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.” 

Among the concerns: integration and deal costs may lower earnings, and rivals like Hewitt and Mercer could grab people and other opportunities in the interim. 

It will take three years to achieve savings of $80 million through job cuts and the streamlining of overlapping operations. The companies also expect one-time costs of $80 million from the merger and “significant noncash expenses” for the first two years. 

“The merger will create a global leader, but the three-year path to accretion could imply a difficult integration,” Citi analyst Ashwin Shirvaikar wrote in a research note.

Exactly one year ago, squabbles over control forced Bharti Airtel and MTN to ditch their hope of forming a global telecoms group, but both emerging markets-focused companies are back on the negotiating table to thrash out a $61 billion merger.

What’s changed?

For a start, both firms are now publicly talking about a detailed structure for the combined entity, something that was missing last time.

As part of an initial deal worth more than $23 billion unveiled on Monday, Bharti will pay in cash and shares for 49 percent of MTN, while MTN pays cash and stock for an effective 36 percent stake in the Indian firm. Previous merger talks collapsed when the South African firm proposed a new structure that would have seen Bharti become an MTN unit.

The past year has seen the full impact of a global recession that has spared few industries and MTN, sub-Saharan Africa’s biggest mobile operator, and Bharti — India’s top mobile operator — might be looking to combine to cope better in tough times.

Thanks to scorching growth in emerging markets, the combined entity boasts a user base of 200 million, catapulting it to the top five global industry players, while last year, the combined group would have ranked among the top ten.

MTN and Bharti are locked in exclusive talks for about two months, giving little room for rivals to upset their game plan.

For Indian telecoms tycoon, Sunil Bharti Mittal, this might be his last chance to acquire a global footprint for his firm.

Some people thought Florida lender BankUnited would be sold months ago as regulators fretted over its health amid the housing downturn. 

The Federal Deposit Insurance Corp tends to take over banks on Fridays as it gives them the weekend to put an institution’s business in order and re-open it under new management by Monday. So the question was, is this the Friday?

The government has given BankUnited some leeway to try to work out a deal. That flexibility may be because the bank has some $13 billion of assets, and disposing of a bank that big could result in a real hit to the FDIC’s insurance fund, Raymond James analyst Michael Rose told Reuters in February.

Things appear to be coming to a head now, though. Regulators deemed the bank “critically undercapitalized” and told it to find a buyer, but a 20-day period for the bank to do so expired on May 4 with no success, and sources said the FDIC took bids for the bank on Tuesday.

At least two bidders were in the race– a star-studded private equity consortium and Toronto Dominion bank with some Goldman Sachs involvement, according to sources. The consortium includes WL Ross, Carlyle, Blackstone and Centerbridge. 

Is it this Friday, then?

The number of bidders for GM’s Hummer brand has narrowed down to three, with current offers ranging from $100 million to $200 million in cash, in addition to other commitments, sources told Reuters.

That would be a further comedown from what was already a comedown — investment bankers initially estimated that the iconic gas guzzler could fetch between $500 million and $750 million, considering it a distressed asset.

Last month, GM turned back a Kentucky industrialist with a lowball bid, who had also put together plans for new powertrain options for Hummer, including a hybrid version of the H3 that would double its fuel economy from the current 14-to-18 miles per gallon, a source said.

That leaves the carmaker, which has lost about $82 billion since 2005, with one U.S. bidder and two from overseas, sources said.

The bidders include private equity and wealthy individuals. Automakers, even from emerging markets, are notably absent.

DEALS OF THE DAY

* Private equity firm Crescent Point, founded by former Morgan Stanley <MS.N> bankers, is looking to sell its controlling stake in Masterskill, Malaysia’s largest nursing training school, sources said, in a deal that could fetch more than $200 million.

* U.S. Bancorp unit U.S. Bank will buy the corporate trust bond administration business of AmeriServ Financial.

