DealZone

Is the worst over?

Merger mania is back, at least that’s what the numbers seem to show.

A staggering total of about $60 billion worth of corporate deals have been announced or rumoured in global markets since Saturday alone. The takeover feast is impressive, spread as it is across diverse sectors such as foods, semiconductors, financials and telecoms.

Kraft Foods’s blockbuster $16.7 billion offer to buy Cadbury has suddenly turned the spotlight back to dealmaking and swept away markets’ lingering concerns of patchy economic growth. The rising deal volume is a welcome relief for investment banks, who’ve gone through a torrid year after Lehman’s bankruptcy last September brought M&A to a halt. The dealmaking will help them partly fill their coffers with much-needed advisory fees and a kick up in the league tables.

No doubt with many equity markets rallying to 2009 highs, and lured by prospects of improved valuations, many buyers are chasing deals while prices are seen as cheap. That could have been the thinking behind Abu Dhabi’s move to offer $1.8 billion to buy loss-making Nasdaq-listed, Singapore-based Chartered Semiconductor in a chip sector emerging from its worst downturn.

Many companies are simply being opportunistic, but with the economic tsunami having left so many companies floundering there the opportunity to reel in cost savings and restructuring bargains through mergers could outweigh any lingering caution about whether the recovery is for real or not.

Keeping score: bankruptcy boom

The Thomson Reuters Investment Banking scorecard lands again. Here are the highlights:

BAAT Offers Largest Auto Loan Securitization of 2009

A US asset-backed offering fell among the top global debt deals of the week, as Bank of America Auto Trust (BAAT) offered a $3.9 billion TALF-eligible auto loan securitization, the largest such ABS offering this year.  In total, auto loan backed issues have accounted for 35.7% of US ABS, the largest share of the approximately $80 billion so far in 2009.

As a whole, securitizations are down 30% in the US and 39% globally over 2008 levels.  This week marks the third largest week for ABS activity in the US during 2009 with $9.7 billion of issuance.

Signs of sovereign life

ubs.jpgSovereign wealth funds were thought to be nearly extinct sources of capital for the crumbling western banks. But life finds a way. The Government of Singapore Investment Corp, one of the world’s biggest sovereign wealth funds, said it would subscribe to UBS‘s rights issue. A GIC spokeswoman declined to provide the value for the transaction but said it currently owns 0.4 percent in UBS common stock. It controls 9.54 percent of the voting rights in UBS. The fund invested 11 billion Swiss francs ($11 billion) in mandatory convertible notes in UBS last December, after the bank’s U.S. housing crisis losses. In January, GIC invested $6.88 billion in Citigroup. Its sister fund Temasek Holdings pumped $5 billion into Merrill Lynch. GIC says on its website that it manages well above $100 billion but some analysts estimate the figure is closer to $300 billion.

The U.S. Federal Reserve Board approved Bank of America Corp‘s acquisition of Countrywide Financial Corp, the nation’s largest mortgage lender. Bank of America agreed in January to pay $4 billion for Countrywide, a California-based firm that helped fuel a multi-year housing boom that went bust when risky loans to shaky borrowers began to fail. In a statement, the federal regulator said it considered many comments for and against the bank buyout and “has considered carefully the financial factors of the proposal.” The Fed also said that it vetted about 770 individual comments on the proposed takeover and the views of many other stakeholders.

Applied Materials has approached beleaguered Dutch semiconductor equipment maker ASM International to buy a significant part of its business for $400 million to $500 million. Shares in ASMI jumped as much as 23 percent to an eight-month high after the company said its U.S. rival had expressed interest in two of its businesses that make machines to deposit thin films of materials on silicon wafers. ASMI, which is locked in a dispute with activist investors who are trying to sack its chief executive, said a divestment would have major implications for its strategy.