Mergers & Acquisitions

Music gods again divert EMI’s destiny

11 Nov 2011

With both EMI and Warner under new owners, it seemed the stars might finally uncross for their long-awaited union. But Sony and Universal brought their own karma and cash to the EMI auction, and Warner is again alone at the altar. Further twists of fate are in regulators’ hands.

Sinopec’s M&A strategy gets a little smarter

11 Nov 2011

The Chinese oil major’s $5.2 billion investment in Brazilian oil resembles a deal it did last year – but at 20 pct less per barrel. Non-financial considerations explain some of the difference. But state-owned Sinopec appears to be learning more tricks of the M&A trade.

Olympus mystery may hinge on M&A accounting

9 Nov 2011

The company hasn’t said how it used takeovers to hide decades of investment losses. Japanese goodwill accounting might provide a way, by allowing companies to pay big takeover premiums and advisory fees and write them down over time. It’s time Japan closed this loophole.

When is a merger-of-equals really a takeover?

7 Nov 2011

One easy way to tell is when the top brass get rich, undeserved paydays. Take NSTAR’s pending $4.7 billion “merger” with Northeast Utilities. NSTAR’s top five executives could feast on $50 mln of payouts from change of control even though they’ll stay, and even run, the place.

BP making a habit of botched M&A

7 Nov 2011

Closing a $7 bln disposal in Argentina is not as urgent today as it was a year ago, when the oil major was reeling from the Gulf of Mexico disaster. But setbacks look bad, coming after the collapse of the Rosneft deal. BP is now stuck with a challenging partner in Buenos Aires.

De Beers buyout adds polish to Anglo American

4 Nov 2011

The miner is paying the Oppenheimer family a reasonable $5.1 bln to take majority control of De Beers, the world’s top diamond producer. It’s another step to a streamlined Anglo, making it look like a more straightforward takeover target.

Less, not more, better for New England utilities

3 Nov 2011

Too many customers of Northeast Utilities lost power for too long after recent storms. As with banks, risk management and regulation failures are to blame. Towns that run their own utilities offer an alternative; meanwhile, Northeast’s planned $4.7 bln deal needs to be torpedoed.

Europe’s mega-buyouts too big to exit

2 Nov 2011

Denmark’s ISS found three exits blocked: it couldn’t sell to new private-equity owners, nor stock-market investors, nor a listed rival. Europe’s mega-buyouts may be in a bind. Waiting for the IPO market to reopen, and deleveraging in the meantime, seems to be the only course.

UK investors still on guard against hubris in M&A

1 Nov 2011

Britain’s worst shareholder revolt since Pru-AIA has nixed G4S’s $8 bln move into cleaning. The security group’s management couldn’t sell a strategic shift funded by a jumbo share issue. Failure sullies the record of CEO Nick Buckles. But he can probably keep his post.

ArcelorMittal chickens out to hoard its cash

25 Oct 2011

The world’s largest steelmaker abruptly bailed on a joint takeover of Australia’s Macarthur Coal, selling out to partner Peabody, as investors tendered their shares with unexpected alacrity. It may be a sensible move, but it certainly makes the billionaire Mittals look a nervy bunch.

Sprint’s antitrust pitch hedges against DoJ miss

25 Oct 2011

The third-largest U.S. mobile operator says it just wants to help Justice kill AT&T’s takeover of T-Mobile USA. But its separate lawsuit suggests unease with Uncle Sam’s arguments. Such private cases rarely succeed. But this one looks like insurance against a government stumble.

Turkish banks still shine despite musical chairs

25 Oct 2011

Dexia has joined the foreign lenders looking to exit the country after just a few years. But Turkey’s banks are well capitalised in an underpenetrated market, and valuations are near historic lows. Even with an economic slowdown looming, they offer a potential bargain for buyers.

Pfizer milk bid could fortify China’s M&A hopes

25 Oct 2011

Mengniu Dairy’s bid for the U.S. pharma giant’s $10 bln nutrition unit would make strategic sense. China can gain from deals pegged on rising consumer demand rather than cheap labour. Buying foreign brands may also help address food safety problems, if bidders tread carefully.

Icahn’s American truck merger pitch has wheels

24 Oct 2011

The billionaire investor often has loopy ideas for M&A among his holdings (remember Lions Gate-MGM?) But a $5 bln-plus combination of Navistar and Oshkosh makes some strategic sense. The net present value of cost synergies could be worth more than their combined market cap.

Apax misses with HIT disposal

24 Oct 2011

The private equity firm’s ownership of HIT Entertainment, the company behind kids’ character Bob the Builder, makes for sad reading. Mattel may enjoy the $680 million company more. But fixing Bob up with Barbie does not necessarily mean they’ll live happily ever after.

Citi’s CDO payout is ripe for the Rakoff treatment

19 Oct 2011

The bank’s $285 mln settlement with the SEC is about half what Goldman paid on Abacus. And yet Citi allegedly picked the assets in the CDO itself while keeping buyers in the dark. Judge Jed upbraided the watchdog for its light touch on BofA. This case warrants a similar hearing.

Closed-door justice will leave dealmakers in dark

19 Oct 2011

A spat between Skyworks and takeover target Advanced Analogic will play out in private instead of open court under Delaware’s new arbitration system. That may save the parties time and money. But it cheats the M&A world - and investors - of valuable legal guidance.

Abbott prescribes a dose of financial engineering

19 Oct 2011

The runaway success of blockbuster drug Humira has been a mixed blessing. It larded the healthcare group’s attractive nutrition and generic drug businesses with a pedestrian Big Pharma multiple. Splitting off its research drug arm should rectify the valuation mismatch.

SAB’s $1.9 bln Turkish tie-up has double benefit

19 Oct 2011

The UK-listed brewer is swapping its Russian unit for a 24 percent stake in Turkey’s Efes. Though Russia is challenging for brewers, the combined business will have a broader base. And SAB is now in pole position if the families behind Turkey’s dominant beer-maker ever sell up.

Abu Dhabi’s airline strategy lacks coherence

19 Oct 2011

Etihad, the UAE’s official national carrier, wants tie-ups with Virgin Atlantic and Aer Lingus via minority stakes. Its ambition is to catch up with Dubai rival Emirates. Such deals may deliver tactical gains. But they won’t replicate Emirates’ impressive organic success.