Rob “Big Loan” Verrone was the banker with the big name behind the 2007 acquisition of now-bankrupt Extended Stay.

His nickname was trumpeted in the hotel chain’s 2007 press release detailing the deal — in retrospect perhaps not the best quality to shout about.

Big Loan, described as one of three who provided the mortgage and mezzanine financing, moved on from Wachovia according to a Wall Street Journal report last year, and we couldn’t immediately track him down for comment.

Extended Stay filed for bankruptcy today after being saddled with too much debt during the economic crisis.

The one party which did come out looking good was Blackstone, which sold out of the deal two years before it cratered.

Citigroup may be too big to fail, but is it big enough to close a deal? Soon after losing its bid for Wachovia to Wells Fargo, Citi turned it sights on Chevy Chase Bank, which while not as mighty as Wachovia, was at least closer to its east coast power base. This morning, Capital One Finance said it had agreed to buy the mid-Atlantic lender, right out from under Citi’s nose.
 
JP Morgan Chase had also been interested in Chevy Chase, a smallish, unlisted lender. The deal announced by Capital One was for $520 million - hardly the kind of blockbuster that makes or breaks a battered Wall Street monolith. 
 
It will be interesting to see if Citi, brimming over with TARP funds that the Treasury has all but begged it and others to spend on lending, stays on the prowl. Bank of America took its TARP money and boosted its stake in a Chinese lender, so there is some precedent for Citi to spend the funds on a deal.
    
But with Citi’s wallet stuffed with taxpayer cash, the impetus for growth may be less imperative. If it decides against bidding for the deposits of another regional bank, Citi will find itself with only financial assets to sell — in a seller’s market.
    
It agreed to sell its German retail business, which it put on the block over the summer with a price tag of around $8 billion, and at the end of November reports emerged it would try to sell its trust bank unit in Japan for more than $400 million. 
 
Deals of the day:

* Goldman Sachs said it has rejected an offer from Panasonic to buy its shares in Sanyo Electric because it believes the offer price is too low.

* Rio Tinto is in talks to sell its half of a Chinese aluminium joint venture to its partner, which is consolidating its assets to prepare for a takeover by another state-owned company, sources in the two Chinese companies said.

* Japanese insurance group T&D Holdings may bid for two Japanese life insurers put up for sale by American International Group, the Asahi newspaper reported.

* Nippon Oil, Japan’s biggest refiner, is merging with smaller Nippon Mining Holdings in a move to cut capacity and costs as a global slowdown hits demand for oil products.

* Private equity firm Apax Partners is considering an investment in Bank of Ireland as interest in Irish banks by buyout groups continues to grow, the Financial Times reported.

* Media mogul Sumner Redstone has agreed with his daughter, Shari Redstone, to sell some of National Amusements’ 1,500 cinemas rather than the entire division, the Financial Times said citing people familiar with the matter.

* Global Investment House, Kuwait’s biggest investment bank, is in talks with several local banks to get $1 billion worth of loans, while seeking a quick sale of its stake in a Bahraini lender, it said.

* Dutch dredging group Boskalis Westminster dropped its bid to buy maritime services company Smit, saying it would be difficult to take it over without management’s cooperation.

* Wm Morrison, Britain’s fourth-biggest grocer, beat third-quarter sales forecasts and said it had agreed to buy 38 stores from the Co-operative Group for 223 million pounds ($329 million).

* Aerospace parts supplier Umeco said it bought Italy-based Industria Plastica Monregalese (IPM) for 16.8 million euros ($21.3 million) as part of its plans to develop a wider global presence in the wind energy market.

* Italian energy group Enel SpA denied a media report it had offered Acciona 12 billion euros ($15.2 billion) for the Spanish builder’s 25 percent stake in Endesa.

(Photo: Reuters/Fred Prouser)

Citigroup investors welcomed news the bank had abandoned its brief but acrimonious battle with Wells Fargo over Wachovia Corp, driving its shares up 15 percent in after-hours trade. 

