Mergers & Acquisitions

Fortune 500 plays tough for home-court advantage

7 Mar 2012

Weary of fighting shareholders in multiple states, big U.S. companies want to force M&A lawsuits into their preferred forum, Delaware. But investors deserve a say in the matter. Deal lawyers and bankers will give the hot-button issue a hearing at their annual New Orleans confab.

Fondiaria saga recalls Italian power-broker heyday

6 Mar 2012

The struggling Italian insurer’s investors have to choose between merging with rival Unipol and a private equity offer led by ex-Capitalia chief Matteo Arpe. Both carry risks. But the benefits of the Unipol deal in particular look skewed to power-brokers rather than shareholders.

Peugeot’s $1.3 bln cash call inspires confidence

6 Mar 2012

Underwriters sought a 32 pct discount to the theoretical ex-rights price for the carmarker’s fundraising in its alliance with GM. That seems steep, but reflects a challenged industry. Indeed, for a company raising a third of its market value, the 6 pct share price drop is muted.

Glencore shouldn’t overplay its hand with Xstrata

5 Mar 2012

The commodity trader’s CEO, Ivan Glasenberg, has said the deal’s terms are fair and questioned why he should pay a higher premium for miner Xstrata. It’s easy to see why he is acting like he holds all the cards. But in reality, his poker face isn’t that convincing.

Kinder deal conflicts deserve a second hearing

1 Mar 2012

A judge was right not to block the pipeline owner’s $21 bln acquisition of El Paso over the skewed motives of Goldman, Morgan Stanley and the target’s CEO. But it’s also a good idea for shareholders to keep the fight going. Penalizing misaligned incentives is the best way to stop them.

Shell can afford to let Cove Energy go

29 Feb 2012

Gas-hungry Asian rivals are complicating the oil major’s attempt to buy 8.5 percent of a giant African gas field. Shell can probably justify paying more, but has no need to get into a bidding war. Even if Cove gets away, there should be other opportunities to participate in the field.

GM needs better ideas for Opel than Peugeot deal

28 Feb 2012

Europe suffers from overcapacity in cars. It’s not at all clear how spending $325 mln for a minority stake in its struggling French rival changes that dynamic, particularly given GM’s history. The deal only makes sense as a precursor to gut-wrenching consolidation.

Browne’s North Sea idea is more than nostalgic

27 Feb 2012

Buying into Fairfield Energy would befit the ex-BP boss, who managed a North Sea oil field in the 1980s. Yet there is sound commercial logic too. Oil prices, and opportunities to scoop up oil majors’ unwanted acreage, have increased since Fairfield pulled its IPO in 2010.

Apollo’s $7 bln bet won’t get gas from leverage

27 Feb 2012

The buyout firm and its partners are writing a chunky 40 pct equity check for El Paso’s E&P business. With energy prices volatile, lenders are rightly cautious. But without the usual debt juice, the best hope of a punchy investment return is a big upturn in gas prices.

Alibaba.com minorities should hold out for more

27 Feb 2012

The Chinese e-commerce provider wants to buy out public shareholders at a third of the valuation at which it sold shares in 2007. Yet Alibaba.com’s potential has arguably grown since then. The China opportunity remains barely tapped. Founder Jack Ma is getting too big a bargain.

Too-coy India prompts Citi’s HDFC retreat

24 Feb 2012

New Delhi has long worried about hot money and fair-weather friends. But the protectionism deployed actually increases the dangers. Give foreign banks more skin in the game and they are less likely to retreat. Citi’s exit from India’s top housing lender tells that tale.

UPS could be bidding against itself for TNT

22 Feb 2012

The huge available synergies mean the $73 bln U.S. parcel giant could sweeten its takeover offer for its Dutch rival. TNT shareholders are for now expecting at least 9 pct more. But with rivals FedEx and DHL inhibited in varying ways, they may not get the bidding war they’d like.

Shell pays up for a foothold in Mozambique gas

22 Feb 2012

The oil giant has offered $1.6 bln for gas explorer Cove Energy – a 70 pct premium but loose change for Shell. The assets are attractive and Shell has the know-how to exploit them. If Asian gas prices stay high and exploration projects deliver, the toppy price could be worth it.

Alibaba $2.5 bln buyout looks opportunistic

22 Feb 2012

The 46 pct premium founder Jack Ma has offered to take the Chinese e-commerce company private is decent, but the shares are far below former highs. Minority shareholders have few options, but Ma’s wily dealmaking may haunt him if he returns to float his crown jewel, Taobao.

GM tie-up could keep Peugeot family at the wheel

22 Feb 2012

The French carmaker had to do something after burning through 1.5 bln euros of cash in six months. It needs greater scale to take on Volkswagen. Fiat was a potential partner. But a non-equity tie-up with GM is a way to let the Peugeot family to keep control.

Eircom’s top lenders will soon call the shots

20 Feb 2012

The debt-laden Irish telco’s last owner walked away, and an auction’s unlikely to find a new one. A $2 bln debt bonfire beckons, which would leave top-ranking lenders in control. Depressed valuations across the sector suggest junior creditors will struggle to salvage anything.

UPS love letter validates TNT’s earlier break-up

19 Feb 2012

Long-term suitor UPS made a $6.4 bln proposal to the Dutch courier just before Valentine’s day. For now TNT is being rightly coy. And FedEx may yet disrupt the courtship. But clearly TNT’s break from dowdy domestic mail unit PostNL is achieving the desired effect.

Would President Romney sell Uncle Sam’s GM stake?

16 Feb 2012

Sure, governments should try not to hold stakes in private firms. But selling now, as Political Romney just proposed, would cost taxpayers $14 bln. That’s a hit Private Equity Romney would surely avoid. As long as D.C. leaves GM alone, it’s smarter to wait for a better price.

Congratulations Google, you’re now a conglomerate

15 Feb 2012

U.S. and EU antitrust authorities have cleared the search firm’s $12.5 bln purchase of Motorola. Its hardware foray might open new markets - or be a vital means of defending its advertising business. But on Wall Street, diversification like this merits a valuation discount.

Kellogg rescues P&G from over-cleverness

15 Feb 2012

The maker of Corn Flakes and Froot Loops is paying $2.7 bln for Pringles, the snacks business that P&G hoped to sell to Diamond Foods in a complex tax-minimizing deal. Kellogg can justify a premium, while P&G will net less after tax. But the consumer giant gets a valuable lesson.