DealZone

Deals wrap: Walgreen prescribes drugstore.com buy

A sign for a Walgreens store is seen in Belle Glade, Florida January 6, 2010. REUTERS/Carlos BarriaWalgreen plans to buy drugstore.com for $429 million, expanding the online presence of the world’s largest drugstore chain.  Drugstore.com shareholders will receive $3.80 a share, which is more than double the company’s closing stock price on Wednesday.

A sale of the British government’s $107 billion stake in Lloyds Banking Group and RBS may start next year, Bloomberg said, citing four people familiar with the matter.

Geothermal energy is likely to attract interest as investors rethink the outlook for nuclear power following the crisis in Japan, writes Leonora Walet and Tessa Dunlop. Japan sits on enough untapped geothermal power to replace all of its planned nuclear stations over the next decade, but the quake-prone country’s only plan to harness that energy’s potential is to develop hot springs.

Cheap valuations along with their respectable free cash flow and extensive real estate assets have made discount and dollar stores attractive targets for companies and private equity firms, and it looks like Wall Street can wring a few billion dollars more out of them, writes NR Sethuraman.

Dutch navigation and digital map maker TomTom, which is struggling with competition from offerings by Google and Nokia, is not looking to sell its mapping unit, denying a report it might consider a sale. TomTom exec Taco Titulaer told Reuters “our content assets are core to our strategy and product offering”.

Deals wrap: Yahoo not selling Alibaba stake

In an exclusive interview with Reuters, Yahoo CEO Carol Bartz said the Internet search company has no intention of selling its stake in Chinese e-commerce site Alibaba.

Bartz told Reuters that despite the Alibaba Group “constantly” approaching them to repurchase Yahoo’s estimated 39-percent stake, the company has no plans to accommodate those requests, adding the investment is “very strategic.” *View article*

***********

Another Chinese company, Sinochem, distanced itself from the possibility of making a bid for Canadian firm Potash Corp, in the wake of BHP Billiton’s $39-million hostile takeover bid for the miner. Han Gensheng, head of Sinochem’s overseas deals, told Chinese magazine Caijing that even a bid of $10 billion would be too large for Sinochem. *View article*

DealZone Daily

Royal Dutch Shell and PetroChina have secured Arrow Energy’s coal-seam gas assets for $3.1 bln after sweetening their offers for the business.  The fresh bid was pitched at a 35 percent premium to Arrow’s share price before the first offer was announced, highlighting burgeoning interest in the coal-seam gas industry.

The former chief exexcutive of AIG is to sell most of his stock in the U.S. insurance giant to a unit of Swiss banks UBS. The deal for the 10 million shares, at about a 20 percent discount to Friday’s closing price, will earn Maurice “Hank” Greenberg $278.2 m.

Private equity firms are interested in acquiring and merging two German department store chains. U.S. firms are interested in acquiring Metro’s Kaufhof and Arcandor’s Karstadt chains, people familiar with the matter said.

How cutting prop desks hits M&A

A wee while ago, DealZone posited that bonus-hungry bankers who had gravitated to bank prop desks might return to the once-glorified M&A desks after the Obama administration targeted banks’ proprietary trading as a business too risky for banks. A logical argument, but one that ignored an aspect of the M&A game that is becoming starkly obvious: deals putting trading operations into banks are clearly at risk.

A source tells us that JPMorgan is rethinking its planned $4 billion purchase of RBS Sempra with an eye to let the U.S. power and gas businesses be bought by Sempra Energy, which jointly owns RBS Sempra with Royal Bank of Scotland. This would leave the U.S. bank with the joint venture’s oil operations and all of the non-U.S. businesses, a source familiar with the matter said.

JPMorgan started exclusive talks with RBS and Sempra on about Jan. 20, after warding off rival suitor Deutsche Bank, which is not expected to have re-entered any talks, according to sources familiar with the situation. But if U.S. banks wind up having to chop and trim their own deals to conform with new regulations, European and Asian rivals may well wind up picking up high-octane U.S. trading assets.

Virgin acquires banking licence

Sir Richard Branson boosted his attempt to become a leading player in the UK banking sector by agreeing to buy Church House Trust, a small regional private lender. The deal effectively gives Virgin Money a banking licence, allowing it to offer a full range of products to consumers, since the proposed purchase has already been approved by the Financial Services Authority (FSA).

