DealZone

Deals wrap: Wanna buy an Irish bank?

Ireland’s banks are up for sale, the country’s central bank chief said, as the government seeks to cut them down in size after their reckless lending forced the country to seek an international bailout.

Shares in Bank of Ireland tumbled 29 percent and Allied Irish Banks lost 17 percent as shareholders face dilution from more capital injections, that could see AIB effectively nationalized.

Fortune’s Dan Primack observes how Republican Senator John McCain once used Ireland’s low corporate tax rate as a fiscal beacon, during his presidential run against Barack Obama. “Ireland considers the corporate tax rate to be a cornerstone of its economic well-being, but today that’s like saying that the Vikings consider Brett Favre to be a cornerstone of this year’s Super Bowl hopes,” writes Primack.

While the Irish economy is crashing, it’s Norwegian friends to the east are preparing for the country’s biggest IPO in nearly a decade. Mutually owned insurer Gjensidige launched a long-awaited initial public offering on Tuesday that could value it around $5 billion, making it the biggest in Norway since oil company Statoil floated in 2001.

In the U.S., GM’s IPO keeps trucking along with the news that Saudi investment firm Kingdom Holding and its Chairman Prince Alwaleed purchased $500 million in GM shares, representing about 1 percent of the value of the company. The GM offering raised $20.1 billion and ranks as the largest IPO in U.S. history.

from Breakingviews:

Investors shouldn’t get too sweet on dolled-up GM

The impressive third-quarter showing from General Motors shouldn't wow prospective investors too much. Sure, the automaker's $2 billion profit beat Ford's. It even eked out a slightly better pre-tax margin than its rival. But GM's last set of earnings before next week's initial public offering aren't as flattering as they look.

The company stuffed its dealers with 10 percent more inventory than it did at the end of June. There's nothing inherently wrong with that. Car sellers have kept fewer vehicles on lots over the past couple of years. Demand was lacking, as was financing. But in GM's case, many dealers also held stocks down in case the Motown manufacturer cut them loose in its restructuring. Rebuilding those levels now makes sense as the 2011 season approaches and sales pick up.

GM also sharply curtailed less profitable fleet business from 34 percent of sales to 26 percent, the low end of the range GM expects for the year. And it churned out more trucks than in recent periods. At 27 percent, full-size pick-ups accounted for a fifth more of U.S. production than in the second quarter. That's fine if buyers are there: margins are higher on these and SUVs. It helped GM rake in more cash in the United States in the three months to September even though vehicle sales actually fell almost 8 percent.

Deals wrap: GM back in the driver’s seat?

General Motors Co posted a $2 billion third-quarter profit on Wednesday, driven by an accelerating turnaround in North America as it rushes to complete an initial public offering of stock set for next week.

The quarterly profit was the largest for GM since it emerged from bankruptcy in July 2009 and provides the last piece of financial data for investors evaluating the automaker’s $13 billion IPO.

The Sanofi-Aventis hostile bid for Genzyme is likely an anomaly in the pharmaceutical M & A scene, according to Reuters’ Jessica Hall. “Barring Sanofi’s overture for Genzyme, few large-scale mergers above $20 billion are likely afterward,” writes Hall.

from Breakingviews:

U.S. still faces a big breakeven hurdle on GM stock

Taxpayers will have to wait a while yet to get back the money invested to keep General Motors out of the scrap yard. The Detroit carmaker is running far more smoothly thanks to its stint in bankruptcy last year—it earned as much as $2.1 billion in the three months to September, its third straight quarter of profits, according to preliminary results. But the terms of GM's upcoming share sale show that, once public, the stock will have to as much as double before its biggest shareholder, the U.S. government, gets close to breaking even.

Assume GM's initial public offering launches at $26, the bottom of the projected price range on the deal. That would mean the U.S. Treasury, which today holds 61 percent of GM, would be taking a 42 percent loss on any stock it sells in the offering. It is planning to sell 263 million shares, or around 28 percent of its holdings. If it does, to get back into the black on its investment GM shares would need to more than double, to above $52 a share, according to a Reuters Breakingviews analysis.

The hurdle for GM's aftermarket performance lowers, of course, if GM's bankers can issue the shares at the top of the price range of $29. But if the underwriters sell more of the Treasury's stock in the IPO, say through the green-shoe, the barrier to breaking even goes up. The calculation is similar for the GM stakes held by the Canadian and Ontario governments.

