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.

FirstGroup targets National Express

FirstGroup, the Aberdeen-based transport group led by its chairman Martin Gilbert, confirmed on Monday that it made an approach for smaller, embattled National Express on June 19.

But, National Express’s newly appointed chairman, John Devaney, and his chief executive, Richard Bowker, believe they can go it alone and have firmly rebuffed First Group. They are hoping, instead, to launch a £400 million rights issue.

This is not the first time the two companies have been linked as merger partners: there was talk three years ago of doing a £3 billion, nil-premium merger.

Capital markets make up for M&A

Its half-year review time in investment banking, when London’s top firms gather up their heavyweights and engage with the press.

Each year a different business line takes the spotlight. In the pre-crisis boom times of 2007, M&A bankers held centre stage. Everybody wanted to talk to them. They were the most popular kids in school.

This year it was the turn of capital markets bankers to shine.

As my colleagues Douwe Miedema and Jessica Hall wrote earlier, mammoth bond sales and massive rights issues kept investment banking revenue rolling in in the second quarter.

Deals du Jour

Virgin Group is keen on buying long-running takeover targets Northern Rock and bmi and is open to discussions on both, its flamboyant president Richard Branson tells Reuters.

Branson said Virgin Money was open to a deal for nationalised bank Northern Rock, despite being rebuffed last year, and he also expects to have talks with German carrier Lufthansa over its British airline bmi.

For the main Reuters Deals news, click here. And in the newspapers on Tuesday:

Russian billionaire Vladimir Potanin is seeking control of metals giant Norilsk Nickel as he wants to buy 25 percent in it from tycoon Oleg Deripaska’s UC RUSAL, Vedomosti business daily reported. Click here for the Reuters story.

Steeling for a fight

If the global recession wasn’t enough, with its idled auto factories and demand dwindling from the construction to the ship-building industries, the world’s steelmakers are facing the kind of consolidation that could well be a transformative event for the business.

Coal giant Xstrata aims to buy Anglo American for $68 billion in a tie-up between two of the biggest iron ore suppliers, creating the second-largest producer of steel-making coals. The move follows joint-venture plans from ore suppliers BHP Billiton and Rio Tinto and is seen as a big threat to steelmakers’ ability to exert any control over falling prices. Expect plenty of opposition from governments about too much pricing power residing in too few hands.

But the deal has other obstacles as well. Xstrata is offering effectively no premium to Anglo shareholders, which is producing loud squawks of outrage from investors. Perhaps by the time this one gets ironed out, the global recovery will be in full swing.

It’s all a bit Zainy

The rumours just won’t go away.

Rumour number one: the Kuwaiti-backed Zain telecommunications group has effectively put its African operations up for sale with a reported price tag of US$12 billion.

Rumour number two: Zain is in talks with France’s Vivendi about doing a deal.

Zain has even posted on its website some of those news reports stating that its African business is under the hammer, effectively advertising a sale.

“I think we will know [about it] very quickly,” one source close to the parties said.

European loan market down but not out

Much has been made recently of the drop in activity in European loan market activity and the corresponding boom in bonds and equities, which was recently highlighted by Reuters columnist Alexander Smith in this article. But while the loan market is undoubtedly down, it is far from out. The flow of bond and equity issuance is feeding cash back into the loan market, and liquidity has clearly improved in the last month, allowing a number of deals to close oversubscribed.

I wrote this story summarising the stronger tone in the market and highlighting the relationship between the loan market and M&A financing which could quickly boost loan volume when M&A activity picks up.

Deals du Jour

Lovefilm, love private equity?

British mail order DVD rental company Lovefilm is in talks with private equity firms including KKR and Silver Lake Partners about buying out existing shareholders and providing support for expansion, the Financial Times reports, citing people with direct knowledge of the strategy.

Elsewhere in the media:
* Bain Capital and PAI Partners have both made offers for about 30 percent of Italian eyewear maker Safilo Group and the potential deal might also include an option to acquire a majority holding at a later date, the FT reports.

* Winkworth, the London estate agency, plans to float on the Alternative Investment Market in the autumn, the Times says.

Deals du Jour

British bank Barclays said it would sell its BGI investment arm to U.S. firm BlackRock for $13.5 billion, creating the world’s biggest asset manager. For today’s headlines, click here.

And in the media:

* Malaysian gaming group Genting is in partnership talks with U.S. casino operator MGM Mirage, the Wall Street Journal reported. 

* British boiler maker Baxi is close to agreeing a 1.7 billion euros ($2.4 billion) merger with smaller Dutch rival De Dietrich Remeha Group, the Financial Times reported. 

Deals du Jour

Australian miner OZ Minerals said its shareholders approved the sweetened $1.4 billion deal by  Chinese state-owned Minmetals’ to buy most of the indebted miner’s assets. For today’s headlines, click here.

And in the newspapers:

* Turquoise, the European equity system owned by nine investment banks, was forced to close on Wednesday morning because of a technical problem, Financial News said.

* The New York Times Co has hired Goldman Sachs to manage the possible sale of The Boston Globe, and plans to request bids in the next couple of weeks, The Boston Globe reported.