DealZone

DealZone Daily

Royal Dutch Shell and PetroChina have secured Arrow Energy’s coal-seam gas assets for $3.1 bln after sweetening their offers for the business.  The fresh bid was pitched at a 35 percent premium to Arrow’s share price before the first offer was announced, highlighting burgeoning interest in the coal-seam gas industry.

The former chief exexcutive of AIG is to sell most of his stock in the U.S. insurance giant to a unit of Swiss banks UBS. The deal for the 10 million shares, at about a 20 percent discount to Friday’s closing price, will earn Maurice “Hank” Greenberg $278.2 m.

Private equity firms are interested in acquiring and merging two German department store chains. U.S. firms are interested in acquiring Metro’s Kaufhof and Arcandor’s Karstadt chains, people familiar with the matter said.

For more deals news from Reuters, click here.

And in other media:

Richard Branson’s Virgin Money has lined up financing from Abu Dhabi Sovereign Wealth Funds and buyout house Blackstone needed to buy 320 bank branches from Royal Bank of Scotland, the Daily Express reports. Other suitors for the estate include Spain’s Santander and National Australia Bank.

DealZone Daily

American International Group could learn the fate of the stalled $2.2 billion sale of its Taiwan unit Nan Shan Life Insurance as early as Thursday, when Taiwan’s parliament will review a report on the deal from the top financial regulator.  Read the Reuters story here.

A clutch of private equity firms have bid up to 400 million pounds for British greetings card retailer Card Factory, sources familiar with the process told Reuters. Here is the story.

And in news reported by other media on Wednesday:

Barclays is looking to buy a retail bank in the US to extend its presence after buying Lehman Brothers, reports the Wall Street Journal. Barclays is not in talks and no deals are imminent, but has designated an internal team to assess possible targets.

The afternoon deal: Beyond the billions paid

The MetLife building is seen in New York, March 8, 2010. REUTERS/Shannon Stapleton It was a two-year quest to seal the MetLife deal for Alico.  Beyond the $15.5 billion purchase price, what does it mean for the companies and the life insurance sector?

MetLife seals Alico deal after two-year quest
Factbox: AIG’s progress on asset sales

From the Web:

A.I.G. Sells Unit to MetLife (NYT)
“Now comes the hard part.” – NYT

MetLife gets new life from AIG

MetLife is moving up in Japan, the world’s second-largest life insurance market, with the $15.5 billion purchase of Alico from AIG. The unit accounted for 70 percent of Alico’s pre-tax operating income in fiscal year. It also has operations in Europe and emerging markets in Central and Eastern Europe, the Middle East and Latin America. Much like the $35.5 billion sale of AIG’s Hong Kong-based AIA subsidiary the week before to Prudential of the U.K, a chunk of AIG is a transformative expansion for Metlife.

Both AIG and Metlife share rose on the news – one of those win-win deals, the market says. But if you want to be skeptical, just keep in mind that AIG is still only part of the way towards repaying the $182.3 billion it owes the U.S. government and Metlife has just exposed itself to an aging Japanese population with prospects in some ways even more worrying than in the U.S., given its lost decade and its near-routine bouts of deflation.

One thing Metlife will not have to worry about is having a government functionary on its board. Though the sale features a sizable equity component from AIG, we’re told that the chance of Uncle Sam calling the shots at yet another major U.S. corporation is nil.

DealZone Daily

American International Group was closing in on a deal to sell its foreign life insurance unit to MetLife Inc for about $15.5 billion in cash and stock, sources familiar with the matter say. MetLife is expected to pay AIG about $6.8 billion in cash and about $8.7 billion in equity, which includes convertible preferred, common shares and common equivalent securities, for the unit, American Life Insurance Co (Alico). Read the Reuters story here.   Indian conglomerate Essar Group plans to raise about $2.5 billion to $3 billion by listing its energy and power businesses on the London bourse in late April, a person familiar with the matter says. Read the Reuters story here.   In other M&A and corporate finance news on Monday:   Kraft Foods is being investigated by UK regulators on whether the company misled employees and investors in its pursuit of Cadbury, the Wall Street Journal said, citing people familiar with the matter.   Top Prudential shareholders are threatening to revolt because they were not given a role subunderwriting the insurer’s $20 billion rights issue, reports the Telegraph. Shareholders are “furious” they have not been offered a role and that the job and lucrative fees that go with it have been given to a group of 30 banks instead.

DealZone Daily

Pfizer will present a nearly $4 billion offer for Germany’s Ratiopharm this week, sources tell Reuters, launching a possible bidding war with Teva Pharmaceutical and Actavis. A decision is unlikely before the end of the month.

