DealZone

Busy signals

June 5, 2008

vodafone1.jpgYou can’t tell the telecom mergers without a scorecard: France Telecom proposed a $41 billion bid for TeliaSonera to create the world’s third-largest broadband operator and fourth-biggest mobile company, but the Nordic company rejected the offer. Britain’s Vodafone said its U.S.-based Verizon Wireless venture with Verizon is in advanced talks to buy U.S. rural mobile service provider Alltel, potentially making it the top U.S. wireless carrier ahead of AT&T. Deutsche Telekom clinched a deal last month with the Greek government that gives it a 25 percent stake in operator OTE, and India’s Reliance Communications and South Africa’s MTN are also close to a tie-up. What is the deal? “In the current context of consolidation, it appears unavoidable to have critical mass,” said France Telecom Chief Executive Didier Lombard.

Verizon’s move in particular was a surprise as it came only seven months after Alltel was loaded up with debt in a private-equity takeover by TPG Capital and Goldman Sachs’ GS Capital Partners. The deal would value Alltel at eight times its earnings before interest, tax, depreciation and amortization, compared with its November sale to private equity firms for about nine times EBITDA, the source said. While TPG and Goldman don’t appear to have made much money, it doesn’t seem they’ve lost much either. It’s hard to imagine they planned to flip it after 6 months, but perhaps for private equity these days, getting out free is good enough.

BHP Billiton, the world’s top miner, said it sees no need to sell assets to win regulatory approval for its $170 billion proposed takeover of rival Rio Tinto, but did not rule out that it might have to. Chief Executive Marius Kloppers also said his company had not held talks with any Chinese entity about buying a stake in BHP. If it had, he added, it would have had to disclose the discussions to the market. BHP will send its takeover offer to Rio shareholders only after it has been cleared by anti-trust regulators in Europe, Australia, the United States, Canada and South Africa, expected later this year. It filed its application to the European Commission, which it considers one of the three key regulators on the bid, on May 30. The EC will say by July 4 whether it will approve the deal, open an in-depth investigation, or permit a short extension.

Other deals of the day:

* Chinese metals trader Sinosteel said it has increased its voting stake in Midwest to 33.82 percent, from 28.37 percent the previous day, as it seeks to take over the Australian iron ore prospector. It has also taken legal steps to stop its rivals buying any more shares in the Australian iron ore prospector.

* Dutch navigation device maker TomTom declared its 2.9 billion euro ($4.5 billion) offer for digital map supplier Tele Atlas unconditional and announced a management reshuffle.

* Pension Corporation, the specialist pension fund manager, has agreed a 451 million pound ($879 million) buyout that will secure the benefits of the pension plan of steel products group Delta, it said.

* French drugmaker Ipsen is to buy the rest of its U.S. partner Tercica for about $404 million and has struck two other deals in a bid to build a $1 billion-a-year U.S. business by 2020.

* Mahindra & Mahindra, India’s top utility vehicle maker, said it had signed an agreement to acquire Italy’s Engines Engineering for an undisclosed sum.

* Indian software firm Tanla Solutions said its Singapore unit will acquire Finland-based mobile payment services firm Openbit in an all-cash deal, valued at $18.6 million.

* Latin American silver and gold miner Hochschild Mining bought 100 percent of the San Felipe project in Mexico for $51.5 million in cash, the firm said.

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