DealZone

Deals wrap: Treasury sells stake of AIG

The Treasury made a small profit when it sold a portion of its shares in AIG, but it was unclear how its investment in the beleaguered insurer will ultimately fare.

Tuesday’s $8.7 billion stock offering, (being dubbed by some as AIG’s re-IPO) which included 200 million shares sold by the Treasury and 100 million sold by AIG itself, is far smaller than the $10 billion to $20 billion deal some banking sources had suggested earlier this year, hinting at a potential lack of investor interest.

With the sale, the Treasury has raised $5.8 billion of the $47.5 billion it needs to break even and now has another 1.5 billion shares to sell.

The government can claim a small victory with this sale, but the Deal Journal says the biggest beneficiary of the decision are the banks underwriting the sale.

A day after Yandex surged in its debut coupled with LinkedIn’s record IPO last week, comes the news that the maker behind a series of popular games on Facebook, Zynga, may file for a multibillion-dollar IPO as early as this week.

Deals wrap: Fiat speeds toward control of Chrysler

A new model of the Fiat 500 is pictured on display at the launch of Chrysler's flagship showroom in Los Angeles November 16, 2010. REUTERS/Mario Anzuoni Fiat will pump another $1.3 billion into Chrysler this quarter as it moves closer to its target of owning a controlling stake in the U.S. automaker. The deal will take Fiat’s holding in the company to 46 percent, just 5 percent shy of the 51 percent it needs to assume full control.

Read the politically charged, behind-the-scenes story of how the Singapore Exchange failed in its bid for a full takeover of Australian stock exchange operator ASX.

The prosecution amped up the tone of its attacks on Raj Rajaratnam in closing arguments at the insider trading trial of the hedge fund manager on Wednesday, saying the Galleon Group founder wanted to “conquer the stock market at the expense of the law.” The jury is expected to begin deliberations once the defense wraps up its closing arguments either Thursday or next Monday.

Deals wrap: Valuing Facebook

Facebook CEO Mark Zuckerberg listens to a question after unveiling a new messaging system during a news conference in San Francisco, California November 15, 2010.  REUTERS/Robert Galbraith Facebook has raised $500 million from Goldman Sachs and Russian Internet investment group Digital Sky Technologies in a deal valuing the social networking site at $50 billion, the New York Times reported, citing people involved in the transaction.

“Facebook doesn’t need to stay worth $50 billion forever — Goldman just needs to engineer an IPO valuation somewhere north of that, then exit quietly in the public markets,” writes Felix Salmon about the deal.

Italy’s Fiat set its sights on a majority stake in Chrysler after completing a long-planned demerger of its car-making activities from its truck and tractor business. Click here for a factbox on the demerger.

Battered car-makers rounding blind corner

AUTOSHOW/(Update: This piece was written, as several commenters have pointed out, before GM clinched a sale of Saab to Spyker on January 26.)

By Quentin Carruthers

(Acquisitions Monthly) Automakers face a demand slump in Europe and the longer-term challenge of addressing climate change. Both pressures are expected to lead to further restructuring, consolidation and M&A activity.

The North American International Auto Show, held each January in Detroit, Michigan, is just coming to an end. Detroit is the hometown of America’s “Big Three” automobile makers – Ford, General Motors, and Chrysler – and the show constitutes one of the most important events in the industry’s calendar.

Faster than a speeding bankruptcy

After enjoying a bit of confusion from savior Fiat about the imperative of a June 15 deadline, and a quick, 24-hour trip to the Supreme Court, Chrysler creditors now know in no uncertain terms just how much political will there is behind getting the automaker’s government-orchestrated deal done.

The top U.S. court can certainly be counted on to ponderously deliberate matters of vital importance to the nation. But when the consequences of delay are dire (thousands of auto workers’ jobs, a U.S. presidency, etc.), a decision to not make a decision can come with lightning speed.

