Fairholme Capital Management and Pershing Square, two key investors in General Growth Properties, have offered to invest another $3.93 billion in the mall operator to help it emerge from bankruptcy. Shareholders, who only had access to the stock again on the NYSE as of last Friday, bid the stock more than 4 percent higher in early Tuesday trade.
While the new offer does not knock out the one from GGP rival Simon Property Group, it could get more support among unsecured creditors who would have had to settle for cash and stock under GGP’s original proposal.
MetLife is moving up in Japan, the world’s second-largest life insurance market, with the $15.5 billion purchase of Alico from AIG. The unit accounted for 70 percent of Alico’s pre-tax operating income in fiscal year. It also has operations in Europe and emerging markets in Central and Eastern Europe, the Middle East and Latin America. Much like the $35.5 billion sale of AIG’s Hong Kong-based AIA subsidiary the week before to Prudential of the U.K, a chunk of AIG is a transformative expansion for Metlife.
Both AIG and Metlife share rose on the news – one of those win-win deals, the market says. But if you want to be skeptical, just keep in mind that AIG is still only part of the way towards repaying the $182.3 billion it owes the U.S. government and Metlife has just exposed itself to an aging Japanese population with prospects in some ways even more worrying than in the U.S., given its lost decade and its near-routine bouts of deflation.
There were more than a few quizzical looks in the newsroom this week when General Growth Properties said it would again list its shares on the New York Stock Exchange. Wouldn’t bankruptcy preclude the stock from being on the Big Boad? Not only does being bankrupt not keep your stock from being traded, but from the reaction of investors, it won’t even make your stock a sell.
Ilaina Jonas reports General Growth is not alone as having its shares trade on the Big Board while operating under Chapter 11 bankruptcy protection. A representative of the exchange did not know how many of the approximately 2,425 companies trading on the New York Stock Exchange were in Chapter 11. But a handful, such as W.R. Grace, have continued to trade on the Big Board post-bankruptcy.
What if AIG sold everything it had? How big a hole in the ground would be left? Perhaps something less than a crater but certainly more than a gopher hole, now that it has agreed to sell its Asian life insurance arm to Prudential of the UK for $35.5 billion. AIG CEO Robert Benmosche, who has been focused on getting as much as he can for the assets that once made up the AIG colossus, must have figured the deal was more lucrative than the Hong Kong IPO that had been in the works.
AIG is busy repaying a $182.3 billion government bailout it received at the height of the financial crisis. First to be paid back are a $16 billion special purpose vehicle and $25 billion taken out of a credit facility taxpayers set up for AIG. The Prudential deal won’t cover those debts, but next up is the pending sale of American Life Insurance Co, or Alico, to MetLife in a $15 billion deal held up by a tax question.
Over the last few months, as Pepsi worked out its deal to buy its main bottlers, Coca-Cola said it wasn’t interested in such a deal. Well you can’t keep a good idea down and today Coke, which once liked to be known as “the real thing,” unveiled plans to buy the bottler’s North American business.
The deal includes about $3.2 billion in Coke’s equity in CCE and the assumption of nearly $9 billion in debt. PepsiCo is due to close the $7.8 billion purchase of its largest bottlers, Pepsi Bottling Group and PepsiAmericas, perhaps within the next 24 hours. Coke expects the transactions to add to earnings by 2012. It also expects cost savings of $350 million over four years, with 70 percent of the savings realized by the end of 2012. It expects to take a related one-time charge of $425 million over three years, but will not need to use any additional borrowings.
China’s Tengzhong is having a hard time selling the People’s government on its big, bold plans to buy Hummer. That in and of itself should be enough to kill the deal. But there is some talk that the little-known construction machinery company, with no experience in the auto industry, is hungry enough for Hummer to use an offshore vehicle to buy the GM brand if it fails to win Chinese regulatory approval.
“Tengzhong has not given up hope yet to win government approval, but buying Hummer through an offshore investment vehicle could be an option if it can’t get the green light,” a source close to the deal, who asked for anonymity due to the sensitivity of the issue, told our reporters Fang Yan and Jacqueline Wong report from Shanghai.
You’d think a company in bankruptcy has few weapons with which to defend itself against a predatory buyer. But in the case of bankrupt mall operator General Growth, the tone that would-be salvager Simon Property has taken makes it sound as if the court-protected business has some leverage. That’s because it does.
Late on Wednesday, Simon threatened to walk away from its $10 billion bid if General Growth did not begin talks soon. Chief Executive David Simon accused General Growth of “inappropriately speculating with creditors’ money”. Simon wasted no time getting nasty. It only made its offer to General Growth public the day before.
BM&FBovespa, the world’s third-largest exchange operator by market value, aims to raise its stake in CME Group to 5 percent, making it among the top three shareholders in the fast-moving market maker. Given Brazil’s huge presence in global commodities markets, it’s not hard to see why the country’s main exchange would want to increase its exposure to the top U.S. commodities trading entity. BM&FBovespa said it will invest $175 million over 10 years in a new trading platform with CME. But shares in CME, the world’s largest exchange operator by market cap, fell in early trading, although they later recovered to rise moderately. Hardly the reaction one would expect on news that a hungry, strategic buyer is more than doubling its stake.
It is possible regulatory concerns weighed on the stock. Cross border mergers that include potential technology transfer are natural fodder for antitrust boffins. But Bovespa is likely in for the long haul, as it has more to gain from taking a position in CME than the other biggest shareholders, Blackrock and Fidelity.
Ohio-based power company FirstEnergy aims to take over Pennsylvania’s Allegheny Energy in an all-stock deal worth $4.7 billion, but getting this deal done is going to be much harder than just flipping a switch.
With no less than 10 regulated utilities across seven states, a merger landscape littered with dead utility deals and a not-too-distant history of power problems, FirstEnergy’s target completion horizon of about a year may be a bit optimistic.