When Citi announced last week that it was buying Wachovia’s banking operations, investors sent Citi’s shares higher, hoping the purchase would allow the bank to raise much-needed capital while expanding its branch network. But this week, investors cheered that Citigroup was walking away from a deal that could have proven more toxic than either Citi or Wachovia had thought. 

By this morning, the euphoria that followed the deal’s collapse had faded. Citi shares had lost all of those gains of yesternight and were trading back near 12-year lows. Dodging a bullet doesn’t seem to have done anything about the quicksand. 
 
Deals of the day: 
 
* Mitsubishi UFJ Financial Group, Japan’s largest bank, said it has no plans to pull out of a planned $9 billion investment in Morgan Stanley, even as shares of the U.S. bank continue to tumble. 

* Shares in South Africa’s Telkom jumped almost 5 percent on Friday after Vodafone offered to pay it 22.5 billion rand ($2.48 billion) for a controlling stake in mobile operator Vodacom.
 
* Japan’s top drug wholesaler Mediceo Paltac Holdings will take over No. 2 Alfresa Holdings in a $2 billion stock deal to better cope with falling prices and tough competition.  
 
* Fortis Bank Nederland may be sold to Deutsche Bank instead of some of ABN AMRO’s Dutch operations to replace a deal that has been put on hold with the nationalization of Fortis’s Dutch holdings, a Dutch paper said. 
 
* Abacus Group, a British distributor of electronic components, said it had agreed to a takeover offer from U.S.-based Avnet which values the company at about 42.2 million pounds ($72.93 million) 
 
* British natural resources consultancy RPS Group said it is buying smaller rival Paras for up to 6.4 million pounds ($11.03 million) in cash and shares, to complement its expansion strategy.  
 

Banks aren’t lending to each other, but they are buying each other. An interesting by-product of the deals: capital-hungry institutions are raising billions of dollars of fresh capital in a tumbling market.
 
Bank of America said yesterday its tier-one capital ratio would be 7.5 percent in the third quarter, down from 8.25 percent in the second quarter, spurring it to launch a $10 billion share offering and cut its dividend. On a conference call, it said it could raise even more to help manage the purchase of Merrill Lynch. Wells Fargo planned to raise $20 billion to fund its bid for Wachovia, while rival suitor Citigroup aimed to raise $10 billion to buy that bank. Those two are taking a three-day break from a legal battle over who gets what.  
 
If Citigroup loses out on Wachovia, Dan Wilchins points out, it will also miss out on a great chance to raise capital. Citi would likely have a much easier time raising capital to fund its growth than to patch holes on its balance sheet. The bank has raised $50 billion of capital in the last seven months, and its management has consistently said that it has raised more than it expected to need, he reports. But that could all change in a recession, as credit cards, investment banking, and retail brokerage businesses lose customers. 
 
Once the dust settles, ruthlessly diluting shareholders may show itself to have been absolutely necessary, and perhaps even unavoidable. But now with the markets in freefall, it’s more than a little scary. 

Deals of the day:

* Singapore state investor Temasek Holdings kicked off the sale of electricity generator PowerSeraya, in a deal that could fetch around $2.5 billion. To read more, please double click on 

* Icelandic investment firm Exista will sell its near 20 percent stake in Finnish insurer Sampo to reduce liabilities but will keep its other assets, the group said in a statement.

* Commonwealth Bank of Australia said it has started exclusive talks with British bank HBOS about a potential takeover of BankWest, HBOS’ Australian operation, estimated to be worth A$2 billion ($1.45 billion).

* British military consumables maker Chemring Group is buying a U.S. mine-detection systems company for an initial $30 million, to boost its explosive ordnance disposal (EOD) business.

* Fletcher Building , New Zealand’s largest building products and construction company, said it would buy steel products company Fielders Australia Pty Ltd.

* Japanese apparel maker Renown said it may sell British clothier Aquascutum as part of restructuring that could also include it selling its offices and a distribution centre in its home country. Shares in Renown fell more than 16 percent after a local newspaper reported that the company would sell 155-year-old British raincoat maker Aquascutum by February.