Hedge fund Elliot Associates offers to buy Novell Inc — the world’s No. 2 maker of Linux — sending its shares up 28 percent. Speculation is that other bidders could come in and drive the price up further.

Britain’s Prudential seems to have stopped its decline after it announced a $35.5 billion takeover of AIA — the Asian life insurance business of AIG. The stock dropped a fifth since the Pru announced its offer, but it’s now bounced a percent or so.

Prudential’s Eastern promise

(Acquisitions Monthly) Tidjane Thiam unveiled his proposal to transform the Pru into an Asian-focused animal just five months after taking over as chief executive of the stately British insurer. The former Aviva man obviously feels the opportunity presented by state-supported AIG’s effectively forced sale of its Asian crown jewel was too immense to ignore.

The US$35 billion transaction – the biggest ever in the sector – also fits in with the currently accepted reading of the financial runes: that the thriving economies of Asia will provide much of the next decade’s growth. Nevertheless Thiam has done well to secure the services of three of the financial crisis’s undoubted winners in Credit Suisse, JP Morgan Cazenove and HSBC.

The impressive line-up are only too willing to flex their financial might to back such a deal through a US$21 billion underwritten rights issue, the largest ever for acquisition purposes. If the Pru’s biggest investors, Capital, BlackRock and Legal & General, are unwilling to take up their rights, finding fresh investors should not be too difficult.

Can AIG become small enough to fail?

What if AIG sold everything it had? How big a hole in the ground would be left? Perhaps something less than a crater but certainly more than a gopher hole, now that it has agreed to sell its Asian life insurance arm to Prudential of the UK for $35.5 billion. AIG CEO Robert Benmosche, who has been focused on getting as much as he can for the assets that once made up the AIG colossus, must have figured the deal was more lucrative than the Hong Kong IPO that had been in the works.

AIG is busy repaying a $182.3 billion government bailout it received at the height of the financial crisis. First to be paid back are a $16 billion special purpose vehicle and $25 billion taken out of a credit facility taxpayers set up for AIG. The Prudential deal won’t cover those debts, but next up is the pending sale of American Life Insurance Co, or Alico, to MetLife in a $15 billion deal held up by a tax question.

Earlier this month, Benmosche said AIG would shed enough assets to remain a global property-casualty and U.S. life and annuity operation at its core. AIG would become “not too big to fail,” he said in an interview with Contact. But having already been saved once, and with taxpayers now owning the company, the question of success or failure seems almost pointless.

The afternoon deal: Trend spotting

DROIDSpotting a trend is an essential skill for M&A reporters. Is the sector consolidating? Collapsing? Where will the next deal be? Following is a list of M&A stories and the trends they may foretell.

More takeovers likely for hard-hit satnav firms
(Reuters)
“Following several takeovers, remaining players in the satellite navigation sector are rethinking strategies and some are set to sell out under pressure to survive, industry sources and analysts say.”

New doubts surface over AIG’s $2.2 billion Nan Shan deal (Reuters)
“The bid raised concern among Taiwanese politicians about the mainland’s intentions toward Taiwan, which Beijing views as a renegade province.”

Duane Reade and Its Road to Health
(NYT)
“But Duane Reade is as much a story about selling milk and toothpaste at 2 a.m. as it is about Wall Street, financial engineering and shifts in the private equity industry.” – NYT

Tengzhong may buy Hummer via offshore vehicle (Reuters)
“Support from Beijing has been critical for Chinese firms that have embarked on a series of deals to pick up distressed assets from a global auto industry reeling from overcapacity and sharply depressed demand during the worldwide recession.”

Wal-Mart Adds Its Clout to Movie Streaming
(NYT)
“The acquisition adds a forceful player to what is already a crowded field of companies aiming to deliver streamed entertainment to the living room.” – NYT

DealZone Daily

Blackstone suffered a setback when travel services provider Travelport, which it owns, pulled its $1.8 billion IPO. Travelport blamed volatile markets, but it had earlier tweaked a bonus scheme for management that investors said was overly lavish. A last-minute cut in the price range didn’t help either. Is the IPO window in Europe closing before it even opened?

Things are looking better in Asia, where AIG has made the long-awaited choice of underwriters for the listing of its Asian life insurance unit, according to our sources. The share sale could raise more than $10 billion. Elsewhere, Korea Life Insurance Co Ltd plans to raise up to $2 billion in an IPO.

For these and all other stories about deals, please click here.

And elsewhere in media (some links may require subscription rights):

Motorola Inc may spin off its TV set-top box and cellphone businesses into a publicly traded company, and sell its wireless network equipment unit, says the Wall Street Journal.