(Recasts lead)

If a deal can’t get done with the backing of Canada’s pension fund and capitalism’s mightiest bank, then the leveraged buyout market would truly be dead.

So it is with limited fanfare that DealZone welcomes the buyout of IMS Health by Canada’s public pension plan and Goldman Sachs as a sign of the market’s return to health. Green shoots in the LBO patch are hardly growing all jack-and-the-beanstalk, but putting together $4 billion for the prescription drug sales data provider is not just ice on the moon either.

Excluding debt, the $22-a-share cash deal is the biggest leveraged buyout since Bristol-Myers Squibb sold its ConvaTec unit to Avista Capital and Nordic Capital just over a year ago for $4.1 billion, according to data from Thomson Reuters.

Financing markets and general optimism have improved from the nadir of the crisis, and debt, if you can find it, is hardly expensive, with core rates at zero. But $4 billion pales in comparison with strategic deals in the health space this year, such as Wyeth’s $68 billion union with Pfizer.

It is safe to say, though, that had the IMS deal foundered, it would have been a far worse signal for LBOs than its success means for the relative health of the business.

Highlights from Thomson Reuters data on mid-market (sub-$500 milion) deals. For October in European, the Middle East and Africa (EMEA):

· Average bid premium four weeks prior to announcement increased on average across sectors in EMEA year to date compared to same period in 2008 by 2% with bid premia rising slightly with half the sector showing an increase and half decreasing.

· Year on year Average Rank Value to EBITDA however decreased by 16% on average with only the Real Estate and Materials sectors increasing.

· JP Morgan top the European Mid-Market M&A rankings YTD, up from third position for same period 2008

· EMEA Mid-Market M&A from January to end of October down 49.6% compared to same period last year, to US$110.2bn from US$218.8bn.

· EMEA Mid-Market M&A activity for October at US$12.2bn, down 12% from September’s US$13.9bn, but down 34.9% compared to October 2008 which stood at US$18.7bn.

Sector coverage:

· EMEA High Technology US$865m for October down 60% from US$2.2bn in October 2008.

· EMEA Media & Entertainment US$165m for October down 86% from US$1.2bn in October 2008.

· EMEA Telecommunications US$219m for October down 79% from US$1.1bn in October 2008

Global Mid-Market deal activity for October at US$46.8bn from 2,864 deals, down 11% from US$52.7bn from 3,207 deals in September but only slightly down compared to same month previous year from US$48.5bn.

BERKSHIRE HATHAWAY’S BIGGEST DEAL
Berkshire Hathaway’s $35.9 billion bid for the remaining share capital of Burlington Northern Santa Fe, ranked as the fourth biggest M&A deal this year in the United States and the largest acquisition for Berkshire Hathaway on record.
Since 1980, Berkshire Hathaway and its subsidiaries have announced nearly 200 acquisitions, with 43% of those deals in the industrials sector, 34% in the financials sector and 12% in energy & power.   Just over 90% of the acquisitions announced by Berkshire Hathaway have been based in the United States.

IMS HEALTH IN LARGEST BUYOUT SINCE 2007
IMS Health agreed to be acquired by TPG and the investment board of the Canada Pension Plan for $5.2 billion, marking the largest leveraged buyout in the United States since the $27 billion buyout of Hilton Hotels in July 2007.
Eight investment banks provided financial advisory services to IMS and the private equity consortium, including Evercore Partners which currently ranks fourth for year-to-date M&A in the United States, up from 16th last year at this time.

JAPANESE M&A UP 41% OVER 2008
This week’s $11.3 billion merger of Nippon Oil Corp and Nippon Mining Holdings Inc brings the volume of Japanese target M&A to $90.1 billion for year-to-date 2009, a 41% increase over 2008 levels and one of the few regions to see year-over-year M&A growth.
Merger activity in the Japanese financial sector accounts for 38% of year-to-date activity, followed by high technology and real estate with 17.1% and 13.3% respectively.  Energy & power mergers account for 13.0% of announced volume this year, nearly three times last year’s total.

And IPO flows from Asia continue — South Korea’s No. 2 insurer Korea Life Insurance may raise around $2 billion in the country’s biggest IPO since Lotte Shopping’s $3.8 billion listing in 2006.

For more on deal-related stories from Reuters, click here.

And here’s some picks from the papers:

* Intel, the world’s biggest chip maker, is planning to participate in bids invited by Indian state-owned telecom equipment maker ITI Ltd. to set up joint ventures, the Business Standard reports.

* Dutch telecoms group KPN mulls to sell its business-customer unit and fibre network in Belgium, Belgian daily De Tijd reports.

* Citigroup plans to relaunch its hedge fund unit, changing the name to Citi Capital Advisors, the Financial Times reports.

Just last week, Ropes & Gray partner Christopher Conniff talked with the New York Times for an article about the Galleon insider trading case, discussing the statue of limitations for these cases.

