DealZone

Deals wrap: Groupon, LivingSocial in buying frenzy

Group buying sites Groupon and LivingSocial are both in the process of launching multi-billion dollar IPOs, but as Deal Journal reports, the companies are also “plowing full steam ahead with deal making.”

Shares of Dunkin’ Brands shot up as much as 56 percent on its first day of trading, closing at $27.85 by the end of Wednesday’s trading session. The parent of the Dunkin’ Donuts chain said it has set a 20-year target to open 15,000 new stores in the U.S., up from its current 6,800. This would surpass rival Starbucks’ numbers.

France Telecom is looking to put its Swiss, Austrian and Portugese units up for sale. Analysts say the sell-off could raise as much as $2.9 billion and pave the way for a return to shareholders.

Private equity and real estate firm Blackstone Group is in talks to buy healthcare IT company Emdeon, in a deal that could be valued at $3 billion, a source familiar with the situation told Reuters.

Goldman builds exposure to China insurance market

Having taken a nibble at the Chinese insurance market in December, helping number three life insurer China Pacific Insurance list a $3.1 billion IPO in Hong Kong in December, Goldman Sachs is taking a bigger bite at that most promising and enticing of global investments, China’s financial products industry.

Sources tell us that an investing arm of Goldman is in the final stages of an agreement to buy AXA’s $1.05 billion stake in Taikang Life, China’s No.4 life insurer. The deal would allow France’s AXA to shed a non-core asset, while granting Goldman a piece of China’s growing insurance industry, report George Chen and Michael Flaherty.

Several private equity firms, including Kohlberg Kravis Roberts & Co and Blackstone Group, competed in the Taikang auction, as did Singapore’s Temasek Holdings, sources have told them.

Simon says … higher bid

BoxingHere’s the latest twist in the General Growth saga: Simon Property says it is weighing a higher bid for its smaller, bankrupt rival and could come up with something within a week.  That’s not surprising.

When General Growth investors Bill Ackman and Fairholme Capital Management stepped up with $3.3 billion of fresh capital to shore up a Brookfield Asset Management-backed plan, Simon lost the edge it had with unsecured creditors. The unsecured creditors stand to get cash under both plans now. And experts said it was too early for Simon to walk away from the game.

For now, Simon is trying to take away General Growth’s excuses for rebuffing its bid.

DealZone Daily

U.S. mall owner General Growth Properties is looking to raise up to $2 billion from public markets to buy its way out of bankruptcy and fend off an unwanted takeover approach. The U.S. no. 2 is facing pressure to enter talks with market leader Simon Property Group, itself in discussions with Blackstone about the private equity firm co-investing in its bid.

National Australia Bank said it is actively pursuing AXA Asia Pacific, despite concerns the takeover fight for the regional arm of the French Insurer was distracting it and hurting earnings growth. The competition regulator last week raised concerns over an NAB-AXA alliance, bolstering the position of rival AMP.

Meanwhile, AXA Private Equity has entered exclusive talks to buy the private equity assets of investment bank Nataxis, which hopes to sell them for 507 million euros, plus a premium to valuation based on performance.

PE deals indicate lending thaw

NORWAY/Two very different deals announced Wednesday show that financing markets are starting to support larger private equity transactions again.

Still, large numbers of banks were involved in each deal and both involved a significant amount of the private equity firms’ own equity.

“It suggests there’s a little bit of thawing,” said Steven Kaplan, a professor of finance at the University of Chicago. “It suggests there will be a normal world at some point and they are both the kind of deals you’d expect to see in this environment — you don’t expect public-to-publics in this market.”

Window opening for clean tech IPOs?

The upcoming initial public offering of A123 Systems could help ease the way for more clean-tech stock offerings, one of the early investors in the battery maker said this week.
The company, which Chrysler has chosento produce lithium-ion batteries for its upcoming electric cars, set an IPO price range of $8 to $9.50 per share, which would raise up to $244 million, based on the 25.7 million shares it plans to sell.
“It will certainly be good for the sector just to get a real exit out there, both from a branding standpoint and from a  financing standpoint,” said Jamie Kiggen, chief investment officer for clean tech ventures at Blackstone Group, who in his previous job at Alliance Bernstein was an early investor in the Watertown, Massachusetts-based battery maker.
“If the IPO window opens up, that helps all of us,” Kiggen said at a Boston conference organized by the Cleantech Group.
A123 first filed its IPO plans with the U.S. Securities and Exchange Commission in August 2008. 
While the IPO market has picked up in recent months after a rough 2008, A123 would be the first U.S. clean tech company to go public since July 2008.

KBW analysts see asset manager deals

Asset managers are in for some deal-making as the sector tries to deal with the chinks exposed by the financial crisis, KBW analysts predict.”Stressed capital markets have depressed profitability at most asset managers and brought to the fore many of the challenges that have been confronting the industry but were obscured by the bull market,” the analysts write in a report.Some of the deal activity has already been playing out as divestitures by financial services companies, with negotiations ongoing for such units as AIG’s business and Bank of America’s Columbia.KBW’s analysts predict most acquisitions are likely to be smaller transactions.Possible buyers? Invesco, BlackRock, Bank of New York Mellon, Franklin Resources, Legg Mason, Affiliated Managers Group, Federated Investors, Blackstone, Fortress, GLG Partners and others have expressed a continued interest in acquisitions, they said.Those hungry for larger deals could include Franklin and Bank of New York Mellon, the analysts said, adding that they see little likelihood of deals between publicly traded asset managers.

Is KKR missing the boat?

Unnerved by sagging markets, storied private equity firm Kohlberg Kravis Roberts appears to be thinking of putting off its New York listing. The original plan was to buy its Amsterdam-listed fund and parlay it into a New York-listed entity.

Now, having watched Blackstone‘s stock tumble a gut-wrenching 68 percent since it went public two years ago, we hear KKR is leaning toward buying out the Dutch fund, known as KPE, but putting off the NYSE listing.

Separating the two plans would give KKR, co-founded by “buyout king” Henry Kravis (pictured left), the option of buying its Amsterdam-listed fund without the pressure of having to list at a difficult time to go public. The company could later decide to list under a different method if it desired, Megan Davies reports.

Debating ‘green shoots’

USAIs it a green shoot or just a less-brown twig? That’s the question posed by the Blackstone Group’s Chief Operating Office Tony James at the Keefe, Bruyette & Woods Diversified Financial Services Conference.
    
“These supposedly green shoots the government wants us to believe in — we see them as slowing rates of decline, not signs of growth,” James said.
 
Blackstone views the current economic crisis as worse than a typical recession, but not as severe as the Great Depression. The firm expects a faster rebound than seen after the Great Depression, but it will be more like “grudging regrowth” than a vibrant resurgence, James said.
    
Overall, James said the private equity firm was excited by investment opportunities but the firm would proceed with caution.

(Photo, of James at 2006 Reuters Summit, by Keith Bedford)

Plenty to go around

USA/Private equity company Blackstone Group CEO Stephen Schwarzman knows more about wealth than most people on this planet. By his estimate, the impact of the economic crisis has hit with the kind of devastating impact once reserved for descriptions of nuclear holocaust.

“Between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half,” Schwarzman told an audience at the Japan Society yesterday. “This is absolutely unprecedented in our lifetime.”

Schwarzman, whose $3 million Manhattan birthday party in 2007 is the stuff of legend, leveled a finger at ratings agencies, roundly blamed for assigning inappropriately high grades to mishmash securities.