Mergers & Acquisitions

Private equity skewered by Romney-bound arrows

10 Jan 2012

The assault from fellow Republicans on the front-runner’s record at Bain makes for an absurd spectacle. Huntsman’s family business agreed to an LBO while Gingrich advised Teddy Forstmann. The slings won’t derail Romney, but the collateral damage could hurt the buyout industry.

Time to think small in stock exchange M&A

10 Jan 2012

If Brussels vetoes Deutsche Boerse’s merger with NYSE, the deal will join Australian and Canadian takeovers on the scrapheap. Exchanges battling legal change and weak markets could use merger-led cost cuts. But from now on big deals will be the exception, not the rule.

Hep C deals show how biotech premia get infectious

9 Jan 2012

Bristol-Myers will pay a 163 pct premium for Inhibitex. Recent bids for other hepatitis C specialists have also gone skyward. In any hot biotech field, there are few targets and most have insiders with big stakes. Satisfying their belief in their efforts is what drives prices up.

Exxon’s Japan sale may not show downstream doubts

4 Jan 2012

With rivals like Conoco splitting off refining, investors are on the lookout for signs the Texas titan will join the trend. Exxon’s likely $5 bln exit in Japan isn’t a clear one. The group recently sank $25 bln into downstream projects. It may merely be ditching a weak asset.

Anglo American risks reaping a Chilean whirlwind

4 Jan 2012

The London-listed miner may think it can win a $2 bln dispute with state-owned Codelco over a prized mine. Still, the stakes are high and the case would be heard in Chile. Defeat would be a big blow for Anglo and CEO Cynthia Carroll. But a face-saving compromise looks possible.

China’s M&A dragon will blow hot in 2012

4 Jan 2012

Falling prices and tight credit mean state-backed buyers can play to their strengths. Two newly minted oil deals, and Three Gorges’ Portuguese swoop, show Beijing’s burgeoning appetite. Big name bids may follow, while China’s savers and consumers unwittingly foot the bill.

U.S. shale exuberance may need to be tempered

3 Jan 2012

France’s Total and China’s Sinopec kicked off 2012 with $4.5 bln of deals to drill for U.S. oil and gas. Vast resources and technology should keep attracting foreign buyers. But the reaction by Ohio officials after several earthquakes suggests political risks will intensify.

More corporate carve-ups to delight M&A bankers

28 Dec 2011

2011 was the year of the spinoff. Fiat, ConocoPhillips and ITT helped deal volume nearly sextuple to $230 bln. Rocky economic times probably won’t give CEOs much reason to shop, so 2012 could bring still more. Maybe even holdouts like GE, Goldman and Pepsi will consider a split.

Delphi slips Tokio Marine a $2.7 bln spiked cocktail

21 Dec 2011

That’s one explanation for the Japanese insurer’s Godzilla-sized overpayment for the U.S. group. Including a special dividend, it’s paying a near 80 pct premium. It’s another example of Japan Inc throwing shareholders under the bus in the name of international expansion.

Exxon bets its size, not troops, will help in Iraq

20 Dec 2011

American forces may have left, but the world-dominating U.S. oil giant is still willing to take risks. Exxon is playing Baghdad off with the Kurdish government, wagering the spoils are worth it and that the company is too important for Iraq’s own oil wealth to be forced out.

AT&T throws in towel, but not without squawking

19 Dec 2011

The telecoms group’s $39 bln bid for T-Mobile USA has been deader than Francisco Franco for months. Now the company’s using the failed deal to fight for more spectrum. AT&T has a point – but shareholders shouldn’t let it obscure management’s risky roll of the dice.

Hoare Govett should find a saviour

19 Dec 2011

The venerable UK advisory franchise is up for grabs, an innocent casualty of new regulation facing owner RBS. Financially, there’s not much to favour a sale over simple closure. Still, Hoare Govett could make good money under a new parent. And RBS won’t want to trash the legacy.

Alwaleed pushes the limits with edgy Twitter stake

19 Dec 2011

Even though Prince Alwaleed bin Talal is known as a bold investor, his $300 mln stake in the regime-usurping social network is decisively edgy. The Saudi royal family member increases his cool factor, but supporting unregulated speech might not sit well in the kingdom.

Fracking tie-up makes sense for shale-rich China

16 Dec 2011

Buying a piece of Frac Tech, a U.S. gas services company, for a mooted $2.2 billion would be a savvy move by China’s national energy majors. Frac Tech’s drilling technology should be easy to copy, and could help China unlock 140 years of gas supplies. The strategic benefits justify a premium price tag.

P&G didn’t crunch its Pringles partner adequately

15 Dec 2011

Troubles have escalated for Diamond Foods, the agreed buyer of the chips brand, with the SEC now probing its accounting. The scale of issues being targeted suggests the consumer giant missed early warning signs. An obsession with taxes may have clouded P&G’s vision.

Fed shows outsized concern for too-small-to-fail

14 Dec 2011

The U.S. central bank spent nearly two years scrutinizing the tiny takeover of a Utah lender by prepaid debit card firm Green Dot. The soundness of even niche banks matters. But in the too-big-to-fail era, the Fed’s slow process is an unneeded deterrent to the sector’s small fry.

Mooted Russian steel mega-merger lacks sizzle

13 Dec 2011

The chairman of Evraz sees merit in a tie-up with Severstal that would pair Russia’s two largest steel producers. The industry could do with more consolidation. But limited potential synergies mean investors may struggle to get excited about an Evraz-Severstal deal.

Rumble in rock garden presages more hostile M&A

12 Dec 2011

That’s one way to read the unsolicited $4.6 bln offer that Martin Marietta Materials made for larger rival Vulcan. The deal won’t succeed without a sweetener. But the lesson is clear: if profits can’t be mined from the ground, they can still be found by cutting costs.

Lehman rump moves to control firm’s former nemesis

12 Dec 2011

Its holding in property outfit Archstone helped bring Lehman down. Now the bankrupt estate may spend up to $2.6 bln to buy control and fend off Sam Zell, architect of the ill-fated Tribune buyout. It’s odd for a liquidating firm to join an M&A fight, but creditors could benefit.

LSE pays high price for full control of FTSE

12 Dec 2011

The London Stock Exchange is paying a rich 450 mln stg to take full control of FTSE International, the index compiler it co-owns with publisher Pearson. It is betting that the boom in benchmark-based investment products such as exchange-traded funds will be sustained.