Deals wrap: On the road to a GM IPO

A Chevrolet vehicle is seen at a GM dealership in Miami, Florida August 12, 2010. REUTERS/Carlos Barria GM is on track for a mid-November IPO, sources told Reuters. China’s top automaker SAIC has not ruled out taking a stake in the company. *View article *View SAIC article *View WSJ blog which extracts some nuggets from GM’s SEC filing

China’s Sinochem will no longer launch a counterbid for Potash, sources said. “It’s finished,” Reuters was told. *View article

“BAE Systems could be poised for a major buying spree in the U.S. defense sector as Europe’s top defense contractor chases new growth in the face of looming spending cuts,” writes Soyoung Kim and Andrea Shalal-Esa. *View article

Deals wrap: Can Genzyme play hardball?

A sign marks the headquarters of Genzyme in Cambridge, Massachusetts August 3, 2010. REUTERS/Brian Snyder   Genzyme may be holding out for more money from suitor Sanofi-Aventis, but will find it difficult to persuade investors it is better off on its own.  *View article *View Genzyme timeline

When GM filed for bankruptcy last summer, the automaker wiped out creditors, and critics warned that Wall Street investors would have a long memory. What a difference a year makes. *View article

What’s better than an angel investor? That would be a super-angel investor, of course. This new breed is shaking up the venture-capital industry. *View WSJ article

Deals wrap: ICBC’s offer

A company logo of the Industrial and Commercial Bank of China (ICBC) is seen outside one of its branches in Beijing June 18, 2010.   REUTERS/Bobby Yip  Industrial and Commercial Bank of China Ltd, the world’s most valuable bank, says it will pay shareholders of its Hong Kong arm a 27 percent premium to take it private, as part of an effort to expand its presence there. *View article

GM is ratcheting up the PR in advance of an IPO, and the NYT takes a look at the mechanics of the promotion. *View NYT article

Who owns the “Sky” in “Skype”? *View paidContent article

peHUB is live-blogging KKR Earnings Call. *View peHUB article

from Breakingviews:

As ex-bankrupt, GM deserves cautious IPO interest

General Motors' coming initial public offering may be a hard sell. After all, the automaker burnt investors with its Chapter 11 filing a little over a year ago. But companies that emerge from bankruptcy can significantly outperform the stock market. On the other hand, a third of them go bust again. The IPO of GM and, in time, those of other cleaned up ex-bankrupts like Delphi and Chrysler, deserve cautious investor interest.

Shares of formerly-bankrupt companies tend to do well if markets are anywhere from plodding to bullish. A portfolio of such stocks including Federated Stores (which later became Macy's) in the early 1990s, and another after the dot.com bust in the early 2000s, would have sharply outperformed stock indices. The early 1990s batch returned about 28 percent more over 200 days than stocks of similar pubic firms, according to a study by New York University professor Edward Altman.

There are several possible explanations. Analysts caught out by companies going bust may be overly cautious about their prospects when they return to the public eye. Executives may also be tempted to lowball expectations. After all, they get to take credit -- and some of the profit -- for beating targets.

Deals wrap: GM to file for IPO in August?

Government-rescued automaker General Motors plans to file its registration for an initial public offering during the week of August 16, according to a Reuters report that cited two people with direct knowledge of the preparations.

The public offering is seen as necessary for GM to reduce the government’s ownership in the company after it was forced to accept a $50-billion bailout last year.

The Reuters story puts the potential move in perspective:

“An IPO for the U.S. automaker, which was restructured in bankruptcy last year, would be the biggest U.S. stock offering since Visa Inc’s $19.7 billion March 2008 IPO and one of the biggest IPOs of all time.”

Deals wrap: No timeline for Facebook IPO

Facebook CEO Mark Zuckerberg did not tip his hand about when the social networking giant would go public, when he sat down recently for an exclusive interview with ABC News’ Diane Sawyer.

“When it makes sense, right,” Zuckerberg told Sawyer, adding: “I mean, what we’re most focused on is just building these tools that help people stay connected with the people that they care about. And at some point along the path, I think it’ll make sense to have an IPO. But we’re not running the company to do that.”

************
General Motors has announced it intends to purchase auto finance company AmeriCredit Corp for $3.5 billion. According to the Reuters story the deal “removes an uncertainty for GM as it prepares for a stock offering intended to reduce the U.S. government’s nearly 61 percent ownership stake.”