Deals wrap: A status update from Twitter
Cross Twitter off your IPO watch-list, at least for now. Co-founder Biz Stone told Reuters in an exclusive interview that the social networking service has no plans to go public or raise funds any time in the immediate future, saying his company is making enough money on its own at the moment.
Stone also flat-out rejected a Financial Times report earlier this week that said a J.P. Morgan technology fund was in talks to take a 10-percent stake in the social networking message service. “(The report is) made up,” he said.
News Corp CEO Rupert Murdoch’s media empire is about to get a little bit bigger. The British government gave a green light to the company’s planned $14-billion buyout of satellite pay-TV company British Sky Broadcasting after Murdoch and co agreed to spin off a chunk of his Sky News channel into a separate company.
Taxpayers should celebrate that AIG is a step closer today to paying off its bailout debt to the U.S. government. The insurer sold $9.6 billion worth of MetLife shares on Wednesday, which should give it about $6.3 billion in gross proceeds to send back into the Treasury’s coffers.
Expect to see more mega-deals in the mining sector this year. A new report that shows a surge in global mining M&A last year also points out that deal valuations in the sector are set to increase this year as mining companies continue to reap the benefits of rising metal prices. The survey by PricewaterhouseCoopers tracked 2,693 global mining deals in 2010 worth a total of $113 billion.
Deals wrap: Warren Buffett’s zoo
Elephants. Zebras. Berkshire Hathaway CEO Warren Buffett rolled out the animal metaphors in an interview on CNBC on Wednesday to explain that his company remains on the prowl for big acquisitions, which he calls “elephants”.
Buffett said they were hard to find, though, noting he’d lost a sizable one – a “zebra” – in recent days. “There aren’t many elephants out there, and not all of the elephants want to be in my zoo,” he said.
Yahoo is in talks to leave its Japanese joint venture, hoping to transfer its 35 percent stake to partner Softbank. If successful, the divesture could free up nearly $8 billion for the once-mighty Internet firm to compete with Google and Facebook.
“Wall Street’s titans aren’t paid to sweat the details. That’s become painfully obvious from the foreclosure and mortgage mess that may cost big banks like JPMorgan and Bank of America billions of dollars. The past two decades of bank merger mania brought big cost savings, and temporarily higher stock prices, but left a massive muddle,” write Reuters Breakingviews columnists Agnes Crane and Rob Coz in a new piece on the dark side of American bank consolidation.
Lightning-fast, high-volume trading and the handling of private stock offerings, or quasi IPOs, have left U.S. financial regulators scrambling to keep up, officials told the Reuters Future Face of Finance Summit.
In man vs machine, GLG has Manly appeal
Hedge fund firm Man Group apparently pricey deal to buy GLG Partners gives Man – the world’s biggest listed hedge fund — better access to the large and lucrative U.S. market. It also counts as a small win for the human race in its apocryphal war for investors’ funds with cheaper, faster and — many would argue — far more dangerous algorithmic trading machines known as black boxes.
The $1.6 billion cash-and-shares deal represents a heady 55 percent premium to GLG’s closing price on Friday. Clearly some investors are worried it’s a little too rich. It has so far driven the shares of Man – which had already lost about a fifth of their value since mid-April — down by a little more than 8 percent.
London-based Man has long been seen as needing more inroads into the U.S. market to take on industry leader JP Morgan. As Joel Dimmock and Laurence Fletcher report, the purchase would also dilute Man’s reliance on its flagship black box fund AHL which badly lagged rivals last year. What do you do when the black box fails? Start investing in people again.
It is easy to see how the deal would have to be rich, since it pays up for talent that it needs to keep interested. A $500 million payout in shares, locked up for three years, ensures GLG principals Noam Gottesman, Pierre Lagrange and Emmanuel Roman don’t take the money and run. The message needs to be just as clear for the rest of GLG’s talent, which has numbers for super-rich clients and sovereign wealth funds.
