Mergers & Acquisitions

Int’l Power does well to get better buyout from GDF

16 Apr 2012

The power generator’s board has won a 7 pct sweetener from GDF Suez in exchange for agreeing to an $11 bln minority buyout. It’s a decent result for International Power’s 30 pct outside shareholders, given wobbly markets and GDF’s majority.

Qatar plays merger-maker at Glencore-Xstrata

12 Apr 2012

The Gulf state has been a successful arbitrageur in the past. Its 5 pct stake in Xstrata is under water following the recent equity market sell-off. But Qatar could provide extra leverage to help the miner extract a sweeter offer from suitor Glencore.

Lloyds forced disposals inch towards quasi-auction

12 Apr 2012

The race to buy 632 branches the UK bank must sell to meet state-aid rules had seemed all but won by the Co-op mutual group. Now new entrant NBNK is detailing a rival pitch. The odd nature of the two bidders may rule out a hot auction. But at least Lloyds has a choice of buyer.

Coty will need to up its Avon game

11 Apr 2012

The U.S. cosmetics group has spurned Coty’s $10 bln approach and hired a new CEO. If Avon’s European suitor is really keen to marry makeup to its fragrances, it needs to pay more. A new Breakingviews calculator shows just how much bigger Coty’s proffered engagement ring could be.

Buyout firms lack artistry on Michaels deal

10 Apr 2012

Bain and Blackstone paid $6 bln for the U.S. crafts retailer near the top of the cycle in 2006. The bad timing was papered over by the success of scrapbooking and beading as cheap family fun in the downturn. That should enable the firms to chalk up a modest return in an IPO.

Facebook’s defensive Instagram M&A raises red flag

9 Apr 2012

Online photos are supposed to be a core Facebook competence. Paying $1 bln for the picture-sharing app may boost the social network in mobile. But paying over the odds for revenue-free rivals is usually what anxious, mature firms do - not growth companies seeking to go public.

Delta would be crackers to fly into refining

5 Apr 2012

Pricey fuel is the airline’s nemesis. But buying Conoco’s idled plant would increase Delta’s risk. It wouldn’t hedge volatile crude prices and would leave the company exposed to the financial challenges of running a refinery. There are better ways for Delta to cut its costs.

Newest burger kings get Whopper of a finder’s fee

4 Apr 2012

The public return of Burger King via a tie-up with a London SPAC gives financiers Bill Ackman, Nicolas Berggruen and Martin Franklin something to relish: a finder’s fee of stock worth some $160 mln. And the hamburger chain gets a far meatier valuation than just two years ago.

Buffett’s banker may come in handy for Coty

3 Apr 2012

The perfume maker will have to sweeten its offer from $10 bln to, say, $11.6 bln, to woo resistant Avon. That would mean $5 bln of equity, after factoring in debt and synergies. Byron Trott, a Coty adviser, might need to call in some favors, perhaps even from his biggest fan.

Molson runs up big tab for emerging markets light

3 Apr 2012

The North American brewer will pay $3.5 bln to enter central Europe. Savings are limited, the seller is probably making a packet, and Molson outbid a Japanese rival: all worrying signs. But while the region doesn’t promise huge growth, the prospects are better than home.

Avon’s hapless board opened door to Coty’s bid

2 Apr 2012

The cosmetics group rejected the $10 bln offer but will struggle to convince shareholders it has attractive alternatives to the LBO-like bid. Fealty to CEO Andrea Jung did less for Avon than Coty accomplished in a morning. It’s a useful lesson for pliant directors everywhere.

Temasek on top in SE Asia bank stake swap

2 Apr 2012

The Singaporean fund will exchange its stake in Indonesia’s Bank Danamon for an enlarged slice of DBS, a bigger lender based in its home state. The price is high and there are integration dangers for DBS. But if all goes well, Temasek will enjoy a windfall of almost $2 billion.

Int’l Power non-execs have some leverage over GDF

30 Mar 2012

The UK energy firm has had a 6 bln stg approach from GDF for the 30 pct that the French group doesn’t own already. Bid rumours have already effectively added a slim premium to IPR shares. But its independent directors still have some power to push for a bit more.

Oil billionaire shows how to handle M&A conflicts

29 Mar 2012

Continental CEO Harold Hamm has persuaded the firm to buy another of his companies, Wheatland. That’s prime territory for stiffing shareholders. But both executives and the board appear to have played it fair. It’s a good blueprint for other firms, and Wall Street, to follow.

Roche makes tactical gain with Illumina sweetener

29 Mar 2012

The Swiss drugmaker has upped its unsolicited offer for Illumina by $1 bln to $6.7 bln – a smidgen above the gene firm’s market value. That puts real pressure on the board to talk. The stage is set for Roche to add a last sweetener in return for a recommendation.

Dodger blue outshines gold after $2 bln deal

28 Mar 2012

The sale of the Los Angeles baseball team represents almost a five-fold gain in value since 2004. Gold aside, returns on sports franchises blow away most other major asset classes, including stocks. The demand for such trophy investments from the ultra-rich is stoking prices.

Not all M&A and financial engineering is worthless

28 Mar 2012

That’s the read from Tyco’s spin-off and merger of its flow control business with Pentair. This paper-shuffling allows the two firms to cut costs and taxes, creating synergies worth a cool $1.5 billion. That provides a nice feast for shareholders to divvy up almost equally.

Taiwanese money can’t save Japan from Samsung

28 Mar 2012

Foxconn’s $1.6 bln investment into Sharp buys Japan’s electronics company time. But there’s a huge glut in flat-panel screens and the likes of Sharp, Panasonic, Sony and Toshiba may be fighting a losing battle against the Koreans. As Hitachi has shown, it may be best to withdraw.

Spanish bank take-under reveals real estate mess

27 Mar 2012

Caixabank is buying smaller rival Banca Civica and its dud property loans at a discount to market value. Caixa reaps savings from cutting costs, including its own network, and avoids being pushed into a deal with larger Bankia. Without state support, though, it’s still a risk.

Icahn gives Breakingviews a window into his method

27 Mar 2012

The billionaire’s reaction to a recent column echoed his approach to corporate boards. A demanding phone call, a written riposte and a form of greenmail all came into play. It’s easier now to empathize with Icahn’s targets, but also showed our interests somewhat align with his.