DealZone

Deals wrap: Taking AgBank’s temperature

It is going to be tough for Agricultural Bank of China’s (AgBank) IPO to match the first-day jump in share price enjoyed by its rivals, analysts say. Institutions are expected help stabilize the stock price of the politically sensitive IPO but liquidity, the economy’s health and a flood of new share issues are seen as action against the company. *View article *More coverage *Asia’s top IPOs graphic

Shares in cellphone maker Nokia edged lower as analysts questioned the wisdom of its possible purchase of Motorola’s network equipment unit to boost its weak North American position. *View article

The board of American International Group is expected to meet to consider the future of its AIA unit, with a public float seen as the most likely outcome, sources say. *View article

When is General Motors going public? CEO Ed Whitacre says “soon” but aside from the pressure to show success emanating from the November elections, now may not be the time. *View WSJ article

Four out of five Americans are not convinced the Wall Street reform bill will protect their finances and help avoid another crisis, according to a poll. *View Bloomberg article *More coverage

GM IPO gassing up

It looks like the long-awaited return to market for GM is only weeks away. The listing could raise up to $20 billion, we’re told by a person with knowledge of the preparations. That would be quite a bit more than the $15 billion that has been talked about. But wait, there’s more!

What does a car company with a solid financing business do to keep the wheels moving? Sources tell us that GM is also in talks with JPMorgan Chase and Wells Fargo on deals aimed at providing improved access to consumers for auto loans at its U.S. dealerships.

GM Chief Executive Ed Whitacre and other executives have said they favor an IPO as early as this year. Bankers had expected a stock listing to raise between $10 billion to $20 billion by selling part of the U.S. government’s 60.8 percent stake in GM to investors.

The Great American IPO?

GMWe (the taxpayers)  paid some of the $50 billion to bail General Motors out of its bankruptcy misery last year.  Now, the former American industrial icon is going to launch one of the biggest U.S. IPOs  of the decade.

According to estimates by Independent International Investment Research, GM’s initial offering would raise $12 billion, higher than any U.S. IPO this year and exceeding all over the last ten years, except for Visa’s offering in 2008 and AT&T Wireless in 2000.

The Wall Street Journal said this morning that GM is close to picking JPMorgan and Morgan Stanley as lead underwriters for the IPO. The U.S. Treasury, which owns  a 61-percent stake in GM, said on Thursday that the timing would be decided by GM, based on market conditions.

Could Chinese bid for Hummer go off-road?

China’s Tengzhong is having a hard time selling the People’s government on its big, bold plans to buy Hummer. That in and of itself should be enough to kill the deal. But there is some talk that the little-known construction machinery company, with no experience in the auto industry, is hungry enough for Hummer to use an offshore vehicle to buy the GM brand if it fails to win Chinese regulatory approval.

“Tengzhong has not given up hope yet to win government approval, but buying Hummer through an offshore investment vehicle could be an option if it can’t get the green light,” a source close to the deal, who asked for anonymity due to the sensitivity of the issue, told our reporters Fang Yan and Jacqueline Wong report from Shanghai.

Analysts told them the production base of the off-road sport utility vehicle would have to remain outside China to get such a deal to fly. That could be a monster-truck-sized roadblock, since it would mean the company would not have access to China’s biggest asset — its giant, cheap labor force.

Saab gasps and splutters

GM says is now evaluating not just a revised offer from Holland’s Spyker, but several new expressions of interest as well. It says that since Friday’s announcement that it would start the orderly wind-down of Saab, it has received inquiries from several parties. Perhaps GM calling it a day its Saab brand was a negotiating tactic meant to draw Spyker out on some of the finer points in their presumed-dead negotiations over salvaging the Swedish car maker.

Spyker said its renewed offer included an 11-point proposal addressing issues that arose during the due diligence process, one that eliminates the need for a European Investment Bank loan approval prior to the end of the year. That would allow it to beat GM’s deadline end-of-year deadline.

