DealZone

Deals wrap: Bank M&A hope in 2011

Bank of Montreal (BMO) Financial Group President and Chief Executive Officer Bill Downe addresses shareholders at the annual general meeting in Winnipeg, Manitoba March 23, 2010. REUTERS/Fred Greenslade The new year is offering hope to deal advisers, as U.S. bank M&As promise to return at a healthy clip after three years of gloom. The return of the mega transaction, however, is still some time away, writes Paritosh Bansal.

Norilsk Nickel launched a $4.5 billion share buyback after failing to persuade co-owner UC RUSAL to sell its 25 percent stake in the company, opening a new front in core shareholder Vladimir Potanin’s campaign to secure strategic control over the world’s top nickel and palladium miner.

After record solar-plant approval in 2010, the California Energy Commission believes its “big push” in solar-thermal projects is over.

Over a year after its acquisition, Mint may be getting stale, writes TechCrunch’s Jason Kincaid.

Marty Lipton walks through his motivations for developing the poison pill during the hostile takeover boom of the 1980s on TheDeal TV.

Deals wrap: Irish banks soon to march to new drummer

ECONOMY-GLOBAL/Ireland’s top three banks will soon be answering to a new boss: the Irish government. Ireland is set to take a majority stake in top lender Bank of Ireland as part of a massive international bailout that could leave the state with effective control of the country’s top three banks.

The state’s ownership of Bank of Ireland could rise to near 80 percent from 36 percent now under the EU/IMF-funded bailout, put at up to 85 billion euros ($114 billion), and Allied Irish Bank could join Anglo Irish Bank in being fully nationalized. Both Bank of Ireland and Allied Irish Bank have lost about 40 percent of their value this week as shares plunged on capitalization fears.

But perhaps private investors should not be so quick to flee Ireland – at least that’s the message Wall Street Journal sends to brave investors in a piece that lays out five ways to bet on Ireland now. The list implies there could be money to be made amidst all the chaos, drawing parallels between the current Irish predicament and the similar one the “tiger” economies of Asia faced in 1998.

Deals wrap: Wanna buy an Irish bank?

Ireland’s banks are up for sale, the country’s central bank chief said, as the government seeks to cut them down in size after their reckless lending forced the country to seek an international bailout.

Shares in Bank of Ireland tumbled 29 percent and Allied Irish Banks lost 17 percent as shareholders face dilution from more capital injections, that could see AIB effectively nationalized.

Fortune’s Dan Primack observes how Republican Senator John McCain once used Ireland’s low corporate tax rate as a fiscal beacon, during his presidential run against Barack Obama. “Ireland considers the corporate tax rate to be a cornerstone of its economic well-being, but today that’s like saying that the Vikings consider Brett Favre to be a cornerstone of this year’s Super Bowl hopes,” writes Primack.

from Financial Regulatory Forum:

Financial regulation scorecard

A House-Senate conference committee must find a middle ground between financial regulation bills passed by the two chambers. The committee's final report could differ from earlier versions.

Once approved by both chambers, the compromise legislation will go to President Barack Obama to sign it into law. That could happen by July 4, analysts say.

Here's a look at the status of major points in the House and Senate financial regulation bills.

DealZone Daily

Sberbank, Russia’s biggest lender, is lining up a bid for the 21 percent stake in Turkey’s Garanti Bank that is being sold by General Electric, a source close to the deal tells Reuters. The stake in the most actively traded stock on the Istanbul bourse is worth $3.7 billion at current market prices. Read the story here.

And in news from other media on Tuesday:

Marsh & McLennan, the number two global insurance broker, has put its security consulting business Kroll up for sale for $1.3 billion, the Financial Times said.  Carlyle, Apax, BC Partners, General Electric and two trade bidders made first expressions of interest in late February, the report says.

Prudential shareholders have been given assurances they will share in the lucrative underwriting of the insurer’s record $21 billion rights issue to head of a brewing row between investors and the company, the Telegraph said, citing sources close to the company.

