Deals wrap: Zynga files for IPO
Zynga Inc filed paperwork for an initial public offering on Friday, the latest in a series of hot social media companies to seek capital in the U.S. public markets. The company, which is behind a series of popular games on Facebook, said it hoped to raise up to $1 billion. It did not specify the number of shares it plans to sell or give an expected price range.
A group including Apple, Research In Motion and Microsoft will pay $4.5 billion to snatch Nortel Networks’ patents from under the noses of Google and Intel, stealing a march on their rivals in a litigious market. Bankrupt Nortel had put up for sale 6,000 patents and patent applications in the largest public sale of its kind, a potential treasure trove for latecomers to the market such as Apple, Google and Intel.
Belgium’s KBC Group is expecting around eight to 10 first-round offers for its private banking arm KBL, people familiar with the matter said, after attempts to sell the business for $1.9 billion failed in March. Bidders are expected to include corporate suitors and private equity firms from across the globe, the person said, and a shortlist for the next round will be drawn up in about a week.
Investors are asking for more of their money back from hedge funds in June than in any other month in 2011 as fund returns hit by May’s commodity rout shake client confidence, according to data by hedge fund services firm GlobeOp.
Can a sports franchise be run like a hedge fund? That’s what Tom Gores, head of Los Angeles-based private equity fund Platinum Equity, is attempting to do with the Detroit Pistons after firing the NBA team’s chief executive and filling the job with a pair of Platinum Equity partners. According to NYT’s DealBook these moves “are straight out of the private equity playbook.”
Deals wrap: Turning down Sanofi
Genzyme broke its five-week silence to reject an $18.5 billion takeover proposal by French drugmaker Sanofi-Aventis, dismissing it as opportunistic and too low. *View article *View Genzyme’s letter to Sanofi-Aventis
Intel will buy Infineon’s wireless unit for $1.4 billion, enabling the chipmaker to boost its presence in the smartphone market. This is the second major deal for Intel within two weeks after the company announced its $7.7 billion offer for McAfee on Aug 19. *View article
Is Cisco in deal talks with Skype? A TechCrunch source says Cisco has made an offer for the Internet phone services provider. Earlier this month, Skype filed for an IPO. *View article
3M said it agreed to buy Cogent for more than $900 million, paying a nearly 18 percent premium for the biometric identification systems company. 3M estimates the $4 billion biometric market will grow by 20 percent a year. *View article
Agrium said it would be interested in Potash Corp’s nitrogen and phosphates business, worth an estimated $12 billion, if miner BHP Billiton secures its $39 billion Potash takeover and decides to sell the assets. BHP Billiton says they have no plans to sell any Potash Corp assets. *View article *View article on BHP’s top deal maker, Alberto Calderon *View analysis on China’s growing appetite
If there were any questions about whether Frank Quattrone could successfully return to the frontline of investment banking after a five-year legal fight, they have been put to rest by his role in advising 3PAR. *View article
Websense is open to takeover bids after rival McAfee was snapped up by Intel. “In my experience the way that you position yourself for sale is not to go around saying, ‘I am for sale,’” Chief Executive Gene Hodges told Reuters. “It’s to win in the marketplace and make sure that potential suitors know what your unique assets are.” *View article
I was thinking, with a huge downturn in the market imminent, a Sanofi bid for Genzyme is premature, the same as it would be premature for anyone to buy a house in the US right now. A couple economic charts gave me some perspective:
GENZ vs S&P 500
http://www.hiddenlevers.com/hl/u?aULDml
Here you can see a high correlation during the mid 2000s bounce back. But Genzyme didn’t careen to earth like the S&P did in 2008-09. Sanofi Aventis may think GENZ will defy gravity again, and put a bid in. If we return to the lows on the S&P, then GENZ might be good insurance.
Sanofi-Aventis vs USD index
http://www.hiddenlevers.com/hl/u?bmvEpU
Here you can see SNY (ADR) has had a roughly inverse correlation to the US dollar. As the markets retrench further on the way to the March 2009 lows, there will be a flight to US dollars, and ostensibly SNY will go down and not have the strength to put a bid in.
So a few visuals tell us why Sanofi targeted Genzyme, and the timing for their bid.
Economics Jai Ho!
Deals wrap: Deal talk gets frothy
Foster’s said the split of its beer and wine divisions was on track for next year, but was silent on growing takeover talk for its profitable beer unit. Foster’s share price has been on a roller coaster ride on the takeover talk, surging 7 percent on Monday and sliding 4.5 percent on Tuesday. *View article
BHP Billiton’s monster earnings expected on Wednesday could strengthen its hand in its bid for Potash Corp and intimidate any rival bidders. *View article
*View analysis on China’s reaction to a possible BHP deal
*View Bloomberg article on the downside of mining mergers
The recent rush of M&A activity is a result of idle cash and not a sign of a stable rising market. *View Barron’s article *View NYT blog pouring more cold water on the boom in deals.
The Intel-McAfee deal is about leveraging Intel’s relationship with personal computer makers to boost McAfee’s products, said Gene Hodges, the former president of McAfee. *View NYT article
Deals wrap: Looking for a better deal
Potash Corp’s search for buyers willing to top BHP Billiton’s $39 billion hostile offer may lead to China. “I am not saying that we are opposed to a sale, but what I am saying is we are opposed to a steal of the company,” said Potash Corp CEO Bill Doyle. Here’s a factbox on the current market for potash, and a graphic on BHP and Potash Corp.
“As an Intel-watcher for 30+ years, I have my doubts that this acquisition will work,” writes guest columnist Robert Cringely about Intel’s deal for McAfee. *View article
The NYT takes a look at Rio Tinto’s often troubled relationship with China, and how the mining company is working hard to patch things up. *View NYT article
Global M&A activity shatters typically one of the quietest months of the year. *View article *View the Investment Banking Scorecard *View WSJ wrap-up on this week’s moves
from Breakingviews:
Surprise Intel $7.7 bln security deal is a gamble
Intel's $7.7 billion deal to buy security firm McAfee isn't only a surprise, it's also a gamble. Mobile gadgets are the chip industry's future, and Intel has fallen behind. It is betting that combining McAfee's security software with its hardware will give it a leg up. Perhaps so. But investors who knocked down Intel's shares are rightly skeptical the chipmaker can pull it off.
Theoretically, devices should be safer if a chip company worries about security from the start. Instead of papering over holes with software, the idea is to eliminate more of them at the source. Intel thinks McAfee's expertise will allow this. Another potential benefit -- running the software closer to the silicon, as the jargon goes -- could mean it works faster and uses less power. Both are important factors for mobile devices.
Yet hardware producers and software firms are fish and fowl. Few manage to cross the divide very successfully. Microsoft's continued flailing in consumer electronics hardware is a prime example. Integrating Intel's engineers of intricate devices made in clean rooms with the geeks at McAfee who figure out how square-eyed keyboard junkies break software security seems intuitively problematic. Intel, though, says it has been collaborating closely with McAfee for some time and likes the results.
Whether an acquisition at a 60 percent premium to McAfee's closing price on Wednesday is the best way to get more of them is, however, an open question. A joint venture might have captured many of the benefits with less risk. Sure, it might have been slower and more difficult to arrange. But Intel is now locked into McAfee, when some customers may prefer another company's software.
Moreover, it is paying plenty. The median takeover premium in the technology sector over the past decade was 40 percent, according to Thomson Reuters data. Intel investors appear unconvinced, wiping almost $4 billion off the company's market capitalization on Thursday -- though a down day for stocks generally didn't help. They may worry that a big cash pile, more than $18 billion in cash and tradable securities at the end of June, was burning a hole in Intel's pocket. There are no such doubts for McAfee's shareholders, though. They walk away worth almost $3 billion more than they were a day earlier.
Deals wrap: Intel’s big bet
Chip maker Intel said it would buy security technology firm McAfee for $7.68 billion. “I think people were probably (expecting) some smaller acquisitions from Intel. It’s definitely — even by Intel’s standards — a pretty big acquisition for them,” said Vijay Rakesh, an analyst at Sterne Agee. *View article *View reaction from analysts and investors
GM declared plans for an IPO. For a breakdown of the U.S. government’s stake in the automaker, click here. Investors shouldn’t get too caught up in the IPO hype, writes Reuters columnist Antony Currie. The WSJ looks at some surprise risks gleaned from the IPO filings. The NYT follows the car maker’s progress over the past 100 years in this timeline.
Online gambling firms Sportingbet and 888 must strike deals to protect themselves from prosecution in the United States if they are to emerge as credible takeover candidates as the industry consolidates. *View article
The NYT’s takes a look at two small deals this week and how they represent a change in deal-making. *View NYT article
