Deals wrap: Takeda offers $12 billion for rival Nycomed
Takeda Pharmaceutical is in talks to buy privately-held Swiss rival Nycomed for more than $12 billion, said sources with direct knowledge of the matter. Japan’s largest drugmaker is seeking to boost its presence in Europe and emerging markets, as well, the acquisition would help them gain a lung disease drug from Nycomed which has just been approved in the U.S. Japanese drugmakers have been actively pursuing acquisitions to boost growth as they face the loss of patent protection on key medicines.
A planned rescue deal involving Saab and China’s Hawtai Motor Group collapsed after it failed to get necessary approvals, leaving Saab’s owner, Spyker, chasing new funding alternatives to restart production at the Swedish automaker. Spyker said it was continuing talks with Hawtai, while a Reuters exclusive reported the Dutch sportscar-maker was also talking to another Chinese company, Great Wall Motor about a possible tie-up.
Glencore’s CEO Ivan Glasenberg said recent falls in commodity prices were due to “froth” in the market and had not affected strong demand for the company’s IPO. Commodity price volatility in the past week has prompted worries over Glencore’s planned $11 billion IPO, with fund managers sensing an opportunity to drive down prices. The commodities giant recently unveiled the prospectus for their IPO, detailing plans to raise funds in a dual listing in London and Hong Kong.
Hedge fund manager Raj Rajaratnam was found guilty on all 14 counts of insider trading, and could face at least 15 years in prison. The Galleon founder was at the center of the biggest insider trading investigation in decades and the use of phone taps in his conviction may have marked a turning point in prosecution of Wall Street crimes. This piece in the New York Times by Peter Lattman and Azam Ahmed takes a look inside Rajaratnam’s circle of friends and business associates, and how they played a crucial role in his scheme.
Deals wrap: Fiat speeds toward control of Chrysler
Fiat will pump another $1.3 billion into Chrysler this quarter as it moves closer to its target of owning a controlling stake in the U.S. automaker. The deal will take Fiat’s holding in the company to 46 percent, just 5 percent shy of the 51 percent it needs to assume full control.
Read the politically charged, behind-the-scenes story of how the Singapore Exchange failed in its bid for a full takeover of Australian stock exchange operator ASX.
The prosecution amped up the tone of its attacks on Raj Rajaratnam in closing arguments at the insider trading trial of the hedge fund manager on Wednesday, saying the Galleon Group founder wanted to “conquer the stock market at the expense of the law.” The jury is expected to begin deliberations once the defense wraps up its closing arguments either Thursday or next Monday.
In an interview with CNBC, NYSE Euronext chief Duncan Niederauer explains why a merger with Deutsche Boerse would better suit his company’s expansion strategy than one with competing bidders Nasdaq OMX and IntercontinentalExchange.
Deals wrap: What drives insider trading culprits?
The U.S. government’s crackdown on insider trading continues. On Wednesday, two men were accused by federal prosecutors of carrying out a 17-year conspiracy to trade on corporate merger secrets stolen from three major U.S. law firms.
As this latest case makes clear, non-disclosure rules and clever systems of checks and balances are only so helpful in preventing insider trading.
“You can’t legislate human behavior. People will act as people will do,” David Lazarus, senior managing director, co-founder, EdgeRock Realty Advisors, said at the Reuters Global M&A Summit in New York, adding there’s always people whose greed will push them over the line.
Shares of Swiss commodities trader Glencore are set to start trading in London on May 24 and in Hong Kong on May 25, a Hong Kong newspaper reported.
Virgin Atlantic boss Sir Richard Branson told Bloomberg that he plans to remain a “major shareholder” in his airline even as his company seeks out a partner to compete with British Airways.
“Generally in their mid-20s or early 30s, today’s start-up founders are becoming more assertive in funding rounds, securing better terms and, in many cases, cashing out part of their investments well before an initial public offering,” writes Evelyn M. Rusli in NYT’s DealBook.
Is the venture fundraising industry becoming too exclusive for its own good? PeHub’s Connie Bessemer investigates.
Deals wrap: Galleon trial to be a “battle royal”
The insider trading case against Galleon Group hedge fund founder Raj Rajaratnam finally goes to trial next week. Rajaratnam faces up to 25 years in prison if convicted of conspiracy and securities fraud but plans to fight the charges and clear his name in court.
“All signs are pointing to a battle royal,” one securities attorney said of the upcoming trial in an interview with Reuters correspondent Grant McCool. According to a Wall Street Journal report, Goldman Sachs CEO Lloyd Blankfein has agreed to testify for the U.S. government at the trial. Here’s a rundown of some of the other main players involved in the case.
