Mergers & Acquisitions

Private equity yellow-bellies make sorry return

23 Aug 2011

Cerberus and a partner reneged on an agreed buyout of hotelier Innkeepers, citing a material adverse change after markets burped. It may be just a wimpy negotiating ploy. But investors got burnt by similar tactics in the crisis. This is a good reminder to remain wary.

Foster’s comeback to SAB bid just a sharpener

23 Aug 2011

The Aussie brewer promised shareholders an A$500 million payout. That was enough to nudge its shares past SAB’s hostile offer, but is less than it can afford. With SAB yet to make a formal bid, Foster’s has left itself plenty of room for something stronger later.

HP stock sell-off looks like overkill

19 Aug 2011

The tech giant has seen about a quarter of its market value, almost $16 bln, vaporized in two days. Shareholders have fled following another profit warning, a huge and pricey acquisition deal, and a strategic U-turn. That makes for plenty of warts - but HP now looks too cheap.

Rivals unlikely to crash HP’s punchy Autonomy deal

19 Aug 2011

Autonomy would be a nice-to-have for Oracle or IBM. But Hewlett-Packard’s $11.7 bln offer for the UK software group is already rich, and rivals don’t need Autonomy quite so badly. Add in falling markets and the ugly reaction of HP shares, and a bidding war doesn’t compute.

UK should avoid handwringing over Autonomy sale

19 Aug 2011

It could have been Britain’s Google, say those who mourn the Cambridge software firm’s sale to HP. Maybe. But Autonomy’s founder has a right to an exit, while public companies have a duty to accept rich takeover bids. Its success is still an inspiration to would-be entrepreneurs.

HP says goodbye Compaq, hello IBM

19 Aug 2011

The U.S. tech giant may spin off its PC unit and stop making some mobile devices. It has also offered to buy UK data search software group Autonomy for $10 bln. Leaving the cutthroat hardware market for higher margin software can work, as IBM shows. But it won’t be quick or easy.

Upstart M&A boutiques earn place at fee table

18 Aug 2011

Two newish shops opened by Blair Effron and Frank Quattrone worked on Google’s $12.5 bln deal this week. Along with firms run by Ken Moelis and Joe Perella, this quartet is eating away at the fee pool of big Wall Street banks. Conflicts and cash should keep them nourished.

SAB may yet brew up friendly Foster’s takeover

17 Aug 2011

The UK-listed brewer is canny to go hostile with an unchanged $10 billion bid days ahead of its Aussie target’s results. Peace may yet break out. Hostile takeovers are hard Down Under, and Foster’s has no white knight. With a small sweetener, both sides may get what they want.

HP purchase of patent-rich Palm now looks smarter

16 Aug 2011

Google’s $12.5 bln buy of Motorola Mobility and earlier frenzied bidding for Nortel’s patents reveal the riches in the intellectual property of mobile computing. HP snatched Palm’s trove over a year ago for a price that now looks cheap. Yet for HP, cashing in is a challenge.

Citadel shows some moats are still hard to cross

12 Aug 2011

Ken Griffin’s hedge fund is abandoning its foray into investment banking. Internal clashes didn’t help and adding a middle man to a trading business creates conflicts, too. But bulge-bracket firms also held up better than expected. Wall Street turf has some solid defenses.

Logical Kraft slim-down aims to fatten world

4 Aug 2011

The Oreos-to-Cheez Whiz conglomerate is splitting into a growth-challenged American grocery business with $16 bln of sales and an oddly named $32 bln “global snacking platform.” This defies the scale case for last year’s purchase of Cadbury, but it makes sense for shareholders.

Rio shareholders get an extra thank you

4 Aug 2011

The miner needed a $15 bln cash call in the crisis. Now it’s raised its share buyback target by $2 bln to $7 bln. Given slightly disappointing H1 numbers and a global slowdown, that may seem imprudent. But the numbers add up. Rio can afford to repay investors their 2009 favour.

Hitachi and Mitsubishi should seek to seal merger

4 Aug 2011

Consolidation is a dirty word in Japan, where jobs are valued above profits. But Hitachi and Mitsubishi Heavy are sprawling conglomerates which, together, can be more efficient and productive. There will be short-term pain. But corporate Japan must grasp its nettles.

Slim pickings for Slim in $6.5 bln Telmex tender

2 Aug 2011

The Mexican mogul’s America Movil is buying out the remainder of the country’s shrinking fixed-line carrier at a premium valuation relative to its own. That looks like a bad exchange. Without a solid explanation, it’s easy to see why investors sliced $4 bln off Movil’s value.

Investors right to shake up S&P parent

2 Aug 2011

An Ontario pension fund and JANA Partners have bought 5 pct of McGraw-Hill and want strategic changes. The $13 bln textbook-to-credit rating group trades at a discount and is already considering its options, but restless investors may force action sooner rather than later.

Kirin pays high price for being late to the party

2 Aug 2011

The Japanese beer group, which like its domestic rivals has belatedly woken up to global M&A, is paying $2.6 billion for 50.45 pct of Brazil’s Schincariol. The brewer, a distant number two, offers a so-so market position - certainly not one worth more than 100 times net income.

Sweeter PR not enough to revitalize M&A deal

1 Aug 2011

U.S. reinsurer Validus may hope that by switching flacks in the heat of battle it can persuade its shareholders to like the bid for $3.2 bln rival Transatlantic they have so far scorned. But messaging doesn’t win deals, numbers do. On that score, Validus isn’t far enough ahead.