Getting online in Europe

With tens of billions in the bank collecting dust since its failed bid for Yahoo, and the elusive promise of the Internet still beckoning, Microsoft returned to the market for Internet search businesses with a $486 million purchase of Greenfield Online, the U.S.-listed owner of European price comparison website ciao.com. The buy is meant to help lift Microsoft out of fifth place in the European search market by giving a boost to its Live Search platform. Google’s monster lead in the search market is a whopping 62 percent and 79 percent in Europe, according to the most recent data published by Web usage tracker ComScore. Microsoft has a 2 percent market share in Europe and 9 percent worldwide, behind both Google and Yahoo. In Europe, Microsoft is also outranked by online auction site eBay and Russia’s Yandex.

Four large hedge funds, all Huntsman shareholders, have proposed a plan to finance at least $500 million of the $6.5 billion buyout of the chemical company by a unit of Apollo Global Management. Hedge funds Citadel Investment Group, D.E. Shaw & Co, MatlinPatterson Global Advisers and Pentwater Growth Fund, and as of this morning, the Huntsman family, have agreed to team up on the financing plan, but Apollo’s Hexion Specialty Chemicals unit rejected the plan last night, saying Huntsman’s increased debt and decreased earnings since the deal was struck in July 2007 would no longer make a combined company solvent. “We are not seeking to renegotiate this transaction,” Hexion responded in a statement. “We are seeking to terminate it, and obtain judicial confirmation that Hexion has no obligation to pursue the acquisition or to pay Huntsman a termination fee.”

Allianz is set to sell Dresdner Bank to Commerzbank, sources with direct knowledge of the matter say, in a deal that will fuse Germany’s second- and third-biggest lenders. The deal, to be announced as soon as this weekend, will see Commerzbank take a 51 percent stake in Dresdner and buy the rest later, the sources said. Taking over Dresdner, which analysts estimate to be worth about 9 billion euros ($13 billion), will create a group to rival flagship lender Deutsche Bank and change the face of banking in Germany, Europe’s biggest economy. It will give Commerzbank a badly needed leg up in its home market, which is dominated by state not-for-profit lenders and allow Allianz to end an unhappy marriage that unsuccessfully tried to match investment bankers with insurance salesmen. The deal is likely to result in heavy job cuts, which would have been avoided had Allianz chosen to sell to another would-be buyer, China Development Bank.

Bain Capital and Carlyle Group are among the private equity firms through to the next round of bidding for a stake in the telecom unit being spun out of Hong Kong’s PCCW, according to sources. A deal, expected to come late this year, could fetch $2.5 billion. Two sources involved in the deal said Goldman Sachs’s private equity arm was considering joining TPG Capital in its own offer for the unit, though they could not confirm that the two had officially linked up. Sources also said Apax Partners moved into the next round of bids, due in mid to late October. PCCW, Hong Kong’s former monopoly fixed-line carrier, said in May it planned to fold its core media and telecoms businesses into a separate firm called HKT and sell 45 percent of the new company. At the time, PCCW shares had dropped 90 percent since 2000.

World’s most 100 most powerful women include finance queens

Forbes Magazine has released its list of the 100 most powerful women in the world today. Making the ranks?

Queens.

Presidents.

And a number of women in finance. Women at banks. Women at the core of dealmaking.

Private equity pros if Romney picked?

Mitt Romney left private equity firm Bain Capital nearly a decade ago. But if the former Massachusetts Gov. is chosen as McCain’s running mate it could push the industry back into the public spotlight anyway. Romney left the firm in 1999 to take over the Salt Lake City Winter Olympics, but he built his reputation — and his fortune — during his 15 years at the buyout firm.

Michael Holland, chairman of private investment firm Holland & Co and a former partner at rival buyout firm Blackstone thinks it would only be good news if Romney is picked.

“The facts are pretty straightforward — he was successful there (at Bain). The businesses they invested in were successful. Taken on the face of it, if you don’t have any political ax to grind in this, it is probably something that should be at least somewhat favorable for the (private equity) industry.

But private equity shouldn’t expect any political favors, Holland says.

Bove: Lehman saga ending soon

Richard Bove is really hammering home a point about Lehman Brothers: The investment bank has big problems that it better deal with it soon.

The Ladenburg Thalmann analyst put out a new research note — the second such note in a week –saying Lehman’s management will have to address its issues rather than just “toughing it out,” or it could face a hostile takeover bid.

What does the investment bank need to do? Says Bove: Lehman must more aggressively write down some of its real estate portfolio and hedge fund investments, raise new capital and rebuild relationships with key employees hurt by the stock’s nosedive.

“I repeat, that if Lehman does not take these actions it is likely that an outsider will do this for the firm through a hostile takeover,” Bove said.

The first stage: denial

After the pummeling U.S. banks have been taking from the credit crunch, you’d think British bankers would try to learn from the mistakes of their U.S. counterparts. Not so, writes the New York Times’ DealBook. A majority claim they have made no changes to their strategy, according to a survey to come out next week. That might be par for the course as British banks face turmoil: denial is the first of the Kuebler-Ross stages of coping with grief.

Print media companies are trying find buyers this summer, but PE Hub asks who would invest in companies with declining business model, pointing to the Newark Star-Ledger’s goal to sell itself. One area in traditional media that is looking up is radio.

Asia is becoming a growing hub for currency trading, with French bank Crédit Agricole moving its head of forex strategy to Hong Kong from London, according to the Wall Street Journal’s DealJournal. Other deals of the day:

** GlaxoSmithKline Plc has signed a deal potentially worth up to $820 million with Valeant Pharmaceuticals International to access the U.S. company’s experimental epilepsy and pain treatments. The alliance gives Europe’s biggest drugmaker worldwide rights to a new epilepsy drug, retigabine, that could reach the market in 2010.

