DealZone

Deals du Jour

Putting together new companies out of parts of old is a challenging task for dealmakers, particularly when the businesses concerned employ large numbers of workers.

The future shape of Germany’s auto industry remains uncertain, following the slow-mo breakdown of General Motors (GM.N) and the collapse of Porsche’s (PSHG_p.DE) bid to take over Volkswagen (VOWG.DE). Over the weekend the list of bidders for Porsche’s stake in Volkswagen grew, while a German newspaper on Monday reported the country’s economy minister saying the outcome of the bidding war for Opel was still up in air. For all the latest deals news from Reuters, click here.

Elsewhere, newspapers name a pair of European companies looking to offload businesses to support their financial position.

French water and environmental services company Veolia Environnement (VE.N) has puts its UK water arm up for sale to raise money to reduce its debt, the Sunday Times reported.

Meanwhile, India’s Oil and Natural Gas Corporation (ONGCF.PK) may join a number of Russian companies looking at buying a stake of at least 20 percent in Repsol’s (REP.N) Argentine unit YPF, Spanish business newspaper La Gaceta reported on Monday.

Keeping score: H1 redux

Final, first-half M&A data from Thomson Reuters, released earlier on Thursday, filled out the picture painted by preliminary data last week — deal-making has shrunk dramatically, even as investment bankers find solace in a record flurry of bonds and rights issues.

One interesting wrinkle, compared to the earlier numbers, is the inclusion of Xstrata’s unwanted approach for rival miner Anglo American, valued by the number-crunchers at $42.5 billion. That helped propel Goldman Sachs to the global top spot for M&A advice, and boosted several other banks engaged on the deal.

Some other nuggets:

* Compared to the first half of 2008, announced M&A is down 40.2% to $941 billion, the slowest H1 since 2004.

Is Genentech taking over Roche?

Roche’s megabucks Genentech buy is looking more like a reverse takeover — in some ways, at least.

Roche headquartersThe Swiss drugmaker splashed out $47 billion to buy out its biotech partner to secure access to Genentech’s impressive new drugs. But Roche’s U.S. operations are to operate under the Genentech name and research, development and commercial operations are all being based at the U.S. group’s South San Francisco headquarters.

Now Roche doesn’t even consider itself Big Pharma. It says it will leave the industry group Pharmaceuticals Research and Manufacturers of America (PhRMA) but will retain Genentech’s membership of the Biotechnology Industry Organization (BIO).

What is an asset worth if no-one wants to buy?

car-washValuation issues mean extra work for financial advisers as they try to restructure the debts of struggling European companies.

With few bidders for companies — as specialist distressed investors continue to sit on their hands — many company valuations are “subjective”, one restructuring expert told me earlier today.

Such uncertainties have serious consequences. An argument has broken out between different groups of creditors to car cleaning firm IMO Car Wash, as senior lenders seek to take control of the company via a debt-for-equity swap.

Deals du jour

Magna and GM aim to sign a deal on Opel by July 15, Blackstone plans to establish a Chinese subsidiary, and AIG picks banks to run the $4 billion-plus IPO of its Asian life insurance unit – for all the latest deals news from Reuters, click here.

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

* KazMunaiGas Exploration and Production, the listed arm of Kazakhstan’s national oil company, has $4bn of cash available for acquisitions and hopes to agree deals before the end of the year, its new chief executive told the Financial Times.

* Stephen Pagliuca, one of three parties interested in buying The Boston Globe, is willing to work with the U.S. newspaper’s largest union to structure a buy-out from its owner The New York Times, the Financial Times reported, citing a person familiar with the discussions.

M&A: lessons from history

Two chunky bits of M&A research landed this week (both, incidentally, drawing on Thomson Reuters data).

Cass Business School’s recently established M&A Research Centre sounded a note of a caution about the merits of buying floundering companies, even if such deals are initially welcomed by the market.

“Companies who bought distressed or insolvent rivals over the past quarter-century suffered lower returns on equity and underperformed buyers of healthy firms, a study released on Monday showed…

Deals du jour

Pfizer is seeking deals in emerging markets, while Nomura and T&D are among second-round bidders for Citigroup’s Japanese asset management arm. Get all the latest deals news from Reuters here.

And in the newspapers:

Alan Lewis, owner and chairman of overcoat maker Crombie, has made an approach to Aquascutum’s Japanese owner Renown to acquire the label’s British business including its manufacturing operation, the Financial Times reported. (Link may require subscription).

The head of German chemicals company Bayer said debt reduction and securing liquidity was taking precedence over acquisitions during the economic crisis, the Sueddeutsche Zeitung reported. Reuters story here.

Keeping score: Rio, real estate, rising rates

This week’s Thomson Reuters “Investment Banking Scorecard” is out. Here are the highlights:

“BHP/Rio Tinto Deal Changes Global M&A Landscape

“The announcement of a joint venture between Australia’s BHP Billiton and domestic rival Rio Tinto last Friday ranks as the second largest worldwide deal this year and may prove fruitful for some investment banks.  Advisors Gresham Partners, Lazard, Morgan Stanley, and Goldman Sachs will advise on the deal, translating to valuable deal activity in a year where M&A volume is down 43%.  Earlier this year, Chinalco announced a multi-continent $19 billion investment in Rio Tinto, which was withdrawn as a result of the new mega-deal.  Of the seven banks on the initial Chinalco deal, only Morgan Stanley, ranked first for worldwide M&A year-to-date, secured a role on the BHP deal.

“Real Estate Equity Capital Markets Activity up 85%

“Equity capital markets offerings from real estate issuers have soared so far in 2009, while activity in the M&A, DCM, and loans segments remains down from 2008.  Real estate ECM volume is up 85% over last year at $36.5 billion.  Activity in the Americas accounts for 44.7% of the total volume across the sector, followed by Asia (including Japan) with 36.6% and Europe with 18.4% share of the market.

Deals du Jour

Porsche is in talks to sell a stake of up to 25 percent in its holding company to the Gulf state of Qatar and a deal could be announced within weeks, people familiar with the talks told the Financial Times. For more of today’s deals headlines on Reuters, click here.

And more in the newspapers:

* German state-controlled bank WestLB was close to being shut down over the weekend , the Wall Street Journal reported, citing people familiar with the situation.

Owners of the struggling bank agreed to provide an additional 4 billion euros ($5.6 billion) in guarantees to help support a sweeping reorganisation, WestLB said late on Sunday.

Wings clipped

The first China-assembled Airbus A320 aircraft lands at the Tianjin Binhai International Airport after a test flight in Tianjing MunicipalityThe sale of BAA-owned airport Gatwick has been beset by delays and difficulties. Another cloud on the horizon might be government plans to launch a new regulatory regime for big UK airports.

BAA today complained that proposals to introduce a “special administration regime” for London’s Heathrow, Gatwick and Stansted would create additional uncertainty for investors and drive up the cost of airport finance.

The Department for Transport is considering introducing such a regime to safeguard operations if an airport operator goes bust. Similar schemes already exist for power and water supplies.