RZB value = zero? Markets think so

Emerging Europe’s No.2 lender Raiffeisen International and its unlisted parent, cooperative bank RZB, on Feb. 22 preempted a Reuters scoop and disclosed that they were considering to put their businesses together. This would add to Raiffeisen’s business, currently exclusively in the former Communist part of Europe, a franchise serving large Austrian and international companies and institutional investors. Analysts and investors have been concerned because they can’t easily put a value on RZB’s business ex-Raiffeisen, and many fear they may be put at a disadvantage in the merger. The 21 percent drop in Raiffeisen’s shares makes it possible to quantify this concern. Raiffeisen International CEO Herbert Stepic (L) and RZB CEO Walter Rothensteiner address a news conference in Vienna February 26, 2010. Stepic and Rothensteiner reiterated they had not yet made a decision about a possible merger, but said they thought this was the right step to take. REUTERS/Heinz-Peter Bader Raiffeisen International CEO Stepic and RZB CEO Rothensteiner address a news conference in Vienna. REUTERS/Heinz-Peter Bader

The planned deal – which Raiffeisen and RZB say is still only one of several options – would be implemented under a procedure known as statutory merger in German and Austrian share law. Here’s how it works: Auditors – one for each company and a third, appointed by a court – review the two companies business plans for the next 10 years and from that derive a valuation for each of the two companies. Based on that valuation, they calculate an exchange ratio for the swap of both companies’ current shareholdings into the shareholdings in the new, merged company.

Since RZB already owns 70 percent of Raiffeisen, the new company’s equity value will equal that of RZB (as determined by the auditors) plus that of Raiffeisen’s current free float of 30 percent. Or, to put it the other way round: The free float in the new company will be calculated as:

DealZone Daily

U.S. industrial gas supplier Air Products and Chemicals Inc launches a hostile bid to buy rival Airgas Inc for about $60 per
share in cash, in a deal valued at about $7 billion including assumed debt.

Deutsche Telekom is considering an initial public offering or spinoff of its U.S. wireless service T-Mobile USA, the Wall Street Journal reports, citing people familiar with the matter. T-Mobile USA could have an equity value of around $20 billion, the Journal says.

There’s plenty of other M&A and corporate finance news reported by Reuters and other media on Friday. Highlights include:

DealZone Daily

Australian wealth manager AMP Ltd will not seek to extend its exclusive agreement with France’s AXA SA on a joint $11.4 billion bid for AXA’s Australian unit, sources tell Reuters, opening the door for rival bidder National Australia Bank Ltd to start talks with AXA SA.

Shares in Thailand’s Thanachart Capital jump ahead of the announcement of the winning bid for a stake in Siam City Bank (SCIB), for which its Thanachart Bank is the frontrunner. Kaohoon newspaper reports that Thanachart Bank, also 49 percent owned by Canada’s Bank of Nova Scotia, has put in the highest bid of around $958 million for the 47 percent stake, beating HSBC.

In other M&A and corporate finance news reported by Reuters and other media on Wednesday:

DealZone Daily

Three U.S. private equity firms have been shortlisted to buy Morgan Stanley’s more than $1 billion stake in China International Capital Corp, a holding the Wall Street bank has been trying to sell since late 2007.

Kohlberg Kravis Roberts, Bain Capital and TPG Capital are competing to win the chance to acquire a stake in China’s best known and most profitable investment bank, sources tell Reuters.

In other M&A and corporate finance news from Reuters and other media on Tuesday:

DealZone Daily

ING Group completed the sale of its Asian private banking unit to Singapore’s OCBC, the biggest deal in the private banking sector since the financial crisis. Netherlands-based ING said the sale is in line with its strategy to focus on fewer franchises and reduces the group’s complexity.  Read the Reuters story here.

Spain’s Ferrovial has no plans to tap equity markets in 2010, though its British airport operator BAA will continue to raise cash through bond issuance, chairman Rafael del Pino told Reuters on the sidelines of the World Economic Forum.

And in other news:

Bank of New York Mellon Corp is in late-stage talks to buy a PNC Financial Services Group business for about $2.5 billion, the Wall Street Journal reported, citing people familiar with the matter. Pittsburgh-based PNC has been shopping its PNC Global Investment Servicing business and a deal could come as soon as next week, says the report.