DealZone

Putting together new companies out of parts of old is a challenging task for dealmakers, particularly when the businesses concerned employ large numbers of workers.

The future shape of Germany’s auto industry remains uncertain, following the slow-mo breakdown of General Motors (GM.N) and the collapse of Porsche’s (PSHG_p.DE) bid to take over Volkswagen (VOWG.DE). Over the weekend the list of bidders for Porsche’s stake in Volkswagen grew, while a German newspaper on Monday reported the country’s economy minister saying the outcome of the bidding war for Opel was still up in air. For all the latest deals news from Reuters, click here.

Elsewhere, newspapers name a pair of European companies looking to offload businesses to support their financial position.

French water and environmental services company Veolia Environnement (VE.N) has puts its UK water arm up for sale to raise money to reduce its debt, the Sunday Times reported.

Meanwhile, India’s Oil and Natural Gas Corporation (ONGCF.PK) may join a number of Russian companies looking at buying a stake of at least 20 percent in Repsol’s (REP.N) Argentine unit YPF, Spanish business newspaper La Gaceta reported on Monday.

Final, first-half M&A data from Thomson Reuters, released earlier on Thursday, filled out the picture painted by preliminary data last week — deal-making has shrunk dramatically, even as investment bankers find solace in a record flurry of bonds and rights issues.

One interesting wrinkle, compared to the earlier numbers, is the inclusion of Xstrata’s unwanted approach for rival miner Anglo American, valued by the number-crunchers at $42.5 billion. That helped propel Goldman Sachs to the global top spot for M&A advice, and boosted several other banks engaged on the deal.

Some other nuggets:

* Compared to the first half of 2008, announced M&A is down 40.2% to $941 billion, the slowest H1 since 2004.

Roche’s megabucks Genentech buy is looking more like a reverse takeover — in some ways, at least.

The Swiss drugmaker splashed out $47 billion to buy out its biotech partner to secure access to Genentech’s impressive new drugs. But Roche’s U.S. operations are to operate under the Genentech name and research, development and commercial operations are all being based at the U.S. group’s South San Francisco headquarters.

Now Roche doesn’t even consider itself Big Pharma. It says it will leave the industry group Pharmaceuticals Research and Manufacturers of America (PhRMA) but will retain Genentech’s membership of the Biotechnology Industry Organization (BIO).

General Electric Co Chief Executive Jeff Immelt went to Michigan, the bleeding heart of the U.S. industrial heartland, on Friday to call for a resurgence in American manufacturing.
But even as he warned against relying too heavily on the financial industry to drive economic growth, he subtly set up a defense of the largest U.S. conglomerate’s hefty finance arm.

Analysts and investors are worried that the Obama administration’s proposed overhaul of U.S. financial regulations could force GE to spin off GE Capital, which has businesses ranging from leasing jet planes to investing in commercial real estate.

“We also need a financial system that is built around helping industrial companies to succeed,” Immelt told the Detroit Economic Club. “GE is an important part of this financial services approach. We plan to focus GE Capital on financing small- and medium-sized customers in industries that we know the best.”

Faced with big debts and falling revenues, companies across the world are hiring experts and pondering options.

One option is to swap old bonds for new, exchanging looming maturities for redemptions a few years off. Another is to buy back debts trading at discounted prices.

UK broadcaster ITV (ITV.L) is the latest company to swap its bonds, one of the most successful of a string of exchanges Reuters predicted back in April.

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.

Deutsche Bank, the underdog in the race to run the IPO of a large AIG unit, has come out on top.

The German bank has been chosen as one of two global coordinators to run the IPO of American International Assurance (AIA), beating out Goldman Sachs and Citigroup, which ran the aborted auction of the Asian life insurer earlier this year.

Morgan Stanley, the other global coordinator, is no surprise. The bank has been advising the Fed since the September implosion of AIG, and on top of its own expertise, regulators wanted it in.

Magna and GM aim to sign a deal on Opel by July 15, Blackstone plans to establish a Chinese subsidiary, and AIG picks banks to run the $4 billion-plus IPO of its Asian life insurance unit – for all the latest deals news from Reuters, click here.

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

* KazMunaiGas Exploration and Production, the listed arm of Kazakhstan’s national oil company, has $4bn of cash available for acquisitions and hopes to agree deals before the end of the year, its new chief executive told the Financial Times.

* Stephen Pagliuca, one of three parties interested in buying The Boston Globe, is willing to work with the U.S. newspaper’s largest union to structure a buy-out from its owner The New York Times, the Financial Times reported, citing a person familiar with the discussions.

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.

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.