DealZone

Road to fortune or highway to hell?

GM-OPEL/That will ultimately be the question asked about what kind of a future the German carmaker Opel faces.

Parent General Motors said on Thursday that it indeed wanted
to sell a majority stake in the unit to Canadian auto parts
group Magna and Russia’s Sberbank, a decision long favoured by the German government under Chancellor Angela Merkel.

With about two weeks to go until a general election in
Europe’s biggest economy, this would clearly be a political
victory — but the question remains whether it will also be an
economic one.

Merkel said that GM’s recommendation — which would see
Magna’s Brussels-listed rival bidder RHJ International losing
out in the battle that has dragged on for months — is going to
be tied to conditions.

Although she said that those conditions would be manageable and
negotiable, doubts remain about whether this will be the new
beginning the company is hoping for.

Deals du Jour

The world’s second largest confectionery group Cadbury has rejected a $16.7 billion bid approach by Kraft Food. But North America’s top food group still hopes it can clinch a deal to create a global powerhouse in snacks and quick meals.

For more from Reuters on the latest deals, click here.

Below is a round-up of all the market chatter from the press on Monday:

* South Korea’s No. 4 lender Hana Bank will buy a 18.44 percent stake in the Bank of Jilin in northern China for $316 million, said Yonhap news, citing an unnamed Hana Bank official.

* Russian billionaire Oleg Deripaska’s carmaker, GAZ, the Russian industrial partner in a Magna-led bid for Germany’s Opel, is not interested in an equity stake in Opel, Deripaska told Vedomosti newspaper.

Deals du Jour

A man carries a cardboard with a picture of a mobile phone inside a hall of the upcoming CeBIT fair in Hanover March 2, 2009. REUTERS/Hannibal Hanschke (GERMANY)

Portugal Telecom <PTC.LS> and Spanish firm Telefonica <TEF.MC> have both agreed to sell their 32.2 percent stakes in Moroccan telecoms firm Meditel to local investors in a deal likely to be closed by the end of the year

Reports suggest that online telephony firm Skype is set to be sold to private investors by its current owner eBay, with further details likely to be announced today. Sources indicated to the New York Times that co-founder of Netscape, Marc Andreessen is among the group of investors.

For the latest news from Reuters on mergers and acquisitions click here.

Here are some of the stories reported in today’s press (some external websites may require subscriptions):

Warner Chilcott to buy P&G’s pharma biz

Warner Chilcott Plc agreed to buy the pharmaceutical business of Procter & Gamble Co for $3.1 billion, winning an auction that drew few bidders.

The unit had attracted interest from some private equity firms but very few pharmaceutical bidders, sources familiar with the auction said.  Many of the key products within P&G’s pharma unit, such as the overactive bladder drug Enablex, already face stiff competition from a wide range of rival drugs, while other products are close to their patent expiration. Other pharmaceutical companies are struggling enough with these problems without buying a business that echo these issues, the sources said.

As a result, Warner Chilcott was essentially in a bidding war alone. Under terms of the deal, Warner Chilcott will pay $3.1 billion in cash.  It will finance the deal, and restructure some of its existing debt, through $4 billion in funding it received from a syndicate of banks, sources said.

Deals du Jour

Spain’s Banco Santander (SAN.MC) has appointed advisers to spin off its Brazilian business in a $3 billion initial public offering (IPO) to create one of Brazil’s biggest bank, the FT reports. But it’s not new — Reuters carried the story last week, which said Bank of America-Merrill Lynch, Credit Suisse and UBS would underwrite any deal. Click here for that story. More details could come from Santander today alongside its Q2 results.

In other M&A related stories reported by Reuters and other media on Wednesday:

Private equity firm Kohlberg Kravis Roberts & Co is in the advanced planning stage for an initial public offering of stock in Dollar General Corp, a discount retailer. Goldman Sachs, Citigroup and KKR are likely to underwrite the deal, the Wall Street Journal cited people familiar with the matter as saying.

Sumitomo Trust and Banking has agreed to buy Nikko Asset Management, Citigroup’s Japanese asset manager, for about 100 billion yen ($1.1 billion), the Nikkei newspaper reported.

Truth in tender offers? An eyewitness account.

U.S. Securities regulators on Thursday sued a well-connected Kuwaiti financier, saying he reaped millions in suspicious profits after false takeover reports briefly sent shares of Harman International Industries soaring this week.

Reuters reporter Ransdell Pierson was in the office working the Sunday shift when he received a fax with the purported takeover offer.  Unable to verify the authenticity of the fax, Reuters did not publish the story.  Here is Ransdell’s first person account of what happened, and a copy of the fax. Would you have questioned its veracity?

Ransdell Pierson:

I was scouring newspapers on a Sunday shift in the Reuters New York bureau and waiting for news about distressed lender CIT Group, when the phone finally rang and broke my reverie. “Newsroom,” I said, and the caller replied, “Your Jeddah bureau is closed today. Can I send you a fax?” The male caller, who I imagined to be a middle-aged office aide frustrated by the thankless chore of delivering his fax, said it was a press release about a deal. Something about one company buying another for about $3 billion.
“If it’s such a big transaction, shouldn’t this news be coming over the PRNewswire or BusinessWire?” I asked him. He explained that it was the weekend, so faxing a press release was the best route.
I gave him a fax number and he called back, irritated the document hadn’t gone through. I gave him another fax number and he soon called back again, more irritated than before. So I gave him the number of a third Reuters fax machine, but told him that it needed to include contact information for all the parties. “Otherwise, we can’t authenticate it.” “OK, you’ll have it,” he replied.

SPAC IPOs return

The team behind cash shell company Germany1 is preparing to list its next special purpose acquisition company (SPAC) in October after Thursday’s 532 million euros deal with AEG Power.

A SPAC is a shell company set up by people with a proven track record in making acquisitions. They offer takeover targets a way to become public companies without having to undertake an initial public offering.

In this case, Germany1′s acquisition makes power system firm AEG a public company through a so-called ”back door” listing. 

Investors worry about Towers Watson

Watson Wyatt and Towers Perrin executives are excited about their deal to create Towers Watson, but investors are not cheering as much. 

Watson Wyatt’s shares plunged nearly 10 percent in Monday morning trading, as investors woke up to the all-stock deal valued at about $3.5 billion, announced Sunday.

A Citi analyst downgraded the Watson Wyatt, which is publicly held, to “hold” from “buy”, calling the companies’ three-year integration plan a “major risk.” 

Deals du Jour

Lovefilm, love private equity?

British mail order DVD rental company Lovefilm is in talks with private equity firms including KKR and Silver Lake Partners about buying out existing shareholders and providing support for expansion, the Financial Times reports, citing people with direct knowledge of the strategy.

Elsewhere in the media:
* Bain Capital and PAI Partners have both made offers for about 30 percent of Italian eyewear maker Safilo Group and the potential deal might also include an option to acquire a majority holding at a later date, the FT reports.

* Winkworth, the London estate agency, plans to float on the Alternative Investment Market in the autumn, the Times says.

Deals du Jour

British bank Barclays said it would sell its BGI investment arm to U.S. firm BlackRock for $13.5 billion, creating the world’s biggest asset manager. For today’s headlines, click here.

And in the media:

* Malaysian gaming group Genting is in partnership talks with U.S. casino operator MGM Mirage, the Wall Street Journal reported. 

* British boiler maker Baxi is close to agreeing a 1.7 billion euros ($2.4 billion) merger with smaller Dutch rival De Dietrich Remeha Group, the Financial Times reported.