DealZone

Deals du Jour

Wall Street banks and lawyers could collect nearly $1 billion in fees from the Federal Reserve Bank of New York and American International Group to help manage and break apart the insurer, the Wall Street Journal said, citing its own analysis.

The following M&A related stories were reported by Reuters and other media on Thursday:

Jewelry retailer Finlay Enterprises filed for Chapter 11 protection and said it would sell its assets in an auction supervised by the bankruptcy court. The company listed assets and debt in the range of $500 million to $1 billion in its filing, Reuters reported.

Indian cellular firm Aircel, 74 percent owned by Malaysia’s Maxis, has shortlisted four firms including American Tower and Bharti Infratel to conduct due diligence as it looks to sell all or part of its tower operations, Reuters said.

China South City Holdings, an operator of a wholesale and logistics centre in Shenzhen, is expected to revive its Hong Kong listing plan next month, raising $500 million for expansion, the South China Morning Post said.

Deals du Jour

Australia and New Zealand Banking Group Ltd will likely clinch a deal this week to buy some Asian assets from British lender Royal Bank of Scotland Group for about $775 million, a source briefed on the situation told Reuters, marking it the Australian bank’s biggest overseas purchase.

In other M&A related stories reported by other media on Monday:

British-based, US-listed cable operator Virgin Media is considering a secondary listing of its shares in London to attract UK-based investors, according to a report in the Times newspaper. Virgin will make an announcement about its decision at its second-quarter results this month, the report said.

The biggest private equity groups are sitting on $400 billion of debt that needs to be repaid over the next five years, putting the future of some of the largest buyouts in doubt, the Financial Times said, citing data from S&P LCD.

Deals du Jour

Time Warner Inc (TWX.N), which plans to spin off AOL by the end of the year, said in a filing with the U.S. Securities and Exchange Commission that it paid $283 million for Google Inc’s (GOOG.O) 5 percent stake in AOL.

In other M&A related stories reported by Reuters and other media on Tuesday:

German flagship carrier Deutsche Lufthansa (LHAG.DE) said it has applied with the Austrian Takeover Commission to extend a deadline for a planned deal to acquire Austrian Airlines (AUAV.VI) by a month to Aug. 31. Click here for a Reuters story.

Private equity group CVC Capital Partners was prepared to offer up to 1.5 billion euros ($2.1 billion) for Anheuser-Busch InBev’s (ABI.BR) Central and Eastern European assets, ahead of a Monday deadline, newspaper De Tijd reports. The private equity firm was in talks with 13 banks, including HSBC, Unicredit and Calyon to secure a loan of at least 700 million euros. While TPG Capital was still in the running, KKR had dropped out of the proceedings.

Deals du Jour

Sweden’s Ericsson has won the race for the wireless assets of bankrupt Nortel Networks Corp, paying $1.13 billion for the crown jewels of the on-time Canadian telecom star.

In other M&A related stories reported by Reuters and other media on Monday:

Volkswagen (VLKAF.DE) is considering a 4 billion euros ($5.7 billion) capital increase to offset the credit rating impact of its merger with Porsche, Financial Times Deutschland reports.

Commerzbank (CBKG.DE) said it has sold Dresdner Bank (Switzerland) to the Liechtenstein-based LGT Group. LTG said the combined Swiss operations would manage client assets totalling almost 20 billion Swiss francs. Click here for a Reuters story.

Deals du Jour

China’s Sinochem approaches Australian farm chemicals group Nufarm about a possible takeover, the second time Nufarm gets interest from a Chinese firm in the past two years. The Australian group has a market value of almost US$1.9 billion, and the news sent its shares soaring.

Other deals reported by Reuters and other media on Friday included:

Spain’s Cosmen family and private equity group CVC have made a joint takeover approach for British bus and rail group National Express, the Financial Times reports, citing people close to the situation.

Hedge fund Fortress Investment Group is looking to go on an acquisition drive, which may include buying banks, insurers, and other hedge funds and financial firms, the FT reports, citing a memo.

Deals du Jour

National Australia Bank is selling new shares to raise up to US$2.25 billion to help it scout for acquisitions, it says. The fundraising will also be used as a buffer against rising bad debts, but the unexpected share sale by Australia’s largest lender will also allow it “to pursue value creating opportunities,” according to its CEO.

