M&A wrap: EU crisis hits bank advisory fees
Europe’s debt woes dragged worldwide investment banking income down this year, data showed, with fees on the continent slumping to the lowest quarterly level ever recorded and company listings and acquisitions grinding to a near halt. In Europe, fees raised since October from bonds, flotations and mergers and acquisitions stand at the lowest quarterly level ever recorded by the data providers. A stronger start to the year in areas such as mergers and acquisitions fizzled out, leaving investment banks’ overall haul of fees at $72.6 billion — down 8 percent on 2010.
Yahoo is considering a plan to unload most of its prized Asian assets in a complex deal valued at roughly $17 billion, sources familiar with the matter said on Wednesday, winning nods of approval from Wall Street and driving its shares higher. The offer – the latest among proposals put forth in recent months to resuscitate the once high-flying Internet company – is expected to be considered by Yahoo’s board on Thursday, sources said. The board was uninterested in entertaining offers for the entire company at this point, said one of the sources, who spoke on condition of anonymity.
Oshkosh Corp has sent a proxy card to shareholders recommending they ignore an effort by billionaire investor Carl Icahn to install his own board members as he pushes for a merger with one of the company’s key rivals. Icahn recently nominated six associates to be on the board of the Wisconsin maker of trucks, construction lifts and defense vehicles. In a letter to the company’s shareholders last week asking for support for his nominations, he also voiced strong support of a merger between Oshkosh and Navistar International Corp. Icahn owns nearly 10 percent stakes in both companies.
Vulcan Materials Co rejected Martin Marietta Materials Inc’s $5 billion takeover bid, and said the offer undervalued the company and would not increase shareholder value in the future. Vulcan Materials, the world’s largest producer of sand, gravel and other construction materials, said the premium offered was significantly lower compared with previous transactions in the construction materials industry.
European Commission antitrust officials on Wednesday showed no sign of being swayed by Deutsche Boerse and NYSE Euronext’s last-ditch arguments to save their $9 billion deal, sources said, making it increasingly likely the exchange operators will have to take their campaign directly to the commissioners.
from Breakingviews:
Forget the IPO, Facebook could reverse into Yahoo
By Rob Cox The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Now that Yahoo has fired its chief executive, anything could happen to the rudderless Internet hodgepodge. Private equity firms, one of Yahoo's founders and even AOL are said to be mulling bids. But consider a more radical option: a takeover by the rival most responsible for Yahoo's fall from grace -- Facebook.
It's of course easy to marshal arguments why Facebook's creator, Mark Zuckerberg, should avoid staining his company Yahoo purple. The social network is already growing rapidly. Revenue doubled in the first half to $1.6 billion with profit of nearly half a billion.
Moreover, Facebook is a private company without the $20 billion or so of cash needed to buy Yahoo. Since Facebook is just starting to profitably harvest its audience of 750 million users, the firm should stick to its knitting, or so the argument goes.
But Facebook has the ingredients to make Yahoo succeed, starting with a clear mission. Yahoo has struggled to articulate a vision beyond being the first page people see when they open a browser. Beyond that, nothing binds Yahoo's pieces -- news, photo albums, stock quotes, email, job listings and entertainment -- together. They look like orphaned applications for a social network.
What unifies Yahoo's bits and bobs is a relatively robust display advertising platform. In an overall crummy second quarter, display revenue increased 5 percent to $467 million. Facebook is still building out its capacity to sell such ads. A combination would make a compelling pitch to advertisers.
In search, both have a common nemesis in Google. They also have a shared partner in Microsoft, which owns a piece of Facebook and whose Bing search engine collaborates with Yahoo.
Deals wrap: Yahoo, Softbank reach pact over Alibaba’s Alipay
After months of intense negotiations, China’s Alibaba Group said it has reached an agreement with Yahoo and Softbank that promises the e-commerce giant could receive up to $6 billion from an IPO or liquidation of its e-payment unit, Alipay.
Alipay is an Alibaba subsidiary that was transferred to a separate entity controlled by founder Jack Ma in order to meet Chinese regulations relating to foreign ownership. Yahoo owns 43 percent of Alibaba, which it acquired for $1 billion in 2005.