* Royal Caribbean Cruises said it has agreed to sell its 50 percent stake in Island Cruises to a unit of British-based tour operator TUI Travel, which owns the other half.

* Wireless technology group Wavecom branded an unsolicited offer by Gemalto as hostile and said it undervalued the company. 

* South Korea’s Hanwha Group is considering selling 20 percent of its life insurance unit to fund its possible purchase of Daewoo Shipbuilding & Marine Engineering, a source close to the company said.

* Malaysia’s Maybank has been offered another 15 percent stake in Bank Internasional Indonesia at a discount to its original offer price that will cut the total price by more than 200 million ringgit ($57.39 million).

It seemed like the natural order of things had returned for a short while last week. Wells Fargo had outbid Citigroup to take over Wachovia, and as an added treat, they did not plan to tap government funds to do it. Apparently caught unawares, the jilted suitor sued saying its exclusivity agreement had been broken. If the parties had had a signed merger deal, rather than just an exclusive agreement to talk, Wachovia would have been obliged to pay Citi some kind of break-up fee. But the waters are murkier this time. So instead, the now fully engaged Federal Reserve is acting as broker in what has become a frantic legal spat between the banks.

The Wall Street Journal reported that the Fed is pushing the two banks to compromise by potentially carving up Wachovia between them. Having already decided a purchase of Wachovia is an issue that has significance for the stability of the financial system, the Fed continues to view resolving the confusion over who is buying one of the nation’s biggest banks as important, a Treasury source told us, adding that discussions were continuing late last night.

What could motivate the Fed to intrude where the free market seemed to be working so well? Citi shares saw their first substantive rally in a long while when their Wachovia deal was announced. It was getting a sweet deal, with government backing, that was seen as a game changer for the mammoth bank. Without that deal, the Fed may be more worried about what to do about Citi than whether a Wells, Wachovia deal makes sense.

Who will win the battle for Wachovia? Place your bets in the news prediction website Hubdub:

What happens to Wachovia?

Deals of the day:

* BNP Paribas has scooped up Fortis’s assets in Belgium and Luxembourg to become the euro zone’s biggest deposit bank after a weekend of frantic talks with the authorities in the two countries eager to stem a cash drain on Fortis and Dexia banks.

* The Australian unit of H.J. Heinz will buy food producer Golden Circle in a deal valuing the canned fruit and juice producer at about A$288 million ($220 million), the companies said.

* British outsourcing group Xchanging and its Mauritius unit have made an open offer to acquire 20 percent of Cambridge Solutions at 81.11 rupees a share, according to a notice in a newspaper.

* Thai steel firm G Steel said that Japanese trading house Mitsui & Co planned to acquire a stake in it.

* Hungary’s MOL has won 21.7 percent of Croatian oil group INA in a public bid, raising its stake to 46.7 percent, but it may still gain a majority as final results will be known only later this week.

Wells Fargo said on Friday it reached a deal to buy Wachovia for about $15.1 billion out from under Citigroup’s nose.

We still haven’t heard back from Citi, so the question now is whether Citi simply walked away from a deal it - and the market - had seemed so excited about just days ago or whether it will come back with another bid. The latest from Citi’s website is that they are committed to the Wachovia transaction - that was Sept. 30.

Another bid? A bidding war? A bidding scuffle?

Seems unlikely in this time of failures, toxic waste and bailouts, and Citi certainly has plenty of trouble of its own. But Warren Buffett and others have been quite vocal about the great deals out there to be had, and certainly Wells Fargo seemed to have missed the boat when Citi made its initial bid — which was worth $2.16 billion for everything but AG Edwards and Wachovia Securities and included a fund business.

Wells is ponying up for the whole Wachovia. Citi’s share price was tanking in premarket trade, and analysts were quick to note that the failure of a Citi/Wachovia deal is as big a blow for Citi as it was for struggling Wachovia. While a full-out war for Wachovia seems unlikely at this point, a higher price for Wachovia can’t be anything but a good thing for a market that has spent months trying to figure out how to value dud bank assets.

