(Recasts lead)

If a deal can’t get done with the backing of Canada’s pension fund and capitalism’s mightiest bank, then the leveraged buyout market would truly be dead.

So it is with limited fanfare that DealZone welcomes the buyout of IMS Health by Canada’s public pension plan and Goldman Sachs as a sign of the market’s return to health. Green shoots in the LBO patch are hardly growing all jack-and-the-beanstalk, but putting together $4 billion for the prescription drug sales data provider is not just ice on the moon either.

Excluding debt, the $22-a-share cash deal is the biggest leveraged buyout since Bristol-Myers Squibb sold its ConvaTec unit to Avista Capital and Nordic Capital just over a year ago for $4.1 billion, according to data from Thomson Reuters.

Financing markets and general optimism have improved from the nadir of the crisis, and debt, if you can find it, is hardly expensive, with core rates at zero. But $4 billion pales in comparison with strategic deals in the health space this year, such as Wyeth’s $68 billion union with Pfizer.

It is safe to say, though, that had the IMS deal foundered, it would have been a far worse signal for LBOs than its success means for the relative health of the business.

China is no stranger to rolling the dice on risky U.S. investments. But like most big investors, it has been staying away from the tables for a while. Now we have word that its $200 billion sovereign wealth fund is pouring $2 billion into three funds focused on U.S. distressed assets. The funds are run by Goldman Sachs, Oaktree Capital and a third, as yet unidentified manager.

At only 1 percent of its portfolio, the balance of risk to Chinese wealth is small. CIC has pumped up its investment volume recently, buying a 14.5 percent stake in commodities trading firm Noble Group for $850 million just last week. Resources may seem like a better investment for a Chinese state-linked fund than distressed U.S. assets, given the country’s gaping hunger for commodities. But China’s macroeconomic exposure to the U.S. economy is at least as important to its future as its ability to source foreign raw materials. And with the dollar against the ropes, distressed U.S. assets may offer China a better bang for its buck.

CIC made a profit of $10 billion last year as it benefited from staying largely in cash and avoiding new investments in Western banks, a source close to the fund told us in February. But it lost over half of an initial $8 billion it ploughed into private equity firm Blackstone and Morgan Stanley when the fund was set up in September 2007.

CIC Chairman Lou Jiwei (pictured above) said in Hong Kong last December that he was “not brave enough” to invest in financial institutions at that time. He seems to have found his nerve.

The number of London's trademark black taxis booked and waiting outside the European headquarters of Goldman Sachs -- meters running -- was once used by some as a barometer of the health of London's investment banking business.

When times were good, the queue was long and it was impossible for anyone else in the vicinity to hail a cab. But when the fees dried up, or markets turned, the cabbies who'd been at Goldman's beck and call suddenly had to find new customers.

Last year, Goldman was reported to have stopped free taxis home for staff working in the office after 9pm, extending this to 10pm.

Now it looks as though taxis may be in vogue again at Goldman, at least indirectly.

Goldman Sachs Capital Partners -- is that a taxi in the picture on the website? -- now appears to be following in the tracks of the maker of many of London's black cabs by cosying up to Geely Automotive -- China's 10th largest vehicle maker.

For Manganese Bronze -- which has made more than 100,000 London taxis at its Coventry plant since 1948 -- it was a case of turning to Geely for help and selling it a stake as well as entering a joint venture.

But in this case, it is Goldman that is providing the money -- buying about $250 million of convertible bonds and warrants. Geely will use the proceeds to ratchet up its production.

Geely Automotive will no doubt be pleased with the celebrity endorsement. By persuading the U.S. investment bank to buy its convertibles, the Chinese carmaker is showing it is a force to be reckoned with.

Until recently, Geely has been seen as a somewhat optimistic "me-too" carmaker that was doing little more than window-shopping.

But it is one of the few privately-owned Chinese carmakers with a green light from Beijing to go shopping abroad. And its recent interest in buying Ford's unwanted Volvo brand and its approach to Magna about an Opel production partnership shows its real ambitions.

So the Goldman Sachs private equity fund could end up owning Geely shares. Goldman may soon have taxis made by a UK firm in which it has an indirect stake through China queueing at its London doors.

