Deals wrap: Coke acting like a VC
The Coca-Cola Co – the world’s largest beverage producer – has been thinking and acting more like a venture capital firm over the last few years, as it attempts to find new ways to increase profits and stay ahead of the competition, according to a Reuters exclusive.
Coke’s Venturing and Emerging Brands unit, dubbed VEB, was founded in 2007 with the purpose of investing in independent brands, like Honest Tea and Zico coconut water. VEB president Deryck van Rensburg told Reuters the venture arm currently receives three to four unsolicited pitches per week from entrepreneurs. Van Rensburg added it was “not inconceivable” for it to work in other places, such as China, where there is “a huge entrepreneurial community.”
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Pharmaceutical company GlaxoSmithKline is also looking at smaller strategic acquisitions. Glaxo CEO Andrew Witty told French daily La Tribune: “We may do small targeted deals, but nothing big. We will not do a large transaction in pharma nor in generics.”
For a Big Pharma company like Glaxo small is a relative term, as it is reportedly kicking the tires on a potential acquisition of U.S. biotech firm Genzyme, along with rival Sanofi-Aventis. The rumored deal last week sent Genzyme’s market value soaring 15 percent to $16.7 billion.
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The trend of private equity firms buying up consumer-oriented food companies continued with the announcement that Lion Capital intends to purchase French frozen-food firm Picard Surgeles from rival BC Partners. According to Reuters, the deal would be France’s biggest leveraged buyout since the collapse of Lehman Brothers. The Reuters story also quoted “three people familiar with the matter” that Picard had a pre-deal value of about 1.5 billion euros ($1.9 billion).
The morning deal: Selling Abraxis
Biotechnology company Celgene has agreed to acquire Abraxis BioScience for $2.9 billion in cash and stock. Abraxis shared are up 20 percent on the news and that’s got to make Abraxis Chairman Patrick Soon-Shiong happy, he owns over 80 percent of the company’s outstanding shares.
Activity in the red-hot potash sector: the Belorussian government hopes to raise up to $7 billion from the sale of a minority stake in potash producer Belaruskali to help replenish state coffers.
Shares in BP jumped 8 percent today, helped by bid talk and optimism that the worst may be over for the stock as the company comes closer to halting the massive oil leak from its Gulf of Mexico well. Read about the fantasy M&A story here.
Investors will closely watch the sale of two French firms (Picard Surgeles and Medi-Partenaires) to see if they will be snapped up in direct deals rather than going to auction, waking up a private equity M&A market that has slumbered. Read more about the future of PE deals here.
Shares of Tesla Motors continue a hot streak rising 15 percent this morning. Here’s a graphic on how its models compare with the competition, and a video of CEO Elon Musk.
The morning deal: Charged up for an IPO
The final pricing of Tesla Motors’ shares is expected later today. The electric car maker has yet to make a profit, and does not expect to make money until its Model S starts selling in significant volume. How strong will investors’ appetite be for his company?
* Offshore oil and gas driller Noble agreed to buy privately held FDR Holdings for $2.16 billion. The deal, plus new Noble drilling contracts with Royal Dutch Shell, indicate the industry is preparing to increase offshore exploration despite the worst-ever oil spill in U.S. history.
* Markets are on the mend but budget deficits need to be slashed and borrowing costs need to rise to avoid a new crisis, says the Bank for International Settlements in a call for action.
* New rules have been agreed upon for Wall Street, but in the end banks won concessions that watered down the financial regulation proposals that could have been most damaging to their profits. It is not the end of life on Wall Street as we know it.
* At the G20 summit in Canada, world leaders abandoned a global bank levy and eased the timetable for new capital requirements. Unable to muster the unity of the past three crisis-era G20 summits, the leaders fell back on the “Sinatra doctrine,” leaving each country to do it “my way,” move at its own pace and adopt “differentiated and tailored” policies. See the factbox here.
* You don’t get to 500 million friends without making a few enemies, says the teaser trailer for the upcoming Facebook movie. See it here.
Love is all around in Toyota-Tesla deal
The stunning romance between global auto giant Toyota Motor Corp and Silicon Valley startup Tesla Motors began like a Hollywood tale – with a date in a fast car.
“I received a call that Mr. Toyoda was interested in meeting with me the next time he was in California, and I said that sounded great,” Elon Musk, chief executive of Tesla said.
The two men hit it off when they met in Musk’s home in Southern California about six weeks ago and went for a drive in the pricey electric Roadster sport car.
“We just drove around Los Angeles, mostly around Westwood initially,” Musk said. “We were mostly talking about random things.”
Toyoda, a car enthusiast and active amateur racer, took the wheel and put the sports car “through its paces,” Musk said. “He was not shy.”
The ride in the Roadster, which can accelerate faster than a Ferrari, effectively sealed the deal for the partnership and the two hashed out a plan to solidify their mutual admiration.
“I love cars… their cars are just magnificent,” Toyoda said of the Roadster in an interview with Reuters.
Tesla sticker shock?
With highly touted plans for a new electric car in jeopardy, an overseas investor steps in to provide new capital and a much-needed endorsement.
GM? No, Tesla.
Remarkably, the terms of German automaker Daimler AG’s 10-percent stake in Tesla may have also helped the Silicon Valley electric-car start-up inch closer to GM in value.
Daimler’s vague disclosure of its purchase price as “double digit million dollar” means Tesla is valued at a minimum of $100 million. That would make Tesla, which was founded nearly six years ago, about one-eighth the size of 100-year-old GM.
A world away in Detroit, GM has seen its share price spiral downward to near $1. That the price may fall to near zero if the automaker files for bankruptcy as is widely expected. It would be worth less than 2 cents if GM proceeds with plans to issue a flood of new shares to pay off creditors.
GM was worth around $768 million, making it by far the smallest component in the Dow Jones industrial average judged by market cap.
What’s that about those not knowing history being doomed to repeat it?
I love how certain folks have labeled a 10% stake by Daimler being an indicator of success. Remember a few years ago when a certain “merger of equals” really turned out to be a “takeover” and eventually resulted in a big-o failure? Many are of the opinion that Daimler came in, picked up whatever technology was good for them and didn’t push for making technology roll the other way (Big deal, the 300C is underpinned by the then out-of-date Mercedes).
Can’t wait ’til Mr. Musk gets a lesson in true “global” business. Too bad it’ll be a small dent in his ego since he “went” to Stanford, “invented” internet commerce, electric vehicles, and space travel.
@ Nikkei: The Tesla is hot because it’s largely a less attractive modified Lotus Elise (now THAT’S hot)
