DealZone

Cap in hand at Lehman

June 9, 2008

lehman3.jpgLehman Brothersplan to raise $6 billion in new capital wasn’t a shock, but the investment banks’ expected results for the second quarter were still a nasty surprise: A $2.87 billion loss, or $5.14 per share, compared with a Reuters Estimate forecast of a 38 cent-per-share loss. And you know there’s really trouble when net revenue is in the red — the company expects it to be negative $668 million, compared with positive $5.51 billion a year earlier, due to asset writedowns and trading losses.

Moody’s followed by moving its rating outlook on Lehman to “negative” from stable” and the bank’s shares were down 10 percent in pre-open trading. If nothing else, we can probably rule out a huge surge in pronouncements that the credit crisis is over.

Willis Group Holdings, the world’s third largest insurance brokerage, is buying smaller rival Hilb Rogal & Hobbs for $1.7 billion, looking to boost business as insurance rates soften, and expand its presence in the United States. Willis will also take on $400 million of HRH debt in a cash-and stock deal valued at $46 a share — nearly a 50 percent premium to HRH’s closing price on Friday. The acquisition is the largest transaction for this industry since Marsh & McLennan’s 1998 acquisition of Sedgwick Group, and if rates soften further, more consolidation could follow.

Other deals of the day:

** ArcelorMittal, the world’s largest steelmaker, said that it would acquire Bakermet, a Canadian scrap metal recycling firm.

** British education and training provider Nord Anglia Education said it had rejected a 450 pence-a-share bid approach from Baring Private Equity Asia, saying it did not reflect its growth prospects.

** Norwegian Eitzen Maritime Services has agreed to buy Dubai-based Seven Seas Shipchandlers for $115 million on a debt-free basis to boost its position in the ship supplies business, Eitzen said.

** Indonesia’s anti-trust agency, KPPU, said it may take legal action against Singapore’s ST Telemedia, over its plan to sell its stake in Indosat to its partner, Qatar Telecom.

** Private equity real estate firm Benson Elliot Capital Management has bought a 70 percent stake in Spanish developer Promobuilding SL in a bid to cash in on distressed housebuilding projects in Spain’s faltering economy.

** Russian gas export monopoly Gazprom has called off its long-anticipated joint venture to pool power and coal assets with energy major SUEK, the companies said in a joint statement.

** Indian drugmaker Cadila Healthcare Ltd said it has acquired 70 percent of South Africa’s Simayla Pharmaceuticals, marking the Indian firm’s second buy in less than a fortnight.

** Construction firm Sadbhav Engineering Ltd said a unit has acquired a 74 percent stake in Hong Kong-based Ocean Bright Corp Ltd, for an undisclosed sum.

** Great Offshore Ltd said it now planned to buy only one of the two rigs it was eyeing through an overseas acquisition of the firm that had ordered them.

** Iliad, the parent of French internet service provider (ISP) Free, said it was in exclusive talks to buy Telecom Italia’s Alice France ISP unit.

** Irish food group IAWS and Swiss baker Hiestand said they would merge to create ARYZTA AG, listed in Switzerland and Ireland and led by the chief executive of IAWS, which will own 83.3 percent of ARYZTA.

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