M & A wrap: The man at war with Olympus
Michael Woodford asked too many questions. That’s the reason the 51-year-old Englishman gives for why he lost his job as the first-ever foreign-born CEO at Japanese camera maker Olympus a mere two weeks after he was given the role in early October.
Woodford tells Reuters investigative reporters Kirstin Ridley and Alexander Smith in a new special report that it was his inquiries into a series of questionable takeover deals and advisor payouts the company made over the past half decade, including the biggest mergers and acquisitions fee ever, that led to his ouster. Board members insist instead it was Woodford’s failure to grasp the company’s management style and Japanese culture that cost him the job, but Woodford says allegations of a “power grab” by him are not the “real story”. Now, Woodford is on a one-man campaign to “cleanse” Olympus with the goal of removing its entire board.
Giving in to pressure from many corners, Olympus on Tuesday named six men, including a former Japanese supreme court justice, to investigate the past M&A deals at the core of the scandal in a bid to stem an exodus of irate investors. The all-Japanese committee will look into $687 million in payments made to a financial adviser for the $2 billion purchase of British medical equipment maker Gyrus in 2008 and the acquisition of three companies in Japan that Olympus, under chairman Tsuyoshi Kikukawa’s decade-long reign at the company, later largely wrote off.
Who can get to market first? That’s the question some may be asking today after Lashou Group, China’s leading daily-deals website, filed for an initial public offering on the Nasdaq. The firm’s business model is similar to that of U.S. deals site Groupon, which is also currently in the process of filing its books for an IPO. Lashou plans to raise up to $100 million in the offering, most of which it plans to use for expanding its marketing efforts and delivery systems.
Meanwhile, Groupon has once again amended its prospectus just days before the company is expected to price its intitial public offering. As DealBook reports, the updated filing notes that the company had completed a 2-for-1 split of its voting common stock. The firm did not increase the price range of its offering from the current $16 to $18 a share, despite strong investor demand.
MF Global Holdings Ltd (MF.N), the futures broker that filed for bankruptcy protection on Monday, failed to keep its customers’ accounts separate from the firm’s funds, its main exchange regulator said on Tuesday. Mixing customer funds with company money violates a key tenet of futures brokerage. Donohue’s statement on Tuesday raises questions about statements from CME and other exchanges as recently as Friday that MF Global was a clearing member “in good standing.”
Deals wrap: Valuing Groupon
Groupon trimmed marketing costs in the second-quarter but its loss more than doubled as it hired new employees, the Internet daily deals company said in an update filing for its IPO.
Global brewer SABMiller is set to renew its assault on Australian bid target Foster’s later this month with a slightly higher offer likely to succeed after rival bidders fail to appear, bankers and investors told Reuters.
HSBC is selling its U.S. credit card arm to Capital One Financial Corp in a $32.7 billion deal as Europe’s top bank streamlines its mammoth operations. Capital One said it was paying a $2.6 billion premium over the value of the loans.
The NYT’s Steven M. Davidoff looks into General Maritime’s $200 million loan from Oaktree Capital Management. “When you play with the big boys, you sometimes get hurt,” reports Davidofff.
“AT&T, looking to win approval for its proposed $39 billion acquisition of T-Mobile, is facing a challenge in California where regulators have raised questions about the deal’s effect on consumers and corporate customers,” Bloomberg reports.
Deals wrap: Splitting Kraft
Kraft said it would split itself into two listed companies, a global snacks business and a North American grocery business, and raised its full-year outlook on better-than-expected quarterly results.
Hitachi and Mitsubishi Heavy Industries have begun talks on what would be Japan’s biggest domestic merger, three sources said, heralding a long awaited shake-up of the nation’s industrial behemoths. Japan Real Time reports on the clumsy merger kabuki which followed a leak to local media.
When Goldman Sachs executed a $479 million block share sale in ICBC this week to help American Express hedge its position in the Chinese lender, it underscored the sensitivities and challenges of dealmaking in China.
Carl Icahn’s $10.7 billion bid for Clorox has rekindled the debate about his investment style, responsibility and impact on other stakeholders — does he keep corporate America honest or is he in it for a quick profit?
