards.

Valeant deal shows how big M&A can add value

4 Sep 2012

Large acquisitions usually merit skepticism. Valeant’s $2.6 bln deal for Medicis looks an exception. The Canadian-U.S. drug maker is paying a $700 mln-plus premium for its rival, but cost cuts could be worth more than twice that. And the fit is good. No wonder both stocks surged.

Mongolia swells anti-China M&A tide

4 Sep 2012

Chinese state miner Chalco pulled a bid for Mongolia’s SouthGobi after clear signs Chinese government-backed firms aren’t welcome. Such protectionism is mostly muddle-headed, but increasingly accepted. Bigger deals, like CNOOC’s $15 billion bid for Canada’s Nexen, aren’t immune.

Founder’s veto backfires in botched M&A operation

3 Sep 2012

Regulators, politicians, your own wary investors: so many people can nix a big deal. Fresenius’s failed $4 bln bid for a rival German health group shows another risk. High approval hurdles can empower an awkward squad with smallish stakes in the target. Glencore must sympathise.

Hon Hai cash not enough to restore Sharp’s edge

3 Sep 2012

The Taiwan company’s boss left Japan without a new deal for the 9.9 percent stake in Sharp he proposed buying in March. Sharp only has cash to last about six months. Without an overhaul or sale of its LCD and solar businesses, the electronics maker may struggle to stay afloat.

Egypt’s banks are ripe for picking

3 Sep 2012

Qatar National Bank is in talks to buy Societe Generale’s Egyptian unit. With the economy stabilising, more banks could change hands as capital-hungry European owners look to exit. And post-revolution prices look attractive even with the prospect of a limited pound devaluation.

Calculator: Glencore-Xstrata from first principles

31 Aug 2012

Commodity prices have dipped and the two miners have posted results since announcing the merger back in February. With Xstrata shareholders readying for a Sept. 7 vote, this calculator looks at how the deal stacks up based on estimates of each company’s fair value.

Does a Wall Street M&A addict ever retire?

30 Aug 2012

Eric Gleacher, a veteran of the landmark RJR and Revlon buyouts, may sell his eponymous advisory firm - again. The former Lehman and Morgan Stanley mergers boss has sold and bought it before. At 72, an exit could be his swansong. Or maybe Gleacher just lives for doing deals.

Glenstrata deal gap is harder than ever to bridge

29 Aug 2012

Xstrata investors are digging in. Yet Glencore has less scope to up its offer after the miners’ interims. Without the retention bonus row, the obstacles may not have got so big. Xstrata’s hold-outs need to believe in its standalone value: that’s probably all they’ll be left with.

Thais belly up for bigger gulp of Heineken’s cash

29 Aug 2012

Thai Beverage has raised its stake in Singapore’s Fraser & Neave close to 30 percent. Its billionaire founder may be trying to block Heineken’s $10.9 billion offer for Asia Pacific Breweries. But it’s more likely he’s just angling for a larger share of the Dutch brewer’s payout.

New York bank merger may be too good to be true

27 Aug 2012

M&T is set to pay $3.7 bln for Hudson City, less than tangible book value and only a 9 pct premium. The deal expands M&T’s reach, solves Hudson City’s troubles and boosts capital and earnings. Savings cover the premium without big job losses, too. The big risk is a rival offer.

New NY Times boss should keep tight rein on cash

27 Aug 2012

The $300 mln sale price for About.com means Mark Thompson joins a Grey Lady which finally has net cash. But he should resist the temptation to splash out. Free cash flow is hardly stellar, the company still has a pension hole and it has yet to get a handle on its future.

Idle bankers can ill afford Dollar Thrifty deals

27 Aug 2012

A flurry of transactions from IBM and U.S. bank M&T marks a pleasant August surprise. But Hertz’s $2.3 bln acquisition of rival Dollar Thrifty has been three years in the making and six banks are sharing the spoils. That patient, balanced approach won’t work in this M&A market.

Dropped Aussie coal bid calls end of go-go days

24 Aug 2012

The timing of Nathan Tinkler’s abandoned bid for Whitehaven Coal is apt. A day earlier, Australia’s mining minister caused a ruckus by declaring the resource boom “over”. Mining isn’t finished. But the debt-fuelled approach favoured by this Australian magnate may be.