DealZone

Deals du Jour

The logo of an Opel car dealer is pictured in Himmelkorn, near Leipzig August 9, 2009. With Magna and GM finally agreeing terms on Opel, more deals are on the horizon.

Mergers and acquisition stories in the media on Friday include:

A Canadian bank has approached Allied Irish Banks and the Irish government with a proposal to buy a stake in Allied when it has been cleansed of its risky loans, the Irish Times reported on Friday

India’s federal government will offer its 49 percent stake in Bharat Aluminium Co (Balco) to Sterlite Industries (India) Ltd for about 20 billion rupees ($416 million), the Economic Times reported on Friday.

Barclays Capital has prepared a database of more than 100 private-equity owned companies ready to be listed in the next 12 to 18 months, the Wall Street Journal reported on Friday.

Peter Cruddas, a leading London financier, may take CMC Markets public in 18 months, the Daily Telegraph reported on Friday.

Merrill Lynch, a unit of Bank of America Corp, is ramping up its recruitment programs for financial advisers with signing packages more generous than its 2006 and 2007 offerings, according to a story on the Financial Times website. Reuters story here.

Deals du Jour

Library photo of the Prudential Center. REUTERS/Ray Stubblebine (UNITED STATES)The acquisition of Friends Provident by Resolution is a reminder that financial services deals have not gone away. A steady stream of deals have made headlines in recent weeks.

On Thursday an online report said Prudential Financial Inc is in the early stages of talks with KB Financial to sell its South Korean brokerage arm, a deal that could fetch an estimated $680 million. Here’s the Reuters story.

Other deal-related stories appearing in the media on Thursday include:

State-run miner Coal India Ltd plans to raise up to 60 billion rupees ($1.25 billion) by selling 10 percent of its equity through an initial public offer expected within a year, the Business Standard reported on Thursday.

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

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:

DEBT CAPITAL MARKETS

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).

Pfizer seen circling top Turkish drug company

From Acquisitions Monthly

Pfizer, the world’s largest pharmaceuticals company, is lining up Turkey’s largest drugs company, Abdi Ibrahim, for a deal, according to an M&A banking source.

There are no talks so far, and what form a potential tie-up would take is not yet known.

Only last month the president of Pfizer’s emerging markets business unit revealed that the drugs company was considering new acquisitions.

Goldman’s Viniar: Why pay twice?

HEALTHFOOD-ASIA/Turns out Goldman Sachs is a staunch advocate of going organic — when it comes to the money management business.

As Barclays auctioned off its Barclays Global Investors unit this year, Goldman was widely seen as a likely acquirer. That is until Blackrock In under Larry Fink emerged as the buyer with a $13.5 billion deal.

Lots of other money managers are expected to be sold, as the industry consolidates and cash-strapped banks look for valuables to pawn. But Viniar told analysts Goldman’s preference is to grow the business without deals, and appeared to question the very idea of money manager deals.

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.)

from Summit Notebook:

Expect action in Japanese M&A

After falling off a cliff at the start of this year as the global financial crisis gripped, mergers and acquisitions by Japanese companies overseas are likely to pick up again in the second half of this year, according to boutique Japanese M&A advisory firm Recof Corp.

There won't be a flood of deals, Recof President Hikari Imai says, but the ones there are, are likely to be chunky as Japanese companies expand their frontiers beyond domestic markets where growth prospects are limited.

Geographically the focus is likely to be Asia -- China, India in particular and possibly the Philippines or Australia. And the types of companies looking abroad will broaden as well, Imai told the Reuters Japan Investment Summit.