Groupon and LivingSocial are leading a virtual land grab in the world of online coupons. The NYT’s DealBook looks into the industry’s business model. A Bloomberg column weighs in on a Groupon metric called “adjusted consolidated segment operating income.”
For your daily distraction, check out GQ’s worst-dressed men of Silicon Valley slideshow.
Deals wrap: Groupon, LivingSocial in buying frenzy
Group buying sites Groupon and LivingSocial are both in the process of launching multi-billion dollar IPOs, but as Deal Journal reports, the companies are also “plowing full steam ahead with deal making.”
Shares of Dunkin’ Brands shot up as much as 56 percent on its first day of trading, closing at $27.85 by the end of Wednesday’s trading session. The parent of the Dunkin’ Donuts chain said it has set a 20-year target to open 15,000 new stores in the U.S., up from its current 6,800. This would surpass rival Starbucks’ numbers.
France Telecom is looking to put its Swiss, Austrian and Portugese units up for sale. Analysts say the sell-off could raise as much as $2.9 billion and pave the way for a return to shareholders.
Private equity and real estate firm Blackstone Group is in talks to buy healthcare IT company Emdeon, in a deal that could be valued at $3 billion, a source familiar with the situation told Reuters.
Deals wrap: SABMiller ready for another round?
SAB Miller said it would keep talking to Foster’s Group after Australia’s largest brewer rejected the global giant’s $10.1 billion cash takeover offer as too low.
Research In Motion has lost so much value that an acquirer could pay a 50 percent premium and still buy the BlackBerry maker for a lower multiple than any company in the industry, Bloomberg reports.
Rather than moan about Groupon’s inability to say anything in the quiet period, CEO Andrew Mason should enjoy it while it lasts, writes Felix Salmon.
Encana Corp called off a proposed C$5.4 billion deal with PetroChina to sell half of its holdings in a prolific shale gas region of northeastern British Columbia to the Chinese company and said it will seek new partners. The shale deal, seen as a positive for Encana, failed as the companies did not agree on the terms of the transaction.
The rash of accounting scandals that has hit U.S.-listed Chinese stocks has not curbed the appetite of private equity and venture capital firms looking for the next set of Chinese Internet stars in the mainland’s “So-Lo-Mo” and luxury e-commerce sectors.
Deals wrap: Copycats sure to follow LinkedIn
A day after LinkedIn’s shares more than doubled in their public trading debut, analysts are scrambling to explain why the stock exploded and figure out what happens next.
The professional networking site’s IPO was being closely watched by Facebook, Groupon, Twitter and Zynga to gauge investors’ appetite for Internet companies.
Facebook COO Sheryl Sandberg described a public offering of Facebook shares as “inevitable,” while Evelyn M. Rusli over on DealBook predicts a surge in Internet IPO’s but doesn’t think the market is setting itself up for another tech bubble burst.
It wasn’t just the big four social media sites waiting to go public that were salivating at LinkedIn’s record day, would-be rivals to LinkedIn were also giddy with excitement.
As for future opportunities for investors, Shira Ovide of WSJ.com gives her three reasons to be wary going forward. Nigam Arora of Seeking Alpha also advises investors to be cautious but gives four low risk ways to make money from LinkedIn.
One of the more interesting comparisons to LinkedIn’s meteoric rise in its debut comes from WSJ.com. At one point yesterday LinkedIn’s valuation was roughly $10 billion, trading at nearly 41 times its 2010 net revenue. If Apple were trading at the same multiple, it would have a market value of $2.7 trillion.
In other news John Malone’s Liberty Media Corp has proposed to buy Barnes & Noble for $1.02 billion, nine months after the largest U.S. bookstore chain put itself up for sale.
Deals wrap: Glencore debuts while markets await LinkedIn
Commodities trader Glencore made a steady market debut with shares trading just above the widely expected launch price of 530 pence, giving it solid currency for potential acquisitions.
There was heavy interest in the stock on both the London and Hong Kong exchanges, due in part to the relatively small amount of shares being sold. Glencore’s Chief Executive and largest shareholder Ivan Glasenberg said demand for the shares “significantly” exceeded the amount available.
