Deals wrap: Conoco may double assets sale
ConocoPhillips, the third-largest U.S. oil company, said it might double its planned sale of less-desirable assets to $20 billion, with proceeds going to buy back stock.
Conoco is executing a plan, first announced in late 2009, to increase shareholder value through debt reduction, stock buybacks and increased dividends. Conoco did not immediately specify what might be sold, but did say those assets targeted would be mature, high-cost projects.
Consumer goods group Colgate-Palmolive has agreed to pay around $940 million for Sanex, a shower gel and deodorant brand which owner Unilever had been ordered to sell. The sale comes just a week after Unilever announced it was stepping up new product launches to drive growth.
Corporate predators could find the beleaguered reinsurance sector offers attractive opportunities, provided they have the nerve to look beyond a round of bumper claims triggered by the Japanese earthquake. “The market was turning anyway, and the earthquake will shift it, which will obviously be a good entry point for private equity and for M&A activity on a wider basis,” said Barrie Cornes, insurance analyst at Panmure Gordon.
After its acquisitions of the Huffington Post and TechCrunch last year, AOL will begin the process of overhauling its family of content sites, reported All Things Digital’s Kara Swisher. AOL chief executive Tim Armstrong will reportedly issue an internal memo detailing the closing down of “dozens of its dedicated content sites — some being shuttered completely and others integrated with existing Huffington Post sites,” writes Swisher.
As part of its agreement with the EU to get out of its debt crisis, the Greek government has tapped a handful of banks to advise it on plans to extend the concession agreeement of the Athens International Airport.
from Breakingviews:
AOL takes alternative-Yahoo approach to M&A
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Robert Cyran Reversing fading Internet brands is difficult -- especially if it isn't clear what a company stands for. Take AOL's $315 million purchase of The Huffington Post. With this, AOL still looks like a patchwork of seemingly unrelated media sites compared to Yahoo's centralized uni-brand approach. Yet both may not succeed in equal fashion.
AOL's access business still accounts for more than 40 percent of sales and a bigger chunk of profits. Yet these sales fell 26 percent in 2010. So the company is acquiring content companies in a hurry, hoping ad revenue will fill the breach.
Now it's adding the well-known left-leaning news and entertainment site to AOL's mix of everything from hyper-local news to technology blogs. And founder Arianna Huffington will oversee all of AOL's editorial operations. HuffPo is growing fast and just profitable -- it had $31 million in revenue last year and should turn more than $50 million this year. Moreover, AOL has far more Internet traffic. If it can send some of this to HuffPo -- and vice versa -- the combined caboodle should be able to reap more advertising dollars. AOL also said it can cut $20 million of HuffPo's costs.
Yet here's the nut of the problem for AOL -- and for Yahoo as well. The audiences are different for national news, local news, trade publications and other content. Putting most content under one label, as Yahoo does, results in an amorphous brand on a single advertising platform. Keeping multiple brands may better segment the audience. And AOL's promise to increasingly focus on women may eventually unify these brands somewhat, but there are few connections so far.
Local, trade, and national advertising markets are structured differently. Supercharging HuffPo's growth by using AOL's large sales force, not to mention its hyperlocally focused Patch sales folks, is easier done on a spreadsheet than in practice. That's particularly true given AOL hasn't done a great job selling its own sites so far -- display ad sales fell 14 percent in the first quarter compared to the same period last year.
That leaves AOL with two potential problems. First, those interested in news of start-ups may not care about, say, celebrity news or divorce tips, so the ability to generate traffic across specialized sites isn't guaranteed. Second, at close to six times estimated 2011 revenue, AOL is paying a pretty penny. Come to think of it, the least confusing aspect of AOL's strategy is its willingness to pay up for Internet traffic.
Deals wrap: AOL looks to Huffington Post
AOL will buy The Huffington Post for $315 million, relying on the high-profile liberal pundit who co-founded the influential website to rescue it from the dustbin of Internet history. The Wall Street Journal looks at the good and the bad of the deal. Felix Salmon asks if AOL is really the right parent for the unique and very valuable Huffington Post Media Group.
Danaher agreed to buy medical diagnostics company Beckman Coulter for $5.8 billion cash, moving further into its growing medical technology business.
Blackstone Group has taken a majority stake in San Diego’s historic Hotel del Coronado. The private equity firm has been active in buying U.S. commercial real estate such as hotels, retail property and warehouse space from distressed owners and others who need cash.
