DealZone

M & A wrap: A Buffett bailout for BofA

Warren Buffett’s Berkshire Hathaway will invest $5 billion in Bank of America, stepping in to shore up the company in the same way he helped prop up Goldman Sachs during the financial crisis.

Bank of America shares rose 20 percent in pre-market trading on the news. Shares for the largest U.S. bank by assets have lost roughly a third of their value in August, and half their value since the beginning of the year.

The news of Steve Jobs’s resignation had many of his peers weighing in on the Apple co-founder’s legacy. Former Google CEO Eric Schmidt said Jobs is the “most successful CEO in the U.S. of the last 25 years,” while former eBay CEO Meg Whitman said his contributions are “unparalleled in the business world.”

Samsung Electronics Co reiterated on Thursday it is not interested in buying Hewlett-Packard Co’s PC business, shooting down persistent market talk the South Korean firm may snap up the unit to become the world’s top PC maker.

The deadline for initial bids in the auction for Hulu was extended until the end of the week to allow interested parties more time to examine the online video site’s financial information, according to people familiar with the situation. Yahoo, Google Inc, DirecTV and Amazon.com were among the parties preparing to submit an offer for the U.S. online company, the people said.

Deals wrap: Glencore disappoints while Yandex confirms price

Even though sources close to Glencore felt the commodities trader had left “money on the table” with an offer price of 530 pence that valued the company at $59.15 billion, the company’s shares were stuck under water on their first day of official trade, dashing hopes of a strong start.

While some analysts still expressed concern over Glencore’s valuation, several analysts and bankers brushed aside worries about the stock trading below the offer price. They said the market debut should be seen as a success given its size and the continued uncertainty in both commodity and equity markets.

In other news Yandex’s initial public offering, the Internet sector’s biggest U.S. float since Google, was 17 times oversubscribed, a source said, with demand boosted by a blow-out float of LinkedIn.

Deals wrap: eBay’s $2.4 billion GSI buy

Visitors chat next to the Ebay logo at the CeBIT computer fair in Hanover March 2, 2011. REUTERS/Tobias Schwarz EBay said it plans to buy e-commerce company GSI Commerce, which owns Web businesses such as the flash site Rue La La and ShopRunner, for $2.4 billion. Ebay said it will offer shareholders of GSI $29.25 per share, a 51 percent premium over its closing price on Friday.

Tabula announced $108 million in funding, one of the largest venture rounds in a decade for a chip company, writes VentureBeat’s Matt Marshall. The company says it can create programmable logic devices for $200, compared to a cost of more than $1,000 offered by competitors.

Despite soaring valuations of tech companies and warnings that the bust a decade ago may be repeated, there are notable differences between the dot-com boom and now, write Evelyn M. Rusli and Verne G. Kopytoff of the New York Times. Today, the stock market is not glutted with offerings and attractive tech start-ups like Groupon have real businesses — not just “eyeballs and clicks”. But, as cash continues to pile up, the fear is that all the money cannot be put to work responsibly, they add.

Facebook is more than just a pretty face

The social networking website of Mark Zuckerberg (pictured) is now worth $23 billion, close to the value of online shopping website Ebay, based on the price of a recent stock purchase by private equity firm Elevation Partners. Elevation purchased $120 million in Facebook stock from private shareholders, valuing the company at $23 billion, a person familiar with the matter told Reuters on Monday.

A valuation of that amount makes Facebook larger than Yahoo, which has a market capitalisation of $20 billion, and edging closer to the size of Ebay, at $27 billion. Still, it is a fraction the size of Google ($150 billion). Facebook’s backers include Digital Sky Technologies, Microsoft Corp Corp, Hong Kong tycoon Li Ka-shing and venture capital firms Accel Partners, Greylock Partners and Meritech Capital Partners.

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):

Coke, eBay activity in Asia

CHINA-ECONOMY/PROPERTYIs it a sign of recovery that cross-Pacific deals are making a comeback? Certainly the mighty dollar makes overseas assets cheap, and foreign governments are probably more willing to create less friction on inflows with investment markets quiet.

