DealZone

Everybody Likes Cake

More big consumer brands are being dealt across the Atlantic. With Kraft’s bid for Cadbury churning, consumer goods giant Unilever plans to pay 1.275 billion euros ($1.87 billion) for a chunk of Sara Lee’s personal care brands, helping the cake maker sheds non-core businesses to focus on food. Sara Lee shareholders are sweet on the deal – bidding the stock up more than 9 percent in early trade. In a space reserved for winners and losers, this deal looks like it has natural benefits for both parties.

The asset sale is quite a bit less rich than the chocolate deal, which is for the whole of Cadbury rather than just its brands, the soap business brings with it a fresh scent of a recovery in deals activity. It is the first major acquisition for the Anglo-Dutch company’s new Chief Executive Paul Polman, and Sara Lee’s CEO Brenda Barnes is still only half-way through her business-shedding exercise.

Credit Suisse analyst Charlie Mills said the price Unilever is paying of 10 times core operating profit, or EBITDA, is not huge by industry standards, reflecting the fairly disparate collection of assets. Brylcream hair gel is part of the mix.

“We’re not convinced that this is the greatest collection of assets but another acquisition shows Unilever still moving from the back foot (cost cutting and disposals) to the front foot (volume growth and acquisitions),” he said. It may also be worth remembering that the deal speaks to Unilever’s business. It is built on brands, whereas Sara Lee is a brand unto itself.

So far as markets are concerned, Sara Lee is the winner here. Having been able to find a buyer for a huge chunk of assets it had on the block, it is now going to be able to buy back more stock and preserve its 11-cent quarterly dividend.

Deals du Jour

ING sells its 51 percent stake in a wealth management joint venture to partner Australia and New Zealand Banking Group for $1.6 billion as the Dutch group slims down through asset sales.

ING is offloading assets to raise 6-8 billion euros, and is also selling its Asian and Swiss private banking assets. HSBC is the front-runner to buy the Asian private bank assets, sources tell Reuters.

In other M&A news:

Britain’s biggest pubs group, Punch Taverns, puts more than 300 of its worst performing pubs up for sale as it strives to cut its debt pile.

Deals du Jour

Canadian media firm CanWest Global Communications Corp will sell down its 50.1 percent stake in Australia’s Ten Network, worth about A$714 million ($620 million), in a move that could put Ten into play.

In other M&A news reported by Reuters and other media on Thursday:

* Chilean forestry group CMPC said it is in talks to buy a unit of Brazilian giant Aracruz for $1.4 billion, which would give it access to the world’s cheapest pulp producing market.

* Chinese solar wafer manufacturer ReneSola said it will buy Dynamic Green Energy Ltd for about $88.5 million, mostly in stock, expanding the arts company into the market for solar panels.

Deals du Jour

POSCO and South Korea’s chemicals-to-brokerage group Hanwha are studying a potential bid for Daewoo International, sources close to the companies tell Reuters. Daewoo International’s market value is around $3 billion.

Meanwhile, five British companies unleash a wave of cashcalls to raise over 1.6 billion pounds, rushing to strengthen balance sheets during a “window of opportunity” as investors show a strong appetite to support fundraisings.

In M&A news reported by Reuters and elsewhere on Wednesday:

U.S. oil and gas exploration and production firm SandRidge Energy strikes a deal to buy bankrupt rival, Crusader Energy Group, for $230 million, in a cash and stock deal that would give it additional acreage in the Anadarko and Permian basins.

from Commentaries:

Green shoots or just talk in fertiliser M&A

CHINA/There are signs of life returning to M&A in the potash sector -- with market speculation that Potash Corp of Saskatchewan may bid for Germany's K+S.

Canada's Potash Corp -- the world's largest producer of the key ingredient in synthetic crop fertiliser -- said last month that North American potash inventories had fallen in July, an indication that sales of potash had begun to move again after a seizing up of the market.

Some analysts reckon that the market is now reaching a bottom and that there will be a sharp rebound in 2010 as farmers start buying again.

from Commentaries:

Cash M&A still lifeless

Bond sales are at a record, equity markets are at year-highs, private equity firms are sitting on huge cash piles -- Blackstone alone has $29 billion -- and banks are lending to each other again.

The ingredients should all be there for a resurgence of cash-driven mergers and acquisitions. But instead, the market is in hibernation.

So far the value of all M&A deals completed this year totals $990 billion. You have to go back to 2003 -- when the total for the year was $1.23 trillion -- to find a figure this low, according to Thomson Reuters data.

What green shoots?

European bankers may be having more conversations that could lead to M&A than six months ago, but this week’s deal figures from Thomson Reuters still make dismal reading.

So far this year, European M&A has been worth $356.6 billion, a 51% fall compared to last year at this time. Excluding government investments, merger activity in Europe totals $239.1 billion, a 67 percent decrease from 2008 levels.

Here is another of this week’s data points:

“Germany’s E.on has agreed to sell its natural gas distribution subsidiary, Thuega AG, to a group of German utility companies for $4.1 billion, topping the list of worldwide mergers this week. Goldman Sachs, which advised Thuega, and @visory Partners GmbH, which advised the consortium, could share an estimated $30 million to $35 million in advisory fees on completion of the deal.

Deals du Jour

Library photo of the Prudential Center. REUTERS/Ray Stubblebine (UNITED STATES)The acquisition of Friends Provident by Resolution is a reminder that financial services deals have not gone away. A steady stream of deals have made headlines in recent weeks.

On Thursday an online report said Prudential Financial Inc is in the early stages of talks with KB Financial to sell its South Korean brokerage arm, a deal that could fetch an estimated $680 million. Here’s the Reuters story.

Other deal-related stories appearing in the media on Thursday include:

State-run miner Coal India Ltd plans to raise up to 60 billion rupees ($1.25 billion) by selling 10 percent of its equity through an initial public offer expected within a year, the Business Standard reported on Thursday.

Deals du Jour

Buyout firm Resolution raises its offer for UK insurer Friends Provident to about 2 billion pounds, and the two sides start talks about a possible deal.

The following are M&A related stories reported by Reuters and other media:

Lloyds Banking Group may consider a multi-billion pound share issue as part of a partial withdrawal from the government’s asset protection scheme, according to a report in the Sunday Times.

U.S. power producer Dynegy will sell nine U.S. power plants to its one-time development partner LS Power Associates, the Wall Street Journal says.

Deals du Jour

An unusual Credit Suisse Group compensation plan could lead to hefty year-end payouts for bankers, The Wall Street Journal said. The newspaper said that the bank told 2,000 top bankers that a $5 billion fund of toxic mortgages and bonds, which it granted as a big portion of 2008 pay, has returned 17 percent since January, citing people familiar with the matter.

The following M&A related stories were reported by media on Friday:

French advertising group Publicis  is poised to buy U.S. digital specialist Razorfish from Microsoft Corp, Les Echos reported in its Friday edition.

Citigroup Inc may give control of its Phibro commodities business to Andrew Hall, the energy trader making headlines for demanding a $100 million payday under his contract, The New York Times said, citing a person with knowledge of the negotiations.