* France’s Sanofi-Aventis plans to buy Brazilian drugmaker Medley in a deal that values the company at 500 million euros and will turn Sanofi into the top generics manufacturer in Latin America.

* Japan’s Sharp Corp and Pioneer Corp said they would set up a joint venture to merge their optical disc businesses, aiming to beef up one of their focus operations and take a leading position in the growing Blu-ray disc market.

* The German government offered 1.39 euros per share to take over Hypo Real Estate, the stricken Munich-based lender it plans to seize control of and restructure.

* British Airways does not feel under pressure to obtain a quick merger deal in talks with Iberia, BA’s Chief Executive said, according to Spanish newspaper Expansion.

* Thailand’s biggest energy firm, PTT, is studying the possibility of merging its four main subsidiaries in a bid to cut costs and boost efficiency, its president said.

(Photo: REUTERS/Rick Wilking)

There was a time not so long ago when “smart” investors and analysts believed that casinos were a sure bet, that gambling was recession proof, and that it was a vice people could not shake off even if money got tight. And so casino giant after casino giant started on mega projects that set to outdo each other and make glitzy Las Vegas, well, glitzier. 

This recession is changing several of those plans. And despite the retirees putting their life savings into slot machines for fun in Atlantic City, casinos are taking a hit. 

MGM Mirage, one of the biggest of them all, is trying to come up with funds amid a sharp downturn. The company, which is controlled by billionaire Kirk Kerkorian, is hoping to raise money to meet debt payments and also to fund CityCenter, a troubled project it jointly owns with Dubai World, in Las Vegas.

The No. 2 U.S. casino operator has hired Morgan Stanley to sell two resort-style properties - one each in Detroit and Biloxi, Mississippi. Los Angeles-based private equity firm Colony Capital is also considering an investment in the debt of the casino company.

Will Lady Luck smile again on Las Vegas? Chances are Sin City will look different again in a few years, with or without her.

DEALS OF THE DAY

* Russia’s Gazprom signed a $4.2 billion deal to reacquire a stake in its oil arm from Italy’s Eni but delayed the buy-back of Russian gas assets from Italian companies to end April.

* About half a dozen investment managers have put forward bids, ranging between $400 million to $800 million, for troubled insurer American International Group’s asset management business, the Wall Street Journal reported.

* French environmental and transportation giant Veolia is close to a deal for a stake in Hong Kong’s iconic tram system, according to a person with direct knowledge of the situation. 

* British condom maker SSL International said it would exercise its planned to buy a further 35 percent of BLVB, a condom distributor operating in former Soviet Union countries except Ukraine, for 63.5 million pounds ($94.74 million).

* Summit Germany Ltd said it agreed to be acquired for 57.8 million euros, or 21 cents per share, by Israel’s Summit Real Estate Holdings Ltd, representing a 71 percent premium to the stock’s Monday closing price.

* British interactive gaming firm NetPlay TV Plc said Virgin Media Television had agreed to buy options to acquire 9.9 percent of NetPlay’s shares at a strike price of 18 pence per share.

* Nigeria’s First Bank said it has approved fresh merger talks with Ecobank Transnational Inc, reviving a plan that could create one of sub-Saharan Africa’s biggest lenders.

(Photo: The construction site of the CityCenter project in Las Vegas. REUTERS/Mario Anzuoni)

Citigroup, which has received $45 billion of U.S. government funds since October, may have had its fill of taxpayer money.

Citi’s chairman thinks the bank does not need any more capital injections from the government and is confident that it will remain in private hands.

“No, I think actually, particularly with the latest conversion … Citi is actually one of the better capitalized banks in the world,” Richard Parsons told Reuters. He also brushed aside any prospect of the U.S. government nationalizing the bank.

Parson’s comments follow CEO Vikram Pandit’s upbeat memo to staff earlier this week, in which he said the bank was profitable in the first two months of 2009 and confident about its capital strength.  

