DealZone

Impending financial regulations are rumbling though the banking quarters like thunder through a skyscraper’s walls. It’s unsettling to some.

Today Christopher Dodd, the Democratic chairman of the Senate Banking Committee, said he has reached an impasse with his Republican counterpart and will begin drafting new legislation to be considered later this month.

Congress is trying to construct an overhaul of financial regulations in the wake of the market meltdown that led to multi-billion dollar taxpayer bailouts of individual financial firms and the collapse of others, including Lehman Brothers.

Proposals include creating a consumer agency to police financial products, forming a systemic risk regulator and drafting stricter capital and liquidity requirements for financial firms.

Some background from the Web:

Federal Reserve Board Governor Kevin Warsh’s opinion piece in the FT: Focus on ways for banks to fail safely Bank reform faces hurdle on Volcker rule (Reuters) The Volcker rule’s loopholes (Reuters) The regulatory landscape for private equity (NYT) Obama bid to rein in banks meets Senate resistance (Reuters) Banks read tea leaves in ‘Volcker rule’ fight (Bank Investment Consultant) Volcker and reform defeated (WSJ)

There’s an art to financing a deal and Kraft and Berkshire Hathaway ‘s brushstrokes are showing. Kraft launched a $9.5 billion debt sale to help finance its acquisition of Cadbury, and Berkshire announced a bond sale of up to $8 billion to help pay for its acquisition of Burlington Northern Sante Fe.

Berkshire’s bond sale announcement comes on the same day S&P stripped the company of its top AAA rating, citing capital adequacy and liquidity concerns related to the Burlington acquisition. An investment strategist tells Bloomberg the ratings firms are “are hedging their bets in the event of another economic downturn.”

More from Reuters and the Web:

Kraft to sell $9.5 billion debt to buy Cadbury: report (Reuters) S&P strips Berkshire Hathaway of AAA rating (Reuters) Buffett Stripped of His Last AAA Rating as S&P Cuts Berkshire (Bloomberg) End of TALF Means Bond Spreads Five-Fold Wider: Credit Markets (Bloomberg) Buyout firms face tough fundraising choice (Reuters)

Is China First Heavy setting its $1.67 billion Shanghai IPO price below the top of its range a sign of growing realism as markets weaken and regulators demand more rational pricing?

Reuters’ Samuel Shen and Edmund Klamann report mainland IPOs are confronting a market that is sagging under the weight of heavy share supplies, fed by authorities who have approved a steady stream of new share issues to keep the market cool and avert asset price bubbles.

The FT has a story on Bejing possibly putting a clamp on “irresponsible” IPO pricing.  See the FT’s blog on the issue as well.

Munching on a Cadbury Dairy Milk bar, Kraft CEO Irene Rosenfeld says in an interview she expects to complete the takeover of Cadbury within weeks. As Rosenfeld warmly welcomed Cadbury employees into the Kraft fold,  Twitter was buzzing with bad chocolate and cheese headlines.

Get the full story here, along with statistics of the combined Kraft/Cadbury company and a timeline of the deal.

Kraft has promised $675 million in annual cost savings from the deal, which will mean cuts to Cadbury’s global workforce of more than 45,000 during the integration process, analysts said.

It’s been an auto-fueled day with investors on tenterhooks awaiting  the now announced $400 million Spyker/Saab deal. Although Saab kept the spotlight, there is news from Chrysler, Opel, Porsche, Mitsubishi, Peugeot and Geely’s Volvo.

From Reuters, get the Saab deal wrap up here, along with a Saab factbox, timeline and profile of Spyker’s CEO Victor Muller. Find some additional facts about Spyker from The Swedish Wire here.

The Guardian has a great story on the mystique around the car brand called, “How did it all go wrong for Saab?”, and in a warning before the deal was announced, Fiat and Chrysler Chief Executive Sergio Marchionne said: “Marginal players will continue to be marginalized.”

With the smell of Cadbury Cream Eggs and Kraft cheese slices thick in the air, Nestle could well be getting hungry for some M&A. Will the Kraft-Cadbury deal soften the Hershey Trust enough for a Nestle merger?

Nestle has plenty of firepower with $28 billion from the sale of its remaining stake in eyecare group Alcon and Hershey might be seen as no more than a large bolt-on. In addition, Hershey is one deal Nestle could do without big anti-trust issues.

And as David Jones reports, from a Hershey perspective, some heat may be softening the the Hershey Trust’s aversion to a deal.

After four months of rhetoric, tense talks, phantom bids and late-night humor (Kraft and Cadbury agreed to a deal. Finally, mac and cheese creme eggs!), the deal is done. Here are some different takes on the deal.

The dealmakers:

Kraft Deal Cements Wasserstein Legacy, Fees for Lazard (Bloomberg) Kraft banker to become UK’s top takeover arbiter (Reuters) Kraft CEO satisfied with sweetened Cadbury deal (Reuters)

National pride:

Kraft bid hurts patriotic pride of Cadbury workers and video (Reuters) For Britain, Cadbury Takeover Isn’t Easy to Swallow (NYT)

Who won?

Nothing says “recovery” like a stong IPO market and investors’ rising risk appetite seems to be taking hold as markets bounce back from the financial crisis. Two of the best IPO reads are Bloomberg’s “Skype founders pondering IPO don’t need “love” from Andreessen” and peHUB’s “If Facebook doesn’t go public, what then?” Also see this slideshow on 15 hot tech companies ready for an IPO from The Business Insider.

Other notable reads:

European IPO market poised for recovery (Reuters)

For Singapore bourse, IPOs remain the Achilles heel (Reuters)

China Took the 2009 IPO Crown (WSJ)

The VC-Backed IPO Pipeline (peHUB)

Private-Equity Exits Are Seen Dominating 2010 IPOs (WSJ)

Financial Engines Steers Toward IPO (WSJ)

Fiat chief raises hopes for Chrysler IPO in 2011 (FT)

The Chinese media sector may seem an unlikely place to make money, given the government’s approach to censorship, but  Reuters’ George Chen finds the private equity industry is hungry for pre-IPO companies in an area with big potential.  Read Chen’s story: China media sector: A magnet for private equity funds and the factbox about China’s media industry.

Related stories from Reuters include:

Baidu to launch online video site for premium content

China video site PPLive eyes profits in 2010

Microsoft pegs China search market as top priority

More background:

China says 5,394 arrested in Internet porn crackdown (Reuters)

China pushes global channels for media (China Daily)

China regrets over WTO appeal ruling on publication imports (China Daily)

Senior Chinese leader urges better media supervision (Xinhua)

For an M&A story you can’t get much better than today’s Kraft/Cadbury/Nestle/Buffett mash-up.  Kraft said it would give detailed terms of its alternative cash offer by January 19, stay tuned. Here is a breakdown of the deal:

Reuters wrap up:  Buffett threatens Kraft’s Cadbury bid Factbox: How the new offer works Scenarios: Kraft sweetens Cadbury bid Timeline: Kraft bid timetable ticks away for Cadbury Berkshire Hathaway news release on Kraft’s bid (Berkshire Hathaway)

What is Buffett up to?

Warren Buffett’s M&A 101 Lesson for Kraft (WSJ) Warren Buffett’s public attack on Kraft is out of character (Guardian) What Buffett’s Vote Means for Kraft’s Cadbury Bid (WSJ) Breaking down the press release (The Rational Walk)

Kraft: