DealZone

M&A wrap: EU crisis hits bank advisory fees

Europe’s debt woes dragged worldwide investment banking income down this year, data showed, with fees on the continent slumping to the lowest quarterly level ever recorded and company listings and acquisitions grinding to a near halt. In Europe, fees raised since October from bonds, flotations and mergers and acquisitions stand at the lowest quarterly level ever recorded by the data providers. A stronger start to the year in areas such as mergers and acquisitions fizzled out, leaving investment banks’ overall haul of fees at $72.6 billion — down 8 percent on 2010.

Yahoo is considering a plan to unload most of its prized Asian assets in a complex deal valued at roughly $17 billion, sources familiar with the matter said on Wednesday, winning nods of approval from Wall Street and driving its shares higher. The offer – the latest among proposals put forth in recent months to resuscitate the once high-flying Internet company – is expected to be considered by Yahoo’s board on Thursday, sources said. The board was uninterested in entertaining offers for the entire company at this point, said one of the sources, who spoke on condition of anonymity.

Oshkosh Corp has sent a proxy card to shareholders recommending they ignore an effort by billionaire investor Carl Icahn to install his own board members as he pushes for a merger with one of the company’s key rivals. Icahn recently nominated six associates to be on the board of the Wisconsin maker of trucks, construction lifts and defense vehicles. In a letter to the company’s shareholders last week asking for support for his nominations, he also voiced strong support of a merger between Oshkosh and Navistar International Corp. Icahn owns nearly 10 percent stakes in both companies.

Vulcan Materials Co rejected Martin Marietta Materials Inc’s $5 billion takeover bid, and said the offer undervalued the company and would not increase shareholder value in the future. Vulcan Materials, the world’s largest producer of sand, gravel and other construction materials, said the premium offered was significantly lower compared with previous transactions in the construction materials industry.

European Commission antitrust officials on Wednesday showed no sign of being swayed by Deutsche Boerse and NYSE Euronext’s last-ditch arguments to save their $9 billion deal, sources said, making it increasingly likely the exchange operators will have to take their campaign directly to the commissioners.

DealZone Daily

Italy’s Ferrero has ruled out a rival bid for Cadbury Plc, clearing the way for Kraft Foods to complete its 11.7 billion-pound ($18.9 billion) proposed takeover of the British confectioner. Fellow chocolate maker Hershey has already said it has no intention of bidding for Cadbury, so with Nestle already ruled out, Kraft appears on course to complete its recommended bid by the deadline of February 2.

US investment group Blackstone is examining the possibility of entering the UK banking market, its chief executive Stephen Schwarzman said on the sideleines of a conference in Saudi Arabia, confirming earlier reports by Reuters and other media. He said that opening a bank in the UK would not represent a major change in strategy for Blackstone.

And from other media:

CPA Global, the patent and legal services group, is set to complete on Thursday a management buyout financed by Intermediate Capital Group, the Financial Times reported.

Obama’s bank plan — good for M&A?

President Barack Obama’s plan to limit financial risk-taking could drive eager bankers, who had seen the juiciest business at the prop desks, to return to Mergers and Acquisitions — the former darling desk of Wall Street.

Picking a fight with the financial titans (that just last week sent their top executives to offer platitudes to Congress about the financial disaster they created), the administration unveiled a plan that would stop banks from playing with their own money to take risky positions – the so-called proprietary trading operations.

Way back when, these were small, cloistered parts of the business, shying away from attention and very much in the shadow of the mighty M&A side of the investment banking world.

Keeping score: autos M&A, U.S. property, Spanish loans

Highlights from this week’s Thomson Reuters Investment Banking scorecard:

·  AUTOMOTIVE STAKES TOTAL $11.2 BILLION
Powered by Germany’s Volkswagen AG, the volume of minority stake purchases in automotive manufacturers totals $11.2 billion for year-to-date 2009, the biggest year on record.
In this week’s biggest deal, Volkswagen secured a 19.9% stake in Japanese automobile maker, Suzuki Motor Corp, valued at $2.5 billion.  Volkswagen’s 49.9% stake in German rival, Porsche was valued at $5.8 billion and completed on December 7th.  Year-to-date, worldwide M&A activity in the industrials sector totals $244.3 billion, a 9% increase over last year at this time.

