DealZone

Disk trouble

Sandisk flash memory cardsAnother day, another round of hand-wringing: Do I, or don’t I? That seems to be the mantra of top executives mulling buys in what continues to be a rocky market while those on the receiving end are left wondering will he, or won’t he?

So far, it ain’t looking good — for the sellers, or the buyers.

Late last night, Samsung Electronics Co Ltd, the world’s top memory chip maker, decided to dump its pursuit of flash memory card maker SanDisk Corp. That unsolicited deal would have been worth $6 billion, but Samsung apparently got cold feet after seeing SanDisk’s wider-than-expected quarterly loss.

“Your surprise announcements of a quarter billion dollar operating loss, a hurried renegotiation of your relationship with Toshiba and major job losses across your organization all point to a considerable increase in your risk profile and a material deterioration in value, both on a stand-alone basis as well as to Samsung,” Samsung CEO Lee Yoon-woo wrote to SanDisk management in a letter disclosed by Samsung on Wednesday.

As a result of these developments, we are no longer interested in acquiring SanDisk at $26/share.”

Ouch. At least Lee won’t be accused of beating around the bush.

The move, of course, wasn’t a big surprise. Many investors had been doubtful a deal would get down in the first place, given that the spread between Samsung’s offer price and SanDisk’s trading price was 80 percent, according to Reuters data.

Waste Management’s sweetened trash bid

waste.jpg[Editor's note: This blog post originally referenced a Reuters article reporting that United Parcel Service had dismissed talk of a $15 billion takeover bid for Dutch rival TNT. That article is wrong and has been withdrawn. Reuters accepts that the UPS executive was not commenting specifically on reports that TNT and UPS were in talks.]

Waste Management Inc, the largest U.S. trash hauler, said on Monday it has raised its rejected bid for rival Republic Services Inc by nearly 10 percent, to $6.73 billion. Under the revised offer, Waste Management would acquire all outstanding shares of Republic for $37.00 each, a 32.6 percent premium to Republic’s share price prior to Waste’s first takeover bid. That’s not likely to bring a smile to the face of Bill Gates, a major Republic shareholder through his investment arm, BGI, who last month asked Waste Management to walk away. BGI didn’t mince words in its letter to Waste Management’s CEO and board: “We can only assume your ill-timed and poorly conceived pursuit of Republic is designed to disrupt what you perceive as a competitive threat to your position in the market.”

GATX Corp is offering more than $3 billion for General Electric Co‘s rail car leasing business, a source familiar with the discussions said. GATX is the leading bidder for the unit and negotiations are ongoing, the person said. A GE spokesman declined to comment. GATX was not immediately reachable for comment.

GE’s inorganic growth

General Electric’s Jeffrey R. Immelt in a file photo.General Electric has bulked up on its health binge, moving to buy medical device maker Vital Signs for $860 million. Vital Signs shareholders are to get $74.50 per share in cash, a 28.4 percent premium to Wednesday’s closing price, and above the shares’ 52-week high of $61.20, reached on May 9. GE said the deal, which it expects to close in the fourth quarter, values Vital Signs at $860 million, net of cash and investments. It said that shareholders with a 37 percent stake in Vital Signs have agreed to vote in favor of the deal.

Chinese pickup truck maker Hebei Zhongxing Automobile Co is in talks with General Motors and major Chinese automaker FAW Group to explore opportunities for cooperation, including possible equity ties, a source close to the situation said. “Consolidation is inevitable in the Chinese auto market, which now has more than 100 players, and a company of Zhongxing’s size makes a good takeover target or joint venture partner,” the source told Reuters. “Zhongxing is holding talks with several potential partners including FAW and GM to seek cooperative opportunities, including possible equity ties, but nothing has been decided at the moment,” a source said.

