DealZone

Deals du jour

Talks to sell the storied Chicago Cubs baseball team reopen with a rival bidding group; the sale of Bernard Madoff’s former securities-trading unit is finalized; possible hurdles to EMC’s bid for Data Domain — for all the latest deals news from Reuters, click here.

And in the papers (some external links may require subscriptions):

Glencore International AG, the Swiss-based commodities trader founded by Marc Rich to become one of the world’s biggest private companies, is considering a stock market listing, the Financial Times reported. Reuters story here.

Bank of America Corp Chief Executive Ken Lewis was approached by three former Merrill Lynch executives this year to discuss buying back some or all of their old company, but he politely rebuffed them, the Financial Times reported.

Lenders to Four Seasons Healthcare, the heavily indebted care homes group, are considering a last-ditch plan for a restructuring that would about halve its 1.5 billion pound debt. If there is no agreement, the company will be sold, the FT reported.

Prudential is expected to confirm it has offloaded its Taiwanese agency business after the life and pensions group received regulatory approval for the transfer to China Life this week, the FT reported.

Quattrone brings “emo” back in dealmaking

rtripsrThe Financial Times’ Richard Waters does a profile of Frank Quattrone in Thursday’s paper, pegging the return of Silicon Valley’s “most prominent banker” to the ongoing Data Domain-EMC-NetApp saga. Quattrone’s firm Qatalyst Partners is the sole adviser to Data Domain, the specialty storage technology company that is the target of competing bids from East Coast storage giant EMC, and its smaller Valley rival, NetApp.

Now, EMC’s Chief Executive Joe Tucci has not hesitated to publicly spell out why his company is playing spoiler in the NetApp-Data Domain deal. When EMC announced its $30-a-share, all-cash bid on June 1 — gatecrashing a cozy agreement where NetApp agreed to buy Data Domain for $25 a share, or about $1.5 billion — Tucci said he was surprised that Data Domain didn’t give his company the chance to bid before announcing the deal. “Particularly since I believe you should have been aware of our interest,” Tucci said, which as Reuters reported a few days later, meant that EMC had talked to Data Domain several times about business combinations, including an acquisition.

So why did Data Domain not run the usual process that a company wanting to sell itself follows? Typically, a company will use its bankers, board members and other top executives to discreetly spread the word. Word has it has Sun Microsystems’ bankers began sending feelers out in the fall of 2008, months before any real negotiations with IBM, Oracle and HP happened. Companies usually run this informal process to solicit expressions of interest so that all potential buyers have a chance to participate before a deal is finalized and announced publicly. Also, they want to avoid “public food fights,” as one tech banker I spoke to described it — nasty EMC-style aggression initiated by potential buyers who feel they were left out.

Hostile deals in tech just don’t work

rtr24ri7Broadcom extended its tender offer for Emulex shares yet again this morning, after less than 3 percent of shareholders turned in their shares to avail of the hostile, $764 million buyout offer. If anyone’s wondering which way this deal is headed, maybe a look at the fate of unwelcome tech bids in recent memory will provide a clue. In no particular order: Microsoft-Yahoo: Microsoft kicked off 2008 with one of the tech industry’s biggest buyout offers — its unsolicited $44.6 billion bid for Yahoo. It even raised it to $47.5 billion before pulling away because Yahoo just didn’t want to sell. Electronic Arts-Take Two: EA offered about $2 billion to buy its rival, Grand Theft Auto videogame publisher Take Two and made a tender offer that it extended a few times before dropping the bid. Cadence-Mentor: Cadence offered $1.5 billion, unsolicited, to buy Mentor Graphics, and then withdrew its bid citing difficulty in financing. Vishay-IRF: Vishay Intertechnology withdrew its $1.7 billion bid for International Rectifier in October, saying the pursuit was futile given IRF’s refusal to engage in talks. Samsung Electronics-SanDisk: The Korean electronics giant offered $5.9 billion to buy SanDisk, but the flash memory maker wanted much more. Samsung eventually dropped its pursuit, citing the economy. Microchip and ON Semiconductor-Atmel: Chipmakers Microchip and ON Semi made a joint $2.3 billion bid for Atmel, which it rejected. ON Semi had trouble securing financing to fund its part of the deal. Eventually, the two companies dropped their bid. United Technologies-Diebold: United Techologies offered $2.6 billion for Diebold and kept its unsolicited offer on the table for eight months before giving up.

