Deals wrap: Steel of a deal
Japan’s Nippon Steel and Sumitomo Metal plan to merge to create the world’s second-largest steelmaker in an effort to fend off tough competition from Asian rivals and offset shrinking demand from domestic automakers.
Sanofi-Aventis could announce a deal to buy Genzyme early next week if final negotiations between the companies go smoothly, Le Figaro reported.
The quote of the day goes to Infineon’s CEO explaining why the chipmaker is not at risk of a hostile takeover. “We are more of a shark and the others are the goldfish,” he told reporters.
Nomura is evolving into a global investment bank, even if it doesn’t yet look like one, writes columnist John Foley.
DealZone Daily
Peabody Energy has raised its offer for Macarthur Coal by 14 percent to $3.8 billion — trumping a sweetened offer from local rival New Hope Corp. In order for the deal to go through, Macarthur must ditch a vote on a proposed takeover of Gloucester Coal, a smaller local rival. The vote had been delayed to April 19.
R0bert Hingley — outgoing director general of the UK’s Takeover Panel — is joining Lazard’s financial advisory group, Lazard says. All the more interesting as senior Lazard banker Peter Kiernan is set to become the Panel’s new head. But his arrival has been delayed, ever since British lawmakers started probing Kraft’s takeover of British chocolatier Cadbury — a deal Kiernan was one of the main architects for.
Royal Bank of Scotland is whittling down the list of suitors for its 3 billion pound payment processing firm WorldPay, sources tell us. UK payments firm Voice Commerce and other suitors have dropped out of the running.
Read all other deals news on Reuters here. And in other media:
Australian steel producer BlueScope Steel has eased its opposition to a proposed $116 billion iron ore joint venture between BHP Billiton and Rio Tinto, newspaper The Australian says.
The afternoon deal: Mining and Steel Summit
Resource nationalism, China’s continuing hunger for commodities and the endless search for growth were dominant themes at the Mining and Steel Summit. Here are some stories from the summit:
* Miners grapple with resource nationalism * China keen to invest in SAfrica mines * AngloGold may split ops, eyes Americas * Movie “Avatar” has few fans among mining execs
Great reads from the Web:
Bankruptcy Watch: Waiting for the Next Big Wave (WSJ) “It is fashionable to look at the relative dearth in recent bankruptcy activity and declare an end to the financial crisis’s restructuring wave.” – WSJ
Buyout Firms Can’t Spend $503 Billion as Fund Deadlines Loom (Bloomberg) “Buyout funds sitting on half a trillion dollars committed by investors may need more than a decade to put the money to work if mergers and acquisitions continue at the current pace.” – Bloomberg
Jones Soda and Reeds Merger Lacks Fizz (Seeking Alpha) “On of my favorite Charlie Munger quotes is ‘When you mix raisins and turds, you still have turds.’ This statement pretty much sums up my thoughts on the merger of Jones Soda and Reeds Inc.” – Seeking Alpha The Price of Admission (Columbia Journalism Review) “For all its flaws, Too Big to Fail remains a work of extraordinary reportage that gives readers access to some of the nation’s most powerful financial figures. It’s also a reminder, however, that on Wall Street, nothing is ever free.” – Columbia Journalism Review
BHP backs down
BHP announced an all-share offer valuing Rio at about $193 billion last November, as mining boomed worldwide. BHP said the risk of taking on Rio’s much heavier debts, and the low prices it could expect from asset sales forced on it by regulators, were among the factors behind the decision to abandon the bid.
The decision could have far-reaching consequences for consolidation in the industry, writes Reuters’ John Kemp.
“For more than two decades, merger policy in the EU and around the world has become progressively more permissive, as regulators cited new theories of market “contestability” to permit accumulation of market shares that would have been blocked had they been proposed in the 1960s and 1970s.
But the BHP-Rio deal proved a step too far. The EU’s decision to insist on significant asset disposals is consistent with other signs that competition policy is toughening in the EU and around the globe,” Kemp says.
BHP’s backtracking also clearly illustrates how times have changed in a very short span as the credit crisis took hold and crippled global financial markets.
“The market has changed dramatically in the last six months. What made sense six months ago doesn’t make sense now. People talked about synergies in iron ore. Those synergies are still there, but nobody is prepared to pay for them,” said Michael Komesaroff, manageing director at Urandaline Investments.
