Mergers & Acquisitions

Private equity energy herd has ample room to graze

26 Jan 2012

Successes like KKR’s five-bagger on East Resources have sped up the sheep-like migration to the sector. That will make such returns hard to replicate. And it’s not obvious how the buyout playbook applies. But hot shale and distressed gas should keep energy pastures green.

Dodgy M&A lawsuits are putting useful ones at risk

26 Jan 2012

U.S. companies now face more deal litigation than “stock-drop” cases, making efforts to curb the former tempting. But among many dubious suits, some expose suspect deals like the J Crew buyout. Investors might benefit more from a little lawyer restraint than ham-handed reform.

Roche’s resolve on Illumina will be tested hard

25 Jan 2012

Investors reckon Roche’s $5.7 bln hostile bid for the U.S. gene-sequencer will be improved. That’s sensible: the Swiss drugmaker has sweetened deals before, Illumina is a long-term strategic bet and counter-bidders could emerge. To win, Roche may have to swallow a super premium.

Endemol tussle shows trials of evicting LBO owners

23 Jan 2012

After years of wrangling, creditors may soon take stakes in the “Big Brother” producer. A sale may follow. Distressed investors have poured money and manpower into Europe in search of similar deals. But future “loan-to-own” victories will require patience and grit.

ING should further carve up Asian insurance sale

23 Jan 2012

The Dutch bancassurer has already separated out the disposal of its Asian insurance arm from its European operations. But potential acquirers are not all interested in the same bits. To maximize value, ING might be better off breaking the sale into still smaller parts.

Vodafone’s India tax victory may come with a twist

20 Jan 2012

The UK phone giant’s $2.2 bln Supreme Court win is great news for India’s battered reputation. It also bodes well for firms like AT&T, which are threatened with similar bills. But if the government now changes the law, future offshore M&A deals won’t escape tax so easily.

CIC only dips toe into UK with Thames Water stake

20 Jan 2012

As the UK’s chancellor hunts out investors for a $46 billion infrastructure plan, China’s investment in the London utility looks timely. Yet returns on investing in a mature water company are very different from funding risky new projects. Osborne has more schmoozing to do.

UK fee disclosure shows bankers rule the M&A roost

20 Jan 2012

Buyers of UK-listed companies now have to come clean about how much they paid to bankers, lawyers and PR firms. It’s too early to say whether transparency will change behaviour. But one thing’s clear: when it comes to M&A fees, bankers grab almost all the spoils.

Connecticut finally steps up to vet utility merger

18 Jan 2012

More than a year on, the U.S. state reversed its earlier rubber-stamping of Northeast Utilities’ $4.7 bln takeover of NSTAR. It took a couple of storms to expose Northeast’s electrifying incompetence and wake Connecticut’s watchdogs. Now they needn’t be shy of killing the deal.

Unipol’s latest empire-building looks a stretch

18 Jan 2012

The Italian insurer’s attempted takeover of BNL in 2006 was a fiasco. An ambitious four-way merger to create a rival to Generali makes greater financial and commercial sense. But the plan still requires jittery shareholders to support a huge capital hike.

Shotgun marriage no solution for Spain’s Bankia

18 Jan 2012

The lender may need more capital if Spain’s new government pushes ahead with plans to boost buffers for dud property assets. One solution is a merger with stronger rival CaixaBank. But it’s hard to see why Caixa’s shareholders should accept risks the state is so keen to avoid.

Moelis and Sumitomo strike unusually balanced deal

18 Jan 2012

Foreign investments into Wall Street often go badly. But Sumitomo is getting an easy, low-risk entrée to global dealmaking. The boutique, meanwhile, gets more access to Japan. Even better, the $1.9 bln valuation should give antsy Moelis bankers with equity renewed optimism.

TPG can be forgiven its mile-high club fetish

17 Jan 2012

A successful contrarian bet on bankrupt Continental in 1993 was the buyout firm’s seminal deal. Since then, David Bonderman has chased airlines across the globe, including now American, and scored with a few like Ryanair. Even bad romances like Midwest can’t dampen the thrill.

With sound packaging, bold M&A can still be done

17 Jan 2012

Shareholders killed Britain’s last ambitious takeover requiring a rights issue. Now the market is applauding a $2 bln move by DS Smith, the packaging group, on a unit of Sweden’s SCA. Showing restraint on leverage and on deal price helps, as does teeing up key investors.

Japan makes better hangar for RBS air unit

17 Jan 2012

Selling its aircraft leasing arm to Sumitomo of Japan for $7.3 bln frees up vital capital for the UK lender at a good price. It’s better yet for the buyer, which has low funding costs, a strong yen and needs to diversify. If only divestments were always so easy.

Build cost inflation threatens new gas economics

13 Jan 2012

Australia’s latest liquid natural gas mega-project will cost 70 pct more than initially envisaged. The French and Japanese backers should still be able to justify the $34 billion price. But cost inflation makes life more difficult for U.S. groups planning big LNG export facilities.

Antitrust watchdog rivalry may spell M&A trouble

12 Jan 2012

The U.S. Justice Department surpassed the Federal Trade Commission in antitrust enforcement last year. But signs that the FTC will block pharmacy provider Omnicare’s bid for PharMerica suggest a new hard line. Competing cops on the beat could gum up Wall Street’s deal machine.

U.S. broker fire-sale thwarts shrinking banks

12 Jan 2012

Regions Financial fetched just $930 mln - two-thirds of initial estimates - for decent performer Morgan Keegan. But the U.S. lender needs the cash. With European banks alone trying to offload some $2 trln of assets, the Keegan deal underscores it’s a serious buyer’s market.

Predictions 2012: Upside down and inside out

12 Jan 2012

Planet finance has a propensity to turn itself upside down and inside out. It’s up to its old tricks again. A new collection of commentaries from Breakingviews sets the financial agenda for the next 12 months.

Ferretti’s yachts find fitting berth in China

12 Jan 2012

The luxury yacht-maker embodies modern finance’s turbocharged highs and lows. Buoyed by the rise of the super-rich, it made one buyout house a fortune, then helped sink another. Ferretti is now being sold to a state-backed Chinese group for around a fifth of its peak valuation.