DealZone

What goes around…

lehman3.jpgLehman Brothers is looking for fresh capital in South Korea, the Wall Street Journal reports. If the investment bank does end up tapping South Korea, it will have taken slightly over a decade for the 1997 multibillion loan from the IMF, backed by Wall Street and the Federal Reserve, to come full circle. The Journal says Lehman is looking to state-run Korea Development Bank and Woori Financial Group as it searches for funds to ward off a Bear Stearnsian crisis of confidence. The IMF demanded strict economic reforms for its money. A South Korean lender, like the Chinese and Arab investors bailing out Citi and Merrill Lynch, might just want a juicier cut.

The best part of waking up is Folgers in your cup — with a side of Smuckers jelly. The maker of Jif peanut butter and Crisco oil said it would buy Folgers from Procter & Gamble for stock valued at $2.95 billion plus the assumption of $350 million in debt. J.M. Smucker & Co also acquired Jif and Crisco from P&G.

Yahoo set its annual shareholder meeting for Aug. 1 in the heart of Silicon Valley, as it braced for a proxy showdown with billionaire activist investor Carl Icahn. Earlier, The Wall Street Journal reported that Icahn would seek to remove Jerry Yang as Yahoo chief executive, citing the company’s failure to reach a merger or partnership deal with Microsoft. Icahn had proposed an alternate slate of directors for Yahoo’s board, but until now had not directly targeted Yang. “It’s no longer a mystery to me why Microsoft’s offer isn’t around,” the Journal quoted Icahn as saying. “How can Yahoo keep saying they’re willing to negotiate and sell the company on the one hand, while at the same time they’re completely sabotaging the process without telling anyone?”

Novartis has bought privately held biotech company Protez Pharmaceuticals in a deal worth up to $400 million, giving it rights to an antibiotic which could be used to fight superbugs. Protez has a broad-spectrum antibiotic given by injection that is currently in mid-stage Phase II development against drug-resistant infections, and Novartis hopes to submit it for regulatory approval in 2012. The Swiss group will pay $100 million immediately for the business, with a potential for up to $300 million of additional payments depending on the future success of the new drug with the catchy code name: PZ-601.

Corporate Express will open its books to U.S. office supplies retailer Staples, which has made an unsolicited bid for the Dutch office goods wholesaler, Het Financieele Dagblad reports. On Tuesday, Staples raised its offer to 9.15 euros a share, or 1.7 billion euros ($2.65 billion), on the condition that Corporate Express shareholders reject the company’s plan to buy privately owned French peer Lyreco. The paper added that Corporate Express will probably give a neutral recommendation to its shareholders about the bid.

The Yahoo lament

yang.jpgMicrosoft‘s $47.5 billion bid may not have met Yahoo’s price target, but the deal sure had a lot of promise, Yahoo’s Chief Executive Jerry Yang lamented during an on-stage interview at the D: All Things Digital conference. Yang said the software giant appears no longer interested in a full merger. “We did not walk away from that proposal. Microsoft did,” Yang said. This might just be a brave face for Yang, who will need one to face a potentially hostile board filled with activist agitators hand picked by Carl Icahn. Then again, Yang may feel emboldened by reports that Icahn may not be able to muster the votes to change Yahoo’s position. News Corp Chairman Rupert Murdoch, also at the D, was quoted by Dow Jones as saying: “Icahn? That’s not serious. It’s just a lot of helpful noise.”

Royal Bank of Scotland extended yesterday’s deadline for the auction of its insurance arm, which includes its Direct Line and Churchill brands, the Daily Mail reports. First-round bids for Britain’s largest motor insurer are expected to come within days, the paper said. RBS declined to comment on the auction for RBS Insurance, expected to be valued around 7 billion pounds ($13.8 billion). Italian insurer Generali, which had been seen as a strong candidate, pulled out of the running because of the hefty price and RBS’s unwillingness to consider breaking off parts of the unit, sources close to the situation told Reuters.

A member of the founding family of Anheuser-Busch said any talks with Belgian brewer InBev should be based on shareholder value rather than the Busch family’s legacy, the Wall Street Journal reports. The comments signal a hardening of the split within the family, which could embolden InBev to make a bid for the St. Louis brewer, the newspaper said. InBev is weighing an offer that could top $45 billion, the Journal reported, citing people familiar with the matter. “A possible merger is not a family issue,” Adolphus Busch IV, an uncle of CEO August Busch, wrote in a release to the newspaper. It is not “a matter of family solidarity or legacy. It is strictly a matter of shareholder value.”