That's assuming its clampdown on taxi use is lifted by then of course.

Warren Buffett knows sweets. His Berkshire Hathaway is the largest shareholder in Kraft Foods, which made an unsolicited — and rebuffed — $16 billion bid for Cadbury. The Wall Street Journal reported that the trust that holds voting control of Hershey has hired Buffett’s favorite banker, Byron Trott, as it also weighs whether to pursue the British chocolate maker.

Trott, a former Goldman Sachs banker who runs his own firm now, is known for his expertise in candy as well as in advising family- and trust-owned companies. He convinced Buffett to pay $6.5 billion to help finance Mars in its $23 billion takeover of Wrigley last year.

Paritosh Bansal and Jessica Hall report that while Trott’s latest engagement may not have anything to do with Buffett, he may end up helping the billionaire investor. Sources previously told Reuters Hershey is unlikely to make a bid on its own for all of Cadbury. But Hershey may want to pick up pieces of Cadbury, which makes Dairy Milk chocolate, Halls cough drops and Trident gum. This could bode well for Buffett, some investors said.

Cadbury shareholders could get better value and Kraft may not have to pay up for a deal if a third party values some pieces of the British company more than what it is worth in its entirety to Kraft, these experts said.

Buffett has made no secret of his worry that Kraft may overpay for Cadbury. On Wednesday, he told CNBC that Kraft had “a lot to do” to justify the price offered for Cadbury. He also said investors undervalued Kraft’s stock, so it was using a weak currency to pay full value for Cadbury.

While Kraft may think of itself as that kid in the candy shop, Buffett also knows how and when to say no.

“He hates the practice of CEOs overpaying, particularly with their own stock when it is undervalued,” said James Armstrong, president of Henry Armstrong Associates, which manages some $400 million and owns Berkshire stock. “It’s pretty clear that he doesn’t think it’s a very attractive acquisition at this price.”

It’s also worth noting that Buffett told CNBC that Kraft CEO Irene Rosenfeld has his full confidence. That was sweet of him.

With apologies to Harper’s Index, some collected statistics on the collapse of Lehman and the roller-coaster year that followed.

Add your own significant digits in the comments section.

***

Number of siblings who made up the original Lehman Brothers, founded as a dry-goods store in 1844:

3

Age of Bavarian immigrant Henry Lehman when he founded the business:

23

Percentage difference between the DNA of former Lehman CEO Dick “The Gorilla” Fuld and an actual gorilla:

1.6

Lehman assets listed in its record bankruptcy filing:

$639 billion

Assets listed in the second-largest U.S. corporate bankruptcy filing of Worldcom

$107 billion

Pounds of yellowcake uranium left on Lehman’s books from a commodity trade:

450,000

“Buy it now” price of Lehman Brothers humidor on eBay:

$62.99

Rank of Giants Stadium LLC in the list of Lehman claimants:

7

Number of Wall Street institutions compared to a “great vampire squid wrapped around the face of humanity”:

1

Size of actual vampire squid, in feet:

1

Estimated ratio of Goldman Sachs bankers to other bank representatives at emergency government meeting to save AIG:

3

Amount of money former Merrill Lynch CEO John Thain spent renovating his office:

$1.22 million

Amount of the renovation budget devoted to an antique “commode on legs”:

$35,115

Percentage of global wealth destroyed by the credit crisis, according to Blackstone CEO Stephen Schwarzman in March, 2009:

45

Percentage losses for investors who bought Blackstone shares at $31 IPO price:

56.5

Number of knees that Treasury Secretary Henry Paulson got down on to beg House Speaker Nancy Pelosi to support the bailout bill:

1

Per capita U.S. bailout funds provided to Fannie Mae and Freddie Mac:

$313.44

Per capita U.S. funds provided to AIG:

$228.97

Amount of bonuses received by 73 AIG executives in March, 2009:

$165 million

Number of bathrooms in AIG CEO Robert Benmosche’s Croatian villa, shown during a tour in which he railed against “lynch mobs with pitchforks” who protested the bonuses.

12

Goldman Sachs CEO Lloyd Blankfein’s recent comments on compensation may seem like a call for responsibility in the financial services industry, but they may also be self serving. 

