DealZone

Did he say IPO?

Speaking in New Delhi, General Electric CEO Jeffrey Immelt said “Discussions are ongoing whether it is an IPO or another partnership,” in response to a question on whether GE was talking to Comcast to sell a stake in the fourth-placed TV network and movie studio. With Vivendi possibly just a couple weeks away from unloading its 20 percent stake in the NBC venture, and all the talk this week about Comcast gathering coins to add the content trove to its cable mix, it might seem as if Immelt is trying to conjure something like a rabbit from a hat – or a peacock from a beret.

GE and Comcast are discussing a deal under which the largest U.S. cable firm would take control of 51 percent of NBC Universal with GE, which has the right of first refusal to pick up Vivendi’s stake if the French company exercises its annual option to sell, taking the rest. “The capital markets have definitely improved,” Immelt said. There is reason to see stability and some optimism for the future,” he said.

Set aside for a moment that the sickly advertising market that NBC already faces. The market for IPOs is picking up nicely right now, but is still in an early stage of recovery, making do with a ragtag bunch of real estate investment trusts and Chinese new-market plays. What effect do you think a big media play splashing into that pool would have on investor demand for new issues?

Deals du Jour

Belgium’s Solvay is selling its drugs unit to U.S. partner Abbott Laboratories for 4.5 billion euros ($6.6 billion) in cash and reinvest in chemicals and plastics. Sources familiar with the deal have earlier told Reuters Abbott had agreed to buy the unit to bloster its flagging prescription drug business.

Australia’s biggest department store chain Myer plans to raise up to $2 billion in a share offering that will test investor appetite for retail stocks.

In M&A news reported by Reuters and elsewhere on Monday: 

* A Saudi prince is set to spend up to 350 million pounds ($558 million) to buy a 50 percent stake in English soccer club Liverpool, al-Riyadh newspaper quoted him as saying on Sunday. 

Keeping score: U.S. bonds, European convertibles, Chinese IPOs

From this week’s Thomson Reuters Investment Banking Scorecard:

· US CORPORATE DEBT TOPS $20 BILLION, BREAKS RECORD

For the second consecutive week, the volume of corporate investment grade debt in the US market topped the $20 billion mark, bolstered by benchmark names in the energy & power and financial sectors.   Shell International Finance raised $5 billion via Morgan Stanley, Bank of America Merrill Lynch and Deutsche Bank, while Canada’s Cenovus Energy raised $3.5 billion this week.

Investment grade debt activity from non-financial issuers totals $372.3 billion for year-to-date 2009, already besting the previous all-time record for annual non-financial activity set in 2001 when $360.5 billion in new corporate issues were brought to market.

· EUROPEAN CONVERTIBLE BONDS UP 50%
While global convertible bond activity is down 46% over 2008, the market for convertible bonds in Europe has picked up dramatically, with $24.1 billion in new convertible offerings – a 50% year-over-year increase.  Issuers in the materials, financial and industrial sectors account for nearly 60% of this year’s volume in Europe.  Deals from Anglo American, Arcelor Mittal and Alcatel Lucent top the list of convertible offerings this year.

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: big-ticket M&A drought, bond bonanza

Highlights and low points — syndicated loans, for example, at their lowest since 1993 — from the July Thomson Reuters Investment Banking Snapshots:

DEBT CAPITAL MARKETS

Asia Pacific & Chinese Issuers Reached New Corporate Bonds High in July – Asia Pacific issuers raised a record US$41bn in July, up 11% from June 2009 (US$43.3bn) and double the level of July 2008 (US$24.1bn). Chinese issuers accounted for 49% of the regions’ activity with a record US$23.4bn raised, up 3% from June 2009 (US$22.7bn) and up 218% from July 2008 (7.4bn). Financials (US$16.2bn, 70%) and Materials (US$4.7bn, 20%) were the main sectors driving the surge in China.

