DealZone

M & A wrap: A Buffett bailout for BofA

Warren Buffett’s Berkshire Hathaway will invest $5 billion in Bank of America, stepping in to shore up the company in the same way he helped prop up Goldman Sachs during the financial crisis.

Bank of America shares rose 20 percent in pre-market trading on the news. Shares for the largest U.S. bank by assets have lost roughly a third of their value in August, and half their value since the beginning of the year.

The news of Steve Jobs’s resignation had many of his peers weighing in on the Apple co-founder’s legacy. Former Google CEO Eric Schmidt said Jobs is the “most successful CEO in the U.S. of the last 25 years,” while former eBay CEO Meg Whitman said his contributions are “unparalleled in the business world.”

Samsung Electronics Co reiterated on Thursday it is not interested in buying Hewlett-Packard Co’s PC business, shooting down persistent market talk the South Korean firm may snap up the unit to become the world’s top PC maker.

The deadline for initial bids in the auction for Hulu was extended until the end of the week to allow interested parties more time to examine the online video site’s financial information, according to people familiar with the situation. Yahoo, Google Inc, DirecTV and Amazon.com were among the parties preparing to submit an offer for the U.S. online company, the people said.

Deals wrap: Shell games

A new Reuters investigative report takes a deeper look at a niche industry of advisers who specialize in so-called “reverse merger” deals that use shell companies to give clients easy entry into U.S. capital markets. As correspondents Nanette Byrnes and Lynnley Browning report, more than 400 Chinese companies have been listed in the U.S. over the course of the last decade by way of this back-door method. But, as their investigation shows, a recent “spate of spectacular collapses of Chinese stocks listed on American exchanges has cost U.S. investors billions of dollars” and sparked multiple investigations into the practice.

Job cuts are on the way at HSBC. Europe’s biggest bank announced plans to axe 30,000 positions between now and the end of 2013 as it retreats from countries around the globe where it is struggling to compete. The first 5,000 cuts came as part of the company’s restructuring efforts across Latin America, the U.S., Britain, France and the Middle East. The bank, which posted a surprise rise in first-half profit on Monday, is reversing a strategy that had been criticized for “planting flags” around the world. CEO Stuart Gulliver’s far-reaching plan unveiled three months ago aims to slash costs and he intends to sell, shut or slim down retail banking in 39 countries. HSBC said on Sunday it would sell 195 U.S. branches to First Niagara Financial for about $1 billion in cash, and close another 13 of the 470 sites it had.

Peabody Energy and ArcelorMittal launched a hostile $5.2 billion bid for Macarthur Coal after the Australian target’s board said the approach undervalued the company and it was working on attracting a rival offer. Peabody, the largest U.S. coal company, and ArcelorMittal, the world’s top steelmaker, have been courting Macarthur to secure its resources of pulverized coal, a key steelmaking ingredient, but talks to get the backing of Macarthur’s board collapsed over the weekend.

Deals wrap: Express Scripts’ CEO steps into the spotlight

For a self-described nerdy accountant who shuns attention, Express Scripts chief George Paz just thrust himself into the limelight, reports Lewis Krauskopf. The company’s planned buy of Medco Health Solutions  met with swift opposition from consumer advocates and drug stores, signaling the beginning of what could be an ugly fight for antitrust approval.

Len Blavatnik’s Access Industries, Sony Music Entertainment and Vivendi SA’s Universal Music Group are among the music companies and private equity firms interested in buying EMI Group, people familiar with the situation said.

Apple is in early talks to join the bidding for Hulu, the online video site that Walt Disney Co, News Corp and its other owners have put up for sale, Bloomberg cited two unidentified sources as saying.

Deals wrap: Zynga files for IPO

Zynga Inc filed paperwork for an initial public offering on Friday, the latest in a series of hot social media companies to seek capital in the U.S. public markets. The company, which is behind a series of popular games on Facebook, said it hoped to raise up to $1 billion. It did not specify the number of shares it plans to sell or give an expected price range.

A group including Apple, Research In Motion and Microsoft will pay $4.5 billion to snatch Nortel Networks’ patents from under the noses of Google and Intel, stealing a march on their rivals in a litigious market. Bankrupt Nortel had put up for sale 6,000 patents and patent applications in the largest public sale of its kind, a potential treasure trove for latecomers to the market such as Apple, Google and Intel.

Belgium’s KBC Group  is expecting around eight to 10 first-round offers for its private banking arm KBL, people familiar with the matter said, after attempts to sell the business for $1.9 billion failed in March. Bidders are expected to include corporate suitors and private equity firms from across the globe, the person said, and a shortlist for the next round will be drawn up in about a week.