After making the acquisition, Virgin aims to grow its banking business organically. However, it has not ruled out buying further assets, such as those that RBS and Lloyds have said they will divest. Buying Northern Rock assets might be possible too. The offer document states: “Having established an initial banking platform, the Virgin Money Directors believe that the acquisition of Church House Trust will enable Virgin Money to contemplate future acquisitions as appropriate.

“The Government has said it hopes the disposal of bank assets will see new players enter the market and Virgin Money may consider opportunities should they present themselves.” At present Virgin has 2.5 million customers of its existing financial services arm, which offers credit card, savings, insurance and investment products. However, Church House Trust is allowed to offer mortgages and take deposits as well.

DealZone Daily

Wednesday’s highlights:

Ford Motor Co (F.N) and China’s Geely are set to report progress as soon as Wednesday in talks to sell Ford’s Volvo unit to the Chinese automaker, two people with direct knowledge of the matter say.

Spyker Cars presses ahead with efforts to cut a deal for Saab with General Motors, with talk of possible backing from a Dutch billionaire fanning the Swedish carmaker’s faint hopes of an eleventh-hour reprieve.

Chinese Internet firms are eyeing more spin-off offerings after raising nearly $1.5 billion this year as they bank on strong foreign interest in high growth China plays.

DealZone Daily

“Saab story ends” we wrote on these pages last week. Now it has begun again, after Dutch luxury carmaker Spyker raised a last-minute bid over the weekend. It looks as if there are other options, with General Motors saying it will look into several new expressions of interest for its Swedish unit. That’s only two days after it said it would start an orderly wind-down.

The London Stock Exchange (LSE.L) is buying 60 percent in Turquoise, its rival launched by a group of investment banks with a lot of fanfare two years ago. The centuries-old bourse will merge Turquoise with Baikal, its dark pool platform.

Kraft’s (KFT.N) hostile bid does not reflect Cadbury’s (CBRY.L) value, a significant number of big Cadbury shareholders thinks — that’s what Cadbury Chief Executive Todd Stitzer told my U.S. colleagues on Friday. ”It appears that the stand-alone value of the company has risen in the eyes of shareholders,” he said. Meanwhile, the New York Times writes that Britain is going “into an emotional tailspin” over the prospect of losing Cadbury. If that’s the case, they’re hiding it well — must be the stiff upper lip.

UBS and the UK banks shake-up

Some cheering news on an otherwise tough day for UBS - the Swiss bank has bagged key roles for both Lloyds and RBS, as the two British banks agree to a massive shake-up that involves taking 31 billion pounds more of government money. As Victoria Howley and Daisy Ku wrote earlier:

“UBS AG (UBSN.VX) has taken key roles on two landmark deals to shore up British banks — landing the Swiss bank a welcome boost in fees and prestige on the same day it shocked the market with worse-than-expected results.

“UBS is working alongside Bank of America Merrill Lynch (BAC.N) to raise 13.5 billion pounds ($22 billion) for Lloyds Banking Group Plc (LLOY.L) in the world’s largest rights issue.

DealZone Daily

Cisco Systems plans to buy advanced wireless equipment maker Starent Networks Corp for $2.9 billion to boost its product offerings as phone carriers build out next generation networks, Reuters reports.

In other stories on Wednesday:

Royal Bank of Scotland Group is considering a government-backed plan to give up all 312 of its RBS-branded branches in England and Wales in a move to satisfy European authorities, the Financial Times says.

Las Vegas Sands, which is seeking to raise up to $2.5 billion by listing its Macau assets on the Hong Kong stock exchange, could launch the initial public offering by late November, the South China Morning Post reports.

Ask Sid if he likes UK banks

If you see Sid, tell him. Tell him his help will be needed to swallow more UK equity than at any time since the flood of privatisations in the 1980s.

That’s the clear message from UK Financial Investments, the body that holds stakes in Royal Bank of Scotland, Lloyds Banking Group and nationalised banks. Those stakes are likely to be worth about 80 billion pounds.

“We will need to innovate, be imaginative in our approach and use the full range of sales methods available to us,” John Crompton, head of market investments at UKFI, says in a speech at Reuters offices in London.