This one’s a gusher

September 8, 2008

U.S. Secretary of the Treasury Henry Paulson speaks at news conference in WashingtonOnce again the government has had to open up its check book to sort out a private sector problem, citing systemic risks to the global financial system. The GSEs may have been more obvious candidates than Bear Stearns, given their assets had carried an implied seal of sovereign support – support that it is now clear had never been meant for shareholders.

After weeks of burble about government takeovers and bailouts, management shuffles and a thrashing of their stocks, things seemed to have gone quiet on the Fannie / Freddie front. How much worse had things gotten by last week? What was Hank Paulson seeing from the windows at Treasury that forced him to take such dramatic action?

Markets are very excited - banking stocks around the world shot up overnight on, if not the bottomless wallets of the American people, then the end of some uncertainty. Early this morning, Paulson was at pains to emphasize that conservatorship would protect tax payers, not shareholders. Fannie and Freddie stocks are halted this morning after falling close to wipe out levels, so the latter part is clearly sinking in. Getting taxpayers to believe that the move protects them may be a harder sell. Warren Buffett told CNBC this morning taxpayers would suffer.

Other deals of the day:

* Origin Energy , fending off an $11 billion hostile bid from Britain’s BG Group, has partnered U.S. major ConocoPhillips to help develop its coal seam gas through a liquefied natural gas (LNG) project.

* Cigarette maker Altria Group has agreed to buy Skoal and Copenhagen smokeless tobacco maker UST Inc for about $10.3 billion in cash.

* Australia’s St George Bank has recommended a sweetened A$17.9 billion ($14.8 billion) takeover offer from Westpac Banking in what would be Australia’s biggest banking takeover.

* South Korea may give the go-ahead to HSBC‘s $6.3 billion offer to buy control of Korea Exchange Bank (KEB) in the near future if it finds no faults with documents submitted by the companies involved, a regulator said.

* U.S. hedge fund Fairfield Greenwich Group has merged with Swiss private bank Banque Benedict Hentsch, bringing their combined assets under management to more than $18 billion.

* French company Manitou said it had agreed to take over U.S. construction equipment maker Gehl in a $331 million deal to raise Manitou’s presence in American market.

* Shareholders in New Zealand meat producer Silver Fern Farms voted to allow rural supplies firm PGG Wrightson to pay NZ$220 million ($150 million) for a 50 percent stake.

* Italy’s Eni SpA has agreed to buy Canada’s First Calgary Petroleums in a cash deal worth C$923 million ($865 million), the latest in a series of acquisitions aimed at boosting its oil reserves worldwide.

* Anzon Australia, a junior oil and gas producer, recommended its shareholders accept larger rival Roc Oil proposed takeover offer.

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