Still, considering that U.S. regulators have been working on a contingency plan to stabilize the bank if its problems mount, it’s worth asking if the sudden wave of euphoria over Citi’s recovery prospects may fade with the latest stock rally.

Other Deals of the Day:

* Japanese non-life insurers Sompo Japan Insurance and NipponKoa Insurance said on Friday they would merge operations in April 2010 to cope with falling demand and rising risks.

* A unit of Indian financial services company Reliance Capital is acquiring 51 percent in UK-based exchange and money transfer firm No 1 Currency, a spokeswoman for the Indian unit said on Friday.

* Sara Lee, which is focusing on its core food and beverage business, is examining a sale of its European household and personal-care business, the Wall Street Journal said.

* Swiss Life said on Friday it was in talks with German insurer Talanx over the Swiss group’s 24 percent stake in pensions specialist MLP, which a source familiar with the situation has told Reuters it wants to reduce.

* The Philippines’ dominant telecommunications firm PLDT said on Friday one of its mobile phone firms will buy about a 20 percent stake in Manila Electric Co for 20.07 billion pesos ($414 million).

* Clothing retailer American Apparel is near a deal to sell a 20 percent stake to British private equity firm Lion Capital for about $80 million, the New York Times said citing people involved in the deal.

* Polish pay-TV operator Cyfrowy Polsat sold an 11 percent stake in phone operator Sferia it bought only two days earlier due to objections raised by minority shareholders, it said on Friday.

(Photo: Richard Parsons. REUTERS/Brendan McDermid)

The credit crisis may just be the leverage Roche needs in its bid for Genentech.

The Swiss drug maker went hostile with its bid to buy the 44 percent of Genentech it doesn’t already own. But in a rather unusual move, it has gone to shareholders with an offer that is actually lower than the $44 billion bid it initially made for the U.S. biotech group.

Investors now have a public tender offer at $86.50 per share in cash, valuing the deal at $42 billion, down from $89 per share earlier.

After the initial announcement in July, Genentech shares rose to a high of $99.05, but later fell back below the offer price as the credit crisis bit, giving Roche the leeway to lower its bid.

Roche had initially aimed to acquire the remaining shares through a negotiated settlement — an offer rejected by Genentech — and decided to appeal directly to shareholders after further talks failed to reach an agreement.

Genentech could have been trying to delay the process until key clinical data on its blockbuster cancer drug Avastin due in April — when positive results could drive up the company’s value, analysts said.

DEALS OF THE DAY

** Toshiba is in talks to merge part of its chip operations with NEC Corp’s semiconductor unit, a source said, as a sharp global slowdown forces Japanese chip makers to cut jobs and try to band together.

** India’s Spice Group is ready to invest about 20 billion rupees ($408 million) in Satyam Computer Services and wants to buy a 51 percent stake in the fraud-scarred outsourcer, Spice Chairman B.K. Modi said.

** Satyam said asset manager Fidelity Investments had raised its holding to 6.79 percent in the Indian outsourcer, which would potentially make it the second largest stakeholder.

** Commodities firm Noble Group and Indonesian coal miner PT Indika Energy are among the companies pursuing a bid for Straits Asia Resources, according to sources familiar with the matter, in a deal that could be worth more than $800 million.

** Billionaire Alisher Usmanov sold his majority stake in a gigantic gas deposit to the banking arm of Russian gas export monopoly Gazprom, taking its share in the field to 100 percent, a paper said. 

** Anglo-Australian fund manager Henderson Group unveiled a 115 million pounds ($162.3 million) offer for struggling rival New Star Asset Management.

** U.S. diagnostics firm Gen-Probe announced a recommended offer to buy British testing company Tepnel for $132.2 million in cash.

** Hospital chain Fortis Healthcare said it acquired a majority stake in Bangalore-based Apollo RM Hospital, widening its presence in south India.