Deals of the day:

* Mitsubishi UFJ Financial Group will consider merging its securities arm with Morgan Stanley’s Japan business, as Tokyo’s biggest lender looks to capitalize on its $9 billion Wall Street investment.

* Ukraine-focused oil and gas explorer Regal Petroleum denied it had received a $1.2 billion takeover approach from oil Major Royal Dutch Shell.

* Japanese property firm Daito Trust Construction shelved a planned buyout that could have exceeded $6 billion, after the funds behind the deal failed to raise enough money amid the global credit crunch.

* Plans by Ireland’s Elan Corp to sell its drug delivery unit in an auction have been delayed by the credit crisis but some discussions are still continuing, people familiar with the situation said.

Shares of HBOS and Lloyds TSB got a boost this morning in London as it appeared Lloyds was less likely to try to renegotiate its takeover of HBOS. Standard Life Investments, a top investor in Lloyds and HBOS, supports the planned takeover under the original terms, a person close to the investment firm said, and analysts suggested political and regulatory pressure would force the deal through, despite its chunky discount to the indicated offer price.

BBC Business Editor Robert Peston writes:

So if you believe that the terms of the deal won’t and can’t be changed, the current HBOS share price is an opportunity to buy £10 notes for £6.60.

That looks too good to be true. And the normal investing rule is that if it looks too good to be true, then don’t touch it even if you’re in a radiation-proof suit.

DealZone postulated yesterday that other big deals could head the same way because of falling prices - think Bank of America’s bid for Merrill Lynch. HBOS’ and Lloyds’ share price puts that deal at a 31 percent discount to its original price tag, compared with a discount of 16 percent for the Merrill/BofA deal.

The ban on short sales in the U.S. is making it tough to gauge just how much doubt there really is about that deal, though its current discount - even after yesterday’s rally - would normally raise eyebrows. That ban is set to expire tomorrow, but can be extended if the SEC deems it necessary for a maximum of 30 days in total.

If the government sees itself as being in the business of salvaging takeovers of distressed banks, a position it bolstered by backing Citigroup’s takeover of Wachovia on Monday, might the SEC seek to keep the ban in place for more than a month?

Deals of the Day:

** Anglo-Swiss miner Xstrata Plc dropped immediate plans for a $10 billion bid for No. 3 platinum producer Lonmin Plc but set the scene for a later deal by scooping up Lonmin shares as they fell.

** Iceland’s troubled banking sector witnessed further upheaval as Straumur-Burdaras said it would pay 380 million euros ($537 million) to buy assets from Landsbanki .

** Hewlett-Packard Co has agreed to buy LeftHand Networks Inc, a network storage provider, for $360 million in cash.

** Video-game retailer GameStop said it will acquire French video-game retailer Micromania from private equity fund L Capital for $700 million, including debt, to gain a presence in France.

** Struggling Finnish technology firm Elektrobit said it had agreed to sell its WiMax baseband software assets to Nokia Siemens Networks [NSN.UL] as part of its new restructuring plan.

** Royal Dutch Shell is poised to take a large stake in its Russian partner company Sibir Energy before the end of this year, the Financial Times reported.

** British instruments and controls maker Spectris Plc is buying LDS Test & Measurement from SPX Corp for $102 million, on a debt and cash-free basis, the company said.

** Nidec Corp <6594.OS>, the world’s largest maker of tiny motors used in hard disk drives, said it would buy a majority of Fuji Electric Holdings’ <6504.T> industrial motor unit for nearly 10 billion yen ($94 million).

** Indian vaccines maker Panacea Biotec Ltd

Lawmakers are gearing up to vote on a $700 billion financial bailout plan, but the rescue from Capitol Hill didn’t come soon enough for Wachovia — whose assets are being acquired by Citigroup — or for Fortis NV, Hypo Real Estate and Bradford & Bingley, which were nationalized by European governments on Monday.

“Wachovia did not fail; rather, it is to be acquired by Citigroup Inc on an open bank basis with assistance from the FDIC,” the agency said in a statement. Still in doubt is the status of brokerage AG Edwards and asset manager Evergreen, which are not included in the deal.

