DealZone

DealZone Daily

Friday’s highlights:

Citigroup Inc could pay commercial and investment banking bonuses for 2009 that are similar to 2008 levels, and may cap individual cash payouts at about $60,000, according to people that have been briefed on the plan.

CF Industries Holdings Inc (CF.N) withdraws its year-long hostile bid to buy rival fertilizer maker Terra Industries Inc (TRA.N) on Thursday, bringing a three-way battle for control of the North American fertilizer business closer to a conclusion.

Shiseido Co Ltd, Japan’s largest cosmetics company, agrees to buy U.S.-based Bare Escentuals Inc for $1.7 billion, as it looks to revamp its global brand and expand in North America.

Billionaire investor Wilbur Ross says he’s “quite possibly” interested in teaming up with Richard Branson’s Virgin Money to bid for state-owned British bank Northern Rock.

Willcom Inc, a Japanese mobile phone company majority owned by U.S. buyout firm Carlyle, may be bailed out by a government-backed turnaround fund, a person with knowledge of the matter says.

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

Friday’s highlights:

Bonus watch: Goldman Sachs Group Inc plans to pay top managers their 2009 bonuses in stock, rather than cash, as it seeks to deflect outrage over a near-record pay haul months after it repaid billions of dollars in taxpayer aid.

UK fund manager Gartmore has lowered price guidance on its initial public offer (IPO) and restructured the deal after investors balked at the valuation, a banking source close to the sale says.

Swedish private equity firm EQT says it, together with the Singapore government, will buy scientific journal publisher Springer Science and Business Media for an undisclosed sum. EQT’s purchase of Springer, from rivals Candover and Cinven, was first reported by Reuters on Wednesday. (See some of the articles Springer has published by Nobel Prize winners here.)

General Motors staff has IPO dreams

CHINA-AUTOS/Ever wonder how General Motors is holding onto its top talent? 

After a traumatic bankruptcy and series of federal bailouts, the company still owes billions of dollars to the U.S. and Canadian governments. It lost $1.2 billion in its latest quarter, and only sees a slight uptick in auto sales next year.    

The days of banner-year profits and bonuses must seem far off for GM’s executives and finance staff.  GM’s Chairman has already said pay caps imposed on companies by the U.S. government’s pay czar make it tough to hire executives.

While other job opportunities are obviously limited in Detroit, and they may have nowhere better to go in the industry,  the company’s plans for a 2010 IPO has emerged as a key staff retention tool, one of its top executives said on Tuesday.

Saturday Night Live pokes Goldman on flu shots

Perhaps theGoldman Sachs CEO Lloyd Blankfein best barometer of public scorn is the Saturday Night Live indicator: if SNL derides you in a comedy sketch, chances are, lots of people dislike you.

Witness this skit from Saturday, where SNL lambasted Goldman Sachs for receiving H1N1 flu vaccines. Goldman’s official line is that the New York City health department gave it swine flu shots to distribute to employees that qualify for it, such as pregnant women.

But to SNL, this was a case of bankers jumping the line for a scarce vaccine.

“I understand you are an institution and like all institutions you need vaccines, but before schools and hospitals?,” said castmember Seth Meyers. “Do you not know that you currently have a serious PR problem?”

DealZone Daily

Cisco Systems plans to buy advanced wireless equipment maker Starent Networks Corp for $2.9 billion to boost its product offerings as phone carriers build out next generation networks, Reuters reports.

In other stories on Wednesday:

Royal Bank of Scotland Group is considering a government-backed plan to give up all 312 of its RBS-branded branches in England and Wales in a move to satisfy European authorities, the Financial Times says.

Las Vegas Sands, which is seeking to raise up to $2.5 billion by listing its Macau assets on the Hong Kong stock exchange, could launch the initial public offering by late November, the South China Morning Post reports.

Bank of America’s Chalice: Poison or Red Bull?

For months, as he endured hearings on Capitol Hill and fought off a series of lawsuits, Bank of America CEO Ken Lewis trudged through a post-apocalyptic financial landscape against a steady drumbeat of questions about his future. The deal he had called “the strategic opportunity of a lifetime” — his purchase/salvage of Merrill Lynch — had swung from an act of patriotism, keeping the American way of banking from utter ruin, to a scandal over Merrill losses and bonuses.

Perhaps he should have seen the writing on the walls of the vacant houses financed by Countrywide, the mortgage lender Lewis purchased/salvaged just six months before the Merrill deal. The two transactions may have been strategic gems, but they were laced with political poison as the economy floundered toward its dramatic deleveraging and taxpayers pumped $20 billion into Bank of America to fund the Merrill deal.

“It was only a matter of time,” Campbell Harvey, a professor at Duke University’s business school, told Jon Stempel. “There is too much collateral damage.” As Stempel reports, Lewis spent north of $130 billion on acquisitions, including FleetBoston Financial Corp, the credit card issuer MBNA Corp, LaSalle Bank Corp, Countrywide, Charles Schwab Corp’s U.S. Trust private banking unit, and Merrill. In buying Merrill, he added a giant investment bank to what was already the largest U.S. retail bank, credit card issuer and mortgage provider. (Wells Fargo & Co has since become No. 1 in mortgages.)

The “pay czar’s” name game

Is pay Czar KennKenneth Feinbergeth Feinberg going to name and shame?

At a speech yesterday in Washington, Feinberg said he planned to disclose the pay for the top 25 employees at Wall Street firms within the next 30 days, according to a research note by Jaret Seiberg, of Concept Capital. Seiberg saw Feinberg’s talk.

But it is not clear if names would be redacted from that disclosure, with perhaps only titles and salaries revealed.

Feinberg is charged with examining pay packages at companies that received government bailout money, including Citigroup <C.N> and American International Group Inc. <AIG.N>

Were Blankfein’s comments on compensation self serving?

Lloyd BlankfeinGoldman Sachs CEO Lloyd Blankfein’s recent comments on compensation may seem like a call for responsibility in the financial services industry, but they may also be self serving. 

Speaking at a conference in Frankfurt on Wednesday, Blankfein said that financial institutions that lose money should not pay outsized bonuses. 

That seems fairly reasonable, but if Wall Street really did embrace that policy, Goldman could benefit. Look at this year: so far Goldman has earned $5.2 billion, while Morgan Stanley has lost $1.8 billion. If Morgan Stanley refrained from paying big bonuses, which bank would be well positioned to hire its top talent?