In a deal that only a month ago was dead in the water, with a big protectionist steak through the heart, Coca-Cola’s bid to get into the Chinese market appears to be coming back to life. The company is now reported to be holding informal talks with China Huiyuan Juice to weigh partnership options after the $2.4 billion deal — the largest-ever buyout of a Chinese company by a foreign rival – was scuppered.

In South Korea, antitrust officials have cleared the way for eBay to buy Gmarket, its key competitor in the country. The deal, worth up to $1.2 billion, is seen a key driver of growth in the region for eBay. Nasdaq-listed Gmarket is the biggest South Korean operator of customer-to-customer marketplaces and has more than 10 million registered users in the country. When combined, Gmarket and eBay’s South Korean unit will have an 87.5 percent share of the South Korean customer-to-customer market and 36.4 percent of the entire domestic online shopping market.

General Growth’s collapse

mallThe modern shopping mall is the cathedral of consumer prosperity, so news that U.S. shopping mall owner General Growth Properties sought bankruptcy protection, capping a months-long effort to cope with a $27 billion debt load, is something of a seminal event in the global economic crisis.

The story of the second-largest U.S. mall owner reflects the larger trend in today’s credit-stifled economy: companies that loaded up on debt in better times and have been struggling to refinance so they can cover their payments. Many have succumbed to Chapter 11 after frequent negotiations with lenders, and many more are expected to.

It’s even worse for shopping malls. Commercial-property values have sunk, and the U.S. retail market is hurting. Many analysts say General Growth could survive a lengthy bankruptcy without resorting to a liquidation, but would have to sell off some properties. That could consolidate power in the mall industry if major players like Simon Property Group, Westfield Group and Taubman Centers could cherry-pick some of the assets.

from Shop Talk:

A suitor for Skype?

(Refiles to correct Donahoe's first name to John.)

TECH TAIWAN SKYPETo sell Skype, or not to sell Skype. That is the question for eBay, and Wall Street has diverging opinions on whether the San Jose company will or won't unload its Internet telephone service.
    
Skype was acquired under the reign of former CEO Meg Whitman (now a California gubernatorial hopeful) and touted as a nifty way for eBay's millions of sellers and buyers to connect. That reality never materialized, and current CEO John Donahoe has acknowledged that synergies between eBay and Skype are nonexistent.
    
Still, Skype is on a tear, growing at double digits and adding 350,000 global users a day. The five-year-old company logged $551 million in revenue in 2008 -- that number is expected to double by 2011 -- and is now a subject of great speculation by analysts, who wonder whether eBay plans to spin it off, or hold it close. 
                              
Cowan and Co's Jim Friedland, for one, thinks it's for sale. Writing in a note the day after eBay held an analyst presentation to outline the company's three-year plan, Friedland said it appeared "eBay was using the Skype discussion to trigger a bidding war between Google and Microsoft."
       
"We believe the asset would be attractive to both Google and Microsoft to enhance their web-based enterprise application services. In addition, Skype's user base of 405 million, which is particularly strong internationally, would likely strengthen Google's dominant position in the consumer web app market."

But Bernstein Research's Jeffrey Lindsay did not see it that way: "We think the dearth of buyers such as Google or Microsoft will mean that eBay is more likely to spin out part of Skype to the public (like Time Warner did initially with Time Warner Cable)."
    
Huh. Donahoe, incidentally, has said only that eBay will do what's best "to maximize Skype's potential and value."
    
Deutsche Bank's Jeetil Patel opined that, since Skype is performing well, "Management should hold on to this business model" and Credit Suisse's Spencer Wang said he did not see eBay rushing to sell.
    
"While we think the company would be open to parting with Skype at the right price (currently valued at $1.8 billion on eBay's balance sheet), a divestiture of Skype does not appear imminent," Wang wrote.

