Deals du Jour

Reliance Communications is one of the bidders for Zain’s African operations, two banking sources with knowledge of the situation have told us. Talks over the deal — reported to be worth $10 billion — are preliminary. 

There is a queue of banks for the other big telecoms deal in the works, willing to fund Bharti Airtel’s acquisition of a stake in South Africa’s MTN, says the Economic Times. The two are in exclusive merger talks till Aug. 31.

For an overview of other stories in the papers, click here.

Keeping score: JPMorgan leads the mid-market

Thomson Reuters data for July show the so-called “mid-market”, of deals below $500 million, has come off slightly compared to the month before, and steeply compared to the same month a year ago.

Year-to-date, JPMorgan is the busiest bank by dollar value of deals, displacing Credit Suisse, which falls from 1st to 6th. Freshfields overtakes Clifford Chance as the busiest legal outfit. A few highlights from the report:

“Global Mid-Market deal activity for July at US$40.8bn from 2,940 deals, down 6% from US$43.3bn from 3,284 deals in June. Down 42% compared to US$70.2bn from 3,627 deals in July 2008

Nycomed crafts a buyout, 2009-style

Nycomed, the Swiss drug company, already has 4 billion euros or so of net debt and some pretty junky single-B credit ratings. But that’s not deterring the private-equity owned outfit from plotting a bid for the drugs business of Belgium’s Solvay, even in these leverage-phobic times. As I wrote earlier:

“Switzerland’s Nycomed plans to draw on buoyant junk bond markets and new cash from its private-equity owners to fund a buyout of Solvay’s drugs unit, people familiar with the matter said.

“Such a structure would allow Nycomed — which already has billions of euros of syndicated loans — to bypass the moribund leveraged loan market and would create a group with some 6 billion euros ($8.6 billion) in yearly sales.”

Phew! Due diligence done at last

Lloyds’ deal to buy HBOS was sealed in the time it takes to sup a few cocktails with Gordon Brown. But poring through the gung-ho mortgage lender’s books took nine whole months and many thousands of man hours.

Lloyds Banking Group on Wednesday admitted it had finally completed due diligence on HBOS, after agreeing to buy it in a shotgun marriage last September.

“Nine months after agreeing to purchase HBOS, it has finally completed its review of the assets at HBOS. This means … it has completed its due diligence of HBOS,” said Hank Celenti, analyst at Royal Bank of Canada.

A little more conversation, a little more action?

It would be hard to describe July as a banner month for mergers and acquisitions.

Friday’s data from Thomson Reuters shows it was the first month since Sept. 2004 where announced deals totalled less than $100 billion, and the first month in almost six years without a single $5 billion-plus deal. But top executives are starting to talk M&A again, and bankers are starting to lay the groundwork for future deals. As Michael Erman and I wrote earlier:

“Bankers are pointing to early signs of a pick-up in mergers and acquisitions (M&A), with stronger stocks and easier credit conditions helping company bosses regain the confidence to do deals.

Keeping score: big-ticket M&A drought, bond bonanza

Highlights and low points — syndicated loans, for example, at their lowest since 1993 — from the July Thomson Reuters Investment Banking Snapshots:


Asia Pacific & Chinese Issuers Reached New Corporate Bonds High in July – Asia Pacific issuers raised a record US$41bn in July, up 11% from June 2009 (US$43.3bn) and double the level of July 2008 (US$24.1bn). Chinese issuers accounted for 49% of the regions’ activity with a record US$23.4bn raised, up 3% from June 2009 (US$22.7bn) and up 218% from July 2008 (7.4bn). Financials (US$16.2bn, 70%) and Materials (US$4.7bn, 20%) were the main sectors driving the surge in China.

European High Yield Bonds Hit 2 Year High – Global issuance of high yield bonds reached US$12.3bn in July 2009, down 27% from June 2009 (US$16.7bn) but up 270% from July 2008 (US$3.3bn). This marked the third highest level of activity for a month of July on record and the best since 2003 (US$18.6bn). European issuers accounted for 44% of total with US$5.4bn raised, the highest monthly volume since June 2007. European activity consisted of two issues, Wind Acquisition Finance (US$3.7bn), the second largest HY bond of the year globally and the second largest European bond ever issued after NXP Semiconductor (US$5.95bn, 2006) and Fiat Finance & Trade ($US$1.8bn).

Lazard CEO: M&A rebound still in the distance

Bruce Wasserstein

Those anticipating a quick return to the heyday of mergers & acquisitions may have a wait a little while longer. 

Lazard CEO Bruce Wasserstein told investors in a conference call that it would be four years before traditional M&A activity picks back up to earlier highs. 

“We are planning for a gradual increase in traditional M&A activity, reaching the prior period highs in about four years,” Wasserstein said.

Deals du Jour

Dutch bank ING has hired JPMorgan to advise on the sale of ING’s private banking business in Europe and Asia, which could fetch over $1 billion, sources tell Reuters.

The sale of the units may may take a few months and could draw interest from global and Asian players, one source with knowledge of the deal said.

In other deals reported by Reuters and other media: will pay about $928 million for booming online shoe retailer, expanding aggressively into the apparel arena with a well-known name after trying unsuccessfully to go it alone.

Deals du jour

CIT Group Inc, which lends to nearly one million small and mid-sized businesses, signed off on a $3 billion deal late Sunday in rescue financing from a group of bondholders to avoid bankruptcy.  And private equity firm Kohlberg Kravis Roberts & Co on Monday moved a step closer to gaining a stock-market listing.

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):

* Lloyds Banking Group (LLOY.L) and the Royal Bank of Scotland (RBS.L) might have to sell part of their businesses under proposals to be announced by the opposition Conservatives on Monday, the Times newspaper reported.

Deals du jour

A brace of autos deals feature in this edition of Deals du jour. Bankrupt auto parts supplier Delphi Corp (DPHIQ.PK) has had talks with bankruptcy lenders readying a bid for its assets that could challenge a proposed sale to private equity firm Platinum Equity, people familiar with the discussions say. Meanwhile, as Christiaan Hetzner writes, General Motors will have a hard time overcoming Germany’s resistance to a financial investor if it wants to sell Opel to RHJ (RHJI.BR) in the hope that it could later buy its European carmaker back.

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):

* Samsung Electronics (005930.KS), the world’s largest memory chipmaker, is expected to invest at least 1 trillion won ($790 million) in a semiconductor production facility in the second half, a newspaper reported. Reuters story here.