Deals wrap: MGM China IPO may be a gamble for investors
Macau casino operator MGM China, co-owned in part by casino mogul Stanley Ho’s daughter Pansy Ho, raised $1.5 billion from its Hong Kong initial public offering after pricing it at the top of its indicative range, triggering some concerns about lofty valuations.
Gambling revenues in the world’s largest gaming market are at record highs, dwarfing those of Las Vegas and fueling a surge in share prices of local casino operators that boosted demand for MGM China’s IPO.
But the rally may have pushed stock prices in the sector too far, reducing their appeal to some investors according to some analysts.
However, shares of Macau’s biggest casino operator SJM Holdings, which has nearly three times the revenue of MGM China, have surged nearly 52 percent so far this year. If MGM China can duplicate the success of SJM, the fears about high valuations should subside.
With the deal Pansy Ho is now worth nearly $2 billion more than her legendary casino father “king” Stanley.
In other news, Yandex said the underwriters of its recent blockbuster Nasdaq IPO had exercised an over-allotment option in full, bringing the total raised to $1.43 billion.
Yandex, which raised $1.3 billion in the biggest internet IPO in the U.S. since Google nearly seven years ago, saw its shares surge 55 percent in their trading debut on Tuesday.
Deals wrap: Treasury sells stake of AIG
The Treasury made a small profit when it sold a portion of its shares in AIG, but it was unclear how its investment in the beleaguered insurer will ultimately fare.
Tuesday’s $8.7 billion stock offering, (being dubbed by some as AIG’s re-IPO) which included 200 million shares sold by the Treasury and 100 million sold by AIG itself, is far smaller than the $10 billion to $20 billion deal some banking sources had suggested earlier this year, hinting at a potential lack of investor interest.
With the sale, the Treasury has raised $5.8 billion of the $47.5 billion it needs to break even and now has another 1.5 billion shares to sell.
The government can claim a small victory with this sale, but the Deal Journal says the biggest beneficiary of the decision are the banks underwriting the sale.
A day after Yandex surged in its debut coupled with LinkedIn’s record IPO last week, comes the news that the maker behind a series of popular games on Facebook, Zynga, may file for a multibillion-dollar IPO as early as this week.
Can Zynga be blamed for attempting to cash in on the latest Internet IPO craze? Hardly not, but each new booming success leads to more caution of another dreaded tech bubble waiting to burst.
Finally, Fiat exercised an option to acquire a further 16 percent of Chrysler bringing its stake to 46 percent following the Detroit-based carmaker repayment of $7.6 billion in U.S. and Canadian government loans from its 2009 bailout.
“The government can claim a small victory with this sale”
Uh, no. The sale reveals that there was little real demand for AIG shares. There were more flippers than genuine buyers. That will be remembered on future sales, and buyers will require a greater discount to the current market price to get them to part with money for shares of AIG.
Deals wrap: Jimmy Choo sold to Labelux
Upscale British shoemaker and retailer Jimmy Choo was bought by luxury goods group Labelux from TowerBrook Capital Partners, the companies said.
The companies did not disclose terms of the deal, but two sources familiar with the deal said it was worth about $812 million.
The deal, according to Footwear News, will help Jimmy Choo makes inroads into the Asian market thanks in part to Bally’s strong presence in the area. Labelux purchased Bally’s in 2008 but added that the two brands will operate independently.
DealBook noted the Choo deal is just the latest in recent intense activity in the luxury industry including LVMH’s recent takeover of Bulgari, Prada’s impending Hong Kong IPO and Hermes selling it’s stake in Jean-Paul Gaultier to Puig.
Investors, analysts and pundits took the weekend to take a step back to see what went right and what went wrong with LinkedIn’s IPO.
Felix Salmon shares not only his take on the IPO, but brings together some differing viewpoints and why LinkedIn’s offering happened the way it did.
Tom Petruno of the Los Angles Times said one of the biggest winners of LinkedIn’s massive IPO is the Federal Reserve.
Deals wrap: Copycats sure to follow LinkedIn
A day after LinkedIn’s shares more than doubled in their public trading debut, analysts are scrambling to explain why the stock exploded and figure out what happens next.