Wasn’t it only two weeks ago that Wachovia was in talks to merge with Morgan Stanley?

DEALS OF THE DAY

** Nokia Oyj is in advanced talks to sell its security appliances business to a financial investor, while it would halt its corporate software development, it said.

** Italy’s ENEL and Czech CEZ submitted bids to buy up to 76 percent of Albania’s power distributor while Austria’s EVN and Energie Steirmark withdrew, a government commission said.

** Iceland took control of its third largest bank, Glitnir as the global credit market turmoil claimed its latest victim following a string of financial collapses in the United States and Europe.

** Kazakhstan’s No.1 insurer Eurasia said it had made a formal offer to buy the local subsidiary of AIG, the insurer bailed out by the U.S. Federal Reserve earlier this month.

** Athletic shoe and clothing chain Foot Locker Inc said it plans to buy Delias Inc’s CCS business for $102 million, as it seeks to boost its appeal with teen-age skateboarders.

** Private equity firms Bain Capital LLC and Hellman & Friedman LLC were closer to a deal on Sunday night to buy Lehman Brothers Holdings Inc’s prized Neuberger Berman unit, two sources familiar with the situation said.

** A buyout of Japanese property firm Daito Trust Construction Co is unlikely to get done this year due to difficulty in raising funds for the deal estimated at $6 billion, financial industry sources said.

** Kazakh gold miner KasakhGold said it had received a possible cash and shares offer for 50.1 percent of the company from Russia’s top gold producer Polyus Gold.

** German lender Hypo Real Estate struck a last-minute deal with a consortium of banks for credit to resolve a refinancing squeeze that it faced, the group said.

** Singapore’s Neptune Orient Lines said it has submitted a binding bid to acquire the Hapag-Lloyd container shipping business but declined to provide details of its bid.

** Kookmin Bank cut the value of its planned sale of shares in Bank Internasional Indonesia to reflect a revision to Maybank’s bid for the Indonesian lender.

** Australian steel company OneSteel Ltd said it would make a NZ$175 million ($120 million) offer for its partly owned New Zealand subsidiary, Steel and Tube Holdings Ltd.

Since socialism is always more palatable when it bails out rich people, Henry Paulson’s $700 billion financial rescue package arrives in Congress today after round-the-clock negotiations over the weekend and exhortations from presidential candidates. But even as Congress prepared to vote, across the ocean the financial crisis rattled several European institutions.

The governments of Belgium, the Netherlands and Luxembourg moved to partially nationalize Fortis with an injection of over $16 billion. Also German lender Hypo Real Estate secured a credit line from the German government and banks up to 35 billion euros. And Britain nationalized mortgage lender Bradford & Bingley. Meanwhile shares in French bank Dexia fell on reports that it may need emergency capital. Rescue deals also emerged in Iceland, Russia and Denmark.

Citigroup will buy Wachovia Corp’s banking business, further consolidating power among three megabanks: Citigroup, JPMorgan and Bank of America.

The stock market was poised to open lower, on fears that the bailout plan would not be enough to rescue the economy. Treasuries and the dollar were up, but pared their gains after the Citigroup announcement.

- Derek Caney

When Wachovia CEO Ken Thompson announced plans to cut up to 500 jobs last month, he probably didn’t expect to be included in the total. The bank ousted Thompson on Monday following a series of disappointments that hurt the fourth-largest U.S. bank and its performance. Wachovia said Thompson is retiring at the request of its board of directors; Lanty Smith, the bank’s chairman, was named interim CEO. The bank’s stock was lower before the open. Wachovia has marked down mortgage and other debt assets by $5 billion so far in the credit crunch.

“Harris is not pursuing any transaction. We’re not for sale,” Howard Lance, chairman, president and CEO of the defense communications company, told Reuters in a telephone interview. Lance said Harris normally does not comment on rumors or speculation, but decided to issue a statement because the “level of rhetoric had risen to a point that it was becoming a distraction and could be damaging to the company, and could fuel speculation in our stock.” One industry analyst last week told Reuters that General Dynamics recently made an informal overture to Harris, but dropped it amid its own management succession. Northrop Grumman also looked into a possible bid for Harris but balked at the high valuation, the analyst added.

