Mergers & Acquisitions

Shanda’s opportunistic MBO may start a trend

18 Oct 2011

Its founder looks to be exploiting the plunging share prices of China’s U.S.-listed dotcoms. Shanda’s cash pile will cut the amount he has to put in. Delisting from the United States paves the way for a relisting in China. Others frustrated by rising U.S. scrutiny may follow suit.

Through adversity, Goldman still plays all angles

17 Oct 2011

The $38 bln Kinder Morgan deal epitomizes what the bank does best. It owns a stake in the pipeline operator, underwrote its IPO and worked with its takeover target, El Paso. Such finesse is what sets Goldman apart. It’s just not clear it’s a gift that will keep on giving.

Hulu owners destined to be regretful refuseniks

17 Oct 2011

Disney, News Corp and Providence pulled the plug on the video streaming service’s auction after bids were too cheap and conditional. But the media giants have struggled with their own digital transitions. Hulu is likely to become a distracting headache they’ll wish they’d exited.

Market sends CEOs harsh message on M&A

17 Oct 2011

Investors have blown a raspberry at G4S’s $8 bln bid for ISS and related $3 bln rights issue. Europe’s first big corporate transaction since the summer was never going to be easy, and the cash-call is massive. If G4S stock doesn’t recover, opportunistic M&A will be cowed.

Rio Tinto takes bold step into aluminium rehab

17 Oct 2011

The miner’s $38 billion purchase of Alcan in 2007 was a financial disaster, and aluminium’s prospects still look poor. Rio is making some amends with a plan to sell off a third of the business. The strategy is sensible and now looks as good a time as ever to sell.

Kinder pays top dollar to enter energy big league

17 Oct 2011

If regulators give the nod, a new $94 bln pipeline titan will be born, becoming among the biggest U.S. energy firms. Kinder is paying more than is justified by the synergies for El Paso. But Kinder’s chief has done investors proud in the past and is not to be underestimated.

IPO shut-down allows strategic bidder to clean up

17 Oct 2011

Private equity is offloading Danish outsourcer ISS to London-listed rival G4S for $8.2 bln – the same value it sought in March’s aborted IPO. So far, so good. But with the IPO market now shut, G4S has got away with paying partly in stock, and has avoided paying a massive premium.

Latest MAC attack hints at bigger M&A trouble spot

14 Oct 2011

After crying “material adverse change,” buyout firm Cerberus is close to landing Innkeepers for less than first agreed. The broad MAC in this bankruptcy deal may not reflect market reality. But sellers still have work to do ensuring buyers know the price of trying to walk.

Credit Suisse has awkward role in Nat’s coal deal

14 Oct 2011

The bank is broker to Nat Rothschild’s mining vehicle, Bumi Plc, and lender and sometime adviser to his partners, Indonesia’s powerful Bakrie family. That’s a tricky position now the Bakries are scrambling to meet a margin call on a $1.3 bln loan - arranged by Credit Suisse.

Richard Li’s financial alchemy fails to wow

12 Oct 2011

The HK tycoon’s plan to spin off his telecoms business into an innovative trust structure is designed to unwind PCCW’s huge conglomerate discount, while preserving his control. The cost is unnecessary complexity, and potential dilution of minority shareholders.

Spanish bank mergers off to inauspicious start

11 Oct 2011

Banco Popular is paying a steep price for rival Banco Pastor. The 1.3 bln euro deal doesn’t lift the mid-sized lender into the big league and does little to strengthen its balance sheet. It’s a reminder that while more consolidation is inevitable, not all investors will benefit.

99 Cents Only shows the way to handle an MBO

11 Oct 2011

Instead of cozying up to the first buyout firm that came along, the discount retailer appointed independent directors to run an auction. They found a new buyer and 15 pct extra for shareholders, including the family owners. After the J Crew debacle, a fresh example is welcome.

Glencore resilience brings Xstrata deal closer

11 Oct 2011

Mining M&A’s clearest fantasy deal has inched closer to reality. A Glencore takeover of its $43 bln mining affiliate looks easier after the commodity trader’s shares held up better in the recent rout. But Xstrata investors are unlikely to roll over without a substantial premium.

India telecoms policy mixed bag for operators

10 Oct 2011

The scandal-ridden sector is crying out for consolidation. Delhi’s new policy will allow spectrum trading and, theoretically, free up M&A too. But costs will rise and takeovers are unlikely until the corruption investigations are complete.

Sinopec shows quirks of Chinese resource M&A

10 Oct 2011

The Chinese energy group has offered a massive 120 pct premium for Canadian producer Daylight. Like similar Chinese deals, the $2.2 bln offer works because of strategic necessity, still-high commodity prices, cheap capital and a shareholder none too fussed about value creation.

BAA sale removes yoke from Ferrovial’s neck

10 Oct 2011

The Spanish construction firm has sold a small stake in airport group BAA at a big price. The value put on BAA by the 325 mln euro deal is more than double consensus. And giving up majority ownership will deconsolidate 14 bln euros of debt. At last, BAA is no longer a drag.

Del Monte settlement quantifies cost of conflicts

6 Oct 2011

Barclays will surrender a big slug of fees from the $5.3 bln buyout, where it advised the seller and financed the buyer, KKR. Wall Street read the writing on the wall after a judge’s slap. But when banks get spanked on the bottom line, the message resonates loud and clear.

Sovereign funds could win big with M&A lending

6 Oct 2011

Abu Dhabi has money and appears willing to use it to grease the wheels of big deals - first Hynix Semiconductor and now EMI. As Warren Buffett has shown, it can be very profitable to lend when other won’t - as long as there are generous rewards for risk-taking in fearful markets.

Can Microsoft be trusted not to buy Yahoo?

5 Oct 2011

The Internet group is gently looking for buyers for bits of its business or the whole shebang. Microsoft boss Ballmer would be remiss not to run the ruler over his strategic partner. But shareholders may justifiably wonder if he can refrain from another overpriced acquisition.

Carlyle gets slice of stale bread-and-butter deals

3 Oct 2011

The $3.9 bln buyout of drug developer PPD is one of the year’s biggest. The by-the-book takeover provides a nice premium to shareholders and leveraged upside for buyers Carlyle and H&F. But the seemingly simple deal was a slog and is a reminder of how few there are to go around.