Today, nine more people were arrested in the Galleon Group insider-trading scandal, including Arthur Cutillo, a former associate at the tony, Boston-based law firm.

Ropes & Gray said in a statement that it was deeply disappointed to learn of the insider trading allegations, and the firm was moving quickly to protect its clients.

Conniff will not likely be publicly discussing the Galleon case any more.

They concede that “picking actual as opposed to potential M&A targets is a notoriously difficult exercise” but have come up with 30 potential European targets, based on strategic and financial criteria. While bank lending remains a problem, they say that is not always an insurmountable hurdle, and should spur more stock-based deals (see graph below).

In a note dated Nov. 4, the DB team writes:

“Following two years of below-normal levels of merger and acquisition (M&A) activity in Europe, we believe the conditions are in place for deals to return to the fore as a major driver of returns: Public markets are well and truly open for financing, low organic growth should spur expansion by acquisition, rising equity markets and sub-peak valuations make stock an attractive acquisition currency, and confidence is returning to boardrooms and executive offices.”

Here are their 30 top targets:

Late on Monday, Cisco’s Ned Hooper used the company’s blog to insist it had offered “a very good price” for Tandberg, after some shareholders of the Norwegian videoconferencing company said the price was too low. (See his full post here.)

The “Driving Conversations” blog of General Motors Europe has also been a source of news on the long-running (and now abandoned) talks to sell Opel, hosting posts from GM’s chief negotiator, John Smith. (See some of his posts on the topic here.)

So could blogging become a major channel of communication on M&A transactions? Big corporations have enthusiastically adopted it for other uses- for example, “Randy’s Journal”, a Boeing blog, has a following in the industry and among aeroplane enthusiasts.

But it is hard to believe this trend would be welcomed by some financial regulators — like the UK’s Takeover Panel, which banned advertising during takeover battles more than 20 years ago.

Other deals news in the media on Thursday:

* An investment company controlled by the Shanghai city government will own a majority stake in a planned Disney theme park that won key government approval this week, the People’s Daily reported on Thursday.

* Scripps Networks (SNI.N) is close to an agreement to acquire a majority stake in the Travel Channel from Cox Communications, the nation’s third-largest cable company, the DealBook blog reported on Wednesday.

* British real estate developer Quintain Estates and Development (QED.L) is set to launch a 180 million pound ($296.5 million) rights issue on Thursday, the Daily Telegraph reported.

* In the latest twist in a takeover battle running since January, Canadian fertilizer maker Agrium Inc (AGU.TO) is planning to make a final offer for CF Industries Holdings Inc (CF.N) on Thursday, the Wall Street Journal said, citing people familiar with the matter.

After the confused attempt to bailout or save Lehman Brothers, Bear Stearns and AIG in 2008, some regulators have been suggesting that banks and important financial institutions plan for their own demise.

A senior Canadian finance official said on Wednesday that the Group of Twenty (G20) are thinking about the idea as a way to avoid financial meltdowns.

 Even one of the top financial advisors unwinding Lehman Brothers’ has said a living will would have helped.

But is it the banks or the regulators that oversee them who should come up with these living wills? Should they come up with them together? Who would have better incentives to prevent systemic issues?

The issue was discussed on Wednesday at a Practising Law Institute conference in New York by  H. Rodgin Cohen, a mergers & acquisitions lawyer at Sullivan & Cromwell in New York, who personally worked on deals like JPMorgan-Bear Stearns, Barclays-Lehman, and Wells Fargo-Wachovia last year.  Here is what Cohen told the conference:    

“I do think we have it somewhat backwards on all this emphasis on the living wills for these institutions. Actually the living will isn’t the institution’s responsibility. It is truly surprising to me that sitting in a locked desk somewhere there isn’t a living will which the relevant supervisor has for each institution. Clearly that did not exist last year, and hopefully we have it today. “

So who should come up with these “living wills”? Banks or Regulators or both?

“During 2009, mining M&A has been led by the junior or mid-level players, which have to consolidate if they want to stay alive and not be swallowed up by the bigger firms. Indeed, many anticipate that the mining sector will continue to consolidate until there are a handful of supermajor firms like there are in oil & gas.

“Large mining companies will increasingly need to buy rivals and subsequently sell off assets to gain synergies if they are to compete with state-owned companies, particularly those from China.

“These conditions mirror those encountered by large oil companies a decade ago, when massive consolidation swept the industry in response to the rise of national oil companies (NOCs) such as Saudi Aramco, Gazprom,Petrobras, and others.”

But what are the deals? Anglo-Xstrata is off (for now), as is BHP-Rio. Maybe it’s just a matter of time. Anyhow, in oil and power the team say:

“Apart from the oil supermajors, consolidation will be likely across sectors. Oil & gas independents will be possible targets for reserve-hungry majors but also potential beneficiaries of portfolio rationalization among larger players.

“Power and utility companies will likely look at M&A activity to bolster their strategic positions, provide access to markets, and to raise cash for capital improvements.”

Get the full report here.