Should Americans be alarmed that Germany’s Deutsche Boerse is taking over Big Board parent NYSE Euronext? Not really seems to be the consensus with lawmakers and regulators who took part in the Reuters Future Face of Finance Summit this week.
Fresh signs that Chrysler is getting closer to going public again. The automaker is in advanced talks with banks on financial details that will help clear the way for the initial public offering later this year, several people with knowledge of the discussions told Reuters.
“Two months into the year, M&A is off to its best start since Lehman failed and the flow of deals slowed to a trickle,” writes WSJ’s Stephen Grocer.
Deals wrap: Genzyme bid hinges on new drug
Genzyme (GENZ.O), resisting a hostile bid from Sanofi-Aventis (SASY.PA), is open to a deal that links its value to the success of key drug Campath, the U.S. biotech’s chief executive was quoted as saying. But it was not up to Genzyme to suggest that to the French drugmaker, which has launched a $18.5 billion takeover offer for Genzyme, Chief Executive Henri Termeer was quoted as saying in French newspaper Le Figaro.
“This is one of the alternatives that could be explored. We are thinking about it with regard to the Campath molecule. This could be used by Sanofi or by other companies we talk to,” Termeer told the newspaper in an interview.
Global food companies are set to square up against emerging market buyers and private equity players to buy half of Yoplait, the world’s second-largest yogurt maker after French peer Danone (DANO.PA). General Mills (GIS.N), Nestle (NESN.VX) and Lactalis, Europe’s largest dairy group, all have sound strategic reasons to pursue the maker of Petits Filous yogurts and Yop drinking yogurt, valued at 1.5 billion euros ($2 billion) by its CEO Lucien Fa in a Reuters interview.
Spanish group Ferrovial has hired Goldman Sachs and HSBC to sell a 10 percent stake in BAA, Britain’s largest airport operator, and the sale will begin next week, people familiar with the matter said.
This week’s arrest of Don Ching Trang Chu, an employee at California-based expert-network firm Primary Global Research, is part of a “larger insider-trading case that is expected to continue unfolding between now and the end of the year,” reports the Wall Street Journal.
Deals wrap: Irish banks soon to march to new drummer
Ireland’s top three banks will soon be answering to a new boss: the Irish government. Ireland is set to take a majority stake in top lender Bank of Ireland as part of a massive international bailout that could leave the state with effective control of the country’s top three banks.
The state’s ownership of Bank of Ireland could rise to near 80 percent from 36 percent now under the EU/IMF-funded bailout, put at up to 85 billion euros ($114 billion), and Allied Irish Bank could join Anglo Irish Bank in being fully nationalized. Both Bank of Ireland and Allied Irish Bank have lost about 40 percent of their value this week as shares plunged on capitalization fears.
But perhaps private investors should not be so quick to flee Ireland – at least that’s the message Wall Street Journal sends to brave investors in a piece that lays out five ways to bet on Ireland now. The list implies there could be money to be made amidst all the chaos, drawing parallels between the current Irish predicament and the similar one the “tiger” economies of Asia faced in 1998.
Meanwhile, South Korea, once counted among the so-called “tigers”, saw its biggest banking acquisition deal ever on Wednesday. Hana Financial Group, a Korean-based financial holding company, said it will buy a 51 percent stake in Korea Exchange Bank for up to $4.1 billion cash, seeking to shut the door on rival bidder ANZ.
Elsewhere in Asia, China’s Xinmao Group moved to dispel doubts over its $1.3 billion offer for Dutch cable maker Draka, saying it had backing from a Chinese bank for its proposed takeover. A recent Economist article points out that Chinese buyers have made up a tenth of cross-border deals by value this year.
While the Chinese are looking beyond their own borders, the United States seems to be increasingly turning its view inward as a massive three-year investigation of insider trading on Wall Street continues to expand. Federal agents arrested network executive Don Ching Trang Chu on Wednesday as part of the ever-widening probe. The New York Times has published a copy of the government’s complaint against Chu.
Deals wrap: Novell deal a Microsoft maneuver?
Attachmate, a privately held provider of technology services, said it’s buying software provider Novell in a $2.2 billion deal. The deal marks the end of a drawn-out auction process the Novell board began back in March after rejecting an unsolicited proposal from Elliott Associates.
A chunk of the deal’s value also includes the concurrent sale of some Novell intellectual property assets for $450 million to a consortium led by Microsoft. Novell and Microsoft have crossed each others’ paths before when they struck a copyright deal over certain Novell assets in 2006. One theory is that this could be Microsoft’s way of maintaining control over the details of that agreement and out of the hands of rivals.
