Deals wrap: Nasdaq getting hostile with NYSE
Nasdaq OMX Group Inc, not wanting to be left out in the cold of the global mergers frenzy among exchanges, is closer to making a counter-bid for NYSE Euronext, a source familiar with the situation said. Nasdaq would finance the transaction with up to $5 billion in debt and would most likely have to sell Euronext’s Liffe derivatives business to IntercontinentalExchange Inc to raise the needed capital.
If successful, such a counter-offer would redraw the global exchange map and thwart yet another merger plan by Germany’s Deutsche Boerse.
Even though the Nasdaq group has several options to go forward with a bid for NYSE, Michael J. De La Merced of The New York Times thinks Nasdaq will find itself hard pressed to stay alone as its competitors bulk up through a series of mergers.
Private equity firm Apollo Management is expected to set terms today for its long-expected initial public offering that could be up to $500 million in size, four sources familiar with the situation said.
A listing would see Apollo join Kohlberg Kravis Roberts & Co and Blackstone Group in becoming one of the few publicly-traded private equity firms.
Speaking of KKP, the buyout giant kicks off its first ever investor day and is boasting it has more than $11 billion available to buy companies.
Goldman builds exposure to China insurance market
Having taken a nibble at the Chinese insurance market in December, helping number three life insurer China Pacific Insurance list a $3.1 billion IPO in Hong Kong in December, Goldman Sachs is taking a bigger bite at that most promising and enticing of global investments, China’s financial products industry.
Sources tell us that an investing arm of Goldman is in the final stages of an agreement to buy AXA’s $1.05 billion stake in Taikang Life, China’s No.4 life insurer. The deal would allow France’s AXA to shed a non-core asset, while granting Goldman a piece of China’s growing insurance industry, report George Chen and Michael Flaherty.
Several private equity firms, including Kohlberg Kravis Roberts & Co and Blackstone Group, competed in the Taikang auction, as did Singapore’s Temasek Holdings, sources have told them.
As we’re talking about Goldman’s private equity business, divining strategic intentions could be difficult beyond what looks like a potentially lucrative business. Might one detect the invisible hand of the Oracle of Omaha here? After all, Buffett, who took a confidence-building $5 billion stake in Goldman at the height of the crisis, is long both China and insurance.
A Goldman takeover of Taikang Life would interestingly also put it in indirect competition with near-collapsed insurer AIG, which has a piece of the Chinese life insurance market, albeit a small one, through its AIA unit, which sells life insurance in China. A potential showdown between Goldman and AIG would be interesting, given the already bitter history between the two companies; Goldman was AIG’s counterparty on many of the credit default swaps which sent the insurer to the brink of bankruptcy.
Of course, AIA might be on the verge of changing hands. That will happen if, and only if, Britain’s Prudential, the unit’s would-be buyer convinces reluctant shareholders to back the deal.
DealZone Daily
Tuesday’s top stories:
* Ireland’s government is poised to take control of a much bigger chunk of the financial sector than initially planned.
* South Africa’s Investec (INVP.L) announces a recommended offer to buy the remaining shares in British firm Rensburg Sheppards (RBG.L) for 412 million pounds ($619.4 million) to boost its wealth and asset management activities.
* Private equity firms Kohlberg Kravis Roberts & Co (KKR.AS) and CVC have teamed up to bid for Interactive Data Corp (IDC.N), yet another private equity team formed in recent weeks as an auction for the financial market data provider progresses, two sources familiar with the matter say.
* More on Sunday’s sale of Volvo Cars by Ford: One of China’s most senior female bankers, two top Swedish industrialists and a childhood friend of London’s mayor led the Rothschild team that helped Geely seal China’s biggest-ever overseas autos takeover.
* Jeffrey Goldfarb of Reuters Breakingviews says Uncle Sam’s plans to sell its 27 percent stake in Citigroup are a partial vindication of the bailout, but Citigroup has hardly been turned around since the government stepped in.
For more on these and the rest of the latest deal-related news from Reuters, click here.
Where’s the bull? Blackstone’s IPO plans
Time to reap some green shoots? Private equity firm Blackstone plans to list up to eight of its portfolio companies, aiming to make more hay from improved stock markets. Rival Kohlberg Kravis Roberts & Co’s Dollar General filed for an initial public offering of up to $750 million in August, and KKR is considering others, sources previously told Reuters.
Blackstone is positioning one company — hospital staffing firm Team Health — for an IPO and evaluating the potential for seven others, a source tells us, citing a letter sent from Blackstone to investors. The letter also says Blackstone is in the process of selling five companies outright, which it sees generating aggregate proceeds of $2.8 billion.
One of the exits is Kosmos Energy’s Ghanaian oil interests, the source who has the letter said. Sources previously told Reuters that Exxon Mobil had agreed to buy Kosmos Energy’s stake in the Jubilee field. Kosmos is backed by Blackstone and Warburg Pincus.
KKR’s imagination
Nobody can question Eastman Kodak‘s intention in raising some $700 million. Getting a commitment from private equity firm Kohlberg Kravis Roberts to buy up to $400 million of its debt is also a perfectly logical step for the old-economy stalwart as it lumbers into the digital age. What KKR is thinking is another matter.