Tribune has narrowed the potential list of bidders for the storied Chicago Cubs baseball team to 3-5 groups bidding $1 billion or more, according to sources briefed on the matter. Of the 10 groups approved to bid for the Cubs by Major League Baseball, only those that bid $1 billion or more for the team, its home ballpark Wrigley Field and a stake in a regional sports TV network advanced to the next round, said two sources, who asked not to be identified because the process is ongoing. While Tribune and baseball officials declined to comment, three sources said Internet billionaire Mark Cuban, owner of the National Basketball Association Dallas Mavericks; and a publicly held group led by New York City taxi tycoon Andrew Murstein were among those advancing. Others advancing included Tom Ricketts, chief executive of Incapital LLC, a Chicago securities and investment banking firm, and son of the founder of TD Ameritrade; and a group headed by Michael Tokarz, chairman of MVC Capital, one of the sources said. The Tokarz group includes Fred Malek, who previously bid on the baseball team in Washington.

Deeper into the abyss

A man walks out of the headquarters of Freddie MacThe subprime crisis has come to this: The U.S. government is considering taking over mortgage finance companies Fannie Mae and Freddie Mac if their funding problems worsen, the New York Times reported, citing people briefed on the matter. Fannie and Freddie, government-sponsored entities that have the implicit backing of Washington, would be placed into conservatorship, with shareholders left with little or nothing, and the losses on the $5 trillion in home loans they own or guarantee — what amounts to half of all U.S. mortgages — would be paid by U.S. taxpayers.

General Electric is set to sell its Japanese consumer finance operation to Shinsei Bank for 580 billion yen ($5.4 billion), people familiar with the matter said. The business includes a moneylender, Lake, as well as a credit card and housing loan operation. GE had previously said it was looking to sell Lake, but did not say anything about the entire Japanese consumer finance business.

How’s this for an about-face? Anheuser-Busch is in active talks to sell itself to InBev in a friendly deal, the New York Times said on its website, citing people briefed on the matter. Price seems to be a factor, with InBev seemingly open to raising its $65 per share offer, along with pressure from major shareholders like Warren Buffett. What will politicians like Sen. Claire McCaskill and presidential candidate Barack Obama say now that “America’s Beer” may be selling itself willingly?

The art of watching

A model waits in the backstage before the ”Nation and Fashion” show in BudapestGE CEO Jeffrey Immelt is in South Korea, where he may or may not be hawking the industrial conglomerate’s century-old appliances division. LG Electronics CEO Nam Yong said his company was “closely watching” developments surrounding the unit’s potential sale. General Electric said earlier this month it may sell or spin off the division, estimated to be worth up to $8 billion. LG, the world’s top maker of household air conditioners, has been talked about as a potential suitor, along with China’s Haier Group. Nam added he had no plans to meet with Immelt. This watching thing appears to be deeply ingrained in LG’s lexicon — the company is also “carefully watchingNokia amid talk the top-ranked mobile phone maker may cut its prices and reenter the South Korean market.

Shares in Belgian brewer InBev, the world’s second-biggest by volume, lost over three percent after a newspaper reported it could soon start takeover talks with rival Anheuser Busch. Belgian business daily De Tijd reported that InBev’s board was about to decide whether to allow its advisers to start negotiating with Bud. This follows the FT’s report on Friday that InBev was considering a $65-a-share bid and had put together $50 billion in financing. A Busch family member, Adolphus Busch IV, told the Wall Street Journal on Tuesday some family members were open to holding talks with InBev but others wanted to keep the status-quo.Germany’s embattled Hypo Real Estate has given its backing to an offer from private equity investor JC Flowers and others to buy almost one quarter of its shares, also declining to give an earnings forecast for 2008. Hypo’s stock price had been under pressure since it surprised investors with subprime-linked writedowns in January. This prompted the investment bank and property lender to look for a committed long-term shareholder to secure its future.

Blackstone Group and Apollo Management are in talks to buy chemicals company Chemtura, the Wall Street Journal reports. The negotiations could fall apart since the parties are still arranging financing and discussing the price tag on the deal, it said. Chemtura, which has a market capitalization of about $1.9 billion, said in December it was pursuing strategic alternatives. Apollo, Blackstone and Chemtura could not be immediately reached for comment.