Deals wrap: Singapore Exchange’s ASX bid in trouble
Consolidation in the Asian exchanges industry hit a roadblock on Tuesday when Australia said it intends to reject Singapore Exchange’s proposed $7.8 billion bid for Australia’s ASX on “national interest” grounds.
Although a final decision has yet to be made, share moves hinted that the market doubts the deal can be salvaged. All eyes will now be on other major exchange deals awaiting approval from regulators and politicians.
Texas Instruments is buying National Semiconductor for $6.5 billion, paying a hefty 78 percent premium to merge two of the industry’s oldest firms into a dominant force in analog microchips.
It’s another spotlight-grabbing win for veteran deal advisor Frank Quattrone, whose boutique investment bank advised National Semiconductor on the sale.
Google’s M&A machine may be slowing down after years of going full throttle as it finds itself in antitrust limbo, argues Reuters Breakingviews columnist Rob Cox
Senior dealmakers at the Reuters Global M&A Summit said Chinese firms are facing a series of regulatory and political challenges in buying U.S. companies, which is driving them to other countries that are seen as friendlier.
DealBook editor Andrew Ross Sorkin wonders why typically outspoken Berkshire Hathaway chief Warren Buffett has been so quiet about the speculations of insider trading that continue to spin around his former heir apparent David Sokol and draws up a list of questions that deserve answers from Buffett.
Deals wrap: GM’s market splash
General Motors has raised billions of dollars in its IPO, but big investors still have plenty of cash on hand to plow into other new stock issues — if they have merit.
General Motors’ swift journey from dying company to blockbuster IPO is a remarkable story, which the Democrats received little political credit for.
One of the first signs General Motors was driving toward a record-setting IPO with booming demand from investors came from an unlikely indicator: a sudden shortage of chocolate mousse at an investor meeting.
Harrah’s scrapped its $500 million initial public offering. Sources told Reuters the stock listing was delayed over concerns it would have been priced too high.
KKR is in advanced talks to buy Del Monte Foods, two sources familiar with the situation said.
Read this week’s Thomson Reuters Investment Banking Scorecard here.
Fortune looks into why Dell won’t go private.
Deals wrap: Turning down Sanofi
Genzyme broke its five-week silence to reject an $18.5 billion takeover proposal by French drugmaker Sanofi-Aventis, dismissing it as opportunistic and too low. *View article *View Genzyme’s letter to Sanofi-Aventis
Intel will buy Infineon’s wireless unit for $1.4 billion, enabling the chipmaker to boost its presence in the smartphone market. This is the second major deal for Intel within two weeks after the company announced its $7.7 billion offer for McAfee on Aug 19. *View article
Is Cisco in deal talks with Skype? A TechCrunch source says Cisco has made an offer for the Internet phone services provider. Earlier this month, Skype filed for an IPO. *View article
3M said it agreed to buy Cogent for more than $900 million, paying a nearly 18 percent premium for the biometric identification systems company. 3M estimates the $4 billion biometric market will grow by 20 percent a year. *View article
Agrium said it would be interested in Potash Corp’s nitrogen and phosphates business, worth an estimated $12 billion, if miner BHP Billiton secures its $39 billion Potash takeover and decides to sell the assets. BHP Billiton says they have no plans to sell any Potash Corp assets. *View article *View article on BHP’s top deal maker, Alberto Calderon *View analysis on China’s growing appetite
If there were any questions about whether Frank Quattrone could successfully return to the frontline of investment banking after a five-year legal fight, they have been put to rest by his role in advising 3PAR. *View article
Websense is open to takeover bids after rival McAfee was snapped up by Intel. “In my experience the way that you position yourself for sale is not to go around saying, ‘I am for sale,’” Chief Executive Gene Hodges told Reuters. “It’s to win in the marketplace and make sure that potential suitors know what your unique assets are.” *View article
I was thinking, with a huge downturn in the market imminent, a Sanofi bid for Genzyme is premature, the same as it would be premature for anyone to buy a house in the US right now. A couple economic charts gave me some perspective:
GENZ vs S&P 500
http://www.hiddenlevers.com/hl/u?aULDml
Here you can see a high correlation during the mid 2000s bounce back. But Genzyme didn’t careen to earth like the S&P did in 2008-09. Sanofi Aventis may think GENZ will defy gravity again, and put a bid in. If we return to the lows on the S&P, then GENZ might be good insurance.
Sanofi-Aventis vs USD index
http://www.hiddenlevers.com/hl/u?bmvEpU
Here you can see SNY (ADR) has had a roughly inverse correlation to the US dollar. As the markets retrench further on the way to the March 2009 lows, there will be a flight to US dollars, and ostensibly SNY will go down and not have the strength to put a bid in.
So a few visuals tell us why Sanofi targeted Genzyme, and the timing for their bid.
Economics Jai Ho!
Quattrone brings “emo” back in dealmaking
The 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.
The banker said Data Domain’s deal to sell to NetApp smacks of the kind of “insider-y, clubby” deal Quattrone is known for — where two companies agree to merge because they like each other. As the FT story says:
The deal has raised questions about how effectively Data Domain, advised by Mr Quattrone’s Qatalyst Partners, has handled the process, in particular its acceptance of an initial, relatively low, offer and its advice to shareholders this week to reject one of the nearly matching bids on the table.
But the story also interprets the state of play as a smart Quattrone move, because his client will be sold for “nearly double its price before the bidding war broke out.”
That’s all well for Data Domain, but much less so for NetApp, which doesn’t have as much room to raise its bid as EMC does. Already, EMC’s enty into the game forced NetApp to raise its offer from $25 a share to $30 a share. Any more might stretch NetApp’s finances, and walking away would be loss of face.
An offer Data Domain can’t refuse
Who knew EMC was a gatecrasher? Two weeks after NetApp announced plans to acquire Data Domain for $1.5 billion, the storage giant barged in with a higher offer and spoiled NetApp’s party.
EMC has always coveted Data Domain, which makes technology that removes redundant data as it is backed up, saving companies costly storage space. EMC CEO Joe Tucci said as much yesterday, complaining that Data Domain didn’t even give EMC a chance to bid for the assets before tying up with NetApp.
Hence, the aggressive move, supported by the $30 a share, all-cash offer that analysts say Data Domain would find tough to refuse.
“It’s unlikely that NetApp outbids EMC for Data Domain, as it will be difficult to match the all-cash deal,” said Mark Kelleher, an analyst at Brigantine Advisors.
“Upping the ante to counter EMC would be a stretch,” wrote Jefferies analyst Bill Choi. EMC has more than four times NetApp’s cash in its books ($6.8 billion versus $1.5 billion).
It’s no surprise then that EMC feels “quite confident” it will walk away with Data Domain at the current offer, according to a person familiar with the matter. Data Domain’s shares are trading at around $31 this morning, up nearly 20 percent, which is one indication of what shareholders are thinking.
That’s unless Data Domain’s advisers come up with some trick in the book. After all, we’re talking about Frank Quattrone, whose Qatalyst Partners is the only firm that advised Data Domain on the NetApp deal.