BCE deal gets a busy signal

bce.jpgBanks financing the $34.8 billion private equity buyout of BCE have been hammering away all weekend to win higher interest rates, tighter loan restrictions and stronger protections that far exceed the original terms, according to the New York Times. Citing people on both sides of the transaction, the paper said talks began to fray late on Friday but lasted all weekend. “It’s patently obvious that the banks have no intention of closing the deal,” said one executive who read the revised terms. Investors have long worried that the massive private equity buyout might be repriced, delayed or abandoned altogether. Looming over the discussions is the spectre of the Clear Channel deal, in which some of the very same lenders also tried to back out, producing an ugly tangle of court cases that was only resolved last week.

Microsoft said it proposed an alternative deal to Yahoo rather than a full acquisition, but a person who knows the mind of Carl Icahn, the man driving trying to unseat Yahoo’s board, said the move was likely to prompt the billionaire investor to nudge Yahoo back toward Google. This source isn’t just familiar with the matter, but has a taste for rustic allusions: “Microsoft is trying to get the milk without buying the cow, and if you look at Icahn’s history, he has never been used that way.” Microsoft did not clarify what that alternative deal might be.

Facebook founder and CEO Mark Zuckerberg stressed his company’s independent spirit, after a report said the social networking site might be sold to software giant Microsoft, which is hunting for ways to beef up its Internet business. “You can tell, from our history and what we’ve done, that we really wanted to keep the company independent, by focusing on building and focusing on the long-term,” Zuckerberg told Reuters while in Japan to launch a Japanese language version of Facebook. Microsoft already has a small stake and the Wall Street Journal said this month the software giant, with the Yahoo deal in limbo, had approached Facebook to gauge its interest in a full takeover.

PE Hub: Facebook’s Valuation Problem

Dan Primack of Thomson Reuters’ PE Hub takes a look at the implications of the $240 million that Microsoft invested in Facebook last year:

The WSJ recently reported that Microsoft is sniffing around Facebook, less than seven months after investing $240 million in the social network at a $15 billion valuation. It was largely discounted as the hopeful fumblings of Steve Ballmer, in his search for a rebound acquisition after being dumped by Yahoo. But it got me to thinking: Microsoft’s initial investment may be one of the worst venture capital deals of all time.

Click here to read the full article.

On a related note, check out this uncomfortably literal depiction of Facebook from BBC’s “The Wall.”

Craigslist a runaway bride?

newmark.jpgEBay‘s lawsuit against Craigslist alleges that founder Craig Newmark and CEO Jim Buckmaster tried to dilute eBay’s 28.4 percent stake in the company after a marriage proposal. According to court papers unsealed Wednesday, Craigslist wanted out of the relationship since eBay had launched a competing product, Kijiji, but Meg Whitman countered with a bid to buy the entire company, leading to the allegedly “clandestine” meetings between Newmark and CEO Jim Buckmaster. At stake is the world’s third most valuable Web startup, as ranked by Silicon Alley Insider, valued at approximately $5 billion.

Microsoft‘s board met on Wednesday to discuss its stand-off with Yahoo, but don’t get too excited: they failed to reach a decision on what to do next, according to a Wall Street Journal report. The board is still weighing whether to adopt a hostile approach and nominate a proxy slate of directors to replace Yahoo’s board, sweeten its cash-and-stock offer for Yahoo, or possibly walk away from the deal. A Microsoft-imposed “deadline” passed last Saturday.

Three-headed canine guardian of the gates of Hell, meet controversial private security contractor Blackwater. Cerberus Capital Management is in talks to invest $200 million for a stake in Blackwater USA, ABC News reported on Wednesday, citing sources. Or, not. The Wall Street Journal confirmed that Blackwater is seeking outside investment, but quotes a Cerberus spokesman as saying the private equity firm took a look but decided to pass. As the WSJ’s Deal Journal notes, the “secretive, billionaire, former paratrooper [Cerberus' Steve Feinberg] trains his largesse on a secretive, lucrative quasi-military operations company” story was just too good to be true.

Yahoo tests Google’s waters, Microsoft’s temper

yahoo.jpgThere’s something about deadlines that sharpens the mind. Reporters know this and Yahoo is finding out with its decision to get into a Web search advertising test with arch-rival search firm Google Inc.

Yahoo is facing a three-week deadline to sit down with Microsoft, which has offered $42 billion to buy the company, and seems to be getting ever more creative in figuring out ways to resist the advances of its suitor to the North. The length of its limited test with Google? Two weeks.

Google, of course, isn’t about to object. “A long-term deal could be the only option that allows Yahoo to remain an independent company,” a person close to Google told us.