China unveiled two mega-deals as the government overhauls the world’s largest telecoms industry, with mobile operator Unicom taking over a fixed-line peer and unloading an underperforming network. Unicom, the smaller rival of China Mobile, said it will issue new shares and swap 1.5 shares for every share in Netcom, the smaller of China’s two fixed-line carriers. Unicom is set to pay more than $55 billion for Netcom, but did not say how it arrived at that figure — which would be more than double Netcom’s current market value. Unicom also agreed to sell a wireless network to fixed-line leader China Telecom and its parent for 110 billion yuan ($15.2 billion). The announcements mark the first steps in a sweeping restructuring that is expected to usher China into a more advanced telecoms age while opening the door to foreign investment and billions of dollars in purchases from telecoms gear makers. China Telecom appears to be paying up for a network that only broke even in 2006 after years of losses and which is a third of the size of Unicom’s GSM communications network, which raked in 62.78 billion yuan in revenue in 2007.

Britain’s Bradford & Bingley said U.S. private equity firm TPG Capital would to take a 23 percent stake in the bank, its first major UK bank investment, for around 179 million pounds ($353 million). The purchase makes TPG the single largest investor in the country’s biggest buy-to-let lender. The private equity group’s surprise swoop mirrors moves by strategic investors shoring up U.S. banks as financial institutions across the world have struggled with writedowns, the impact of the credit crunch and the prospect of recession. B&B issued a stark warning on the state of the UK mortgage market, hitting bank shares across Europe. Just three weeks after it last spoke to investors, B&B said it had tumbled to a loss for the first four months of the year and saw continued pressure on margins, as funding costs remain high, and arrears deteriorate more than expected

Other deals of the day:

* General Electric said it had finalized plans of a deal announced in March for GE Commercial Finance to acquire Banco Santander ’s Italian commercial bank Interbanca, and the Spanish bank agreed to buy GE Money’s businesses in Germany, Finland and Austria, and its card and auto businesses in U.K.

* South Africa’s Telkom has had an offer from a Vodafone unit for its half of mobile operator Vodacom, while Mvelaphanda may lead a bid for the whole group minus the Vodacom stake, Telkom said.

* Royal Dutch Shell said it will pay $739 million for an interest in Arrow Energy’s coal seam gas projects, as competition heats up for Australia’s vast coal seam gas assets, driving Arrow shares up by a fifth.

* Australian clothing retailer Just Group rejected a hostile A$836 million ($800 million) bid by billionaire investor Solomon Lew, citing an independent adviser as saying the offer was too low.

* Robert Bosch has agreed to buy 50.45 percent of solar power company Ersol for 546.4 million euros ($845.7 million) from Ventizz Capital and plans a public offer for the rest, Bosch and Ersol said.

* Lodging real estate investment trust Sunstone Hotel Investors said it had sold a hotel for about $366.5 million, and cut its second-quarter and full-year adjusted funds from operations outlook.

* French engineering group Alstom denied a newspaper report it was mulling a tie-up with British aero engine and turbines group Rolls-Royce.

* Colonia Real Estate and Merrill Lynch said they had bought a German residential property portfolio for about 103 million euros ($159.4 million) from Bonn-based Wohnbau.

* Finnish builder YIT said it had bought building automation system maker Computec.

* Norwegian oilfield services group Scorpion Offshore advised shareholders to reject a takeover offer by Oslo-listed rival Seadrill.

* Four candidates have been short-listed to buy French electrical engineering firm Cegelec, French daily La Tribune reported.

* Shyam Star Gems said its board has approved a proposal to acquire up to 50 percent stake in Thamina Diamonds International DMCC Dubai.

* Associated British Foods said it was to merge its Ryvita crispbread unit with the UK breakfast cereals Jordans business with AB Foods set to have a 62 percent share of the combined business.

* Australian alcoholic beverages group Lion Nathan said it had acquired U.S. wine importer Cumulus Wine, giving no price details.