DealZone

M&A wrap: Buffett trades off his reputation

Warren Buffett showed again that his name and money is enough to give a struggling company instant credibility in the market. But the legendary investor also demonstrated his canny command of that reputation means that deals such as the $5 billion investment in Bank of America can immediately generate profits.

Anglo-Irish bank has chosen preferred bidders for its $9.5 billion U.S. commercial real estate loan portfolio and aims to have completed that sale, the largest in the United States in recent years, before the end of the year.

Glencore, the world’s largest commodities trader, stood on the verge of its largest takeover bid since its May stock market listing, after South Africa’s Optimum Coal confirmed it had received approaches.

The New York Times’ Dealbook is reporting that Rio Tinto and the Mitsubishi Corporation have raised their offer for Coal & Allied to approximately $131 a share , valuing the company at about $11.6 billion.

The blogging service Tumblr is close to raising $75-$100 million in venture capital, implying a market value of $800 million, the Wall Street Journal reported, citing people familiar with the matter.

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.”

Deals wrap: Barrick strikes deal for Equinox

Barrick Gold said it will acquire Australia’s Equinox Minerals for more than C$7 billion ($7.36 billion), topping an offer by China’s Minmetals Resources. Barrick said it has committed cash and financing in place for the transaction.

NYSE Euronext sees higher savings of almost 400 million euros ($584 million) in its $9.8 billion deal with Deutsche Boerse, up by about a third from its initial estimates, according to a Big Board spokesman. The new savings estimate, along with 100 million euros in benefits coming from cross-selling and distribution opportunities, would bring the total savings and benefits from the deal to about $725 million.

All eyes will be on Warren Buffett at Berkshire Hathaway’s annual shareholder’s meeting next weekend, as he will undoubtedly face questions regarding the resignation of his presumed successor David Sokol. This piece in the New York Times examines Buffett’s hands-off management style, which may come under scrutiny after Sokol’s resignation following news of his dealings in Lubrizol prior to Berkshire’s acquisition of the chemicals company.

Deals wrap: Singapore Exchange’s ASX bid in trouble

Singapore Exchange (SGX) Chief Executive Officer Magnus Bocker (R) talks as Australia's ASX Ltd Managing Director and CEO Robert Elstone listens during a media briefing in central Sydney October 25, 2010. REUTERS/Daniel Munoz Consolidation in the Asian exchanges industry hit a roadblock on Tuesday when Australia said it intends to reject Singapore Exchange’s proposed $7.8 billion bid for Australia’s ASX on “national interest” grounds.

Although a final decision has yet to be made, share moves hinted that the market doubts the deal can be salvaged. All eyes will now be on other major exchange deals awaiting approval from regulators and politicians.

Texas Instruments is buying National Semiconductor for $6.5 billion, paying a hefty 78 percent premium to merge two of the industry’s oldest firms into a dominant force in analog microchips.

Deals wrap: What now for Berkshire?

David Sokol, Chairman, MidAmerican Energy Holdings, and Chairman, President, and CEO of NetJets, speaks during the Fortune Brainstorm Green conference in Dana Point, California April 13, 2010. Reuters/Mario AnzuoniWarren Buffett’s reputation as someone who prides himself on his transparency and handpicks managers who can run businesses in a similar manner, took a blow when David Sokol, widely seen as Buffet’s successor at Berkshire Hathaway, resigned after buying shares in chemical company Lubrizol Corp before pushing Buffett to acquire it. Sokol said he did nothing wrong. Analysts said any impact on Berkshire Hathway will be short-term but acknowledged that Buffet’s brand was damaged.

Other Berkshire execs seen as possible successors to Buffett include Ajit Jain, Berkshire Hathaway Reinsurance Group chief, repeatedly praised by Buffett for his running of the insurance business;  Gregory Abel, MidAmerican Energy Holdings CEO, who Buffet called a “terrific manager” and part of a “dream team” at the Berkshire-owned utility; and Matthew Rose, Burlington Northern CEO, who joined Berkshire after selling the No. 2 U.S. railroad company to Buffett last year for $26.4 billion.

Warren Buffett’s hunt for a large acquisition could lead to targets like Eaton, Illinois Tool Works or Cliffs Natural Resources, all of which seem to fit his recent preference for growth in industries outside of his core insurance unit, writes Michael Erman and Ben Berkowitz.