Warren Buffett’s Berkshire Hathaway will buy the 19.9 percent it does not own of Wesco Financial, in a deal worth about $547.6 million, the companies said.
Deals wrap: AOL still eying Yahoo deal?
AOL Inc has tapped Bank of America to explore strategic options including a potential Yahoo Inc merger, according to people familiar with the matter. The idea of combining AOL with Yahoo is still considered in an early stage and may not materialize into a deal, the sources said.
“First of all, Yahoo has to be approached and this is nowhere close to that point,” said one of the sources.
China’s largest e-commerce company, Alibaba Group, has reportedly been approached by a group of private equity investors to gauge its interest in joining a bid to buy Yahoo. Alibaba is 40 percent held by Yahoo and it was unclear if the bid attempt was part of the AOL deal.
Chevron Corp agreed to buy U.S. natural gas producer Atlas Energy for $3.2 billion, excluding debt, becoming the latest energy giant to break into the lucrative Marcellus shale field. Chevron’s move into the Marcellus follows acquisitions by Exxon Mobil and Royal Dutch Shell earlier this year.
Sanofi Aventis CEO Christopher Viebacher and Genzyme CEO Henri Termeer have exchanged letters over Sanofi’s $18.5 billion hostile takeover bid for Genzyme. M & A Law Prof Blog editor Brian JM Quinn says Viebacher is attempting to assert pressure on his counterpart to do the deal by appealing to Termeer’s “fiduciary duties as a director of a MA (Massachusetts) company.” In related news, the vice chairman of investment advisory firm Peter J. Solomon, Frederick Frank, said “Genzyme is history.”
Deals wrap: Who’s eying Yahoo?
Yahoo shares surged after sources said private equity firms have approached News Corp and AOL to gauge interest in a buyout deal. *View article *View WSJ blog asking if a deal would make sense *NYT’s Andrew Ross Sorkin writes: “A deal is not happening anytime soon.”
Is he a loudmouth corporate raider or the investing world’s version of a Las Vegas Elvis? Reuters interviews hedge fund manager William Ackman to find out. *View article *Full coverage PDF
Private equity firms have been reaping huge dividends from companies they own. A WSJ blog asks if the feeding frenzy has gone too far. *View blog
As Sanofi-Aventis hunkers down for a long battle to buy Genzyme, a proxy battle for control of the biotech firm will become an increasingly real threat, sources tell Reuters’ Jessica Hall. *View article
Fortune.com’s Dan Primack finds one more reason for Warren Buffett to hate private equity. *View article
Deals wrap: Getting hostile
Sanofi is getting hostile in its bid for Genzyme, after Genzyme management refused to negotiate. The $69-per-share offer will be taken directly to shareholders but will they be looking for more? *View article *View graphic on hostile deals *View WSJ article on pharma M&A
Growth in emerging markets is aiding a global M&A boom and with large cash piles in hand, companies are finding it hard to resist the urge to acquire. *View article Coca-Cola has completed its deal to take over North American operation of its top bottler, Coca-Cola Enterprises. Reuters interviewed Coke Chief Executive Muhtar Kent about what the deal will mean for the remaining independent bottlers. *View article
Business Insider makes the case for Yahoo and AOL merging, immediately. *View Business Insider article
No longer just a dumb pipe
Comcast’s deal to buy a majority stake in NBC Universal from General Electric should put to rest fears at the cable operator that King Content will kill its business. But even if it becomes a thoroughfare of programming genius, the new venture will still have to convince a skeptical marketplace. The train wreck of Time Warner-AOL threw the idea of new media into financial purgatory.
Just how the venture will wring savings from its disparate businesses and avoid suffocating regulatory scrutiny are issues that could also create Comcastic headaches. Robert MacMillan points out on our Mediafile blog, with a sensible dose of skepticism, that the new venture is affirming its commitment to local news, in effect, promising to keep the garden hoses pumping even as it primes for a media gusher with big-ticket programming.
Still, while making a new media juggernaut could still turn out to be a pipe dream, Comcast CEO Brian Roberts (pictured above) cannot be faulted for allowing his company to get stuck in a dumb pipe nightmare.
AOL then and now
Anyone want to take a shot at what’s behind Time Warner‘s repurchase of a 5 percent stake in AOL held by Google? Time Warner sold the stake in December 2005 for $1 billion. Now, it has bought it back for $238 million — a nice job of selling high and buying low. Time Warner plans to spin off AOL by the end of the year.
