DealZone

Small things matter

Interesting detail in a research note on Thursday from Credit Suisse, highlighting how it pays for bankers to sweat the small stuff in these lean times.

The bank’s own research and Dealogic data shows that deals worth less than $100 million have generated average success fees equivalent to nearly 1.2 per cent of the value of the transaction this year. Deals worth $1 billion or more have yielded just 0.2 percent.

As I wrote earlier, Credit Suisse also says that M&A may replace fixed income as a driver of investment banking revenues in coming quarters as the high-grade bond bonanza draws to a close.

Deals du jour

Barclays mulls a sale of its private-equity arm, AIG says it will pursue a New York public offering for its life-insurance unit, and CIT’s assets appear attractive, but only to bargain-hunters. For these stories and all the rest of the latest deals news from Reuters, click here.

And in the newspapers (some external links might require subscriptions):

* Bank of America Corp (BAC.N) is operating under a secret U.S. regulatory sanction that requires it to overhaul its board and address perceived problems with risk and liquidity management, The Wall Street Journal reported, citing people familiar with the situation.

* Citigroup Inc (C.N) is close to a secret agreement with one of its main regulators that will increase scrutiny for the bank, the Financial Times reported.

Deals du jour

U.S. officials consider giving CIT Group Inc a temporary loan as part of an aid package to help the lender avoid collapse; U.S. asset manager Franklin Resources Inc (BEN.N) drops out of a consortium negotiating to buy American International Group Inc’s (AIG.N) asset management unit; and The New York Times Co agrees to sell its New York City classical music radio station for $45 million, to help pay off debt. For these stories and all the other latest deals news from Reuters, click here.

And here’s what’s in the newspapers and online (some links may require subscriptions):

* Belgium’s Solvay (SOLB.BR) has narrowed the list of bidders for its pharmaceuticals business to Swiss company Nycomed and Abbott Laboratories (ABT.N) of the United States, FT.com reported on its website.

Deals du jour

In China, two regulators are facing off over GM’s controversial plan to sell its Hummer unit to a little-known Chinese outfit. In the United States, the sale of a stake in Facebook gives the whole a value of some $6.5 billion. And in Germany, Software AG is buying IDS Scheer in the country’s first major corporate takeover of 2009. For more on these stories, and all the other latest deals news from Reuters, click here.

And here’s what the papers are saying (some external links may require subscriptions):

* China National Petroleum Corp (CNPC) could make a binding offer for up to 75 percent of the Argentine unit YPF of Spanish oil major Repsol (REP.MC) in the next few days, ABC reported, citing sources close to the talks. Reuters story here.

Keeping score: signs of life in the mid-market

The so-called “mid-market”, of mergers and acquisitions (M&A) valued at less than $500 million, is showing tentative signs of life.

On an initial reading, first-half deal data from Thomson Reuters suggests a market still struggling, with deals down 45.7 percent from a year earlier in dollar terms, to $213.3 billion. But on closer inspection, the second quarter reveals itself to have been busier than the first, and in fact home to a stronger rebound than the overall M&A market.

Granted, second-quarter M&A plunged 43 percent in dollar terms and 12 percent by number of deals, compared to the same period a year earlier. But compared to the first quarter, the number of deals actually rose 4 percent, while the dollar value of deals struck bounced 20 percent. (In the wider M&A market, the number of deals rose quarter-on-quarter by a similar amount, but dollar values fell 2 percent.)

Deals du jour

Suntory and Kirin consider joining forces to create one of the world’s biggest beer and soft drinks companies, with annual sales of $41 billion. Meanwhile Friends Provident and Venture Production are both fending off unwanted approaches. For all the latest deals news, click here.

And here’s the latest dose of market chatter:

* McGraw-Hill has hired Evercore Partners Inc, a top U.S. merger advisory boutique to sell BusinessWeek magazine, Bloomberg said, citing a person close to the situation.

* Bank of America Corp is trying to avoid paying billions of dollars in fees to U.S. taxpayers for guarantees against losses at Merrill Lynch, saying the rescue agreement was never signed and the funding never used, Bloomberg said, citing people familiar with the matter.

Is oil heating up?

oil1Energy M&A has heated up over the past few weeks, with two large deals possibly on the horizon: the sale of Repsol’s Argentine unit YPF as well as Kosmos Energy’s stake in the Jubilee oil field in Ghana.

If thise deals would happen, it would follow Suncor Energy’s $20 billion takeover of rival Petro Canada, announced earlier this year.

So is M&A in the oil sector heating up? Maybe, but insiders warn that the fluctuations in oil and gas prices could slow the flow of deals.

Deals du Jour

The following deal-related stories appeared in today’s newspapers:

* British private equity firm Silverfleet Capital has begun exclusive talks to buy German sausage maker Kalle Nalo from rival Montagu Private Equity, the Financial Times said.

* The world’s biggest mutual funds firm, Fidelity Investments, has sought potential candidates to succeed its president Rodger Lawson who rejoined the company in mid-2007, The Wall Street Journal reported.

* Four of the biggest names in the UK digital media scene are teaming up to launch an investment fund for internet start-ups, the Financial Times reported. Michael Birch, co-founder of Bebo, the social network acquired by AOL last year for $850 million, is the cornerstone investor. He is joined by Brent Hoberman, Peter Dubens and Jonathan Goodwin.

Four Seasons (or more) of restructuring

A woman looks at the 2009 artwork "Sixty Watches" by Austrian artist Michael Schuster at the Art Basel art fair June 9, 2009. The Art Basel runs from June 10 to 14. REUTERS/Arnd Wiegmann (SWITZERLAND ENTERTAINMENT)Restructuring a company’s debts is not a simple process. Unlike acquisition deals, when everyone around the table has something to gain, a restructuring requires everyone to agree to lose something.

Pain has to be shared but everyone has an interest in ensuring someone else takes more of that pain.

As a result, the larger and more complex a company’s debt structure, the more likely it is that restructuring the company’s debt will be a long and difficult process.

M&A: Carpe diem, says Towers Perrin

Quite how much the world changed after Lehman Brothers fell is still up for debate. Perhaps not as much as indicated by a new piece of research by Towers Perrin. This starts with a drawn-out parallel between the demise of Dick Fuld’s bank and the work of sixth-century monk Dionysius Exiguus, whose invention of the BC/AD system, Towers says, came to “define civilization”.

Still, once the long-dead monks are out of the way, the Towers Perrin / Cass research shows that for the select band of firms brave – and strong – enough to undertake M&A post-Lehman, the reward has been stock market out-performance. And it was even better for an elite band able to make more than one acquisition. As I wrote:

“Stock markets rewarded companies such as Johnson & Johnson (JNJ.N) and Cisco (CSCO.O) who were brave enough to make acquisitions in the months after Lehman Brothers’ collapse, a study released on Monday showed.