The professional networking site’s IPO was being closely watched by Facebook, Groupon, Twitter and Zynga to gauge investors’ appetite for Internet companies.
Facebook COO Sheryl Sandberg described a public offering of Facebook shares as “inevitable,” while Evelyn M. Rusli over on DealBook predicts a surge in Internet IPO’s but doesn’t think the market is setting itself up for another tech bubble burst.
It wasn’t just the big four social media sites waiting to go public that were salivating at LinkedIn’s record day, would-be rivals to LinkedIn were also giddy with excitement.
As for future opportunities for investors, Shira Ovide of WSJ.com gives her three reasons to be wary going forward. Nigam Arora of Seeking Alpha also advises investors to be cautious but gives four low risk ways to make money from LinkedIn.
One of the more interesting comparisons to LinkedIn’s meteoric rise in its debut comes from WSJ.com. At one point yesterday LinkedIn’s valuation was roughly $10 billion, trading at nearly 41 times its 2010 net revenue. If Apple were trading at the same multiple, it would have a market value of $2.7 trillion.
In other news John Malone’s Liberty Media Corp has proposed to buy Barnes & Noble for $1.02 billion, nine months after the largest U.S. bookstore chain put itself up for sale.
Deals wrap: Glencore debuts while markets await LinkedIn
Commodities trader Glencore made a steady market debut with shares trading just above the widely expected launch price of 530 pence, giving it solid currency for potential acquisitions.
There was heavy interest in the stock on both the London and Hong Kong exchanges, due in part to the relatively small amount of shares being sold. Glencore’s Chief Executive and largest shareholder Ivan Glasenberg said demand for the shares “significantly” exceeded the amount available.
Analysts on Thursday said the 530 pence per share level was realistic and should mean strong aftermarket support. “Obviously everything is priced to do well. I don’t know whether five to ten percent upside is in the bag or not, but certainly they are trying to please investors with the price,” analyst Tim Dudley at Collins Stewart said.
In other news, internet companies that expect to go public in the future are eagerly awaiting market reaction to LinkedIn’s debut. The professional networking site sold shares at the top of an already raised price range in its initial public offering on Wednesday, signaling that stock investors are eager to buy shares of social networking companies even if valuations are lofty.
Although companies like Facebook, Groupon, Twitter and Zynga have significantly different business models than LinkedIn, they each tap social networks and the valuations for each are skyrocketing.
According to data provider Capital IQ and posted on WSJ.com the amount of money LinkedIn is raising makes it the fifth-biggest-ever U.S. internet IPO, but still well off Google’s 2004 IPO that raised $1.67 billion.
Yesterday we told you that Takeda Pharmaceutical was on the verge of acquiring privately held Swiss rival Nycomed.
Deals wrap: Investors willing to overlook LinkedIn’s risks
LinkedIn’s IPO, which is expected to price after the close of U.S. markets on Wednesday and start trading on Thursday, appears set to be a stunning success, but it carries a number of risks that may shake up investors in the future.
Potential risks include LinkedIn’s gutsy bet on future growth, an admission that it does not expect to be profitable in 2011 and the prospect of having its site blocked, which would limit its user base and could curtail some of the potential growth so attractive to investors.
After two years of losses, LinkedIn finally made money for its common stockholders in 2010 — but then it was back to only breaking even in the first quarter of 2011. A profitable company flatlining or swinging to a loss in its first year as a publicly traded stock could prove an unwelcome surprise for investors betting on the booming growth of social media companies.
On Seeking Alpha, IPO Candy says LinkedIn’s growth, positioning and financial performance in large part justifies their stocks filing range. But unless their future execution surpasses recent performances, investors will not see expected returns.
Takeda Pharmaceutical will announce the $12 billion purchase of closely held Swiss rival Nycomed later today as it seeks to expand in Europe and emerging markets.
If the deal is successful it will give Takeda access to lung-disease drug Daxas, just approved in the United States, and a portfolio of over-the-counter consumer products.
Finally, the creator of the hit iPhone game Angry Birds is aiming for a stock market listing in New York in two to three years.