(Photo: REUTERS/Christian Hartmann)

Citi scrapped plans to buy a $50 million corporate jet after it raised eyebrows all the way to the White House. Politicians called the order, which was made in 2005, wasteful. 

True, Citi has been propped up by taxpayers, swallowing up $45 billion of capital since October. Its market value is now only about $17 billion. And it has lost more than $28.5 billion in the last 15 months.

But how unusual is it for a company the size of Citi, once the world’s largest bank, to have a corporate jet? 

It is not as if Citi placed an order for it in November, when it got the $20 billion emergency cash infusion. Cancelling the Dassault Falcon 7X order is actually going to cost money. The bank placed a deposit on the jet when it agreed to buy it. And it will likely have to pay a penalty for not buying the plane, the amount of which is being negotiated.

Citi is down. And the jet became an excuse to kick it, which is probably well-deserved. But should a bank really be micromanaged by popular vote?

DEALS OF THE DAY

** The world’s top oil seed processor Bunge is in talks to buy a strategic stake in sugar firm GMR Industries to gain entry into sugar making, a newspaper reported  citing an unnamed source.

** The heirs of the founder of Roche Holding have decided to extend their agreement to exercise a majority shareholding in the Swiss drugmaker, private bank Scobag said.

** Britain’s VT Group said it would sell its 45 percent stake in its BVT Surface Fleet naval shipbuilding operations to its joint-venture partner BAE Systems for a minimum 380 million pounds ($536 million).

**Israeli conglomerate Africa Israel Investments said it signed a memorandum of understanding to sell its 50 percent stake in the Gottex swimwear venture to its partners for $50 million. 

** Britain’s business support group Hargreaves Services bought the remaining 50 percent stake in Coal4Energy Ltd from UK Coal Plc for 9 million pounds ($12.70 million), the companies said.

** Norwegian engineering company Aker Solutions ASA said that it had bought the remaining 50 percent of the German drilling equipment firm WIRTH.

** Drug maker Piramal Healthcare Ltd said it had acquired the inhalation anaesthetic gas distribution unit of U.S.-based RxElite Inc for about $4.2 million in cash.

** A group of Spanish investors, Catalana D’Iniciatives, is finalising an offer for SAS unit Spanair, a spokesman for the Barcelona-based consortium said. 
     
** Dutch market maker All Options has agreed to buy Dutch proprietary trading company Saen Options to strengthen All Options’s position in Europe and Asia, All Options said.

** Shares in Veolia rose on Wednesday after a report in French weekly L’Express said U.S. funds were eyeing a stake in the French water and waste management group.

** Lanxess could buy Indian peer Gwalior Chemical Industries Ltd. or another small or mid-sized company on the subcontinent, a person familiar with the plans told Reuters.

** Shares in Satyam Computer Services rallied on Wednesday, extending gains to an eighth session, after the fraud-hit outsourcer’s new board said there had been wide bidding interest and a transparent process would be devised.

** British construction materials group Ennstone Plc’s shares were suspended on Wednesday after it said the chance of sales and refinancing talks concluding successfully had “diminished greatly”. 

(Photo: REUTERS/Alywin Chew)

Pfizer has taken the plunge, and others may follow.

The world’s largest drug maker is buying rival Wyeth for $68 billion in cash and stock to become even larger.  

Pfizer’s Jeff Kindler is content with swallowing Wyeth for now. He told CNBC the company has no plans to do any huge transactions in the near future.

But the merger could trigger a wave of consolidation in the cash-rich sector as big pharma looks to diversify revenues in the face of competition from generic-drug rivals, analysts say.

The deal helps Pfizer cope with a major gap in revenue in 2011, when its blockbuster Lipitor cholesterol treatment will begin to face U.S. generic competition. It will also help it diversify into vaccines and injectable biologic medicines by adding Wyeth’s big-selling Prevnar vaccine for childhood infections and Enbrel rheumatoid arthritis treatment.

Pfizer would also realize major cost savings by streamlining areas that overlap.