Deals wrap: AT&T’s crystal ball

The at&t logo is seen at their store in Times Sqaure in New York April 21, 2010. REUTERS/Shannon StapletonAT&T’s surprise $39 billion deal to buy T-Mobile USA from Deutsche Telekom will create a new leader in the U.S. mobile sector and likely draw scrutiny. The regulatory challenge will be predicting what the dominant form of communication will be 3 to 5 years from now, analyst Evan Stewart said. The deal will take a year to close, in which time customers are expected to see improved network quality, according to AT&T.

Sprint Nextel risks being further eclipsed by Verizon and the new AT&T, which together would boast 230.3 million customers in the U.S., compared to Sprint’s less than 50 million, writes Michael J. de la Merced and Jenna Wortham of The New York Times.

Citigroup plans to slash the number of common shares outstanding and reintroduce a dividend after suspending payouts two years ago, taking another step in its long recovery from the brink of failure during the financial crisis.

Deals wrap: Japan crisis may delay some IPOs

  The Glencore logo is seen on a sign in front of Swiss commodities trader Glencore building in Baar near Zurich January 5, 2010.

Extreme market volatility tends to make investors a jittery bunch. The deadly earthquakes and nuclear crisis in Japan will obviously have an immediate impact there, but the fallout from the catastrophe is expected to spread across the globe where it could delay or even cancel a slew of new share offerings and debt deals.

According to IFR, a Thomson Reuters publication, one major deal in the pipeline that’s at risk of cancellation is the planned $6-$8 billion London-Hong Kong IPO of Swiss commodity trading group, Glencore, a deal expected in May.

Institutional investors will be demanding a higher return on their investments, forcing stock and bond deals to expect lower valuations, or face being pulled all together. Glencore’s IPO may be the victim of bad timing.

Deals wrap: Warren Buffett’s zoo

An elephant sprays earth in the Tsavo East National Park, 280 km (173 miles) east of Kenya's capital Nairobi February 10, 2011. REUTERS/Noor KhamisElephants. Zebras. Berkshire Hathaway CEO Warren Buffett rolled out the animal metaphors in an interview on CNBC on Wednesday to explain that his company remains on the prowl for big acquisitions, which he calls “elephants”.

Buffett said they were hard to find, though, noting he’d lost a sizable one – a “zebra” – in recent days. “There aren’t many elephants out there, and not all of the elephants want to be in my zoo,” he said.

Yahoo is in talks to leave its Japanese joint venture, hoping to transfer its 35 percent stake to partner Softbank. If successful, the divesture could free up nearly $8 billion for the once-mighty Internet firm to compete with Google and Facebook.

Deals wrap: A successor for Buffett?

A fairly unheralded 44-year-old Chinese-American hedge fund manager, with a strong background as a human rights activist, has become a leading candidate to replace Warren Buffett, should he retire as founder and CEO of the $100-billion Berkshire Hathaway fund, according to the Wall Street Journal.

Li Lu, who was a student leader during the 1989 Tiananmen Square protests in Beijing, is the first person to be identified to potentially replace the soon to be 80-year-old Buffett, in what the WSJ story said is “among the most high-profile succession stories in modern corporate history.”

Buffett told the WSJ his retirement plans are not imminent and his job would likely be split after he leaves the company into separate CEO and investing functions. The WSJ story revealed David Sokol, the current chairman of Berkshire unit MidAmerican Energy Holdings, is considered the top contender for Buffett’s CEO role, while Li would potentially serve as one of Berkshire’s top fund managers.

How to get a job in business? Short Buffett

Raj Rajagopal will graduate from business school in May and he’s currently looking for a job. But don’t expect the Cornell University student to get a call anytime soon from Warren Buffett.

That’s because Rajagopal recently put together a report in which he recommended selling shares of Buffett’s Berkshire Hathaway in part because “adoration is not an investment strategy.” In short, Rajagopal said anyone who sinks money into Buffett’s empire is chasing past returns and buying shares “at the tail end of his career.”

Rajagopal’s 15-page presentation is making the rounds on Wall Street and being circulated by some hedge fund managers who aren’t particualy big fans of the so-called Oracle of Omaha.