Neuberger action moves to court
The sale of the Neuberger asset management arm of Lehman might have been agreed back in September, but it’s not quite a done deal.
The whole process has been rather messy — Lehman put a majority percentage of the prized asset management arm up for sale in August, prior to filing for bankruptcy.
The unit, one of Lehman’s best performing assets, drew interest from a number of private equity bidders such as Kohlberg Kravis Roberts, Hellman & Friedman, Blackstone, Bain Capital and Clayton Dubilier & Rice, sources previously said.
Some estimates valued the unit between $8 billion and $10 billion.
After its September bankruptcy filing, the whole of the asset was marketed. Bidders were whittled down to the winning team of Bain Capital LLC and Hellman & Friedman LLC who clinched the deal for $2.15 billion.
Typically, that would have been the end of it — but because the sale was being done after Lehman filed for bankruptcy, an auction is to take place and could draw counter bids. The 45-day clock for the auction started ticking in October and stops at noon on Monday.
The most likely potential bid could come from Carlyle Group, which together with former Neuberger Berman Chief Executive Jeffrey Lane, in October filed an objection to the sale of Neuberger and said in court it would itself be interested bidding, but believed that Bain and H&F had an unfair advantage.
Another case of worried suitors
LandAmerica’s experience is the latest example of how dismal the M&A market has become in financial services as potential suitors worry about buying someone else’s troubles.
The title insurer, weakened by the U.S. housing slump, started its search for a buyer some two months ago.
But despite hiring JPMorgan and Wachtell Lipton, setting up a data room and approaching a range of potential suitors – a large shareholder, rivals and private equity firms – it could not survive.
The unidentified shareholder, whom the company initially approached for a capital injection or acquisition, was uncomfortable with its potential liquidity needs.
Fidelity National ultimately emerged as the only suitor able to complete a deal quickly and a merger agreement was announced on Nov. 7. But within two weeks Fidelity wanted to back out as well.
Fidelity reached a new deal to buy the insurer’s largest underwriting businesses, while LandAmerica filed for Chapter 11 bankruptcy protection.
Fidelity agreed to pay a combined $298 million for the units. It had agreed to buy all of the company for about $126 million in stock earlier this month.
The Day After for Rio Tinto
A day after mining giant BHP Billiton dropped its bid for rival Rio Tinto, Rio said it was confident it could sell assets worth billions of dollars. Analysts aren’t convinced.
As the credit crisis dries up available funds, some companies are backing away from buying anything.
“The environment over the next six to 12 months is not going to be a good environment for selling assets,” said FW Holst analyst Rob Craigie.
Despite the skeptics, Rio Chairman Paul Skinner, speaking at a scheduled business breakfast, said it would make asset sales in the next few months.
“We now move on. We have a very strong company,” Skinner told reporters. “We are confident with our financial position. We have other ways of managing our debt.”
Assets on the block include a major packaging business, aluminum products, its U.S. coal business, an Australian copper mine and its U.S. Sweetwater uranium mine.
(Note from Editor: Given the Thanksgiving Day holiday this week, today’s posting will be the last for this week. Expect us back as usual on Monday.)
Cuomo plays coy on Hillary succession
New York Attorney General Andrew Cuomo on Tuesday ended a call with reporters about curbs on executive salary and bonus payments at insurer American International Group and other Wall Street firms with a parting shot at a tabloid reporter who asked if he planned to take up similar issues as a U.S. Senator.
“No maybe as a Daily News journalist…,” Cuomo quipped.
Joking aside, in a Nov. 18 poll of New Yorker opinion, Cuomo was favored as a replacement for U.S. Sen. Hillary Clinton, who is expected to become Secretary of State once president-elect Barack Obama takes office. Voters preferred Cuomo 43 percent, more than any other candidate.
The New York survey of 613 voters had a 4 percent margin rate, and was conducted by Poughkeepsie-based Marist College Institute for Public Opinion.
