DealZone

Top Chinese automaker SAIC Motor Corp is close to making a decision on whether to buy a stake in its long-time partner General Motors, sources told Reuters. The WSJ reports General Motors will not have to pay U.S. federal taxes on up to $50 billion of profits for as long as 20 years. *View WSJ’s timeline on GM

Russian fertilizer group Phosagro wants Russian firms to buy a stake in Potash Corp in an attempt to scupper BHP Billiton’s $39 billion offer awaiting a crucial ruling from the Canadian government.

MUFG is in talks to buy Royal Bank of Scotland’s project financing unit, sources said, in a deal reportedly worth $6.4 billion and aimed at accelerating the overseas expansion of Japan’s biggest bank.

The Deal looks at the private equity shops, accounting and law firms which make up the dealmaking community in Cleveland.

By Timothy Sifert

Buyout barons are paying themselves on the back of the market's short memory. Dividend recapitalizations are on pace to exceed the volume seen in 2007. Dunkin' Brands and Getty Images mark the latest efforts by private equity firms to get ahead of a potential U.S. tax change. In their zealous quest for Treasury-topping returns, investors seem to have forgotten recent lessons.

The ability to replace equity with debt has come back with a vengeance. Buyout firms managed less than $2 billion of such dividend recaps over the last two years, according to Thomson Reuters LPC. This year, there have been $15 billion of them, with more than $5 billion queued up.

Private equity has good reason to rush these deals out the door. Selling portfolio companies onto public markets has been constrained, making it ever harder to return funds to investors. What's more, the threat of tax hikes means they're eager to write these checks before more winds up going to Uncle Sam.

AIA Group surged 17 percent in its Hong Kong debut as investors piled into the record offering. The strong start boosted AIA’s market value above the $35.5 billion Prudential had initially offered for AIA in March, vindicating AIG’s decision not to accept the $30.4 billion bid that followed.

While investors flocked to IPOs of AZ Electronic and the Warsaw bourse, a dose of realism soured Enel’s goal to raise $4.2 billion from its green power unit. Enel dropped the bottom of its price range for Enel Green Power to 1.6 euros from 1.8 euros. “There are plenty of IPOs that seem to be working particularly well, and it is all to do with the willingness of the seller to be realistic,” said a source close to the deal.

Just days before bankers are expected to begin an IPO road show, General Motors buffs up its finances with a repayment to U.S. taxpayers and early payments to pension and retiree health plans. Taking a step back, the WSJ asks if GM is really worth $70 billion.

Wal-Mart may scale back its bid for Massmart and take a 50 percent stake, rather than a full buyout, Massmart said in a statement. Wal-Mart has been under increasing fire from shareholders to revive its ailing U.S. stores, and some analysts have said it should concentrate on fixing its business at home before spending big on expansion. *View article

Private equity firm Blackstone Group reported a rise in quarterly earnings and said the value of its investment funds grew. *View article

With the U.S. car industry in a slow, fragile recovery from a punishing downturn, auto parts makers are reluctant to pull the trigger on deals, delaying a long-predicted wave of consolidation in the sector, write Soyoung Kim and Deepa Seetharaman. *View article

Communications cable maker CommScope said it agreed to be bought out by The Carlyle Group in a $3.9 billion deal. It’s the latest sign of a resurgence of acquisitions by private equity firms, which are under pressure to invest billions of dollars of capital raised in the past few years. *View article *View preview of Blackstone and KKR’s results

Green Mountain’s near-monopoly in single-cup brewing, just 4 years after it bought coffee machine maker Keurig, makes it a compelling target for food or consumer products giants seeking entry to a fast-growth part of the U.S. beverages market, writes Mihir Dalal. *View article

Private equity is testing the regulatory waters with a rare bank takeover, reports Bloomberg. *View article

Three Taiwanese life insurance assets worth $2.5 billion are up for grabs, but a rash of exits by foreign firms and picky regulators could make investors think twice about a deal, write Faith Hung and Denny Thomas. *View article

“With its options running out and time running out, Potash Corp may soon have little choice but to negotiate with BHP Billiton over the $39 billion bid that the world’s largest fertilizer supplier has flatly rejected,” write Euan Rocha and Michael Erman. *View article
*View article on Yara open to buying Potash Corp assets

Andrew Ross Sorkin interviews Felix Rohatyn. The veteran investment banker has “grown uneasy about his own industry and perhaps himself,” writes Sorkin. *View NYT article

Yahoo shares surged after sources said private equity firms have approached News Corp and AOL to gauge interest in a buyout deal. *View article *View WSJ blog asking if a deal would make sense *NYT’s Andrew Ross Sorkin writes: “A deal is not happening anytime soon.”

Is he a loudmouth corporate raider or the investing world’s version of a Las Vegas Elvis? Reuters interviews hedge fund manager William Ackman to find out. *View article *Full coverage PDF

Private equity firms have been reaping huge dividends from companies they own. A WSJ blog asks if the feeding frenzy has gone too far. *View blog

CNOOC agreed to pay $1.1 billion for a stake in a U.S. shale oil and gas field, testing the U.S. political climate with a deal for assets once deemed off limits to the Chinese due to protectionist sentiment. *View article *View factbox on China M&A activity

Rival bids for Potash look unwieldy, analysts say, which leaves Potash alone to defend itself from BHP’s $39 billion offer. *View article *View timeline

The private equity industry is bouncing back and has a strong presence in UK mergers and acquisitions, according to the FT. *View article

AIGs exit plan with the government is good for the company but  taxpayers may not be getting an equally good deal, writes columnist Richard Beales. *View column *View graphic *View WSJ report on how the exit plan was formed

Chinese refiner Sinopec will buy 40 percent of Repsol’s Brazilian arm for $7.1 billion. *View article *View factbox on China’s M&A activity

“Tucked away in a basement in London’s exclusive Mayfair district is a hedge fund manager investing entirely in raw materials, one of a small band trading commodity spreads and making big money in the process,” writes Christopher Johnson and Joe Brock. *View analysis

Are buyout barons becoming sellout barons? Private equity firms are on track this year to sell more assets than they buy for the first time ever. Buyout firm bosses say this reflects the need to realize cash for investors. That's probably true to a point. But the prospect of tax hikes in the United States has also given the executives a rationale to sell now, even if it doesn't much help their clients.

So far in 2010, private equity firms globally have sold $140 billion of assets from their portfolios, putting this year on a pace for the most disposals since 2007 and the second-biggest year in history, according to Thomson Reuters. Purchases this year stand at around $136 billion so far. Since at least 1994, sales have never exceeded purchases in a full year.

To some degree this follows from the recent boom and bust. Private equity firms went on a takeover rampage fueled by cheap debt in 2006 and 2007, making $1.1 trillion of purchases. At some point the firms need to exit those investments. And investors in their funds, known as limited partners, have been clamoring to extract cash and reduce future commitments. Last week the managers of the Harvard University endowment, for example, said they were reducing private equity exposure.