Speaking at a conference in Frankfurt on Wednesday, Blankfein said that financial institutions that lose money should not pay outsized bonuses. 

That seems fairly reasonable, but if Wall Street really did embrace that policy, Goldman could benefit. Look at this year: so far Goldman has earned $5.2 billion, while Morgan Stanley has lost $1.8 billion. If Morgan Stanley refrained from paying big bonuses, which bank would be well positioned to hire its top talent?  

(Photo courtesy of goldmansachs.com)

European bankers may be having more conversations that could lead to M&A than six months ago, but this week’s deal figures from Thomson Reuters still make dismal reading.

So far this year, European M&A has been worth $356.6 billion, a 51% fall compared to last year at this time. Excluding government investments, merger activity in Europe totals $239.1 billion, a 67 percent decrease from 2008 levels.

Here is another of this week’s data points:

“Germany’s E.on has agreed to sell its natural gas distribution subsidiary, Thuega AG, to a group of German utility companies for $4.1 billion, topping the list of worldwide mergers this week. Goldman Sachs, which advised Thuega, and @visory Partners GmbH, which advised the consortium, could share an estimated $30 million to $35 million in advisory fees on completion of the deal.

This probably wasn’t what Lloyd Blankfein had in mind when he reportedly asked Goldman Sachs employees to cut back on conspicuous displays of consumption.

The New York Post, which screamed the news about Blankfein’s order to exercise restraint from its front page on Tuesday, reported on its Page Six gossip column Wednesday that his wife sent a rather different message at a charity event in the Hamptons last Saturday.

According to Page Six, Laura Blankfein and Susan Friedman, wife of Richard Friedman, a Goldman managing director,  “caused a huge scene” as they waited with lesser donors for the doors to open for a charity event for ovarian cancer research.

“Their behavior was obnoxious. They were screaming,” one witness told the Post, who added that Blankfein said she wouldn’t wait with “people who spend less money than me.”

Of course it’s not the first time that Wall Street wives’ high-falutin’ ways have gotten tongues wagging. Former Pan Am stewardess Susan Gutfreund, the free-spending wife of 80’s era Salomon Brothers CEO John, was gossip column fodder, as was Henry Kravis’ ex-wife, fashion designer Carolyne Roehm.

More recently, an anonymous Wall Street spouse penned a column for Portfolio.com entitled “Confessions of a Bailout CEO Wife” that bemoaned the inability to throw birthday parties at “Michelin hotspots” and other sad side effects of her vow of “financial abstinence.”

(reporting by Steve Eder; photo by Reuters)

Turns out Goldman Sachs is a staunch advocate of going organic — when it comes to the money management business.

As Barclays auctioned off its Barclays Global Investors unit this year, Goldman was widely seen as a likely acquirer. That is until Blackrock In under Larry Fink emerged as the buyer with a $13.5 billion deal.

Lots of other money managers are expected to be sold, as the industry consolidates and cash-strapped banks look for valuables to pawn. But Viniar told analysts Goldman’s preference is to grow the business without deals, and appeared to question the very idea of money manager deals.

“If there were an acquisition that made sense financially for us to do, we would certainly consider it,” he said, something he says every three months to calm down excitable analysts. “When we look at the prices of most of the acquisitions, we think that they haven’t made sense in that you’ve had to assume really heroic growth rates that we don’t think are realistic.” 

Jefferies Putnam Lovell recently said it counted 35 management deals in the second quarter, compared with 52 deals a year earlier. Besides the BGI takeover, Aquiline Capital Partners acquired Conning & Co,  JPMorgan Chase bought the remainder of its Highbridge Capital Management hedge fund unit and Woori Finance purchased Credit Suisse’s 30 percent interest in a joint venture.

Yet Viniar notes money management firm deals are tricky, since buyers have to pay a premium for the company and then put up more money to retain star managers. And even as billions of profits come sloshing into Goldman’s coffers, Viniar apparently doesn’t like to part ways with the firm’s cash.

“It has taken a while, but we’ve grown (the asset management business) quite successfully, almost exclusively organically.” he said. “And the high likelihood is that is the way we are going to continue to grow it in the future.”

(Photo: A customer walks past organic products in an organic food chain store in Taipei/Pichi Chuang)