Keeping score: Exxon-XTO data points
From the Thomson Reuters data team:
- Exxon Mobil’s $40.7 billion acquisition of XTO Energy ranks as the sixth biggest announced worldwide M&A transaction this year and the fourth biggest US target transaction.
- The deal ranks as the eighth biggest Energy & Power M&A transaction in history and marks the biggest US transaction since Chevron’s $43.3 billion acquisition of Texaco in October 2000. The $85.1 billion combination of Exxon and Mobil in December 1998 ranks as the biggest Energy & Power deal on record.
- Worldwide, energy & power M&A totals $330.9 billion for year-to-date 2009, an 18.1% decrease from last year at this time. Worldwide M&A in the oil & gas sector totals $203.7 billion, a 17.2% increase over last year at this time.
- In the US, energy & power M&A accounts for 12.2% of overall activity, a 7.5 decline from last year. Oil & gas M&A activity in the US totals $74.9 billion, a 35.6% increase over 2008.
- With the announcement, JP Morgan (advisor to Exxon Mobil), moves from fourth place to third place for worldwide merger advisors, with $467.5 billion in announced deals from 299 deals. Barclays and Jefferies (advisors to XTO Energy) rank 10th and 21st, respectively.
- In the US, JP Morgan remains in third place with $269.5 billion. Barclays moves to sixth place from seventh and Jefferies moves from 23rd place to 13th.
DealZone Daily
Reckitt Benckiser shares rise 2 percent — so markets are taking notice of the Daily Telegraph’s “latest tale” that the UK group could link up with Colgate-Palmolive. Benckiser is worth roughly $37 billion in the market, Colgate some $41.2 billion, so a deal would be humongous. And this just in: J.P. Morgan Cazenove will become a fully-owned part of J.P. Morgan, as the U.S. investment bank buys out its joint-venture partner Cazenove Group.
Finally, Blackstone Group’s Pinnacle Brands Corp is likely to buy U.S. frozen vegetable company Birds Eye Foods for more than $1.3 billion, according to the Wall Street Journal.
For the latest deals news from Reuters, click here.
Dealzone Daily
Cisco says more than 40 percent of Tandberg shareholders are backing its bid for the Norwegian group now that Cisco has raised its offer to value the group at $3.4 billion.
Canon plans to buy Dutch copier and printer maker Oce for $1.1 billion. For these, and other merger Monday stories, click here.
And here’s what we found of interest in other media.
U.S. investment bank J.P. Morgan will offer 500 to 525 pence per share to buy out the 50 percent stake it does not already own in its UK stockbroker joint venture with Cazenove, according to media reports, such as in the Financial Times.
UC RUSAL, the world’s largest aluminium producer, is close to a deal to restructure $7.4 billion in debt to foreign banks which is crucial for the Russian firm’s planned $2 billion IPO in December, the Wall Street Journal says.
Jaguar Land Rover is expected to announce today that it has secured a 170 million-pound ($282.5 million) working capital facility from GE Capital, according to the Financial Times.
Germany’s largest steelmaker ThyssenKrupp has sold its U.S. scaffolding unit Safway to Odyssey Investment Partners for an undisclosed price, Handelsblatt newspaper reports.
Deals du Jour
General Motors’ upcoming Volt model will run up to 230 miles per gallon of fuel, but the saga to sell off its European operations seems equally long-lasting. The bidding process is now between two bidders — Magna International and RHJ International — with GM’s CFO Ray Young telling Reuters earlier that “everyone is anxious to get this thing done”.
In other M&A related stories reported by media on Wednesday:
Indian state-run explorer Oli and National Gas Corp is in talks with three Russian firms about a joint bid for a stake in YPF the Argentinean arm of Spanish oil major Repsol YPF SA, the Economic Times reported.
JP Morgan is looking to sell 23 office properties in what may be the country’s largest office real estate sale this year, the Wall Street Journal said. Here’s Reuters’ report.
