Deals wrap: Japan crisis may delay some IPOs

March 16, 2011

  The Glencore logo is seen on a sign in front of Swiss commodities trader Glencore building in Baar near Zurich January 5, 2010.

Extreme market volatility tends to make investors a jittery bunch. The deadly earthquakes and nuclear crisis in Japan will obviously have an immediate impact there, but the fallout from the catastrophe is expected to spread across the globe where it could delay or even cancel a slew of new share offerings and debt deals.

According to IFR, a Thomson Reuters publication, one major deal in the pipeline that’s at risk of cancellation is the planned $6-$8 billion London-Hong Kong IPO of Swiss commodity trading group, Glencore, a deal expected in May.

Institutional investors will be demanding a higher return on their investments, forcing stock and bond deals to expect lower valuations, or face being pulled all together. Glencore’s IPO may be the victim of bad timing.

Yesterday we told you about Nasdaq OMX Group’s desire to make a counterbid for NYSE Euronext.  But there are significant hurdles that it must overcome if it wants to trump the $9 billion offer Deutsche Boerse made for the Big Board.

Nasdaq must find $5 billion in debt financing, account for a relatively steep $347.5 million termination fee on the NYSE-D.Boerse deal and team up with the IntercontinentalExchange, which would look to buy NYSE Euronext’s lucrative interest-rate futures business. All of this means, the deal is far from a certainty.

Finally, Peter Mycroft Psaras of Seeking Alpha takes an in-depth look at Warren Buffett’s purchase of Lubrizol. Psaras uses his own formula, which is based on Buffett’s Owner Earnings, to see if the Berkshire Hathaway CEO overpaid for the company.

Psaras finds that while Buffett didn’t overpay, he may have been better served to make his move on Lubrizol a little earlier.

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