DealZone

The afternoon deal: Criminally inclined

A file photo of an inmate inside a prison in Arbil, 190 miles north of Baghdad March 4, 2010.  REUTERS/Azad Lashkari Pay-to-play, pump-and-dump schemes and plain old bribery are on the plate today. Rising above the muck is Quadrangle, which is now looking at starting up a new fund after settling an SEC investigation, a source tells Reuters. Steve Rattner, Quadrangle’s co-founder, is still under scrutiny.

From the Web:

Quadrangle, Cuomo in kickback accord; Rattner eyed (Reuters)
Quadrangle did not admit wrongdoing in agreeing to settle. In a joint statement with Cuomo, it said the principals involved in the alleged improper conduct have left the firm.

Quadrangle’s Anti-Love Letter To Steve Rattner (WSJ)
“If there was any doubt that Steven Rattner parted from Quadrangle Group LLC on less than amicable terms, let that doubt now be laid to rest.”

Germans target nine suspects in HP bribery probe (Reuters)

Goldman Director in Probe (WSJ)
“Wall Street’s most powerful firm is being drawn into the government’s sprawling insider-trading investigation.”

Special Report: Sweethearts in crime (Reuters)
“At one time, the idea of a husband and wife team like the Stones working in tandem to orchestrate a securities fraud might seem like a Wall Street novelty act. But that’s not the case any more.”

Volvo purchase: an exceptional Chinese deal?

Zhejiang Geely Holding Group’s acquisition of Volvo from Ford for US$1.8bn means a Chinese carmaker has finally succeeded in reaching agreement to buy a Western marque. Ford originally put the Swedish brand up for sale nearly three years ago, as GM looked for a buyer for its notoriously gas-hungry Hummer.

Sichuan Tengzhong Heavy Industrial Machinery, advised by Credit Suisse, agreed to buy Hummer last June but that deal was later shelved. Similarly Beijing Automotive Industry Holding Co pulled out of a possible purchase of GM’s Swedish asset Saab. That deal had been fronted by smaller Swedish luxury carmaker Koenigsegg.

At the time, advisers murmured that these deals had been killed by the Chinese authorities baulking at allowing smaller vehicle makers in the unconsolidated Chinese market buying tired Western consumer brands. These would have needed significant investment to be restructured.

AIG’s mysterious Schedule A finally revealed

AIG/The heavily-redacted regulatory filing that spells out the details of the New York Federal Reserve’s controversial bailout of American International Group is a secret no more.

Reuters has obtained a copy of the five-page document the giant insurer and the New York Fed had asked the Securities and Exchange Commission to keep confidential. The effort by the New York Fed to keep the document under wraps has sparked a furor on Capitol Hill and was the subject of a hearing on Wednesday by House Committee on Oversight and Government Reform.

The unredacted version of the “Schedule A – List of Derivative Transactions” fills out some of the missing pieces in the AIG bailout, in which an entity set-up by the New York Fed effectively funneled tens of millions of dollars to 16 big U.S. and Europeans banks that had bought credit default swaps from the insurer.

Reinventing Glass-Steagall

With Congress already debating a sweeping overhaul of financial regulation, perhaps the most enduring regulatory stricture of the Depression era is again getting an airing in Washington. The venerable Glass-Steagall laws that barred large banks from affiliating with securities firms and engaging in the insurance business were repealed in 1999. Now, as the banks try to move on from the dreaded salary caps and the humiliation of TARP, lawmakers are wondering whether getting rid of Glass-Steagall was such a good idea.

Financial giants such as Goldman Sachs could be broken up under two bills introduced in Congress on Wednesday, one with the backing of former Republican presidential nominee John McCain. Both would reinstate Glass-Steagall. Passage of the Cantwell-McCain bill would force firms at the center of last year’s financial crisis — such as Goldman Sachs, Morgan Stanley, Citigroup, JPMorgan Chase and Wells Fargo — to spin off investment and insurance operations, according to Demos, a progressive think tank in New York. A similar measure was offered on Wednesday by six Democrats in the House of Representatives.

To be fair, many have wondered whether dumping Glass-Steagall was such a good idea. What’s odd is that the discussion about bringing it back comes as almost an afterthought to the massive regulatory reform bill now before Congress. Rather than start from scratch, it may have made more sense to try to reinstate laws that the marketplace was already familiar with, and add new bits around the edges.

