DealZone

Not quite last call

inbev-brito.jpgTalk about a friendly bid. InBev CEO Carlos Brito gushes about Bud in this video statement, making a $46.3 billion bid sound almost cheap. “We respect the Anheuser-Busch board a lot,” he said. “We admire them a lot and we think that the business rationale is very strong. But Bud shares are still trading well below the $65 per share offer, so skepticism abounds. With analysts calling for a bid closer to $70, expect at least a few more rounds.

India’s Ranbaxy Laboratories sees huge opportunities for growth in Japan’s generics drug market and mergers and acquisitions are a likely option for it to expand. The attractiveness of the market was a big factor in its decision to team up with Daiichi Sankyo, Ranbaxy Chief Executive Malvinder Singh told a news conference in Tokyo. Faced with an ageing population and ballooning healthcare costs, Japan’s government has recently taken steps to promote the use of the off-patent drugs — currently only 17 percent of volume compared with 63 percent in the United States. Ranbaxy and Daiichi Sankyo announced on Wednesday that Japan’s No. 3 drug maker would pay up to $4.6 billion for control of the Indian generic drugs maker.

Citigroup Chief Executive Vikram Pandit must have seen this coming. The Wall Street Journal reports that the bank plans to close the hedge fund he co-founded, and which more-or-less launched his rocket ship to the top. Last month, Citi said it was looking at restructuring the fund, called Old Lane. Nearly all investors unaffiliated with the fund have requested to redeem their money. Citi bought Old Lane last year for more than $600 million, but the fund’s performance has since been disappointing. Citi wrote down $200 million of intangible assets linked to the acquisition in the first quarter.

Other deals of the day:

*BHP Billiton took its case for a takeover of rival Rio Tinto to well-heeled investors on Thursday, saying a marriage could better capture markets in fast-industrializing Asian economies.

*InBev courted shareholders of Anheuser-Busch after making a $46.3 billion bid, hoping to add Budweiser to its own Stella Artois and Beck’s beers and create the world’s largest brewer.

Shrinking Citi

pandit.jpgCitigroup chief Vikram Pandit has sold off assets here and there in the months since taking over the top job, including stakes in CitiStreet, CitiCapital and Diners Club. But with sources saying some $400 billion of extraneous assets are going on the block, it’s fair to ask whether the head of the country’s biggest bank is being boldly aggressive or slamming the panic button.

“The only reason you’d sell off that many assets is you have a lot more losses coming than you originally thought,” said Jim Huguet, co-chief executive at fund manager Great Companies LLC, which does not own Citi shares. Since late last year, Citi has recorded more than $45 billion of writedowns and credit losses, raised more than $40 billion of new capital including $2 billion of preferred shares this week, and slashed its dividend 41 percent. The Financial Times, which first reported the story on Thursday, said the moves would take place over several years.

Global economic instability has created huge investment opportunities for China Investment Corp, but the sovereign wealth fund’s head said he will be careful not to destabilize countries where it operates. CIC paid $5 billion in December for a stake in U.S. investment bank Morgan Stanley but has otherwise kept its powder dry as Western financial institutions have sought to replenish capital depleted by big subprime credit losses. “The current international market turbulence has produced unprecedented investment opportunities,” said Lou Jiwei, head of the $200 billion sovereign wealth fund. “In the 1990s, some hedge funds exploited defects in the macroeconomic policies of some emerging economies and attacked them, which damaged their economies and caused hardship for people,” he said. “CIC will certainly never do a similar thing.”

Just enough for the Citi

citigroup.jpgCitigroup‘s $3 billion $4.5 billion stock offering didn’t exactly dazzle one of its most well-known critics, as Oppenheimer analyst Meredith Whitney said the company will need to raise an additional $10 billion to $15 billion or sell assets worth billions to truly shore up its capital position. “The fact that Citi raised capital at this time did not come as a surprise to us, but the fact that the company raised such a small amount of capital at this time confounds us,” said Whitney, who correctly predicted last year that the company would have to cut its dividend.

Time Warner is kissing its majority-owned cable division goodbye, part of CEO Jeffrey Bewkes’s attempt to revamp the company and lift its sluggish stock price. Details on how the transaction will be structured were scarce, but analysts have speculated that the separately listed unit could be spun off to shareholders.

UK gas producer BG Group has made a $12 billion bid approach to Origin Energy, seeking to bolster its position in the fast-growing Asia-Pacific gas market by securing the Australian utility’s gas reserves. The companies said BG, valued at around $85 billion, had approached Origin with a proposal of A$14.70 per share in cash — a 40 percent premium to Origin’s close of A$10.47 on Tuesday.

Sovereign wealth investors growing fast

Sovereign wealth funds — the increasingly powerful investment arms of governments around the world — are growing at a rapid pace, according to the Preqin Sovereign Wealth Funds Review.    

There are currently 46 active sovereign wealth funds worldwide, with aggregate assets at $3.05 trillion, the study says, adding that assets have risen 51 percent from the end of 2006.    

The Middle East is the biggest region for SWFs in terms of value, with 41 percent of all capital centered there. Asia has 31 percent of the capital, with Europe laying claim to 19 percent, according to the study.