Cuomo is needed where he is. He is the only one who seems to understand the abuses. Where is the SEC
\can they not fine big time some of these executives.
seems SEC and Cox are asleep at the wheel
BHP backs down
BHP announced an all-share offer valuing Rio at about $193 billion last November, as mining boomed worldwide. BHP said the risk of taking on Rio’s much heavier debts, and the low prices it could expect from asset sales forced on it by regulators, were among the factors behind the decision to abandon the bid.
The decision could have far-reaching consequences for consolidation in the industry, writes Reuters’ John Kemp.
“For more than two decades, merger policy in the EU and around the world has become progressively more permissive, as regulators cited new theories of market “contestability” to permit accumulation of market shares that would have been blocked had they been proposed in the 1960s and 1970s.
But the BHP-Rio deal proved a step too far. The EU’s decision to insist on significant asset disposals is consistent with other signs that competition policy is toughening in the EU and around the globe,” Kemp says.
BHP’s backtracking also clearly illustrates how times have changed in a very short span as the credit crisis took hold and crippled global financial markets.
“The market has changed dramatically in the last six months. What made sense six months ago doesn’t make sense now. People talked about synergies in iron ore. Those synergies are still there, but nobody is prepared to pay for them,” said Michael Komesaroff, manageing director at Urandaline Investments.
BCE’s stock benefits from Citi saga
One beneficiary of Citi’s massive bailout was BCE Inc, the massive telecoms company that is being bought in one of the last remaining leveraged buyouts to close. Citigroup, alongside TD Securities, a unit of TD Bank Deutsche Bank and Royal Bank of Scotland, is financing the deal and the market has been nervous about the buyout cratering for months — evidenced by significant arbitrage spread.
One of the biggest worries for traders is the C$34.8 billion deal closing amid the turbulence in the financing markets.
But they gave the firmer footing for Citi a thumbs up and shares in BCE shot up 3.4 percent after the U.S. government agreed a bailout package for the bank.
(Reporting by Megan Davies)
Nice Move after all that has been going in the market….
Big CEOs make Big money on deals like this and normal people lose their jobs and live miserably ever after.
Guns n’ Roses rocks Best Buy, gently
After scoring one of the biggest exclusive deals in music retailing in a long while– or at least since Wal Mart snagged the exclusive for the new AC/DC opus “Black Ice” earlier this year– Best Buy began selling the long awaited new recording by Guns n’ Roses, “Chinese Democracy,” on Sunday.
But stepping down the escalator at the chain’s Chelsea story in New York City on Sunday, when a more than 17 year wait for original Guns n Roses material ended, it would have been easy to walk by the modest display box with the Chinese Democracy CDs and vinyl LP’s. There were few other signs of CDs being available, and the store was not blasting it on the P.A. system as a record store would have back in the old days.
It was a far cry from the scenes in 1991, when fans waited in long lines outside record stores in cities around the world for the band’s “Use Your Illusion” two-CD set.
But then again, 1991 was a long time before iTunes, Apple’s online music store, made its debut. While Best Buy has the exclusive on “Chinese Democracy” in actual stores, the 14-song set is available on iTunes too, unlike the AC/DC record which can only be bought at Wal-Mart stores (and to accommodate Wal-Mart free New York City, at MTV’s store in Times Square.)
And for all the quiet at the Chelsea store on Sunday afternoon, the new Guns n Roses is a clear early hit, with iTunes on Monday morning ranking it the #1 album in the U.S.
Either way, we’ll know how well the CD did both online and at Best Buy next week, when Billboard reports its debut on the record charts.
(Photo/Reuters)
It is nice to see GNR back. It was too long time since “Use Your Illusion”. This album is not that good, but still shows that Axel is back on the track.
Citigroup bailout another subsidy for the Mets?
Mets fans can rest easy. Citigroup and the New York Mets have confirmed that their record 20-year, $400 million naming rights deal for the team’s new ball park, set to open for the 2009 baseball season, is still on. Not that Citi could wiggle out of the deal anyway.