In a brief two-page order, the justices said opponents of the Fiat-Chrysler deal had not met the burden of showing the Supreme Court needed to intervene. The court’s action was not a decision on the merits of the challenge, they said. The Chrysler dispute marked the first time the Supreme Court had been confronted by legal issues involving the federal government’s power to deal with the economic crisis.

Live blog of the Chrysler bankruptcy hearing

Reuters will be sending live updates from the Chrysler bankruptcy hearing, on the automaker’s plan to reject 789 dealership franchises, expected soon after 0830 ET. Read the updates below or follow us on Twitter.

No deal on Opel as GM needs more cash – again

opel1What’s surprising: Talks for General Motors Corp’s Opel failed to yield a deal.

What’s not-so-surprising: GM needs cash. Again.

Talks that ran all through Wednesday night to sell Opel to one of four final bidders narrowed the race to two but failed in sealing a deal. German ministers, emerging in the early hours of Thursday morning after more than 12 hours of talks, blamed GM and the U.S. Treasury for the failure.

Why? Because GM, the ministers say, shocked participants by announcing it needed 300 million euros ($415 million) more in short-term cash from the German government to  keep Opel operating.

Chrysler lawyer’s e-mails show doubts on speed of deal

Opponents seeking to slow down Chrysler’s blitz through bankruptcy court received unexpected support for their argument on Wednesday: Chrysler’s lead attorneys. 
    An email that turned up during discovery showed that Jones Day attorneys tried to discourage the U.S. government from setting a June 15 deadline for completing a sale of most of the automaker’s assets to a group led by Fiat.
    A lawyer for a group of Indiana pension funds, which oppose the sale, read the email in court which showed Jones Day attorneys said the tight schedule would undermine the credibility of their case, called the time frame a mistake and said it would “stuff the judge” by forcing such a rapid hearing schedule.
    “The debtor lost that one,” said the Indiana fund’s attorney, Glenn Kurtz of White and Case, referring to Jones Day recommendation regarding the deadline.
    Judge Arthur Gonzalez overruled Jones Day attorneys who objected to entering the email, which the U.S. Treasury released during discovery, because it was not meant to be public and tapped into Chrysler’s legal strategy.

-By Tom Hals and Emily Chasan

Chrysler, an American Bankruptcy

CHRYSLER/DEALERSChrysler’s private equity owners Cerberus, or at least their lawyers, will arrive at bankruptcy court in Manhattan later this morning. Yesterday, President Obama assured hand-wringing industrialists that the process would be quick and efficient and that Chrysler would emerge a leaner, meaner machine.

To some degree, one can look at the U.S. airline industry in the same light. But that industry, while “saved” through bankruptcy numerous times, is today a shadow of its former self, and remains haunted every so often by the threat of a return to that business mortuary for rebirth.

But a lot has changed since the crisis mad bankruptcy court so busy. The key for the new age of court-run restructuring is to sell major assets before going to court — effectively leaving creditors to haggle over the dregs. Some disgruntled creditors contend that the quick bankruptcy promised by Obama is being engineered in such a way because the sales would never make it past a judge.

Chrysler bankruptcy looms despite deal

USA/Chrysler’s biggest lenders and the U.S. government reached a breakthrough framework deal to cut the automaker’s debt by $6.9 billion, but officials say bankruptcy is still a strong possibility with the Obama administration’s Thursday deadline for a comprehensive rescue plan just hours away.

Fiat Chief Executive Sergio Marchionne was quoted by the president of the Canadian Auto Workers union as saying Chrysler would likely enter Chapter 11 bankruptcy for a period of time. But Michigan Senator Carl Levin said, “If they do go into bankruptcy, it would really be in and out.” A source with senior-level knowledge of the restructuring told us that a surgical bankruptcy could be a way, for instance, to address “recalcitrant” lenders.

With Germany’s Daimler AG dumping its 19.9 percent stake in Chrysler and Italy’s Fiat poised to “eventually” own more than a third of the company, European know-how and innovation have never been more important for the U.S. auto industry.