Deals wrap: Investors willing to overlook LinkedIn’s risks

LinkedIn’s IPO, which is expected to price after the close of U.S. markets on Wednesday and start trading on Thursday, appears set to be a stunning success, but it carries a number of risks that may shake up investors in the future.

Potential risks include LinkedIn’s gutsy bet on future growth, an admission that it does not expect to be profitable in 2011 and the prospect of having its site blocked, which would limit its user base and could curtail some of the potential growth so attractive to investors.

After two years of losses, LinkedIn finally made money for its common stockholders in 2010 — but then it was back to only breaking even in the first quarter of 2011. A profitable company flatlining or swinging to a loss in its first year as a publicly traded stock could prove an unwelcome surprise for investors betting on the booming growth of social media companies.

Deals wrap: Facebook investors look for exits

A group of Facebook shareholders is seeking to offload $1 billion worth of shares on the secondary market, a sale that would value the company at more than $70 billion, according to sources. It would represent one of the largest transactions of Facebook shares to date and points to a growing wariness among early-stage investors and employees who fear the social networking service’s growth cannot keep pace with its market valuation.

The sellers have lowered their price after previously trying to offload shares at a price that valued the company at $90 billion, but buyers balked.

Power company Exelon Corp is set to buy rival Constellation Energy Group for $7.9 billion, which will add 1.2 million customers to its existing 5.4 million. The Exelon-Constellation deal is the latest in a series of acquisition in a fragmented U.S. utility industry that faces new costs to upgrade power grids and meet environmental controls.

Deals wrap: Icahn turns inward

Investor Carl Icahn speaks at the Wall Street Journal Deals & Deal Makers conference, held at the New York Stock Exchange, June 27, 2007.  REUTERS/Chip East Seems billionaire investor Carl Icahn has had enough of managing money for outsiders. The 75-year-old stock picker dropped a bit of surprising news on Tuesday when he said he plans on returning all of his clients’ money, making him the latest in a string of investors to do so.

Barnes & Noble’s bid to reinvent itself as a formidable competitor in the burgeoning e-books sector is off to a solid start. Its Nook is the second best-selling e-reader on the market behind Amazon’s Kindle, and the book chain’s chief says it has 25 percent of the e-books market.  So why can’t the bookseller find any buyers? Reuters correspondents Phil Wahba and Jessica Hall take a closer look in a new piece.

Jury selection in the trial against Galleon Group hedge fund founder Raj Rajaratnam kicks off the action today in a case at the heart of the biggest insider trading investigation in a generation.

Deals wrap: Just one word – plastics

A worker sorts plastic bottles at a recycling centre in Hefei, Anhui province November 10, 2010. REUTERS/StringerPlastics. They don’t glitter like gold does, but more top hedge fund managers are betting on the chemical commodities that go into making plastics and buying up shares in the companies that produce them.

The Smart Money 30, a group that includes some of the biggest stock-picking equity funds, also trimmed bets on tech giants Apple and Google while favoring General Motors and Citigroup, according to data compiled by Thomson Reuters.

What’s the easiest way to boost your company’s reputation? Buy up a top global brand. At least that’s the advice being given to top Chinese companies by the country’s commerce minister, who is urging the country’s firms to seek out new foreign acquisitions in an effort to secure more name recognition abroad.

Deals wrap: What’s next for Apple?

Apple Chief Executive Steve Jobs smiles after the Apple's music-themed September media event in San Francisco, California September 1, 2010. REUTERS/Robert GalbraithShares of Sony rose nearly 3 percent at one point on Tuesday, but later retreated as analysts dismissed speculation that the electronics maker could be an acquisition target of Apple. *View article *View WSJ article looking at an Apple tie-up with Netflix

Warren Buffett’s Berkshire Hathaway said hedge fund manager Todd Combs would join the firm, potentially bringing the company a step closer to solving Buffett’s succession puzzle.*View article *View background article on Todd Combs

The NYT’s Andrew Ross Sorkin delves into SEC insider trading laws and how they apply to two rail yard employees facing charges. *View article

from MediaFile:

HP buys Palm — who cares?

HP’s deal to buy Palm underlines the keenness of PC vendors to jump into the booming smartphone game, but will likely have very little impact on the smartphone market. HP has agreed to pay $1.2 billion for loss-making Palm, best known in recent years as the investment target of U2 lead singer Bono. The firm only sold 2.4 million smartphones in the last 12-month period, giving it just over 1 percent of the market.

In the last few years all top PC vendors — including Acer, Lenovo and Dell — have rushed to the surging smartphone market hoping to boost profits. So far only Apple has succeeded, and it has taken over two years for it to build up global phone distribution.

Top smartphone vendors Nokia, RIM and Apple boast much higher profit margins than PC vendors. HP’s gross margin for its most recent quarter was 22.8 percent, just half Research in Motion’s 45.7 percent margin, while Apple’s was 41.7 percent.