Australian brewer and takeover target Foster’s said it did not rule out takeover talks with SABMiller, but the company’s new CEO John Pollaers said “the value put on the table was so far away from reality that it wasn’t worth engaging (with SABMiller).” SABMiller, the world’s number two brewer had offered $10.4 billion for Foster’s last month.
Superstar hedge fund manager George Soros announced earlier this week he was returning all captial to outsiders, citing tougher government regulations as the reason for his decision. This piece by Deal Journal’s Shira Ovide quotes a comment by Senator Richard Shelby on Soros and asks, “is George Soros a hypocrite on regulation?”
Deals wrap: Nasdaq, ICE drop NYSE bid
Nasdaq OMX and IntercontinentalExchange (ICE) dropped their $11.1 billion bid for rival exchange NYSE Euronext after it became clear the deal would not gain approval from U.S. antitrust regulators. The companies first offered to buy the New York Stock Exchange parent on April 1, aiming to curb a proposed friendly merger with Deutsche Boerse that was worth $10.2 billion when first announced in February. Deutsche Boerse responded to the news of the dropped bid by saying it plans to continue to pursue a merger with the Big Board parent.
In other exchange merger news, a consortium of Canadian banks and pension funds launched a $3.7 billion bid for TMX Group in the hopes of keeping Canada’s largest stock exchange from falling under foreign ownership. The bid tops a $3 billion offer for the exchange operator from the London Stock Exchange (LSE). The LSE said it remains committed to its own merger proposal with the TMX despite the higher rival offer, but should its bid fail it could find itself to be a takeover target, analysts said.
U.S. chemicals group DuPont won its takeover battle for Danish food ingredients company Danisco. The $6.4 billion acquisition is a part of DuPont’s push into the food technology business that CEO Ellen Kullman says will “create an industry leader in industrial biosciences and nutrition and health.”
BP is in talks aimed at buying out its Russian partners in its TNK-BP joint venture and other options to help secure passage of a stalled share swap and Arctic exploration deal, sources close to the matter told Reuters.
Yahoo and Alibaba Group will have a tough time resolving their feud over the Chinese company’s transfer of a major Internet asset despite a joint statement from both companies that said they were working towards a resolution, writes Reuters correspondent Melanie Lee.
Deals wrap: Warren Buffett’s zoo
Elephants. Zebras. Berkshire Hathaway CEO Warren Buffett rolled out the animal metaphors in an interview on CNBC on Wednesday to explain that his company remains on the prowl for big acquisitions, which he calls “elephants”.
Buffett said they were hard to find, though, noting he’d lost a sizable one – a “zebra” – in recent days. “There aren’t many elephants out there, and not all of the elephants want to be in my zoo,” he said.
Yahoo is in talks to leave its Japanese joint venture, hoping to transfer its 35 percent stake to partner Softbank. If successful, the divesture could free up nearly $8 billion for the once-mighty Internet firm to compete with Google and Facebook.
“Wall Street’s titans aren’t paid to sweat the details. That’s become painfully obvious from the foreclosure and mortgage mess that may cost big banks like JPMorgan and Bank of America billions of dollars. The past two decades of bank merger mania brought big cost savings, and temporarily higher stock prices, but left a massive muddle,” write Reuters Breakingviews columnists Agnes Crane and Rob Coz in a new piece on the dark side of American bank consolidation.
Lightning-fast, high-volume trading and the handling of private stock offerings, or quasi IPOs, have left U.S. financial regulators scrambling to keep up, officials told the Reuters Future Face of Finance Summit.
Deals wrap: AOL still eying Yahoo deal?
AOL Inc has tapped Bank of America to explore strategic options including a potential Yahoo Inc merger, according to people familiar with the matter. The idea of combining AOL with Yahoo is still considered in an early stage and may not materialize into a deal, the sources said.
“First of all, Yahoo has to be approached and this is nowhere close to that point,” said one of the sources.
China’s largest e-commerce company, Alibaba Group, has reportedly been approached by a group of private equity investors to gauge its interest in joining a bid to buy Yahoo. Alibaba is 40 percent held by Yahoo and it was unclear if the bid attempt was part of the AOL deal.
