Mergers & Acquisitions

Xstrata price fears no reason to vote for "Glenstrata"

21 Jun 2012

The miner’s shares could fall sharply if investors vote no on the Glencore merger. But that’s a red herring. Technical factors would be a big driver. A combined Glenstrata would also be vulnerable to a correction. And for a standalone Xstrata, life would go on.

Alliance Boots boss pulls off quite a coup

21 Jun 2012

Normally when you sell a company for a fat premium, you lose control. But Stefano Pessina has extracted both a rich price from Walgreen and will end up as by far the largest shareholder in the merged group, with a 15-16 percent stake.

UBS royal pickle reveals Gulf M&A minefield

21 Jun 2012

The Swiss bank is fighting a claim that it failed to pay a Kuwaiti sheikh for advising on an $11 bln deal. Even if UBS suffers no lasting damage from the spat, it has exposed the extent to which big banks fall over themselves when schmoozing Gulf royals to win scarce business.

Quest board cleverly squeezes more out of MBO

20 Jun 2012

The software company’s directors were put on the defensive when boss Vincent Smith, who owns a third of the firm, teamed up with an LBO shop for a lowball bid. But offering new shares to Dell leveled the playing field and bagged shareholders a 12 pct higher offer.

London bankers get swift kick from Boots deal

20 Jun 2012

The UK pharmacy chain’s sale is a bitter pill for the City to swallow. Big banks that backed KKR’s 2007 mega-buyout of Boots were stuck with the debt as the crisis struck. Adding insult to injury, none were hired to advise it on the Walgreen deal. The timing couldn’t be worse.

HKEx’s offer for the LME stretches the numbers

20 Jun 2012

The Hong Kong bourse may pay 1.4 bln pounds for the London metals trader. HKEx hopes its investment will yield 10 pct-plus by 2017. A Breakingviews calculator shows Chinese LME trading volume would have to grow over 40 pct a year and become half the business. That’s a tall order.

Jilted Air Products gets only a consolation prize

19 Jun 2012

Since the U.S. hydrogen producer’s hostile bid for Airgas failed last year, it has lagged rivals. Its former prey’s dramatic outperformance exposes the $5.8 bln offer as too stingy. A smaller deal in Chile may help Air Products revive growth but is a poor Airgas substitute.

KKR gets rich prescription for top-of-market LBO

19 Jun 2012

Walgreen’s two-stage acquisition of European rival Alliance Boots should more than double the investment KKR and its partners made at the height of the 2007 boom. What the U.S. drug chain’s investors will get for their money - as much as $16.2 bln - is harder to fathom.

World’s new air giant taking off at turbulent time

18 Jun 2012

The marriage of Brazil’s TAM with Chile’s LAN has taken nearly two years to consummate and will create the most valuable airline in the world. The promise of greater regional integration is fueling big expectations that will be difficult to meet given economic headwinds.

Xstrata shareholders should say no

18 Jun 2012

The $45 mln three-year retention package to keep CEO Mick Davis at a merged Glencore-Xstrata is an insurance policy against the damage the company would suffer if he quit. But the premium is excessive. Investors should take a stand, even if that means losing the deal.

Everything Everywhere LBO: someday, somehow?

18 Jun 2012

At $12.5 bln or more, a buyout of the UK mobile operator would need to draw on pretty much every funding source going. It won’t happen right now, and EE’s parents do not seem keen. But with lots of junk bonds, and maybe unusual equity partners, a takeout could make sense.

HK exchange makes risky $2.2 bln LME bet

15 Jun 2012

The exchange is paying an alarming 58 times last year’s earnings for the London Metals Exchange - even factoring in its new fee structure. There are no cost synergies, so all depends on whether mainland Chinese buyers will be allowed to play more on foreign commodity markets.

English soccer deal is doubly worrying

14 Jun 2012

Domestic rights to top-flight matches just sold for 6.6 mln pounds a game. Auction winners BSkyB and BT lost at least a billion pounds in combined market value. That implies the duo over-paid. It also reflects investor unease that the two are increasingly direct competitors.

Disney’s sports battle with Murdoch goes global

8 Jun 2012

The rival media empires keep ratcheting up the war to broadcast everything from baseball to soccer in America and Europe. Now, they’re set to square off over cricket and more in Asia, after dissolving a 16-year partnership. The rising value of sports rights just got another bump.

Qatar play for EFG Hermes stokes backlash in Egypt

6 Jun 2012

The possible bidding war for the investment bank illustrates the growing fears about the emirate’s influence in post-Mubarak Egypt. EFG agreed to be partially taken over by QInvest. But the Gulf state’s rivals promise to keep the bank whole, and Egyptian. Now anything can happen.

Party City celebrates embattled private equity

5 Jun 2012

A $2.7 bln deal for the costume and streamer chain wraps together the mixed feelings U.S. voters have for the buyout industry. Revel in the huge jobs and profit growth created by three Boston-based owners. But a dividend recap and growing debt leave the affair somewhat subdued.

Salesforce.com enlists Buddy to help defy gravity

4 Jun 2012

One after another, über-trendy stocks have fallen to earth - think Netflix or Green Mountain. The $18 bln Salesforce.com has held up better than some. To help it stay aloft, it is spending $689 mln on Buddy Media. Social media is still a sweet spot, but it’s an expensive gambit.

Egypt’s EFG Hermes is worthy of a fight

4 Jun 2012

The region’s pre-eminent investment bank has sparked rival bid interest from Qatar and an Egyptian consortium. M&A-ers have to rise above doubt created by illegal share-dealing allegations and links with the old regime. But in a post-Mubarak world, EFG has a decent business.

Carlos Slim may drive KPN to poison

1 Jun 2012

The Dutch telecoms group is scrambling to dodge what it sees as a takeover-on-the-cheap from the world’s richest man. It seems to want to do a deal in Germany that’s been talked about for years. But counterpart Telefonica isn’t ready to trade. KPN might resort to poisoned pills.

Xstrata throws down gauntlet to shareholder spring

31 May 2012

Glencore-Xstrata will only go ahead if investors approve retention schemes including a three-year, 28.8 million pound package for Mick Davis to run the merged commodities firm. But shareholders have no easy choices. Voting no risks killing the merger and wounding Xstrata’s board.