Still the stakes are huge. Pfizer is taking on $22.5 billion of debt from a consortium of banks and cutting its dividend.

And the deal, which has a material adverse change clause, could falter if lenders lose confidence in Pfizer’s health. The transaction is expected to close at the end of the third quarter or during the fourth quarter.

DEALS OF THE DAY

** South Africa’s biggest consumer goods group, Tiger Brands, made a new approach to AVI about a potential offer for the company, and its smaller rival is considering the proposal.

** Norwegian gas shipper BW Gas Limited said it has agreed to buy four liquefied natural gas carriers from World Nordic SE for $720 million and will pay for the vessels by issuing new shares.

** Japanese soy sauce maker Kikkoman said U.S. drinks maker Coca-Cola Co was seeking a 50 percent stake in an unlisted Kikkoman subsidiary, Tone Coca-Cola Bottling Co.

** Danish insurer TrygVesta said it was in talks to buy small Swedish insurer Moderna.    

** Austrian steelmaker Voestalpine is eyeing two possible purchases of railway systems makers in the United States, Austrian newspaper WirtschaftsBlatt reported.

** U.S. drugmaker Wyeth has withdrawn from talks to take over Dutch biotechnology firm Crucell.

** Turkey’s Finansbank, a unit of Greece’s largest lender National Bank, said it had decided to sell its Malta subsidiary to another unit of NBG for 185 million euros ($240 million).

** Coal miner Polo Resources said it received an unsolicited offer approach from a private equity firm.

(Photo: Pfizer Chief Executive Jeff Kindler. REUTERS/Brendan McDermid)

Pfizer’s at it again. The world’s largest drugmaker by revenue has set its sights on rival Wyeth and the two are talking about a deal that could be valued at more than $60 billion, according to the Wall Street Journal.

Pfizer was built in the last 10 years on two of the biggest deals in the sector — the purchase of rivals Warner Lambert and Pharmacia.

And another big deal would not come as a surprise. Some analysts and investors have made pleas to the company to make another acquisition to obtain products to prepare for an expected loss in earnings in 2011, when the patent on its flagship cholesterol drug Lipitor expires.

But a deal may not be a panacea to its problems, and Chief Executive Jeff Kindler has said so in as many words.

“Business development — whether it is a small deal, a medium-sized deal or a large deal, is an enabler for strategies. It is not a strategy in and of itself,” he told Reuters Health Summit last November.

Kindler’s strategy to deal with Lipitor’s side effects: maximizing sales of current products, jump-starting sales in emerging markets, launching new medicines and cutting costs.

Now, apparently he is adding deal-making to the list.

DEALS OF THE DAY

** French banks Credit Agricole and Societe Generale have agreed in principle to a possible merger of their asset management divisions, financial paper l’Agefi reported.

** Germany’s Siemens plans to dispose of its 34 percent stake in the nuclear power plant unit of France’s Areva, Les Echos reported.

** Spanish construction and services firm ACS has received four bids for its port assets, which could fetch between 1.2 and 1.4 billion euros ($1.56-$1.82 billion), Expansion reported.

** The European Bank of Reconstruction and Development plans investments into Hungarian banks, focusing on OTP, which does not have a foreign parent bank, the EBRD chairman told Nepszabadsag.

** French state-controlled Banque Postale could seal a liquidity deal with Dexia to allow the Belgian-French financial services group to refinance itself on financial markets, French daily Les Echos reported.

** Hannover Re is buying a life insurance portfolio of ING Groep from Scottish Re to become the fifth-biggest individual life reinsurer in the United States.

** Swiss department store Jelmoli said it had settled litigation with Tivona in a deal that will see it pay 60 million Swiss francs ($52 million) and 80,000 shares to acquire a 55.5 percent stake in the real estate firm.

(Photo: A woman walks into the Pfizer headquarters in New York in a file photo. REUTERS/Jeff Christensen)