DealZone

In an attempt to thwart a $39-billion hostile takeover bid by BHP Billiton, Potash Corp has turned to China to try to find a white knight, according to the Globe and Mail. The Canadian miner is hoping that China’s worries over BHP getting control over the global potash market will lead to a consortium of companies submitting a rival bid, said the Globe.

“It is a viable option,” an unnamed source close to Potash Corp told the Globe, adding the venture posed some significant challenges in finalizing a consortium’s structure. The bid being considered would include some major capital from a Chinese resource company or investment fund, with smaller contributions from international sovereign wealth funds and possibly Canadian players such as pension funds. *View article*

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Smartphone maker Motorola, looking to boost its social networking content, has acquired German software company Aloqa GmbH, according to Reuters. The privately held Aloqa, which has developed a location-based social software, has joined Motorola’s Mobility division, which comprises the company’s set-top box and cellphone businesses. Terms of the transaction were not disclosed. *View article*

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In a move that may portend well for the passage of carbon emissions legislation in the U.S., power company NRG Energy said it would buy privately held cleantech company Green Mountain Energy for $350 million in cash, according to Reuters. *View article*

Acquisitive by nature, with a famed M&A team at hand and a couple of different bids already in the market, Cisco Systems is no stranger to stakeholders in its takeover targets trying to get a better deal. So news that investors holding 24 percent of the shares in videoconferencing firm Tandberg have snubbed Cisco’s $3 billion bid shouldn’t rattle the company too much.

A Norwegian analyst figured it was possible Cisco might raise its 153.50 crowns-per-share bid by 11 percent. But investors aren’t nearly as optimistic about Cisco opening up its wallet or a rival bidder emerging. Tandberg shares are hovering at only about a crown above Cisco’s offer price, even after the call to arms from existing shareholders.

The one-month tender period for Tandberg shareholders began on Oct. 9, and Cisco needs acceptances from at least 90 percent of shareholders to fully acquire the company. Analysts say it could opt for a smaller stake if the price for the whole company isn’t right.

Only a week to go before decision time and it looks increasingly as though Xstrata boss Mick Davis has already made up his mind and opted to walk away from making a formal bid for mining rival Anglo American.

Reuters correspondent Raji Menon quotes an unnamed top-10 shareholder in Xstrata saying: "They have pretty much indicated to us that they will be walking away".

This makes sense -- nothing has changed since Xstrata got a "put up or shut up" notice from the UK's Takeover Panel, giving it until October 20 to make a formal offer or walk away for six months.

So Cadbury has succeeded in convincing the UK's Takeover Panel -- the City of London body which polices M&A -- to slap a "put up or shut up" order on Kraft.

Kraft now has until Nov. 9 to decide whether to make a formal offer for the British confectionery group. If it decides to walk away, it is not allowed back for six months.

Cadbury shares are still trading above the price of Kraft's informal stock and cash offer. At just over 8 pounds per share, the current price is some 10 percent above the indicative offer, which is now worth just 7.20 pounds. But shareholders in Cadbury -- which is a household favourite in the UK -- aren't being that ambitious in their expectations for an improved offer. The shares are trading at nowhere near the multiples which were initially bandied about after Kraft's approach became public.

More big consumer brands are being dealt across the Atlantic. With Kraft’s bid for Cadbury churning, consumer goods giant Unilever plans to pay 1.275 billion euros ($1.87 billion) for a chunk of Sara Lee’s personal care brands, helping the cake maker sheds non-core businesses to focus on food. Sara Lee shareholders are sweet on the deal – bidding the stock up more than 9 percent in early trade. In a space reserved for winners and losers, this deal looks like it has natural benefits for both parties.

The asset sale is quite a bit less rich than the chocolate deal, which is for the whole of Cadbury rather than just its brands, the soap business brings with it a fresh scent of a recovery in deals activity. It is the first major acquisition for the Anglo-Dutch company’s new Chief Executive Paul Polman, and Sara Lee’s CEO Brenda Barnes is still only half-way through her business-shedding exercise.

Credit Suisse analyst Charlie Mills said the price Unilever is paying of 10 times core operating profit, or EBITDA, is not huge by industry standards, reflecting the fairly disparate collection of assets. Brylcream hair gel is part of the mix.

Kraft's offer for Cadbury got off to a sticky start on Tuesday when the U.S. food group's stock fell 6 percent, taking some of the buzz out of Cadbury's bid-fuelled share price.

Kraft's initial offer has raised expectations of a higher bid, but while it is likely to have to pay more to win, the take-out prices now being touted are stretching the value of the British confectionery group further than a Curly Wurly.

The multiple paid by Mars to Wrigley -- some 17.5 times EBITDA -- has encouraged analysts to look for a valuation of 15-16 times forecast 2009 EBITDA, implying a price of 10 pounds or more, against Kraft's 7.16 pound per share offer after the fall in the Kraft price. The Cadbury share price also gave up some of its gains, but is still well above the value of the bid.

    Anglo American hasn't yet received a formal bid from Xstrata. But the miner's interim results read very much like a defence document.
    The highlights alone give a pretty good idea of what chief executive Cynthia Carroll and new chairman John Parker will focus on if Xstrata does eventually pounce.
    Anglo's case hinges on four things.
    First, that its plan to cut $2 billion of costs by 2011 is ahead of target. Second, that it is getting on top of its $11 billion net debt, and third, that progress is being made in restructuring its problem child Anglo Platinum <AMSJ.J>. Lastly, Anglo acknowledges that it is an objective to reinstate the dividend.
    Added to these elements, lest they appeared to have too defensive a flavour, is the promise of growth, largely through its Minas-Rio iron ore project in Brazil and its Los Bronces copper development.
    Of these, cost savings are a crucial point of contention in the Xstrata debate, with the rival miner's chief executive Mick Davis confident he can squeeze a further $1 billion out of a combination with Anglo, taking the total to $3 billion.
    Anglo isn't making any promises beyond those already given but the tone of the language -- which includes talk of being ahead on "asset optimisation", procurement and job reductions -- hints that it may be able to find more savings on its own, without handing anything to Xstrata.
    So far the market seems largely happy to let Carroll stick to her plan -- highlighting Anglo's leading position in platinum, diamonds and iron ore alongside its cost cutting success. But investors might ask more searching questions in the event that Xstrata did come back offering a premium.

Australian miner OZ Minerals said its shareholders approved the sweetened $1.4 billion deal by  Chinese state-owned Minmetals’ to buy most of the indebted miner’s assets. For today’s headlines, click here.

And in the newspapers:

* Turquoise, the European equity system owned by nine investment banks, was forced to close on Wednesday morning because of a technical problem, Financial News said.

* The New York Times Co has hired Goldman Sachs to manage the possible sale of The Boston Globe, and plans to request bids in the next couple of weeks, The Boston Globe reported.