European High Yield Bonds Hit 2 Year High – Global issuance of high yield bonds reached US$12.3bn in July 2009, down 27% from June 2009 (US$16.7bn) but up 270% from July 2008 (US$3.3bn). This marked the third highest level of activity for a month of July on record and the best since 2003 (US$18.6bn). European issuers accounted for 44% of total with US$5.4bn raised, the highest monthly volume since June 2007. European activity consisted of two issues, Wind Acquisition Finance (US$3.7bn), the second largest HY bond of the year globally and the second largest European bond ever issued after NXP Semiconductor (US$5.95bn, 2006) and Fiat Finance & Trade ($US$1.8bn).

from Alexander Smith:

Santander wins with Brazil float

    Buying ABN AMRO may have bankrupted Royal Bank of Scotland and Fortis, but it has proved another coup for Spain's Santander whose chairman Emilio Botin has shown his eye for a bargain.
    After flipping Italy's Banca Antonveneta for an impressive profit before the ink was even dry on the contract to take it over from ABN, Botin is now looking to float Banco Santander Brasil, including another former ABN asset, Banco Real, once part of the Dutch bank's Latin American empire.
    With Brazilian valuations riding high and the IPO market flourishing, Citigroup reckons BSB could be worth as much as $30 billion. If so, the partial sale would again demonstrate Botin's ability to spot a good deal.
    Brazil is far too important to Santander -- it accounted for 18 percent of the bank's first half profits of 4.5 billion euros -- for Botin to give up control. But a flotation of 15 percent of the Brazilian bank could raise $4.5 billion of scarce capital while giving Botin another currency for shopping in South America. lt is already Brazil's third-largest bank by assets.
    Santander has been able to keep buying through the financial crisis, becoming the biggest bank in the euro zone as a result. Botin has also picked up Sovereign Bancorp in the U.S. and Alliance & Leicester, along with the remains of failed former building society Bradford & Bingley, in Britain.
    Floating the Brazilian business would crystallise its value. It might also boost Santander's own share price, but risks investors taking the view that a global roll-out of the bank's name and brand means the parent is becoming a conglomerate rather than an integrated group.
    The possibility of attracting a conglomerate discount won't have escaped Botin, whose family still owns nearly 2.5 percent of the $115 billion bank.
    Unlike his colleagues in the banks which have failed, Botin has his family fortune tied up in the business he runs. This, surely, is a powerful reason why Santander has avoided plunging into areas where the risk was far greater than the executives knew or cared. The bank has the strength to take advantage of the fashion for things Brazilian, and he can reflect that the acquisition which sunk RBS has done him no harm at all.

Santander joins Brazil’s IPO party

Spain’s Santander confirms plans to spin-off 15 percent of its Brazilian business in a flotation potentially worth over $3 billion.

Reuters reported on July 21 that the bank was mulling an initial public offering in the second half of the year, and advisers have been appointed, people familiar with the matter say.

Santander will lead and underwrite the share sale alongside Credit Suisse and Bank of America/Merrill Lynch. Banco Pactual, the Brazilian bank sold by UBS in April, will be a bookrunner on the deal, the sources say.

Deals du Jour

Spain’s Banco Santander (SAN.MC) has appointed advisers to spin off its Brazilian business in a $3 billion initial public offering (IPO) to create one of Brazil’s biggest bank, the FT reports. But it’s not new — Reuters carried the story last week, which said Bank of America-Merrill Lynch, Credit Suisse and UBS would underwrite any deal. Click here for that story. More details could come from Santander today alongside its Q2 results.

In other M&A related stories reported by Reuters and other media on Wednesday:

Private equity firm Kohlberg Kravis Roberts & Co is in the advanced planning stage for an initial public offering of stock in Dollar General Corp, a discount retailer. Goldman Sachs, Citigroup and KKR are likely to underwrite the deal, the Wall Street Journal cited people familiar with the matter as saying.

Sumitomo Trust and Banking has agreed to buy Nikko Asset Management, Citigroup’s Japanese asset manager, for about 100 billion yen ($1.1 billion), the Nikkei newspaper reported.

from Commentaries:

Don’t hold your breath for European flotations

COLOMBIA/A web-based survey of more than 40 European institutional investors by investment bank Jefferies shows most -- 83 percent of those who responded -- are not expecting a re-opening of the IPO market in the UK and Continental Europe before the middle of 2010.

 

Only 23 percent of the analysts, portfolio managers and dealers surveyed reckon the IPO market will re-open by the end of this year.

Seems the world is still split on what type of companies will be floated though:

SPAC IPOs return

The team behind cash shell company Germany1 is preparing to list its next special purpose acquisition company (SPAC) in October after Thursday’s 532 million euros deal with AEG Power.

A SPAC is a shell company set up by people with a proven track record in making acquisitions. They offer takeover targets a way to become public companies without having to undertake an initial public offering.

In this case, Germany1′s acquisition makes power system firm AEG a public company through a so-called ”back door” listing.