DealZone

Hostilities resume

wwwreuterscomboxing1(Acquisitions Monthly) The past year has seen the return of the hostile bid approach, requiring advisers to deploy their full range of defensive skills to fend off such opportunistic offers, or force the bidders to raise their price.

Finding the right balance between those two goals can be notoriously tricky. In theory, National Express defended itself successfully from a series of approaches this year, initially from transport rival First Group then from private equity group CVC in conjunction with major shareholder the Cosmen family and latterly Stagecoach.

However, this victory looks Pyrrhic. The company’s share price is 25% below the high point it reached during the offer period. Added to that, the board also now faces a disgruntled shareholder base. Hedge funds are seeking quick profits while its largest investor is at strategic odds with the directors and unwilling to support a rights issue.

That is far from ideal. A better outcome has transpired for Anglo American after rival miner Xstrata suggested a merger of equals in late June. Since the latter decided in mid-October not to submit a formal proposal, after a prompt from the Takeover Panel, Anglo’s shares have risen 17%. The company also remains independent.

In a sense, Anglo American was in a strong position. Xstrata’s nil-premium offer was not particularly compelling and Anglo had key South African shareholders that were never likely to support an alternative proposal.

DealZone Daily

A couple of nuggets from transport-land. Britain’s National Express unveils a 360 million pound rights issue and buyout giant TPG emerges as a potential investor alongside American Airlines in Japan Airlines.

For the latest deals news from Reuters, click here.

And in the papers:

* Fubon Financial, parent of Taiwan’s No.2 insurer, and China’s State Development & Investment Corp will set up a 3 billion Chinese yuan ($440 million) private equity fund, the Commercial Times reported, citing a Fubon executive. Reuters story here.

* Indian software services firm Patni Computer Systems (PTNI.BO) has shortlisted four firms for a multi-million dollar acquisition, the Mint newspaper reported, quoting Chief Executive Officer Jeya Kumar.

DealZone Daily

The end of the year looks set to be full of news of rights issues and IPOs as share investors are offered a bet on next year’s economic recovery.

The travails of UK transport firm National Express fill many of Tuesday’s business pages, with rivals First Group and Stagecoach both in the frame for a bid, while the debt-laden company finalises plans for a rights issue. For other Reuters stories on deals, click here.

Other stories in Tuesday’s newspapers include:

- Private equity firm Cerberus Capital Management is in advanced preparations to take rifle and ammunition maker Freedom Group Inc public, the Wall Street Journal reports.

Deals du Jour

Orangina may change hands as Suntory Holdings is talking to the soft drinks maker’s current owners, Blackstone and Lion Capital. Suntory meanwhile is in talks itself to be sold to Kirin Holdings, its bigger rival.  

And Britain’s transport group National Express is ready to accept the 765 million pound bid offer from private equity house CVC and the Cosmen family, the Daily Telegraph says.

For these and other Reuters stories on deals, click here. Plus top stories in other media (some links may require subscription):

Keeping score: US leads M&A, Securitizations, National Express

An Iraqi worker adjusts an oil pipe at Nahr Al-Umran gas refinery in Al-Dier District, northern Basra July 17, 2009. REUTERS/Atef HassanHere are the highlights from this week’s Thomson Reuters Investment Banking Scorecard:

- US M&A Accounts for the Majority of Weekly Worldwide Activity

US M&A activity was worth $13.9 billion for the week, bolstered by a flurry of deal announcements ahead of Labor Day in oil and gas, media and pharmaceuticals.  Goldman Sachs and Bank of America Merrill Lynch each advised on just over $9 billion in deals this week.

 

- Government Program Lifts Weekly US ABS Volume to $16.4 billion

The weekly volume of US asset-backed securities totaled $16.4 billion, powered by $14.2 billion of offerings eligible for Term Asset-Backed Securities Loan Facility (TALF).  Multi-billion dollar securitizations from the likes of Citigroup, Bank of America and Ford brought year-to-date ABS volume to $110.5 billion, a 28% decrease from last year at this time when issuance totaled $154.1 billion.

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.

Deals du Jour

TMT is heating up. Vodafone, the British mobile phone operator, is pondering a bid for T-Mobile UK, while Microsoft has hired Morgan Stanley to sell its digital agency Razorfish. Both stories are in the Financial Times. Private equity group Candover says it has ended talks with potential acquirers, confident it can meet debt covenants. For all Reuters Deals news, click here.

And here’s what other media are writing today.

* Anglo American (AAL.L) is building its defences against a 41 billion pound ($67.74 billion) merger approach from Xstrata (XTA.L) by plotting talks about a major Chinese investment, the Sunday Telegraph reported.

* Switzerland’s UBS (UBSN.VX) is to pay 3 to 5 billion Swiss francs ($2.77-$4.62 billion) in the next two weeks to settle a U.S. tax probe into the bank, Swiss newspaper Sonntag reported on Sunday.