Deals wrap: Nasdaq getting hostile with NYSE
Nasdaq OMX Group Inc, not wanting to be left out in the cold of the global mergers frenzy among exchanges, is closer to making a counter-bid for NYSE Euronext, a source familiar with the situation said. Nasdaq would finance the transaction with up to $5 billion in debt and would most likely have to sell Euronext’s Liffe derivatives business to IntercontinentalExchange Inc to raise the needed capital.
If successful, such a counter-offer would redraw the global exchange map and thwart yet another merger plan by Germany’s Deutsche Boerse.
Even though the Nasdaq group has several options to go forward with a bid for NYSE, Michael J. De La Merced of The New York Times thinks Nasdaq will find itself hard pressed to stay alone as its competitors bulk up through a series of mergers.
Private equity firm Apollo Management is expected to set terms today for its long-expected initial public offering that could be up to $500 million in size, four sources familiar with the situation said.
A listing would see Apollo join Kohlberg Kravis Roberts & Co and Blackstone Group in becoming one of the few publicly-traded private equity firms.
Speaking of KKP, the buyout giant kicks off its first ever investor day and is boasting it has more than $11 billion available to buy companies.
DealZone Daily
Sigh of relief for Cadbury? Hershey and Ferrero may join forces to launch a rival bid for Kraft‘s offer for the British confectioner, a source tells us. On a rather much smaller scale, Cosmo Pharmaceuticals plans to buy rival BioXell for around $40 million, it says. For these and all other Reuters stories on deals, click here.
Plus a look at other media (some links may require subscription):
Hyundai Motor Co is planning to sell off its stake in affiliate Hyundai Mobis Co in a block trade to comply with antitrust rules, according to online media provider eDaily.
Apollo Management, the private equity firm headed by former Drexel Burnham Lambert executive Leon Black, is planning to list on the New York Stock Exchange, the Financial Times says.
Nippon Telegraph and Telephone Corp has entered the race to buy a majority stake in Patni Computer Systems, the latest in a string of potential suitors eyeing India’s No. 6 software services firm, the Economic Times says.
Did the crackdown on illegal workers cost Apollo $76.5 mln?
EuroFresh, a leading producer of greenhouse tomatoes and cucumbers, filed for Chapter 11 bankruptcy protection Tuesday, partly blaming crackdowns on undocumented migrant workers for its woes.
In a bankruptcy filing in Arizona, where it is based, EuroFresh essentially said the government’s actions has raised demand for workers with legal papers, making them scarce.
“The pool of illegal immigrant labor in the area surrounding the Facilities shrank, creating higher overall demand for legal immigrant labor,” the company complained.
One might wonder whether this particular bankruptcy might prompt investors such as Apollo Investment Management, Barclays and JP Morgan, which hold millions of dollars to join the ranks of corporations such as Microsoft urging immigration reform including more visas.
As unsecured creditors, pretty much at the bottom of the totem pole, the three investors stand to lose $76.5 million, $47 million and $35 million respectively because of the bankruptcy.
PE feeds on Bankruptcies
Back in February, Apollo Management founder Leon Black said he expected no return to the leveraged buyout salad days for at least two years, and that his and other dens of private equity would have to make do on paltry meals of distressed debt until then.
That carrion diet is still the order of the day. Caroline Humer reports that Apollo plans to take ownership of most of Charter Communications through the cable company’s reorganization in bankruptcy court. Citing three sources familiar with the situation, she says Apollo, which has purchased Charter’s debt, plans to own the majority of its equity following the bankruptcy restructuring, which includes a preplanned reorganization of its debt and an equity rights offering.
Apollo’s move seems to be more evidence that what Black said in Germany earlier this year is settling into the permafrost of the great credit freeze. “The big public-to-privates are gone the way of the dodo,” he said.
If financing really thaws (and we note ominously that a freak snow storm, heavy enough to bury several legions of groundhogs, is hitting midtown Manhattan this morning), Black said he would invest the last half of his latest fund in traditional buyouts.
Deals of the Day:
* Skincare specialist Stiefel Laboratories Inc is considering selling itself in a deal that could be worth more than $3 billion.
* Indian Oil Corp and the Indian unit of Royal Dutch Shell are front runners for buying a 50 percent stake in Reliance Industries’ retail fuel business, the Economic Times said on Friday.
Apollo’s Huntsman problem keeps on giving
The dispute over the dead Huntsman deal is going further than litigation over the break-up fee.
Apollo was seen by some as getting off lightly by settling the deal for $1 billion rather than slugging it out in court. But LPs might not be so happy about how they’re handling who pays the various pieces of that. Dan Primack at our sister publication PEHUB reports the details here.
Huntsman’s break-up payday
To terminate its $6.5 billion deal to buy Huntsman, Apollo Management’s Hexion Specialty Chemicals had to cough up $1 billion in fees and charges. This follows the long-awaited collapse of the private equity bid for Canada’s BCE last week, which cost buyers C$1.2 billion in break-up charges.