Bailed-out insurer AIG is still shopping around some of its larger assets, restarting its earlier campaign to sell its Taiwan unit Nan Shan Life. A source close to the process told Reuters on Monday that first-round bids for the unit are likely in early December, shortly after due diligence ends. In August, Taiwan regulators rejected AIG’s plan to sell the unit for $2.15 billion to a Hong Kong-based buyer group. The insurance giant is still struggling to repay its bailout debts to the U.S. government.
A day earlier, oil and gas exploration company Energy XXI agreed to buy nine Exxon Mobil oil and gas fields in the Gulf of Mexico for $1.01 billion, an acquisition that will boost the company’s reserves and production by more than 70 percent.
Federal authorities are on the cusp of filing a raft of insider trading cases against the likes of hedge fund traders, consultants and Wall Street bankers that could be among the biggest ever, several lawyers familiar with the matter told Reuters. The Wall Street Journal reported on Monday that the FBI has raided two hedge funds in connection with the probe. The Journal, which first broke news of the three-year investigation, also has a piece on what tactics the FBI likely used in building its case.
SEC to be busy with 3Com fishiness
Hewlett-Packard’s move into the network equipment market with a $3.1 billion deal for 3Com could be marred by allegations of insider trading. At first glance, the hallmarks of suspicious trading are there, according to option traders said. 3Com shares jumped 5.18 percent to $5.69 during the day — before the deal was announced — rising from the opening bell and closing a penny off the session high.
After the bell, when the deal was disclosed, 3Com shares shot up 35 percent to $7.65. Option market sources told our reporter Doris Frankel it wasn’t just the stock behaving oddly ahead of the late-afternoon news. Volume in 3Com call options — which convey the right to buy the company’s shares at a fixed price within a specified time period — soared.
A total of 8,085 calls traded, against only six puts. That amounted to 17 times the recent average daily call volume, according to option analytics firm Trade Alert.
“The rise in 3Com shares and a surge in call volume before the takeover announcement tell us that somebody’s timing was extremely good,” said Jon Najarian, co-founder of optionMonster, a Web information site. “Since I do not believe in coincidences on Wall Street, I would bet that these unusual call option trades will spark an investigation.”
The Securities and Exchange Commission, which looks into unusual options and share trading activity, was closed on Wednesday for the U.S. Veterans Day holiday. Expect it to be busy today.
Ropes & Gray: In the news again…
Law firm Ropes & Gray has gone from commenting on the Galleon insider trading case to being in the case.
Just last week, Ropes & Gray partner Christopher Conniff talked with the New York Times for an article about the Galleon insider trading case, discussing the statue of limitations for these cases.
Today, nine more people were arrested in the Galleon Group insider-trading scandal, including Arthur Cutillo, a former associate at the tony, Boston-based law firm.
Ropes & Gray said in a statement that it was deeply disappointed to learn of the insider trading allegations, and the firm was moving quickly to protect its clients.
Conniff will not likely be publicly discussing the Galleon case any more.
Insider trading spreading in M&A?
Yet another case of insider trading in the M&A space.
A Blackstone investment banker is alleged to have shared information on the buyout of grocery chain Albertsons with a friend, who went on to make $3.6 million from the friendly chats. (The lawsuit says the banker passed on the tips in at least 20 telephone calls and at least 18 text messages)
33-year-old Ramesh Chakrapani was a vice president working on the deal, advising Albertsons as part of a Blackstone team. Wall Street firms are teeming with vice presidents — relatively junior bankers who work their way up to the first coveted title of managing director. Chakrapani himself was subsequently promoted to managing director and sent to the firm’s London offices.
Media reports have cited senior bankers from the Albertson deal as barely remembering Chakrapani. Some told the Wall Street Journal Chakrapani played a junior role and did not have much involvement with the negotiations.
Insider trading, historically associated with traders, now seems to be spreading to M&A professionals.
In 2007, a Credit Suisse banker was convicted for leaking confidential information on several deals, including the $32 billion buyout of power giant TXU. The banker was charged with one count of conspiracy and 28 counts of insider trading for relaying information to a former boss. Authorities tagged the profits at nearly $7.5 million.
Last month, U.S. authorities said a former Lehman Brothers salesman was charged with sharing information about 13 impending mergers gleaned from his wife, a partner at public relations firm Brunswick Group. Two day traders, a lawyer and a brokerage salesman were also charged with illegal trades that the U.S. Securities and Exchange Commission said netted $4.8 million in illegal profits.
Do you really believe what has been written in this article when it is alleged that every broker, trader or associate in any firm trading stocks who says he has never insider traded is either a liar or a fool.
Burt McCarthy.