I might have missed a couple more, but you get the idea. Hostile deals don’t seem to work in tech, despite all that people said when Oracle succeeded in buying BEA two years ago. Does the adage about assets, i.e. engineers, walking out the door in hostile situations still apply? Or are there other reasons, such as cultural fit, that cause a lot of resistance among target companies in techland?

(Photo: Reuters)

M&A: lessons from history

Two chunky bits of M&A research landed this week (both, incidentally, drawing on Thomson Reuters data).

Cass Business School’s recently established M&A Research Centre sounded a note of a caution about the merits of buying floundering companies, even if such deals are initially welcomed by the market.

“Companies who bought distressed or insolvent rivals over the past quarter-century suffered lower returns on equity and underperformed buyers of healthy firms, a study released on Monday showed…

Deals du jour

Pfizer is seeking deals in emerging markets, while Nomura and T&D are among second-round bidders for Citigroup’s Japanese asset management arm. Get all the latest deals news from Reuters here.

And in the newspapers:

Alan Lewis, owner and chairman of overcoat maker Crombie, has made an approach to Aquascutum’s Japanese owner Renown to acquire the label’s British business including its manufacturing operation, the Financial Times reported. (Link may require subscription).

The head of German chemicals company Bayer said debt reduction and securing liquidity was taking precedence over acquisitions during the economic crisis, the Sueddeutsche Zeitung reported. Reuters story here.

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. 

Deals du Jour

U.S. money manager BlackRock is set to buy Barclays Global Investors (BGI) for between $12 billion and $13 billion, people familiar with the matter told Reuters. The deal, which could come today, would create a global asset manager twice the size of its nearest rival. For today’s headlines, click here.

And in the newspapers:

* Australian bank Macquarie may trump a Chinese bid for assets of debt-laden miner OZ Minerals, the Australian Financial Review said, which could stoke further anger in China after its massive deal with Rio Tinto collapsed last week.

* The chief executive of German retailer Metro is already sounding out foreign investors to buy the combined department store group it hopes to create with the Karstadt chain, Handelsblatt paper reported, citing investment bank sources.

Flowers, TD also bid on BankUnited

BankUnitedFlorida’s BankUnited drew bids from two other groups besides the winning consortium of private equity powerhouses in the FDIC-run auction. 

The other two bidding groups included J.C. Flowers & Co and Toronto Dominion bank, according to sources familiar with the matter.

Regulators seized the troubled Florida lender last month and sold it to a consortium that includes Wilbur Ross’s WL Ross, Carlyle Group, Blackstone and Centerbridge Partners.

Deals du Jour

Porsche is in talks to sell a stake of up to 25 percent in its holding company to the Gulf state of Qatar and a deal could be announced within weeks, people familiar with the talks told the Financial Times. For more of today’s deals headlines on Reuters, click here.

And more in the newspapers:

* German state-controlled bank WestLB was close to being shut down over the weekend , the Wall Street Journal reported, citing people familiar with the situation.

Owners of the struggling bank agreed to provide an additional 4 billion euros ($5.6 billion) in guarantees to help support a sweeping reorganisation, WestLB said late on Sunday.

Deals du Jour

British department stores group Debenhams Chief Executive Rob Templeman told Reuters the company will price its 323 million pound rights issue at a modest discount, while Chinese state-owned metals firm Chinalco may revise its planned $19.5 billion investment in miner Rio Tinto before a June 14 deadline, according to two sources close to the deal we talked to.

In the U.S., American International Group (AIG) is in talks with three bidding groups for International Lease Finance Corp., but a sale is complex as the parties have to deal with the aircraft leasing unit’s mountain of debt and funding needs, Reuters heard late on Wednesday.

And in the newspapers:

* State-run Rosneft, Russia’s largest oil firm, will take over private bank Trust in exchange for writing off debts, Kommersant business daily reported.