·  US REAL ESTATE M&A DOWN 60% OVER 2008
Simon Property Group’s $2.3 billion acquisition of Baltimore-based Prime Outlets Acquisition Co LLC, an owner and operator of shopping centers, ranks as the biggest US-based real estate transaction since Boston Properties Inc acquired New York’s General Motors Building and other properties from Macklowe Properties for $3.9 billion in May 2008.
US real estate mergers and acquisitions, which account for just 2% of overall US M&A, total $12.5 billion for year-to-date 2009, a 60% decline from 2008.

·  LENDING IN SPAIN MORE THAN DOUBLES
Spain’s Urbaser SA, a waste management company, closed a $1.1 billion term loan from a syndicate of banks this week, brining the volume of syndicated lending in Spain to $66.2 billion, more than double last year’s total.
Borrowers in the energy & power and industrials sectors comprise 83% of overall syndicated loans in Spain this year, with multi-billion dollar borrowings from utilities such as Gas Natural ($29 billion) and Iberdrola SA ($6.8 billion) and infrastructure concern Grupo Ferrovial SA ($4.6 billion).

Keeping score: NBC, asset-backed bonds

Highlights from this week’s Thomson Reuters Investment Banking Scorecard:

COMCAST-NBC UNIVERSAL LIFTS MEDIA M&A
The proposed combination of Comcast and NBC Universal into a 51:49 joint venture brings the announced volume of mergers in the media and entertainment sector to $79.7 billion, a 31% decrease from last year at this time.
The transaction is valued at $14.4 billion, which signifies GE’s net asset contribution and ranks as the second biggest transaction in the sector this year, after DirecTV Group’s $14.5 billion merger with Liberty Entertainment in May.  Overall, worldwide M&A totals $1.9 trillion, down 33% compared to 2008 levels.

SECURITIZATIONS PULL AHEAD OF 2008 LEVELS
The volume of new asset-backed and mortgage backed securities total $498.9 billion for year-to-date 2009, a 3% increase over 2008 levels.  After a nearly 85% decline in 2008, the market for securitizations of residential mortgages, credit card receivables and auto receivables has slowly returned aided by US government guarantee programs.
Issuers in the United States account for 38% of overall activity this year, followed by UK-based issuers with 15%.

ASIA PACIFIC M&A DOWN 11%
Asia Pacific M&A activity totals $367.5 billion for year-to-date 2009, an 11% decrease from 2008 levels.  Consolidation in the financial, high technology and energy and power sectors accounts for 45% of announced deal volume this year.
High technology merger activity has more than doubled in the region, while activity in the telecommunications and materials sectors has seen declines of 77% and 45%, respectively.

Keeping score: HK IPO, M&A picks up

Highlights from this week’s Thomson Reuters Investment Banking Scorecard:

6TH LARGEST IPO OF THE YEAR
In this week’s second largest ECM transaction Sands China, the Macau operations of US based Las Vegas Sands raised $2.5 billion on the Hong Kong stock exchange. It is the 6th largest IPO of the year and the second of its kind in a couple of months after Wynn Macau, a subsidiary of US based Wynn Resorts raised $1.9 billion in September.
Follow On activity is up 35% when compared to the same period last year with $528 billion and it also accounts for 75% of total ECM activity so far this year.

GLOBAL CORPORATE BOND ISSUANCE UP
The top two bonds issued this week are both investment grade corporate debt issues which are both above the $1 billion mark. UNEDIC and CDP Financials with $5.9 billion and $4.9 billion.
Global corporate bonds reached $2.4 trillion so far this year up 11% when compared to the same period last year. Corporate bond issuance also makes up 46% of total bond activity this year.

M&A HITS 5 MONTH-HIGH
Global announced M&A in November totaled $234 billion and marks the second busiest monthly level of activity of the last twelve months after June 2009 ($275 billion).
There were ten transactions in excess of $1 billion announced this week, including the $1.7 billion takeover of UK based JPMorgan Cazenove by JPMorgan Chase & Co.

Keeping score: Breaking records in Qatar, Taiwan

Highlights from the Thomson Reuters Investment Banking scorecard:

QATAR PRICES BIGGEST MIDDLE EASTERN BOND ON RECORD
This week’s $7 billion offering from the State of Qatar marked the largest bond offering from a Middle Eastern issuer on record and the second multibillion dollar offering from Qatar this year.  For year-to-date 2009, debt capital markets activity from Middle Eastern issuers totals $38.6 billion, a 120% increase over last year at this time.
The offering, which was led by Barclays, Credit Suisse, Goldman Sachs, JP Morgan and Qatar National Bank, bested the previous Middle Eastern record, a $3.2 billion offering from UAE-based real estate developer, Nakheel Co PJSC.