KKR says the investment reflects its belief in Kodak’s strategy. They’re also getting warrants in Kodak to purchase up to 53 million shares of its common stock. The Wall Street Journal says KKR could end up owning close to 20 percent of the company.
The 24/7 Wall St blog notes that the fall in Kodak’s share price following the news shows the market isn’t blindly convinced of KKR’s intelligence. But Kodak’s bonds got a boost, if for no other reason than there’s a buyer out there.
Nobody has offered much in the way of explanation as to why KKR sees potential in Kodak. Boosters may say most of the company’s restructuring is behind it, but that doesn’t answer the more important question of what lies ahead. Any bright ideas?
Here,imagination of getting Kodak into a very big corporate house is practicable in future.
Kodak means photography and excellent photos generation devices for many.
Very sorry to say that,this branded name is suffering for survival to this highly competitive world.
Latest digital map,digital photos, mobile photos and very attractive web cams are available and less maintenance charges for keeping it for years together.
I have observed that,many noted companies are falling like pack of cards .
Because they have not updated their research on new,more consumer friendly products.They thought that,established names will survive on new competition and carry on en cashing it for years together.
Now,this traditional way of business is over.
Kodak name is still in every body!s mind.
If any new,big business enterprise gets entire brand equity and then will be cherished by us for longer years.
Imagination will be put into practice.
Chairgate: the Economist recants
The Economist has published a correction to its earlier report that Henry Kravis, KKR’s archetypal “Barbarian at the Gate”, may have stumped up 22 million euros for a chair once owned by Yves Saint Laurent:
“Our report suggested that Henry and Marie-Josée Kravis may have been the purchasers of an early 20th-century chair designed by Eileen Gray. Mr Kravis assures us that neither he nor anyone in his family bought the chair in question. Our apologies to all concerned,” the free-trade-loving weekly says.
Our post yesterday on the Economist’s original story prompted some acerbic follow-ups elsewhere in the blogosphere and a firm denial from Kohlberg Kravis Roberts HQ.
Anyone who knows the whereabouts of the actual buyer of the chair, or who wishes to speculate as to his or her identity, please leave a comment.
UPDATED: KKR denies an auction victory
(This updates an earlier post with KKR’s denial).
Maybe the days of private equity paying eye-watering prices at auction really are over.
Kohlberg Kravis Roberts has firmly denied a report in the Economist’s books and arts section saying that, despite the deep economic funk, buyout doyen Henry Kravis was behind the “startling” $28 million purchase of a vintage chair at the recent Yves Saint Laurent sale in Paris:
“Who, in the current climate, were the buyers?” the Economist asked. ”Few prices were more startling than the €22m commanded by an early 20th-century chair designed by Eileen Gray. Cheska Vallois, an Art Deco dealer, won the work in the room; it is thought that she did so on behalf of Henry and Marie-José Kravis, who had already acquired examples of Gray’s work from Ms. Vallois at the Biennale des Antiquaires in Paris.”
But this is one sales process KKR is keen to distance itself from.
“Contrary to speculation, I can categorically deny that neither Henry Kravis, nor anyone in his family, purchased the chair in question,” KKR spokesman Peter McKillop told Reuters in an email. A spokeswoman for the Economist did not immediately return an (admittedly late in the evening) request for comment.
Who was Gray anyway? As London’s Design Museum explains, Gray is “regarded as one of the most important furniture designers and architects of the early 20th century and the most influential woman in those fields.” Kravis, as you must know, was by Forbes‘s reckoning the 49th richest American last year.
IPO by U.K. buyout firm an ocean apart
It’s enough to make Leon Black, Henry Kravis and Stephen Schwarzman jealous.
UK-based buyout firm Resolution, founded by entrepreneur Clive Cowdery, has not only launched a rare IPO – it raised £600 billion ($889 million) last week- but the deal enjoyed a 15 percent “pop” in its trading debut on the London Stock Exchange Wednesday.
The buyout fund will target U.K. insurance and asset management companies in deals in the range of £3 to 5 billion. And that may be part of why the IPO did well: The U.K. insurance sector has underperformed the market with companies contending with lower valuations.
The deal was only the fifteenth IPO to list in London this year, where new issues in 2008 have raised only $8.9 billion, down 78 percent this year, according to Thomson Reuters data, and the fourth largest. The U.S. market for IPOs is down by about the same for the year.
The deal’s success came in stark contrast to the cold shoulder the IPO market in the U.S. has given financial companies, including private equity firms.
Apollo Management, which used the private placement market in August 2007 to begin trading stocks, filed to transfer its shares to the New York Stock Exchange in April, while Kohlberg Kravis Roberts has postponed its complicated plan to use the Amsterdam-based listing of a subsidiary to list on the NYSE.
But then again, with the performance of rival Blackstone Group – its shares are down 70 percent so far this year, who can blame investors for sitting on the sidelines? And it’s been a brutal year for private equity firms with little improvement in sight.