(Photo: Reuters)

Getting online in Europe

A man browses web at an Internet cafe in MadridWith tens of billions in the bank collecting dust since its failed bid for Yahoo, and the elusive promise of the Internet still beckoning, Microsoft returned to the market for Internet search businesses with a $486 million purchase of Greenfield Online, the U.S.-listed owner of European price comparison website ciao.com. The buy is meant to help lift Microsoft out of fifth place in the European search market by giving a boost to its Live Search platform. Google‘s monster lead in the search market is a whopping 62 percent and 79 percent in Europe, according to the most recent data published by Web usage tracker ComScore. Microsoft has a 2 percent market share in Europe and 9 percent worldwide, behind both Google and Yahoo. In Europe, Microsoft is also outranked by online auction site eBay and Russia’s Yandex.

Four large hedge funds, all Huntsman shareholders, have proposed a plan to finance at least $500 million of the $6.5 billion buyout of the chemical company by a unit of Apollo Global Management. Hedge funds Citadel Investment Group, D.E. Shaw & Co, MatlinPatterson Global Advisers and Pentwater Growth Fund, and as of this morning, the Huntsman family, have agreed to team up on the financing plan, but Apollo’s Hexion Specialty Chemicals unit rejected the plan last night, saying Huntsman’s increased debt and decreased earnings since the deal was struck in July 2007 would no longer make a combined company solvent. “We are not seeking to renegotiate this transaction,” Hexion responded in a statement. “We are seeking to terminate it, and obtain judicial confirmation that Hexion has no obligation to pursue the acquisition or to pay Huntsman a termination fee.”

Allianz is set to sell Dresdner Bank to Commerzbank, sources with direct knowledge of the matter say, in a deal that will fuse Germany’s second- and third-biggest lenders. The deal, to be announced as soon as this weekend, will see Commerzbank take a 51 percent stake in Dresdner and buy the rest later, the sources said. Taking over Dresdner, which analysts estimate to be worth about 9 billion euros ($13 billion), will create a group to rival flagship lender Deutsche Bank and change the face of banking in Germany, Europe’s biggest economy. It will give Commerzbank a badly needed leg up in its home market, which is dominated by state not-for-profit lenders and allow Allianz to end an unhappy marriage that unsuccessfully tried to match investment bankers with insurance salesmen. The deal is likely to result in heavy job cuts, which would have been avoided had Allianz chosen to sell to another would-be buyer, China Development Bank.

Craigslist a runaway bride?

newmark.jpgEBay‘s lawsuit against Craigslist alleges that founder Craig Newmark and CEO Jim Buckmaster tried to dilute eBay’s 28.4 percent stake in the company after a marriage proposal. According to court papers unsealed Wednesday, Craigslist wanted out of the relationship since eBay had launched a competing product, Kijiji, but Meg Whitman countered with a bid to buy the entire company, leading to the allegedly “clandestine” meetings between Newmark and CEO Jim Buckmaster. At stake is the world’s third most valuable Web startup, as ranked by Silicon Alley Insider, valued at approximately $5 billion.

Microsoft‘s board met on Wednesday to discuss its stand-off with Yahoo, but don’t get too excited: they failed to reach a decision on what to do next, according to a Wall Street Journal report. The board is still weighing whether to adopt a hostile approach and nominate a proxy slate of directors to replace Yahoo’s board, sweeten its cash-and-stock offer for Yahoo, or possibly walk away from the deal. A Microsoft-imposed “deadline” passed last Saturday.

Three-headed canine guardian of the gates of Hell, meet controversial private security contractor Blackwater. Cerberus Capital Management is in talks to invest $200 million for a stake in Blackwater USA, ABC News reported on Wednesday, citing sources. Or, not. The Wall Street Journal confirmed that Blackwater is seeking outside investment, but quotes a Cerberus spokesman as saying the private equity firm took a look but decided to pass. As the WSJ’s Deal Journal notes, the “secretive, billionaire, former paratrooper [Cerberus' Steve Feinberg] trains his largesse on a secretive, lucrative quasi-military operations company” story was just too good to be true.