DealZone

Waiver waivered

May 30, 2008

kerkorian.jpgFord got a boost from billionaire investor Kerk Kerkorian’s Tracinda, which waived a condition requiring it to bail on its tender offer for Ford shares at $8.50 if the stock fell by 10 percent or more from the close of trade on May 8th, when the stock was at $8.20 per share. It closed at $6.71 on Thursday, but was up about 2 and a half percent before the market opened Friday. Tracinda said it “continues to believe in Ford’s management and turnaround efforts and remains committed to its offer,” which expires at on June 9. Tracinda already has 100 million shares of Ford, and if it shied away from the tender offer, the value of its existing investment would suffer. That’s not to say it doesn’t believe in management, but the ring of the endorsement is perhaps a little less pure.

BHP Billiton‘s $180 billion bid for Rio Tinto appears to be yet another firmly inconclusive step closer to reality. The world’s biggest miner, in hot pursuit of unwilling Rio since last fall, has formally filed with the European Commission for takeover clearance. The European Union’s executive arm and antitrust regulator has set a deadline for consideration of July 4. By then, it must approve, extend (briefly) or launch an investigation into the merger bid. Rio spurned BHP’s all-share offer shortly after BHP was required to put up or shut up by British regulators on Feb. 6. The filing was delayed for months during pre-filing talks with the European Commission. Analysts say the most contentious area is likely to be iron ore, since the combined firm would control around a third of seaborne trade in the raw material for making steel.

Casino and racetrack operator Penn National said it was unlikely to receive necessary regulatory approvals before an upcoming merger deadline for its acquisition by a group led by Fortress Investment. Fortress and Centerbridge Partners agreed in June 2007 to buy Penn National for $67 a share, or $6.1 billion. In March, the company said the per share amount will be increased by $0.0149 per day if the buyout is not completed by June 15. Penn said approvals for the merger remain pending before a number of state regulatory authorities. Gambling and racing activities are individually controlled by states, so the company needs the green light from each state it operates in.

Communications equipment maker Harris began fielding expressions of interest from potential buyers this week, with preliminary bids for the electronics and defense company in the low $70 per share range, or about $10 billion, the Wall Street Journal reported on Friday. That’s less than the $75 to $80 per share range the company’s board hopes to fetch, the newspaper said, citing people familiar with the matter. The identity of the bidders wasn’t known, but analysts have speculated that major defense companies such as General Dynamics Corp and Northrop Grumman might be interested, though they’ve said there has been little interest shown from potential buyers in the defense sector due to its current high valuation, narrow product focus and heavy commercial exposure. Athough Harris boasts solid earnings, U.S. defense spending is expected to peak soon, which could signal an end to the growth that has more than quadrupled Harris’ stock price over the past five years.

Australia’s Origin Energy has rejected an improved $13 billion bid from UK gas producer BG Group, saying its coal seam gas reserves alone are worth over $15 billion after doubling its resource estimate. Origin, Australia’s largest coal-seam gas producer, said it would now focus on how to get the best value from its reserves, possibly through partnerships to supply a liquefied natural gas plant or even through a break-up of the company, which also has power generation and retail businesses. “We’re now back in the game and we will be aggressively pursuing those alternatives as quickly as we can,” Chairman Kevin McCann told reporters. “BG is welcome to come back in any way they want,” McCann said. BG said it was surprised by Origin’s rejection and was considering its options.

A consortium including NBC Universal and Blackstone Group bidding for the Weather Channel is offering about $1.8 billion in equity for their bid, or roughly half the total offer, a source familiar with the matter said. The group, which also includes private equity firm Bain Capital, is seen as the leading bidder for the Weather Channel with a total offer of about $3.5 billion, the source said.

Private equity firms are pursuing a bid for Orica’s Chemnet, sources involved with the auction said, as the Australian explosives maker looks to sell the chemicals trader, which could be worth more than A$600 million ($574 million). Goldman Sachs is running the sale of the division, with CVC Capital Partners and Kohlberg Kravis Roberts among the firms with the strongest interest, the sources said. Chemnet, Australasia’s leading chemicals trading business, sells chemicals to a range of industries, including the food and drink, pharmaceuticals and construction sectors. Chemnet posted A$40.6 million EBITDA in the six months to end-March, but it was the least profitable of Orica’s five divisions during that period, making up 16 percent of its A$5 billion sales but only 7.7 percent of its A$528 million EBITDA.

Other deals of the day:

* Drug maker Cadila Healthcare unit, Zydus Cadila, said it acquired Spain’s Laboratorios Combix to gain entry into the Spanish market.

* Finnish builder YIT Oyj said it has agreed to buy building service operations from MCE AG in Germany, Austria, Poland, the Czech Republic, Hungary and Romania for 55 million euros ($85.8 million).

* Steel manufacturer Sujana Metal Products said it acquired three steel units and would invest 1.8 billion rupees for the acquisitions, modernization and capacity expansion, sending shares up.

* Hyundai Heavy Industries, the world’s top shipbuilder, said it and an affiliate would buy a small brokerage and an asset management firm from South Korean conglomerate CJ for an undisclosed sum.

* China Merchants Bank has agreed in principle to buy control of Hong Kong’s Wing Lung Bank in a deal that would value the lender at over $4.5 billion, a person familiar with the situation said.

* Australia’s Origin Energy rejected a revised $13 billion takeover bid from UK gas producer BG Group, and upped the ante by doubling its own gas reserves estimate.

* Major Chinese appliance maker Qingdao Haier said that it was in talks with Deutsche Bank to buy Deutsche’s 20.1 percent stake in a sister company, Haier Electronics Group Co.

* Beijing Gehua CATV Network, a Beijing-based cable television service provider, said it will form a China joint venture with Liberty Global, the world’s biggest international cable group.

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