Under new management

Fannie Mae’s executive shake-up seemed to help build a floor under the tumbling mortgage finance company, with debate still raging about whether the Treasury will take it over. Bloomberg’s report yesterday that Pimco, the manager of the world’s biggest bond fund, was building funds to buy as much as $5 billion in mortgage-backed debt is also a sign of budding investor interest. Often a change of the old guard at a listed company points to a potential merger or buyout, particularly if the incoming chiefs have merger experience. That doesn’t appear to be the case for Fannie – the new CFO is the old Controller. But if the feared nationalization does not materialize and more buyers for mortgage-related debt stick there toes in, could Fannie Mae or Freddie Mac – cheap as they are – become (gulp) – takeover candidates, barring any conflicts with their charters? You have to suspend disbelief and squint your eyes hard, but it’s not like there is nobody out there without any resource to buy a $6 billion company with an implicit (if somewhat tarnished) pledge of government support. Given their rough ride of late, $6 billion of investment into Fannie might seem to a risk-averse white knight, such as Warren Buffett, a slightly less secure investment than $6 billion in quarters in Las Vegas.

The shaky economy and sluggish jobs market have driven a big jump in applications to business schools, BusinessWeek reports. The magazine said in its online edition that the Graduate Management Admission Council said 77 percent of business schools surveyed reported an increase in application volume in 2008, up from 64% in 2007. They say it’s the second-largest surge in applications to full-time programs since 2002, and the highest level of increase in five years

Deals of the day:

* British engineer Bodycote has agreed to sell its testing business to U.S. private equity firm Clayton, Dubilier and Rice for 417 million pounds and will return 260 million pounds to shareholders.

Pocketbook anxiety prompts enthusiasm for Obama, says Bill Daley

“The American people are frightened,” former Commerce Secretary Bill Daley said on Wednesday, as he discussed the American economy with Corbett B. Daly, Washington bureau chief for Thomson Reuters Markets.

People are concerned about income inequality and the widening wage gap, he added, and “that is driving a lot of the anxiety, and also driving in a strange way the enthusiasm for change.”

View the full video interview from the sidelines of the Democratic National Convention in Denver.

http://mediacdn.reuters.com/blogs/2008-0 8-28/04.50.02-7f048e0cb2623a962980b77f53 fee302.flv

from Global Investing:

Adecco’s dilemma: To bid or not to bid

Adecco, the world's largest staffing firm, now has six weeks to either make a formal offer for British rival Michael Page or walk away and leave the company in peace for at least six months.

White-collar staffing firm Michael Page has so far rejected  informal offers from Adecco, which would value the group at 1.3 billion pounds, and management has stressed its desire to remain independent.

But now may be the optimal time for Adecco to snap up Michael Page as shares have lost 26 percent of their value over the past 12 months on concerns about companies cutting back on hiring as a result of slowing economic growth.   

Will Adecco, which has a warchest of 1.4 billion euros ($2.06 billion), brush aside the frosty reception and make a formal offer for Michael Page? Or will it walk away?

In for a penny…

Singapore’s Temasek made clear how bullish it is on Merrill Lynch in a Bloomberg TV interview, expressing great confidence in CEO John Thain. The news service reported that the Singapore wealth fund has U.S. clearance to raise its stake in the brokerage to as much as 14 percent. That would be worth roughly $1.7 billion on the open market. Though less if they issued new shares, it would certainly help Merrill deal with the $5.7 billion in write-downs it said it would take in the third quarter, and would probably be worth even more as a sign of steady capital support from its biggest share holder.

Such lifelines are likely to keep pumping funds into struggling Western banks, according to a regional executive at one of the world’s biggest institutional money managers. Hon Cheung, regional director of the Official Institutions Group in Asia at State Street Global Advisors said he expects the funds increasingly to adopt passive investment approaches, given the need to move large amounts of money without disrupting markets. “Their purpose is not to support the U.S. taxpayer or the U.S. economy or to ensure stable global markets. If by doing that, they get a side benefit that’s great. But their principal job is to benefit the stakeholders,” said Cheung. And as these sovereign wealth funds aren’t even really beholden to share holders, they may have stomach for even more stunning losses.

Lehman Brothers has asked three private equity firms to remain in the bidding for its asset management arm even though the investment bank has yet decide on whether to sell the unit, the Financial Times reported. Kohlberg Kravis Roberts, Hellman & Friedman and Bain Capital have been told by Lehman that their bids are high enough to go forward, the paper said, citing people familiar with the matter. Although Lehman has not reached a decision, it has been soliciting bids from private equity firms to gauge interest in its asset management arm, which includes Neuberger Berman, the fund manager, and minority stakes in several hedge funds.

Other deals of the day:

Corzine: Ditch hybrid structure for Fannie, Freddie

The federal government should ditch the hybrid structure of mortgage giants Fannie Mae and Freddie Mac and fully back them with taxpayer funds, said New Jersey governor Jon Corzine, former CEO of Goldman Sachs.

“I don’t think we can continue with the schizophrenic view that we have today, sort of part public company, part private company, where the leaders of the company do well when things are going well but then the government and the public and the taxpayer has to bail them out when it goes bad,” he said.

This report is by Corbett B. Daly, Washington bureau chief for Thomson Reuters Markets.

http://mediacdn.reuters.com/blogs/2008-0 8-27/03.15.01-d0de0d61725af06053aed87bab d5cdf9.flv