Ok. So we may have been premature in pronouncing Saab’s demise.  GM’s deadline – to keep this ghastly metaphor running – is more like a ventilator. Having already gone through its bankruptcy, GM executives may feel they have less reason to pull the plug than they did when they were themselves facing the end of the road. But is the prospect of a deal going to be enough to convince them to keep loss-making Saab alive for another month or more?

General Motors staff has IPO dreams

CHINA-AUTOS/Ever wonder how General Motors is holding onto its top talent? 

After a traumatic bankruptcy and series of federal bailouts, the company still owes billions of dollars to the U.S. and Canadian governments. It lost $1.2 billion in its latest quarter, and only sees a slight uptick in auto sales next year.    

The days of banner-year profits and bonuses must seem far off for GM’s executives and finance staff.  GM’s Chairman has already said pay caps imposed on companies by the U.S. government’s pay czar make it tough to hire executives.

While other job opportunities are obviously limited in Detroit, and they may have nowhere better to go in the industry,  the company’s plans for a 2010 IPO has emerged as a key staff retention tool, one of its top executives said on Tuesday.

GM’s debt designs

Announcing a third-quarter operating loss, the government-owned automaker said it would begin paying down its $6.7 billion debt to the U.S. government ahead of schedule. Most financial experts would agree that paying off debt is a good thing.

The government extended almost $50 billion in financing to GM but agreed to convert most of that into a 61 percent equity stake in the automaker. A congressional oversight panel said the government was unlikely to recover all of the financing it provided GM.

Banks that paid off their government bailouts early were able to shrug the pay czar off their backs and return to the time-honored practice of paying their executives whatever they pleased. It’s unclear whether GM will be able to do the same once it pays off the government. After all, taxpayers will still be majority shareholders after all debts are paid. Ken Feinberg may well wind up with a desk at GM’s HR office.

Next in M&A: the WordPress Hug?

Maybe it’s time to add a new weapon to the old M&A arsenal of poison pills, dawn raids, and white knights — the corporate blog. You could call it the WordPress Hug.

Late on Monday, Cisco’s Ned Hooper used the company’s blog to insist it had offered “a very good price” for Tandberg, after some shareholders of the Norwegian videoconferencing company said the price was too low. (See his full post here.)

The “Driving Conversations” blog of General Motors Europe has also been a source of news on the long-running (and now abandoned) talks to sell Opel, hosting posts from GM’s chief negotiator, John Smith. (See some of his posts on the topic here.)

DealZone Daily

Mergers and acquisitions activity may be predicted to increase over the next year but in the short-term it may provide another reason for deals to be postponed. Just ask General Motors.

Other deals news in the media on Thursday:

* An investment company controlled by the Shanghai city government will own a majority stake in a planned Disney theme park that won key government approval this week, the People’s Daily reported on Thursday.

* Scripps Networks (SNI.N) is close to an agreement to acquire a majority stake in the Travel Channel from Cox Communications, the nation’s third-largest cable company, the DealBook blog reported on Wednesday.

Magnum’s Opel

General Motors may soon get the long-delayed green light to sign over carmaker Opel to Canada’s Magna. EU antitrust regulators have no plans to block Magna’s acquisition of GM’s European arm, a European Commission spokesman said in Brussels, easing fears the transaction could run out of gas in debate over German state aid to the mostly German-staffed company.

Magna hopes to conclude the deal within weeks of signing a contract. That should be that, right? Well, hardly. For one thing, Spanish workers at Opel’s plant at Figueruelas have voted to strike in protest at cuts included in the Magna package. And European politicians say GM and the Opel Trust should have the option of reopening the bidding process.

But the jilted other bidder, RHJ, says it is no longer interested in doing a deal, so going back to the auction block is probably a nonstarter. And with European auto titan Volkswagen saying sales will likely stay stalled next year, the political will to get a deal done is about all Opel has going for it right now. The company is poised to run out of cash by mid-January.