DealZone

M & A wrap: Plan B for ING

Dutch financial services group ING Group has scrapped plans for a separate trade sale of its Belgian insurance business, worth 500 to 750 million euros, a person familiar with the deal said on Wednesday.

Sears “has been a mismanaged asset,” Gregory Melich, an analyst at International Strategy & Investment, said in a Bloomberg Television interview yesterday. “A lot of traditional department stores have reinvigorated themselves through merchandising, through changing their locations; you think of Macy’s. You haven’t seen that from Sears.” Yesterday the largest U.S. department store chain reported that it would close as many as 120 locations after same-store sales fell 5.2 percent in the eight weeks ended Dec. 25.

Whirlpool investors–already burned by a sagging stock in 2011–aren’t spending time trying to figure out what the impact of Sears’ planned store closings will be. They’re just bailing out, reports the Wall Street Journal. As Whirlpool has seen weak demand of its own this year, investors are seemingly done for now in waiting for turnaround signs. Shares are off 7 percent today to $47.57, pushing Whirlpool’s stock price down more than 46 percent for 2011.

Deutsche Boerse and NYSE Euronext have extended the deadline for completion of their planned merger to March 31 next year as they seek to convince European regulators to back the $9 billion deal.

Deal Book asks, how do you go from being one of the country’s most-renowned and respected business leaders to landing on the list of the Worst C.E.O.’s of 2011? Sydney Finkelstein, professor of strategy and leadership at the Tuck School of Business at Dartmouth College and author of “Why Smart Executives Fail” presents his list of the worst C.E.O.’s of 2011.

DealZone Daily

Friday’s highlights from Reuters:

The energy, finance, technology and healthcare industries are expected to be the hottest areas in a dealmaking market that in 2010 is likely to expand gradually from this year’s depressed levels. M&A totals $1.968 trillion so far in 2009, down 32 percent from full-year 2008 and down 53 percent from the record high in 2007, according to data from Thomson Reuters

A dizzying recovery in financial markets this year has upended the usual pecking order for fee-making in investment banking and turned the bonuses flowing from those fees into political dynamite. The shape of the fee pool has really changed materially over recent years,” said Simon Warshaw, co-head of investment banking for Europe, the Middle East and Africa (EMEA) at Swiss bank UBS, ranked fifth for global equity capital markets (ECM) issues and fees this year. Read the  story here.

And in news elsewhere:

The disposals Lloyds has agreed to as compensation for taking state aid were a “very fair deal” but it has no plans to sell the assets off soon, the banking group’s chief executive told the Financial Times.  Read the report here.

DealZone Daily

Thursday’s highlights:

National Australia Bank made a surprise trump bid for AXA Asia Pacific Holdings’ Australian and New Zealand units on Thursday, in a cash deal that would value all of the target firm at around $12 billion.  The bid tops an offer from Australian life insurer AMP Ltd, which had faced resistance from AXA Asia Pacific’s independent directors who were looking for a higher offer.

Private equity firm Apollo Management said it had agreed to buy Ohio theme-park company Cedar fair for $635 million. The total deal is valued at $2.4 billion including the refinancing of the firm’s outstanding debt.

And in news elsewhere:

Bailed out U.S. insurer American International Group plans to file a prospectus for a multi-billion dollar IPO of its Asian life insurance unit before Christmas, the Financial Times reported on Thursday.  The Hong Kong IPO of American International Assurance is expected to raise $10 billion to $20 billion, the paper said.

R.I.P. Salomon Brothers

It’s official: Salomon Brothers has been completely picked apart.

Citigroup’s agreement to sell Phibro, its profitable but controversial commodity trading business, to Occidental Petroleum today puts the finishing touches on a slow erosion of a once-dominant bond trading and investment banking firm.

When Sandy Weill (pictured left) staged his 1998 coup – combining Citicorp and Travelers, Salomon Brothers was a strong albeit humbled investment banking and trading force. Yet little by little, a succession of financial crises, Wall Street fashion and regulatory intervention has whittled away at the once-dominant firm.

Not long after the Citigroup was formed, proprietary fixed income trading –  once the domain of John Meriwether, was shut down after the Asian debt crisis fueled losses that Weill could not stomach.

from Summit Notebook:

Tax evaders on the run

  By Neil Chatterjee
    The U.S. has promised it will hunt down tax evaders.
    And it seems tax evaders are on the run.
    DBS bank, based in the growing offshore financial centre of
Singapore, told Reuters it had been approached by U.S. citizens
asking for its private banking services. But when told they would
have to sign U.S. tax declaration forms, the potential clients
disappeared.  
    Swiss banks also approached DBS on the hope they could
offload troublesome U.S. clients to a location that so far has
not been reached by the strong arms of Washington or Brussels.
    DBS said no thanks. In fact many private banks and boutique
advisors now seem to be avoiding U.S. clients.
    Will this spread to other nationalities, as governments
invest in tax spies and tax havens invest in white paint?
    Is this the end of offshore private private banking?

Phew! Due diligence done at last

Lloyds’ deal to buy HBOS was sealed in the time it takes to sup a few cocktails with Gordon Brown. But poring through the gung-ho mortgage lender’s books took nine whole months and many thousands of man hours.

Lloyds Banking Group on Wednesday admitted it had finally completed due diligence on HBOS, after agreeing to buy it in a shotgun marriage last September.

“Nine months after agreeing to purchase HBOS, it has finally completed its review of the assets at HBOS. This means … it has completed its due diligence of HBOS,” said Hank Celenti, analyst at Royal Bank of Canada.

Deals du Jour

Citigroup plans to sell 20 businesses in consumer finance, many of them located in Europe, its chief executive Vikram Pandit said in an interview with Singapore’s Business Times

He said the move was due to the shift in the consumer finance market where “there is less funding availability and they are probably less robust as businesses.”

Pandit also said that the group’s capital position following the completion of the exchange of preferred shares for common equity in July, reflected an “incredible financial strength.”

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.

Last week in columns

A visitor walks inside Attalos arcade at archaeological site of Roman agora in Athens

There’s been plenty of deal-related argument from the fast-expanding stable of Reuters columnists over the last week.

Anglo-Spanish dealmaking has a chequered recent history — look no further than Ferrovial’s (FER.MC) disastrous takeover of airports operator BAA. But this shouldn’t put British Airways (BAY.L) and Iberia (IBLA.MC) off fast tracking their planned tie-up to help stem losses, says Alexander Smith.

Tech columnist Eric Auchard says while Larry Ellison, Oracle Corp’s chief executive, “is not saying so directly yet … the unmistakable conclusion to draw is that he is ready to embark on a new wave of mergers to consolidate the business computer market, once the Sun deal closes.”

Canary Wharf’s bankers don denim, brace for protests

A man sits and another stands by a sign in the Canary Wharf financial district of London

Some in Canary Wharf swapped their emblematic pin-striped suits for more casual gear on Thursday as London’s banking bastion braced for anti-capitalist protesters.

“We have advised staff to dress casually and security around Canary Wharf has been tightened significantly,” said Robert Whitton, chairman of Whitton Investments, an investment management firm based in the district.

The majority of G20 protests are expected to migrate from the City of London towards the summit epicentre at the nearby ExCel complex in the London Docklands on Thursday. Businesses on the nearby Canary Wharf estate, which houses banks such as HSBC, Citi, Barclays, Bank of America and Morgan Stanley in a cluster of London’s tallest buildings, are on high alert for trouble.