The 2005 deal implied a chunky price tag of $20 billion for AOL. While it may not be exactly apples to apples, the repurchase implies a value of about $5.7 billion.
Brigantine Advisors analyst Colin Gillis said the implied $5.7 billion represents a “floor valuation ” as AOL moves toward a spinoff. If that’s true, then Google not only overpaid, but undersold.
Then again, with AOL expecting about $90 million of restructuring charges in the last nine months of 2009, and $58.3 million in charges already taken, related primarily to layoffs and closing facilities, maybe Google got out cheap.
Yahoo’s deal with Google: Band-Aid
So Yahoo and Google scaled back the terms of their search advertising deal in what looks like a last-ditch, attempt — at least for Yahoo — to get it past U.S. regulators.
Some analysts called it the Band-Aid deal, while others said it smacks of desperation.
Frost & Sullivan’s digital media global director Mukul Krishna said the revised terms were “more of a Band-Aid than the extensive surgery” Yahoo needs.
Barclays Capital’s Douglas Anmuth had a similar take: “We have long viewed the search outsourcing deal as a Band-Aid-not-a-panacea for Yahoo, but compromised terms or an outright rejection of the deal would likely force Yahoo to consider other strategic measures.”
Those “other” measures are a merger of Yahoo and Time Warner’s AOL unit, or Yahoo shareholders’ ultimate dream: Microsoft coming back to woo Yahoo.
Eric Jackson, the dissident Yahoo shareholder who sold his fund’s 3 million Yahoo shares in September after being convinced regulators would nix the Google deal, said: “You just gotta hope that the love bug bites Microsoft again and they want to come back.”
Sanford Bernstein analyst Jeffrey Lindsay said he expects Yahoo’s deal with Google to falter and for Microsoft to come back next year with a bid of around $20 per share. That may not sound too bad considering Yahoo is trading at $13, but remember that the last Microsoft offer had been for $33 a share.
A-courtin’ we will go
Like a bad soap opera, the Internet storyline is getting more and more convoluted. The tale so far: Microsoft Corp, spurned by Yahoo Inc, is courting Time Warner Inc to allow a union with Internet division AOL. But Yahoo, which turned its back on Microsoft’s $47.5 billion bid, also wants AOL’s hand. These talks have taken on a new urgency ahead of Yahoo’s Aug. 1 shareholders meeting, a source familiar with discussions told Reuters on Tuesday. How either marriage will work is not immediately clear, but any combination will likely redraw the landscape for advertising on the Internet. So why is AOL so attractive? Both Yahoo and Microsoft view it as beneficial to leverage their positions in the Internet marketplace, where search giant Google Inc dominates. Stay tuned.
But good soaps are not only made in America. It seems the Germans are good at them, too. Tires-to-brakes maker Continental rejected Schaeffler Group’s surprise 11.2 billion euro ($17.8 billion) bid, saying only the family owned firm stood to gain from the offer which was too low. Late on Tuesday, the ball-bearing maker announced the terms of its proposed takeover after winning control of more than a third of Continental’s shares through a web of options organized for it discretely by banks. Schaeffler’s bearings are found in London’s landmark Ferris wheel, the London Eye and it also makes high-precision bearing supports for the U.S. space shuttle and the European launch vehicle Ariane, not that that has any bearing on a deal.
Some suitors, however, do get lucky. Mining company Cleveland-Cliffs Inc said on Wednesday it would acquire Alpha Natural Resources Inc for about $10 billion in cash and stock to expand its coal assets. Stockholders of Alpha, an Appalachian coal producer, will receive 0.95 of a Cleveland-Cliffs common share and $22.23 in cash for each of their common shares when the union is completed. Based on closing stock prices on Tuesday, the deal values Alpha at $128.12 per share, a premium of 35 percent, the companies said in a statement. The combined company will be renamed Cliffs Natural Resources and will include nine iron ore facilities and more than 60 coal mines located across North America, South America and Australia.
More deals of the day:
** Shareholders of utilities Suez and Gaz de France are set to approve a long-delayed 100-billion euro ($159.5 billion) merger, creating Europe’s second-largest electricity and gas group.
** The Co-Operative Group has agreed a long-awaited deal to buy Somerfield for 1.57 billion pounds ($3.1 billion) to strengthen its position as Britain’s fifth-biggest food retailer.
** Russian real estate company LSR said it had acquired a property developer in Yekaterinburg in the Urals region for 100 million euros ($159.5 million).