Analysts on Thursday said the 530 pence per share level was realistic and should mean strong aftermarket support. “Obviously everything is priced to do well. I don’t know whether five to ten percent upside is in the bag or not, but certainly they are trying to please investors with the price,” analyst Tim Dudley at Collins Stewart said.
In other news, internet companies that expect to go public in the future are eagerly awaiting market reaction to LinkedIn’s debut. The professional networking site sold shares at the top of an already raised price range in its initial public offering on Wednesday, signaling that stock investors are eager to buy shares of social networking companies even if valuations are lofty.
Although companies like Facebook, Groupon, Twitter and Zynga have significantly different business models than LinkedIn, they each tap social networks and the valuations for each are skyrocketing.
According to data provider Capital IQ and posted on WSJ.com the amount of money LinkedIn is raising makes it the fifth-biggest-ever U.S. internet IPO, but still well off Google’s 2004 IPO that raised $1.67 billion.
Yesterday we told you that Takeda Pharmaceutical was on the verge of acquiring privately held Swiss rival Nycomed.
Deals wrap: LinkedIn boosts IPO, pushes more air into bubble
LinkedIn, the social networking site for professionals, boosted the pricing of its initial public offering by 30 percent valuing the 9-year old company at a little over $4 billion, or about 17 times their 2010 revenue.
LinkedIn’s IPO, which is scheduled for Thursday, comes on the heels of what appears to be an unsuccessful offering Renren.
Earlier this month Renren, one of the biggest social networking sites in China, stock surged 29 percent in their debut but it has since dropped to below its IPO price.
The poor showing of Renren has not slowed investors appetite for a chance to gobble up another slice of the social networking pie. Two other Internet giants are expected to go public sometime in the near future. Groupon may be valued as high as $20 billion and Facebook could be north of $100 billion.
Is this the start of another tech bubble or will investors rue the day they passed on the social network pie?
Yesterday Deals wrap told you that BP was in talks about buying out its Russian partners in TNK-BP, in conjunction with state-controlled Rosneft, and other options to ease passage of a stalled share swap and Arctic exploration deal.
However today came news that the deal has collapsed. The tie-up unraveled because BP failed to mollify partners in its existing Russian venture TNK-BP. They argue the British company had no right to strike a new deal in the country without them.
Deals wrap: The value of Groupon
Groupon is likely to pick Goldman Sachs and Morgan Stanley to lead a second-half initial public offering that could value the fast-growing daily deals site at $15 billion to $20 billion, according to a source.
Commodity trader Glencore’s planned $12 billion London listing has long been seen as the first step to merging with Xstrata, in what could be the biggest mining takeover in history. The question for most analysts and investors since the IPO was confirmed is not if the deal happens but when — and how.
BP’s partners in its Russian venture TNK-BP rejected the UK oil major’s offer to settle a dispute caused by its $18 billion tie-up with Rosneft, casting further doubt on the deal.
The New York Times reports that CVS Caremark is under pressure from consumer groups and shareholders to split up the merger of the drugstore chain and the pharmacy benefits manager. Regulators are also investigating whether the company used anticompetitive behavior.
Deals wrap: eBay’s $2.4 billion GSI buy
EBay said it plans to buy e-commerce company GSI Commerce, which owns Web businesses such as the flash site Rue La La and ShopRunner, for $2.4 billion. Ebay said it will offer shareholders of GSI $29.25 per share, a 51 percent premium over its closing price on Friday.
Tabula announced $108 million in funding, one of the largest venture rounds in a decade for a chip company, writes VentureBeat’s Matt Marshall. The company says it can create programmable logic devices for $200, compared to a cost of more than $1,000 offered by competitors.
Despite soaring valuations of tech companies and warnings that the bust a decade ago may be repeated, there are notable differences between the dot-com boom and now, write Evelyn M. Rusli and Verne G. Kopytoff of the New York Times. Today, the stock market is not glutted with offerings and attractive tech start-ups like Groupon have real businesses — not just “eyeballs and clicks”. But, as cash continues to pile up, the fear is that all the money cannot be put to work responsibly, they add.
Well-known Canadian clothiers Le Chateau, Jacob and Reitmans could become takeover targets as a wave of U.S. retailers follows Target’s lead and seeks opportunities north of the border.