TECH DEALS DOMINATE RECORD TAIWAN M&A ACTIVITY
Taiwan’s Innolux Display Corp agreed to merge with Chi Mei Optoelectronics Corp, a manufacturer of LCD TV panels in a merger valued at $13.1 billion, including debt.  The deal ranks as the largest merger in Taiwan’s history.
M&A activity in Taiwan totals $26.1 billion for year-to-date 2009, nearly five times last year’s total and the largest annual period for M&A activity in Taiwan on record.  High technology mergers account for just over 60% of activity in Taiwan this year, while financials account for $6.1 billion or 23%.

UNITYMEDIA IN BIGGEST BUYOUT EXIT THIS YEAR
Germany’s Unitymedia GmBH, a provider of cable television and internet services was acquired by Englewood, Colorado-based Liberty Global Inc in a deal valued at $5.2 billion.  A portfolio company of BC Partners and Apollo Management LP, the sale marks the biggest M&A exit for a buyout consortium this year.
Worldwide M&A activity for buyout-backed companies totals $75.0 billion for year-to-date 2009, a 58% decrease from last year at this time when activity totaled $177.5 billion.

Keeping score: IPO filings, U.S. debt, Porsche

Highlights from this week’s Thomson Reuters Investment Banking Scorecard:

·Nine Consecutive Weeks of IPO Filings in the US
Since late June, 32 Companies have filed to go public on US stock exchanges, marking nine consecutive weeks of IPO filings and the longest streak in over a year.  Notable names include Hyatt Hotels, Dole Foods, Dollar General and Ancestry.com.

·US Debt Capital Markets Activity Breaks Even
The volume of new debt offerings from US issuers totals $1.5 trillion for year-to-date 2009, exactly even with volume last year at this time.  US High Yield activity is up 139% over 2008 levels, totaling $72.4 billion from 166 offerings.

·Porsche-Volkswagen Tie-up Boosts M&A Rankings
As Porsche and Volkswagen prepare to merge operations, eight investment banks secured advisory roles in the transaction, boosting worldwide M&A rankings.  Most notably, Citi moved up one spot to third, while UBS moved to seventh from ninth.

Keeping score: Sukuk pickup, blank-cheque M&A

Highlights from this week’s Thomson Reuters Investment Banking Scorecard:

“Islamic Financing Reaches $10.9 billion

“Malaysia state oil company Petronas lifted the volume of Islamic financing for year-to-date 2009 with a $1.5 billion sukuk offering that was part of a $4.5 billion global financing package via CIMB Securities, Citi and Morgan Stanley. Year-to-date, Islamic financing volume has reached $10.9 billion, a 30% decline from last year at this time when new offerings totaled $15.7 billion.

“Issuers from Malaysia, Saudi Arabia and Pakistan have accounted for over 80% of this year’s Islamic financing activity, while Energy & Power companies have raised just over 40% of the overall proceeds in the market this year.

“Infineon Offering Marks Biggest EMEA Tech Deal

“A $1.0 billion secondary offering from Germany’s Infineon Technologies marked the biggest high technology equity offering in Europe, Middle East and Africa this year, bringing activity in the sector to $2.4 billion, a 52% increase from last year at this time.  Excluding financials, EMEA follow-on activity totals $78.5 billion for year-to-date 2009, an increase of 72% over 2008.

Deals du Jour

An unusual Credit Suisse Group compensation plan could lead to hefty year-end payouts for bankers, The Wall Street Journal said. The newspaper said that the bank told 2,000 top bankers that a $5 billion fund of toxic mortgages and bonds, which it granted as a big portion of 2008 pay, has returned 17 percent since January, citing people familiar with the matter.

The following M&A related stories were reported by media on Friday:

French advertising group Publicis  is poised to buy U.S. digital specialist Razorfish from Microsoft Corp, Les Echos reported in its Friday edition.

Citigroup Inc may give control of its Phibro commodities business to Andrew Hall, the energy trader making headlines for demanding a $100 million payday under his contract, The New York Times said, citing a person with knowledge of the negotiations.