Hexion agreed to buy Huntsman in July 2007. The deal faltered amid the credit crisis. Apollo tried to walk away, citing insolvency concerns about the combined company.
But with a hefty break-up fee in its pocket – almost as much as its diminished $1.4 billion market cap – Huntsman is looking to settle what could be an even bigger score.
Huntsman sued twice over the deal – once in Delaware to force Hexion to go through with it, and once in Texas alleging that Hexion’s bid scared off another potential suitor, Basell.
The Texas suit could feature a big pay-off. Given its record so far is 1-0, and the Lone Star state is known for its plaintiff-friendly juries, Huntsman can be forgiven for looking to the courts for a little confidence. It isn’t getting much from the market. Huntsman shares sank 17 percent in premarket trade Monday.
Deals of the day:
* ArcelorMittal, the world’s largest steelmaker, said it sold part of its stake in German plate mill Dillinger Huette for 777 million euros ($1.03 billion).
Hexion fight vs Huntsman weakened by its own results
Hexion’s weak quarterly results are going to hurt the chemical company and its private equity owner in more ways than one.
It could take away the punch in their argument against Huntsman, the company that they once wanted to buy.
Hexion and its parent Apollo Management agreed to buy Huntsman for $6.5 billion a year ago, but the deal has been in jeopardy since June, when Apollo and Hexion filed suit against Huntsman seeking to limit their liability in the event that their proposed buyout falls apart.
Apollo Management and Hexion are hinging their argument on an exit clause, which could allow them to walk away from the deal if Huntsman’s business suffers a materially adverse change.
They were quick to point out a month ago that Huntsman’s 19 percent decline in second-quarter operating profit was proof it had.
Now, Hexion has posted a 30 percent decline in operating profits, after excluding a merger related write-off.
Huntsman buyout hits the rocks
Private equity buyouts of Clear Channel and BCE have already gone to court due to tightening credit markets, and now it looks like Apollo Management’s $6.5 billion buyout of U.S. chemical company Huntsman Corp may be next. Apollo’s Hexion Speciality Chemicals filed a lawsuit against Huntsman on Wednesday that would seek to limit its liability if the deal falls apart, saying financing for the buyout– one of the last still to close from the private equity boom of 2007 — was in jeopardy because of Huntsman’s weakened financial position. Huntsman called the move “a blatant attempt to deprive our shareholders,” and a countersuit seems to be all but inevitable.
Spanish retail bank Santander is looking at taking over insurer Allianz’s loss-making Dresdner Bank, according to sources familiar with the matter. Commerzbank, Germany’s second-biggest bank, is already in advanced talks about a deal with Dresdner. But foreign banks like Santander are keen not to miss a rare chance to get a foothold in Europe’s biggest economy, whose banking market is largely closed to outsiders because of the dominance of not-for-profit community savings banks.The Dresdner sale is only part of the merger mania in Germany’s banking sector: Top retail bank Deutsche Postbank is also up for sale and Citigroup is selling its retail business here.
Vodafone has dropped out of the auction for Tiscali, according to the the Financial Times, driving the Italian broadband company’s shares down more than 9 percent. Vodafone had been seen as the most likely buyer for Tiscali as it could acquire both the Italian and British divisions to combine them with existing assets. BSkyB and Carphone Warehouse, Italy’s Wind and Swisscom are still in the frame, and the FT said that Vodafone could even re-enter the process if an agreement with the remaining bidders could not be reached. At a time of tight credit markets, slowing consumer spending and flagging broadband growth, it seems that bidders can afford to play hardball.
More Deals of the Day:
** Google Inc and Yahoo Inc face intense U.S. Justice Department scrutiny of their deal to share some advertising revenue, and the heat will likely increase under a new administration, antitrust experts said.
** French drugmaker Sanofi-Aventis plans to make a 40.04 billion crown ($2.6 billion) offer for Czech drugmaker Zentiva trumping a bid from financial group PPF. ** Miner BHP Billiton Plc/Ltd is due to file with Chinese competition authorities this month for its planned $170 billion takeover of Rio Tinto Plc/Ltd, but lawyers said a new anti-monopoly law threw up uncertainties.
** Healthcare technology company MEDecision Inc said on Wednesday it agreed to be bought by insurer Health Care Service Corp for about $121 million, or $7 a share.
Hi,
Ive just got back for a telecom’s conference in Dubai, the place was buzzing with rumours that a group of investors from the middle east is about to put in a bid for Tiscali UK to add to their existing telecoms portfolio. The main rumours were that the group was lead by either a influential Kuwait or Saudi investor.
It certainly sounds like a interesting deal for all concerned, suites me working for a IPTV services provider.
Does anybody else have any information on this?
Kirt
