DealZone

By Rob Cox and Richard Beales
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Investors fixated on the possibility that a Greek default would deliver a shock akin to the Lehman Brothers collapse in 2008 may want to consider another analogy. A restructuring of Greece’s obligations could more closely resemble the orderly wind-down of General Motors. The U.S. carmaker’s bankruptcy filing didn’t spark the market or economic Armageddon that followed Lehman’s demise.

What would it take to bring about a GM moment for Greece? Preparation, an orderly mechanism and financial support.
The main difference between the two mega-bankruptcies of Lehman and GM was the level of preparedness of all parties involved. Though GM filed for creditor protection in June 2009, its excessive debt and rich promises extended to retired employees had made its solvency questionable since at least 2005, when the Detroit carmaker saw its credit rating junked. That episode gave investors time to wind down their exposure.

So when GM did finally fail, the fallout was limited. By then, GM had around $170 billion of debt. And participants in the credit default swap market had just $35 billion of gross exposure to deal with, according to the Depository Trust & Clearing Corporation. GM’s tidy bankruptcy process was also made possible by the U.S. and Canadian governments agreeing to provide the equivalent of debtor-in-possession financing, so that the group didn’t have liquidity problems through its period of restructuring.

Lehman was a whole different story. It wasn’t just the company’s hapless management led by Richard Fuld that expected to emerge from the second weekend of September 2008 with a deal to sell or rescue the firm; so did the U.S. government and many in the financial markets. When it filed for bankruptcy protection early on the following Monday morning, its $600 billion balance sheet interlinked as it was with financial institutions and hedge funds across the globe caused mayhem.

The London Stock Exchange faces a nail-biting fight for Canadian peer TMX Group after aggressive rival bidder Maple trumped its sweetened offer by a whisker overnight. Proxy advisory firm ISS recommends TMX shareholders back the LSE offer.

Hulu has defied early skeptics that old-school media companies could collaborate to create a successful service for a new generation of TV watchers. But joint ventures have a knack for degenerating and an unsolicited approach for Hulu creates a perfect opportunity to find it a better home, writes Breakingviews columnist Jeffrey Goldfarb.

“Hulu LLC may cost potential buyers from Yahoo! Inc. to Amazon.com Inc. as much as 50 times earnings for a chance at owning what may be the next Netflix Inc,” reports Bloomberg.

By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Hulu needs to be free of its hoops. Media titans NBC Universal, Walt Disney and News Corp have given the online TV service a good running start. But their ownership creates conflicts that will retard Hulu's growth. An analogy can be found in banking, where Visa and MasterCard have flourished since being granted independence. An unsolicited approach for Hulu creates a perfect opportunity to find it a better home.

Hulu has defied early skeptics that old-school media companies could collaborate to create a successful service for a new generation of TV watchers. The firm said last year it was profitable and now expects to generate $500 million of mostly advertising revenue with 1 million paying subscribers this year. Nielsen reported that viewers on average watched nearly five hours of Hulu last month, more than any online video site including YouTube. Netflix was omitted from the survey.

More than 80 percent of venture capitalists believe the initial public offering market is at very weak levels and it is curbing profits, according to a new survey.

Online video site Hulu has been approached by a potential buyer and is weighing whether to sell itself, according to a person familiar with the matter. GigaOM lists the possible candidates and the merits of a deal for each company.

Taiwan regulators rejected Kohlberg Kravis Roberts & Co’s $1.6 billion joint management buyout of electronics component maker Yageo Corp, a decision that may cast a shadow over other private equity involvement in the island.

By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

HONG KONG -- SABMiller’s A$11.2 billion ($11.8 billion) approach to Foster’s Group is unlikely to be its last. The UK-listed brewing giant will have to dangle more to win a recommendation from its Australian target, whose shares jumped 5 percent above the A$4.90 being offered. But SAB cannot afford to stretch too far.

Foster’s has undeniable charms for a global brewer like SAB, starting with its 50 percent share of a highly profitable market. Foster’s 38 percent operating margins are more than twice SAB’s. There’s even room to improve on that. As half of a cosy duopoly, Foster’s has grown fat. A new, unproven chief executive gives further grist to SAB’s opportunistic mill.

SAB Miller said it would keep talking to Foster’s Group after Australia’s largest brewer rejected the global giant’s $10.1 billion cash takeover offer as too low.

Research In Motion has lost so much value that an acquirer could pay a 50 percent premium and still buy the BlackBerry maker for a lower multiple than any company in the industry, Bloomberg reports.

Rather than moan about Groupon’s inability to say anything in the quiet period, CEO Andrew Mason should enjoy it while it lasts, writes Felix Salmon.

PNC Financial Services Group will buy Royal Bank of Canada’s U.S. retail bank operations for $3.45 billion in cash and stock, making it the fifth largest bank in the United States. The WSJ gets some early reaction to the deal.

ING said it has put its car leasing business up for sale, in a deal Dutch media reported may be worth $5.7 billion.

Japan’s industrial, healthcare and technology sectors are the main focus for the Carlyle Group, the co-head of its Japanese unit told the Reuters Rebuilding Japan Summit in Tokyo on Monday.

Capital One plans to buy ING’s U.S. online bank for $9 billion in cash and stock, freeing the Dutch bank to repay bailout funds and sever its state ties.

Italian fashion house Prada floated at the low end of its target price range on Friday, raising $2.1 billion as investors baulked at its rich valuation while global markets are weak.

Private equity firm Leonard Green & Partners said it has teamed up with CVC Capital Partners to submit a proposal to buy BJ’s Wholesale Club, the third-largest U.S. wholesale club retailer.

Samsonite, the world’s biggest luggage maker, dropped 7.7 percent in its Hong Kong trading debut on Thursday, underscoring tepid investor appetite for initial public offerings as global markets struggle.

Pipeline operator Energy Transfer will buy smaller rival Southern Union for about $4.11 billion to bolster its natural gas gathering and transportation capacity amid burgeoning production from U.S. shale fields.

Alibaba Group said it has reorganized Taobao, China’s largest e-commerce website, into three separate companies, squashing any chance of a Taobao public offering.

Online radio company Pandora Media priced shares in its initial public offering above an already raised range on Tuesday, the latest company to take advantage of red-hot valuations for Internet companies. Deal Journal breaks down the company by the numbers.

DST Systems  has received several buyout overtures from private equity firms in recent months, including one led by activist investor Russell Glass, according to people with knowledge of the situation.

To get General Motors firing on all cylinders, Chief Executive Daniel Akerson needs to fix the sputtering Opel. However, neither a sale nor a quick fix to return to sustained profitable growth is easily achievable, analysts and experts say.