DealZone

DealZone Daily

Cadbury posts its final defence against Kraft’s hostile takeover, but a muted share price reaction shows it is not changing market views about the deal much.  Ferrero, the Italian chocolate maker, is “very close” to taking a decision on whether to launch a counterbid together with U.S. group Hershey, a source close to the operation tells Reuters. Italy’s Il Messagero reported earlier Ferrero was securing a $4.5 billion syndicated loan.

General Motors repeats it is closing down Saab, because it has not yet received a credible bid. Dutch group Spyker meanwhile, says it remains hopeful that a deal can be reached.

And in other media:

Ford remains open to talks with potential bidders for its Volvo cars unit, despite a commercial agreement on a sale with China’s Zhejiang Geely, Sweden’s Dagens Industri says.

Fortis Holding’s special purpose vehicle Royal Park Investments — set up to hold the toxic assets of Fortis Bank, has raised 4.3 billion euros, according to Belgian newspaper De Tijd.

Corus Entertainment Inc, Shaw Communications Inc, Fairfax Financial Holdings Ltd, and Jim Pattison Group are considering investing in debt-laden media company Canwest global Communications Group, the Globe and Mail newspaper reports late on Monday.

from Alexander Smith:

Santander wins with Brazil float

    Buying ABN AMRO may have bankrupted Royal Bank of Scotland and Fortis, but it has proved another coup for Spain's Santander whose chairman Emilio Botin has shown his eye for a bargain.
    After flipping Italy's Banca Antonveneta for an impressive profit before the ink was even dry on the contract to take it over from ABN, Botin is now looking to float Banco Santander Brasil, including another former ABN asset, Banco Real, once part of the Dutch bank's Latin American empire.
    With Brazilian valuations riding high and the IPO market flourishing, Citigroup reckons BSB could be worth as much as $30 billion. If so, the partial sale would again demonstrate Botin's ability to spot a good deal.
    Brazil is far too important to Santander -- it accounted for 18 percent of the bank's first half profits of 4.5 billion euros -- for Botin to give up control. But a flotation of 15 percent of the Brazilian bank could raise $4.5 billion of scarce capital while giving Botin another currency for shopping in South America. lt is already Brazil's third-largest bank by assets.
    Santander has been able to keep buying through the financial crisis, becoming the biggest bank in the euro zone as a result. Botin has also picked up Sovereign Bancorp in the U.S. and Alliance & Leicester, along with the remains of failed former building society Bradford & Bingley, in Britain.
    Floating the Brazilian business would crystallise its value. It might also boost Santander's own share price, but risks investors taking the view that a global roll-out of the bank's name and brand means the parent is becoming a conglomerate rather than an integrated group.
    The possibility of attracting a conglomerate discount won't have escaped Botin, whose family still owns nearly 2.5 percent of the $115 billion bank.
    Unlike his colleagues in the banks which have failed, Botin has his family fortune tied up in the business he runs. This, surely, is a powerful reason why Santander has avoided plunging into areas where the risk was far greater than the executives knew or cared. The bank has the strength to take advantage of the fashion for things Brazilian, and he can reflect that the acquisition which sunk RBS has done him no harm at all.

Another four bite the dust

wachovia.jpgLawmakers are gearing up to vote on a $700 billion financial bailout plan, but the rescue from Capitol Hill didn’t come soon enough for Wachovia — whose assets are being acquired by Citigroup — or for Fortis NV, Hypo Real Estate and Bradford & Bingley, which were nationalized by European governments on Monday.

“Wachovia did not fail; rather, it is to be acquired by Citigroup Inc on an open bank basis with assistance from the FDIC,” the agency said in a statement. Still in doubt is the status of brokerage AG Edwards and asset manager Evergreen, which are not included in the deal.

Wasn’t it only two weeks ago that Wachovia was in talks to merge with Morgan Stanley?

West Coast Care

CVS CaremarkCVS Caremark Corp is bolstering its position on the West Coast with its acquisition of rival Longs Drugs Stores Corp. The deal, announced on Tuesday, is worth $2.54 billion and will allow CVS to expand in states like California and broaden the reach of its prescription services. The acquisition of Longs’ 521 stores will also give CVS a leading position in Hawaii, where it doesn’t operate. CVS will pay $71.50 per share for Longs, including its Rx America subsidiary, a prescription benefits management services company with over 8 million members. Longs shares closed at $54.04 before the news on Tuesday, but surged nearly 30 percent in extended trading on the deal. Shares in CVS fell nearly 7 percent on the news.
GM chief Rick Wagoner says there’s significant interest in the auto maker’s planned sale of up to $4 billion of assets as it battles record losses and falling sales, but no deals are expected soon. General Motors Corp is struggling against an accelerating downturn in its home market and high oil prices that have hammered sales of its trucks and SUVs, triggering a $15.5 billion quarterly loss, the third-largest in its 100-year history. Earlier this month, sources told Reuters GM was in talks with India’s Mahindra & Mahindara Ltd and automakers in Russia and China about selling its Hummer brand.

A consortium led by Goldman Sachs Group Inc has agreed to pay about $1.5 billion for a number of ABN AMRO’s private equity assets, the Wall Street Journal said Wednesday. On Monday, Belgian-Dutch financial services group Fortis said that together with Britain’s Royal Bank of Scotland Group and Spain’s Banco Santander, it had sold a number of ABN AMRO private equity assets to a Goldman Sachs-led consortium. The Journal said Goldman’s investment comprised 32 European companies as well as roughly $450 million in capital to be invested in future deals.
Other deals of the day:

* Australia’s CSL Ltd, the world’s top maker of blood plasma products, is buying smaller U.S. rival Talecris Biotherapeutics Holdings Corp for $3.1 billion, to boost its presence in the fast-growing biopharmaceutical industry.

Ice cold rejection

Anheuser-Busch is set to reject InBev‘s $46.3 billion takeover offer, a source tells Reuters. After a few weeks of stonewalling by the company and posturing by Missouri politicians, is that really such a surprise? The company’s defensive strategy will hinge on restructuring  the workforce and spinning off non-core assets like the SeaWorld theme parks, but as DealZone’s David Jones notes, those same strategies have alreclydesdales.jpgady been offered up by InBev as a justification for its bid. Might as well crack open a few icy cold Budweisers — looks like this is going to take a while to sort out.

Fortis shareholders might also be in need of a Stella six-pack, as the Belgian-Dutch financial services group announced plans to shore up its finances with measures worth more than 8 billion euros ($12.54 billion), including issuing new shares, hitting its stock on dilution worries. Fortis will issue 1.5 billion euros in new shares plus up to 2 billion euros of non-dilutive preference shares, save 1.3 billion euros by not paying an interim 2008 dividend, and will also sell non-core assets and sell and lease back real estate. “We believe that 2008 will be a difficult year for our industry and we do not expect an improvement in the economic environment soon,” said CEO Jean-Paul Votron. “The measures announced today will help Fortis navigate through the current challenging market circumstances.”

Goldman analyst William Tanona has pulled a page from the Meredith Whitney playbook, questioning the viability of the Citibank‘s dividend, predicting $8.9 billion in second-quarter writedowns, and adding its stock to the “conviction sell” list. He also said that the bank may have to issue common stock or sell assets to raise capital because regulators may forbid it from issuing more preferred or convertible securities. Citi shares were down 3.7 percent in pre-open trading.