It’s hard to imagine that our infrastructure is ready for a 230mpg car. I’m for it, but we seem to still be so oil dependent and because of this we still seem to need cars that use more gas. I really hope we can get beyond the need to fuel our economy on off-shore gas..
Paul
Wall Street bankers — so humble, so frugal!!!
It is amazing how the prospects of a grilling in Washington can make Wall Street’s CEOs behave. Until a little while ago, these were the masters of the masters of the universe. An elite group of highly paid stars who rarely showed signs of vulnerability, who rarely seemed to doubt their place at the top of the heap. But take a look at the testimonies they have prepared for today’s hearing at the House Committee on Financial Services and it looks like they have begun to embrace the new era, the new religion.
You would be forgiven in thinking they had all also hired the same speechwriter. They mostly stress they are prudent, frugal, humble, though not quite yet apologetic — it will be interesting if that changes once the grilling begins. Here are some of the themes:
Public anger towards Wall Street is justifiable: “It is abundantly clear that we are here amidst broad public anger at our industry. In my 26 years at Goldman Sachs, I have never seen a wider gulf between the financial services industry and the public. Many people believe — and, in many cases, justifiably so — that Wall Street lost sight of its larger public obligations and allowed certain trends and practices to undermine the financial system’s stability.” — Lloyd Blankfein, CEO of Goldman Sachs Group.
“I know the American people are outraged about some compensation practices on Wall Street. I can understand why.” — John Mack, CEO of Morgan Stanley.
Bailout money from the government is not being used to reward bankers or executives (though they don’t quite explain how this is achieved): “We have not used any of the government investment for dividends, bonuses or compensation of any kind — nor will we.” –John Stumpf, CEO of Wells Fargo.
“We have NOT used it to pay compensation — nor did we use it to pay any dividends or lobbying costs.” — John Mack, CEO of Morgan Stanley.
The government bailout money is being used for lending:
“We have not used any of the government investment for dividends, bonuses or compensation of any kind — nor will we.” –John Stumpf, CEO of Wells Fargo.
“We have NOT used it to pay compensation — nor did we use it to pay any dividends or lobbying costs.” — John Mack, CEO of Morgan Stanley.
Anyone watch the Curb your enthusiasm episode where Larry David lends his friend $10,000 and subsequently finds out that his friend was going to through a super lavish birthday party at a fancy club for himself, including paying $10,000 for a special celebrity guest to show up?
His excuse to Larry was that he wasn’t using any of the money Larry loaned him for the party…sounds familiar doesn’t it?
Banks mea culpa at taxpayers’ expense?
The U.S. government has frowned upon banks using TARP money for things such as corporate jet travel, junkets to Las Vegas, and out-sized salaries.
But it hasn’t said anything about using the money to buy full page ads in major newspapers to try to win back some love from the American public.
For example, Bank of America, which this week said it was selling most of its corporate jet fleet, has been peppering the Wall Street Journal, New York Times and Financial Times with ads extollings its virtues for several days now.
On Thursday, for example, one of its ads proclaimed that “the foundation of this nation is its communities” before going on to brag about its ten-year $1.5 trillion community development initiative, and commitment to its goal of $2 billion in philanthropy over ten years, saying, “the renewed strength of this nation will come from deep within.”
The ad’s tag-line: “This is America. We keep moving forward.”
Other TARP recipients are also running advertisements.
JP Morgan, for example, has a recurring ad boasting it has lent $100 billion in the last quarter alone, apparently in response to criticism from the government banks are sitting on TARP money.
This is a classic example of what happens in a crisis when you rush through supposed solutions without fully working out how it will actually address the situation. The TARP program seems to change direction every week itself so it is no surprise that without a clear directive, the banks will use the money in the way they feel is most beneficial.
I have also read reports about banks tightening their lending standards right when everyone seems to want the lax lending standards of pre-2007. This seem counter-productive, being the lax lending and rating standards are what helped get us into our current crisis. It will be interesting to see how this plays out. Until we address the job aka: loss of income problem, no amount of credit will help our situation.
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