On Sunday, the struggling bank won a $326 billion bailout from the federal government. But the Mets deal was signed in 2006, when times were flush for Citi, or at least when the extent of its troubles was harder to see.
To be sure, handing over $20 million a year to the National League baseball team is a drop in the bucket compared to the magnitude of the bailout, but even the bank seems to be having second thoughts about the deal’s value.
Millions of fans and television spectators will be regularly reminded of how much Citi spent to name the baseball field, before ultimately turning to the government to be rescued. Probably not be the branding Citi intended for when it signed the deal.
Here is what CFO Gary Crittendon had to say about it Monday on CNBC:
“That was a decision made in a different time. We have binding legal agreements… I don’t think it’s an issue.”
So let’s follow the money here: The government gives funds to Citigroup, who is now better able to make an annual payment to the Mets. Sounds a bit like a new taxpayer subsidy for the Mets, who are already receiving government subsidies for building their stadium.
Citibank has a contract and it has to meet those obligations, though that’s a good point that the logo will now likely remind everyone of the bailout, so as publicity goes, it’s probably not worth the money.
Matt Cerrone at metsblog.com wants Apple to purchase the naming rights so the new stadium could be called The Apple. See his idea here: http://www.metsblog.com/2008/11/21/news- citi-field-deal-is-fine-per-mets/
If the Mets, Apple, and Citibank get together they can work out a deal that could benefit all of them. Mets would get good publicity for letting Citibank off the hook, and therein not taking any more taxpayer money. Citibank would not pay for 20 years of bad publicity, but instead could subsidize Apple’s naming rights for a million a year. And Apple would get good publicity for stepping in, and get a discount on the naming rights. Now THAT is a plan.
Shareholders live to see Citi rescue
The Citigroup rescue seems to be the latest sign that the government is now wary of scaring away shareholders from financial services companies as it rescues them.
In its massive bailout of the financial giant unveiled Sunday, the government took warrants that would dilute shareholders by only about 4.5 percent. Compare that with the bailouts for Fannie Mae and Freddie Mac as well as AIG, where the government took nearly 80 percent.
The government also only took preferred shares, as opposed to senior preferred shares in the case of Fannie and Freddie and the revised rescue of AIG earlier this month, again sending a comforting signal to existing shareholders in these institutions at a time when the financial services sector is a pariah for many investors.
What changed the government’s heart? Maybe the realization of how bad the crisis has become. And clearly Citi shareholders and the stock market are cheering out loud today.
(Photo credit: Shannon Stapleton, Reuters)
from MediaFile:
Facebook-Twitter: the deal that could have been
Microsoft/Yahoo, Samsung/SanDisk, Electronic Arts/Take-Two....Facebook/Twitter?
According to Kara Swisher of All Things Digital, Facebook had talked for several weeks about buying micro-blogging site Twitter for $500 million in stock, and then gave up on the idea about three weeks ago.
The sticking point apparently was price -- whether the deal valued Facebook shares too highly. "But, more important, it seems, was a feeling among Twitter investors and execs that the start-up should still take a shot at building its revenues-there are none right now-as well as it had done at building its growth," Swisher writes.
But she notes that Twitter needs all the investors it can get, and while the lack of revenue was an issue for Facebook, it may revisit the deal at another time. "We'd hate to see Twitter go to another company," like Google, Yahoo, Microsoft or Verizon, she said, citing an unnamed source.
Keep an eye on:
- CNN"s famous foreign correspondent Christiane Amanpour to anchor her own news show next year (New York Times)
- Six Apart offers journalist bailout plan in the form of a free blogging account for up to 30 laid-off journalists. But almost 300 have applied (New York Times)
- US TV viewing on home TVs, the Internet, and mobile phones grew in Q3 with average viewing of 142 hours/month at home, 2 and a half hours on the Web and 3 hours on mobile phones (Nielsen)