Where’s Lloyd?

FINANCE/TARPLloyd Blankfein has very much been a man in the news lately, sometimes to good effect and sometimes not so much. In the past few weeks the Goldman Sachs CEO has made headlines by declaring that his firm was “doing God’s work” and, just this week, by suggesting that Goldman probably would have survived without the government largess that was channeled its way at the height of last year’s financial sector meltdown.  Those comments, made in interviews with the Times of London and Vanity Fair, were part of a broad media offensive which has sought to burnish the image of the bank Rolling Stone’s Matt Taibbi famously described as a blood sucking vampire squid.

It seems surprising, then, that the nearly ubiquitous Blankfein will be absent when Goldman convenes its annual U.S. financial services conference next week, featuring such industry heavyweights as JPMorgan’s Jamie Dimon and Blackstone’s Steve Schwarzman, there will be no appearance by Blankfein or any other Goldman senior executive. That’s in sharp contrast to what happens at many top banks when they sponsor conferences; Bank of America’s outgoing CEO Ken Lewis, for example, was keynote speaker at his bank’s financial services conference early last month.

Does this mean Blankfein has said his piece for now and is going to adopt a lower profile going forward? Not necessarily, Goldman says. Blankfein, or whoever the Goldman CEO is at a given time, is never a featured guest at the conference, said Ed Canaday, a spokesman for the bank. “Historically we have not had our CEO or another member of senior management speak at the conference,” he said. “I know it’s different from some other companies but that’s how it’s been done historically.”

Money no problem for Geely’s Volvo bid

Goldman Sachs has been known to pick a few winners in its day. The $334 million it plunked into the Chinese automaker Geely in September may prove to be one of its craftiest bets.

Geely, picked as the preferred bidder for Ford’s Volvo unit, is seeking at least $1 billion in loans from Chinese banks to finance a $1.8 billion bid, sources say.

Geely means “lucky” in Chinese. But with the bankers it has lined up, the company probably doesn’t need much in the way of luck. Bank of China, China Construction Bank and Export-Import Bank of China have agreed to extend it loans, our sources tell us. That’s about as mighty a banking syndicate as you can get in the People’s Republic.

DealZone Daily

For the latest deals news from Reuters, click here. And here’s the top stories from the newspapers (some external links may require subscription):

Italian chocolate maker Ferrero could be interested in Cadbury‘s gum and candy division, a unit worth about 5 billion euros ($7.4 billion), in a possible joint takeover bid, business daily Il Sole 24 Ore said on Friday.

TPG, Blackstone, Warburg Pincus, BC Partners and Advent are among the first-round bidders for discount retailer Matalan, which is being auctioned with an estimated price tag of about 1.5 billion pounds, the FT said.

Saturday Night Live pokes Goldman on flu shots

Perhaps theGoldman Sachs CEO Lloyd Blankfein best barometer of public scorn is the Saturday Night Live indicator: if SNL derides you in a comedy sketch, chances are, lots of people dislike you.

Witness this skit from Saturday, where SNL lambasted Goldman Sachs for receiving H1N1 flu vaccines. Goldman’s official line is that the New York City health department gave it swine flu shots to distribute to employees that qualify for it, such as pregnant women.

But to SNL, this was a case of bankers jumping the line for a scarce vaccine.

“I understand you are an institution and like all institutions you need vaccines, but before schools and hospitals?,” said castmember Seth Meyers. “Do you not know that you currently have a serious PR problem?”

IMS deal shows life, if not strength, in leveraged buyouts

(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.

from Joseph Giannone:

Alpha Male: Goldman’s Carhart is back

Undated photo from Goldman days

More than a year after one of the hedge fund industry's best known managers departed Goldman Sachs, Mark Carhart re-emerged at a hedge fund conference and told Reuters the big news: he is coming back. You heard it here first.

Mark and his longtime partner, Raymond Iwanowski, retired last March and with research head Giorgio De Santis. More than 12 years of strong performance from Goldman's quant team had made Global Alpha the bank's flagship fund and one of the industry's largest at its early 2007 peak of $12 billion.

 But a year before Wall Street imploded, computer driven funds had their own debacle. Global Alpha plunged in August 2007 as stock prices gyrated and interest rates jolted, prompting investors to pull out billions. That after the fund had lagged the average fund in 2006. And so Carhart "retired" at the age of 43.