Just last month, NAB bought most of British insurer Aviva’s Australian businesses for A$825 million to expand in wealth management.

In other deal news reported by Reuters and other media:

Procter & Gamble is in advanced talks to sell its prescription-drug business with several parties, including specialty drugmaker Warner Chilcott and private equity firm Cerberus Capital Management, the Wall Street Journal reports, citing people familiar with the matter.

Deals du Jour

Bank of America’s Merrill Lynch is in talks with several firms including Blackstone and Apollo Investment Management to sell management rights of its $2.65 billion Asian Real Estate Opportunity Fund, a source tells Reuters. A deal would be valued at a few hundred million dollars, the source said.

Meanwhile, China’s sovereign wealth fund has acquired 1.1 percent of British drinks firm Diageo drinks group, the Financial Times reports. China Investment Corp’s stake is worth 221 million pounds.

In other media reports on Tuesday:

The chief executive of German automotive supplier Continental is planning to propose a 1 billion euro ($1.4 billion) capital increase, the FT says.

from Commentaries:

Friends will find Pac-Man out of fashion

Pac-Man The 1980s revival continues. Music fans have been flocking to see the Human League and Spandau Ballet on their reunion tours. Now M&A aficionados can savour their own mini revival. Yes, it's the return of the Pac-Man bid.
Two mid-sized British insurers, Friends Provident and Resolution have revived this gambit, named after a mind-bogglingly dull computer game where the objective is to eat your pursuers rather than be eaten yourself. In M&A, this involves the target of a bid approach (in this case, Friends) turning on the bidder and launching an offer itself.
In the case of Resolution there was a certain logic in so doing. Resolution is effectively a cash shell company, which has opaque governance. Its nil premium share for share approach offered little to Friends other than the chance to hand over 10 percent of the combined company's profits to Resolution's management. The proposed nil premium counterbid made little sense (other than to eliminate the 10 percent profit share). But it did at least tease out a slightly more generous bid proposal from Resolution.
Pac-Man defences are rare in M&A -- and for good reason. They're wholly unconvincing. If you get a bid for your company, and think that the combination has merit, squabbling over who bids for whom seems to miss the point. At worst it smacks of management self interest.
This is not the only reason there have been very few Pac-Man defences. The bigger problem is that they are uniformly unsuccessful. The target never actually gets to gobble up the predator. It is 10 years since Elf Aquitaine's desperate  attempt to see off an ultimately successful bid by fellow French oil major Total. The same year, British regional brewer Marston's also used the defence against a bid from Wolverhampton and Dudley Breweries. It too failed.
That doesn't stop it from rearing its ugly head from time to time. Pac-Man defences were raised as a possibility for Rio Tinto  to turn the tables on BHP Billiton and more recently as a means for Anglo American to round on Xstrata. But generally that's all it is: talk.
The Resolution-Friends situation is an unusual one. Resolution is a cash company that is desperate to do a deal, while Friends rejected a 150 pence per share bid from J.C. Flowers last year. There are particular reasons they have ended up in a sort of death embrace. So while the Spandaus may be back in favour, the Pac-Man bid is likely to remain consigned to the archive.

from Commentaries:

Bankruptcy-related M&A at 5-year high – more to come?

This week's Thomson Reuters Investment Banking Scorecard shows bankruptcy-related M&A at a five year high.

 

There were five bankruptcy-related M&A deals announced during the week, including the acquisition of venture-backed public company Nanogen by French investment holding company Financiere Elitech for $25.7 million. 

 

So far this year there have been 173 bankruptcy-related deals, the highest level since the same period of 2004 when there were 202.

Four Seasons (or more) of restructuring

A woman looks at the 2009 artwork "Sixty Watches" by Austrian artist Michael Schuster at the Art Basel art fair June 9, 2009. The Art Basel runs from June 10 to 14. REUTERS/Arnd Wiegmann (SWITZERLAND ENTERTAINMENT)Restructuring a company’s debts is not a simple process. Unlike acquisition deals, when everyone around the table has something to gain, a restructuring requires everyone to agree to lose something.

Pain has to be shared but everyone has an interest in ensuring someone else takes more of that pain.

As a result, the larger and more complex a company’s debt structure, the more likely it is that restructuring the company’s debt will be a long and difficult process.