Deals wrap: LinkedIn boosts IPO, pushes more air into bubble
LinkedIn, the social networking site for professionals, boosted the pricing of its initial public offering by 30 percent valuing the 9-year old company at a little over $4 billion, or about 17 times their 2010 revenue.
LinkedIn’s IPO, which is scheduled for Thursday, comes on the heels of what appears to be an unsuccessful offering Renren.
Earlier this month Renren, one of the biggest social networking sites in China, stock surged 29 percent in their debut but it has since dropped to below its IPO price.
The poor showing of Renren has not slowed investors appetite for a chance to gobble up another slice of the social networking pie. Two other Internet giants are expected to go public sometime in the near future. Groupon may be valued as high as $20 billion and Facebook could be north of $100 billion.
Is this the start of another tech bubble or will investors rue the day they passed on the social network pie?
Yesterday Deals wrap told you that BP was in talks about buying out its Russian partners in TNK-BP, in conjunction with state-controlled Rosneft, and other options to ease passage of a stalled share swap and Arctic exploration deal.
However today came news that the deal has collapsed. The tie-up unraveled because BP failed to mollify partners in its existing Russian venture TNK-BP. They argue the British company had no right to strike a new deal in the country without them.
Deals wrap: AIG’s $9 billion stock offer less than half of what was expected
American International Group and the Treasury will sell nearly $9 billion in stock as the bailed-out insurer begins its return to public control. This offering is less than half of what had been expected when Wall Street banks offered their services to manage the stock sale in January. The company was rescued in September 2008, receiving $182 billion in bailouts and managed to restructure while preserving two core businesses. At the time, few expected AIG would even exist today.
Professional networking service website LinkedIn is looking to go public, a move that could value the company at more than $3 billion. In this article, NYT’s Steven M. Davidoff explains why certain plans LinkedIn has for its IPO would “not only disenfranchise its future shareholders, but contains elements that have been heavily criticized by corporate governance advocates.”
The impact of AT&T’s proposed acquisition of T-Mobile on competition, pricing and consumer choice will be examined at a congressional hearing, where top executives are scheduled to appear to defend the deal. A successful merger would concentrate 80 percent of U.S. wireless contract customers in just two companies — AT&T/T-Mobile and Verizon Wireless.
Microsoft’s decision to acquire internet phone service Skype for a hefty $8.5 billion was immediately slammed by analysts, who questioned the logic of the deal and suggested the software giant paid too much. Reuters Breakingviews columnist Richard Beales thinks that, in theory, there are potential advantages to the deal but points out how Microsoft’s poor M&A track record and the high price means the transaction is unlikely to ever connect with investors.
Medco Health Solutions CEO David Snow says no biotech company is too big to be bought. He told the Reuters Health Summit he sees major drugmakers needing the growth potential of biotech more than ever.
Deals wrap: M&A is back
Dealmaking is back on the agenda as CEOs step up the hunt for ways to put a multitrillion-dollar cash pile to work, triggering the busiest January for M&A in 11 years.
If ProLogis and AMB Property’s recently announced talks on a “merger of equals” pan out, AMB Property is likely to be the real buyer and ProLogis the target, investors and Wall Street analysts said.
Sara Lee plans to split into two separate public companies focusing on North American meats and international coffee after takeover bids it received were not enough to entice it to sell the company.
Buying Ocado, the loss-making British online grocer, would give Amazon.com the model for cutting-edge customer service it would need to crack the market for selling groceries. The question is, will it take the plunge?
LinkedIn plans to raise up to $175 million in an initial public offering, according to a regulatory filing.
Facebook is not worth $50 billion, according to a Bloomberg poll.
Deals wrap: LinkedIn’s IPO plans
LinkedIn plans to go public in 2011 and has selected its financial underwriters, three sources familiar with the process told Reuters.
Interest in Facebook shares is so strong that Goldman Sachs plans to stop soliciting interest from potential investors on Thursday, the Wall Street Journal reported, citing people familiar with the situation.
Felix Salmon lists reasons why Facebook won’t go public.
TechCrunch rebuts some recent themes surrounding Facebook in the blogosphere.
