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 derision thing
Derisory (di-ry-ser-i) adj. deserving derision; too insignificant for serious consideration.
In lambasting a formal takeover offer from Kraft as “derisory”, Cadbury Chairman Roger Carr has both ratcheted up the rhetoric (an earlier letter to Kraft did not use this term) and struck a tone familiar to connoisseurs of bid battles. Carr, of course, is a veteran dealmaker himself.
UK targets have often found rejecting an approach as “derisory” is just scornful enough, without incurring the wrath of the Takeover Panel. Other approaches to have met with the same brushoff include Macquarie’s 2005 hostile bid for the London Stock Exchange and BHP Billiton’s epic tilt at rival miner Rio Tinto. Over in Ireland, Aer Lingus has decried the advances of budget archrival Ryanair in exactly the same manner.
Still, a bit of bluster doesn’t mean a deal can’t eventually be done at whatever the opposite of a “derisory” price is. WPP, for example, eventually won over market researcher TNS, and brewer Scottish & Newcastle finally melted into the arms of Heineken and Carlsberg.
Kraft’s offer is actually worth less than an initial informal approach because its stock has fallen in the meantime. Monday’s move certainly hasn’t impressed Reuters columnist Neil Collins, who says Kraft CEO Irene Rosenfeld has “pressed the snooze button”.
from Commentaries:
If Xstrata is to shut up on Anglo it should say so
Only a week to go before decision time and it looks increasingly as though Xstrata boss Mick Davis has already made up his mind and opted to walk away from making a formal bid for mining rival Anglo American.
Reuters correspondent Raji Menon quotes an unnamed top-10 shareholder in Xstrata saying: "They have pretty much indicated to us that they will be walking away".
This makes sense -- nothing has changed since Xstrata got a "put up or shut up" notice from the UK's Takeover Panel, giving it until October 20 to make a formal offer or walk away for six months.
If Xstrata has indeed made up its mind, it should waste no time in telling investors that it has no plans to make an offer. Why wait?
from Commentaries:
Takeover Panel sets Cadbury clock ticking for Kraft
So Cadbury has succeeded in convincing the UK's Takeover Panel -- the City of London body which polices M&A -- to slap a "put up or shut up" order on Kraft.
Kraft now has until Nov. 9 to decide whether to make a formal offer for the British confectionery group. If it decides to walk away, it is not allowed back for six months.
Cadbury shares are still trading above the price of Kraft's informal stock and cash offer. At just over 8 pounds per share, the current price is some 10 percent above the indicative offer, which is now worth just 7.20 pounds. But shareholders in Cadbury -- which is a household favourite in the UK -- aren't being that ambitious in their expectations for an improved offer. The shares are trading at nowhere near the multiples which were initially bandied about after Kraft's approach became public.
And despite noises about Kraft finding it difficult to raise the money it needs for the 11 billion pound bid -- of which some 4.1 billion pounds would be in cash -- bankers seem to think there won't be any problem getting lenders to make the necessary loans.
The real question is how far Kraft shareholders are willing to let CEO Irene Rosenfeld stretch to get her hands on Cadbury's famous chocolate and chewing gum brands. Kraft stock fell another 1 percent following the Takeover Panel ruling, having dropped around $2 from above $19 to $17.6 since it went public with its approach to Cadbury.
Cadbury, which has rejected the approach, will be hoping that based on the performance of Kraft shares, Rosenfeld will be kept on a fairly tight leash.
Time for tea – and a new debt panel?
The fall-out from the IMO Car Wash court case continues to rumble through London’s restructuring world, with momentum building for better out-of-court processes to help avoid a repeat performance.
Wednesday saw RBS’s head of restructuring Derek Sach add his voice to calls for a new restructuring panel in London, modelled on the Takeover Panel, which oversees acquisitions in the City of London.
Sach, who spent 19 years at private equity firm 3i before going to RBS to set up the first dedicated restructuring unit in London in 1992, says the new panel is a “wonderful idea”.
“If you have a syndicate owed 500 million pounds and one lender is holding out on a deal who is owed 5 million pounds, there is no remotely simple court process to bring that lender into line,” Sach said.
In the old days of London banking, such a recalcitrant lender would find themselves summoned to the Bank of England and invited to explain their position over a cup of tea, veteran bankers say. As regulator of the City’s banking system, the Bank of England had formidable powers up its sleeve to help make sure it got its way.
This cosy “London Approach” weakened as foreign lenders and hedge funds entered the market, and was killed off when the Bank’s regulatory powers moved to the FSA in 1998.
However, with years of complex restructurings looming, a yearning remains for an informal — and perhaps quintessentially British — style of resolving restructuring disputes.