Chevron Corp agreed to buy U.S. natural gas producer Atlas Energy for $3.2 billion, excluding debt, becoming the latest energy giant to break into the lucrative Marcellus shale field. Chevron’s move into the Marcellus follows acquisitions by Exxon Mobil and Royal Dutch Shell earlier this year.
Sanofi Aventis CEO Christopher Viebacher and Genzyme CEO Henri Termeer have exchanged letters over Sanofi’s $18.5 billion hostile takeover bid for Genzyme. M & A Law Prof Blog editor Brian JM Quinn says Viebacher is attempting to assert pressure on his counterpart to do the deal by appealing to Termeer’s “fiduciary duties as a director of a MA (Massachusetts) company.” In related news, the vice chairman of investment advisory firm Peter J. Solomon, Frederick Frank, said “Genzyme is history.”
Deals wrap: On the road to a GM IPO
GM is on track for a mid-November IPO, sources told Reuters. China’s top automaker SAIC has not ruled out taking a stake in the company. *View article *View SAIC article *View WSJ blog which extracts some nuggets from GM’s SEC filing
China’s Sinochem will no longer launch a counterbid for Potash, sources said. “It’s finished,” Reuters was told. *View article
“BAE Systems could be poised for a major buying spree in the U.S. defense sector as Europe’s top defense contractor chases new growth in the face of looming spending cuts,” writes Soyoung Kim and Andrea Shalal-Esa. *View article
Yahoo is sounding out how serious the interest is in the company following news of potential suitors, according to the WSJ. *View article *View Yahoo analysis
Deals wrap: Who’s eying Yahoo?
Yahoo shares surged after sources said private equity firms have approached News Corp and AOL to gauge interest in a buyout deal. *View article *View WSJ blog asking if a deal would make sense *NYT’s Andrew Ross Sorkin writes: “A deal is not happening anytime soon.”
Is he a loudmouth corporate raider or the investing world’s version of a Las Vegas Elvis? Reuters interviews hedge fund manager William Ackman to find out. *View article *Full coverage PDF
Private equity firms have been reaping huge dividends from companies they own. A WSJ blog asks if the feeding frenzy has gone too far. *View blog
As Sanofi-Aventis hunkers down for a long battle to buy Genzyme, a proxy battle for control of the biotech firm will become an increasingly real threat, sources tell Reuters’ Jessica Hall. *View article
Fortune.com’s Dan Primack finds one more reason for Warren Buffett to hate private equity. *View article
Deals wrap: Getting hostile
Sanofi is getting hostile in its bid for Genzyme, after Genzyme management refused to negotiate. The $69-per-share offer will be taken directly to shareholders but will they be looking for more? *View article *View graphic on hostile deals *View WSJ article on pharma M&A
Growth in emerging markets is aiding a global M&A boom and with large cash piles in hand, companies are finding it hard to resist the urge to acquire. *View article Coca-Cola has completed its deal to take over North American operation of its top bottler, Coca-Cola Enterprises. Reuters interviewed Coke Chief Executive Muhtar Kent about what the deal will mean for the remaining independent bottlers. *View article
Business Insider makes the case for Yahoo and AOL merging, immediately. *View Business Insider article
Deals wrap: Yahoo not selling Alibaba stake
In an exclusive interview with Reuters, Yahoo CEO Carol Bartz said the Internet search company has no intention of selling its stake in Chinese e-commerce site Alibaba.
Bartz told Reuters that despite the Alibaba Group “constantly” approaching them to repurchase Yahoo’s estimated 39-percent stake, the company has no plans to accommodate those requests, adding the investment is “very strategic.” *View article*
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Another Chinese company, Sinochem, distanced itself from the possibility of making a bid for Canadian firm Potash Corp, in the wake of BHP Billiton’s $39-million hostile takeover bid for the miner. Han Gensheng, head of Sinochem’s overseas deals, told Chinese magazine Caijing that even a bid of $10 billion would be too large for Sinochem. *View article*
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Some major buyout firms have entered the bidding for mental-health specialist the Priory Group, which seller Royal Bank of Scotland hopes could fetch about $1.55 billion, people familiar with the matter told Reuters. According to Reuters, companies planning to submit non-binding bids before Wednesday’s deadline included Advent International, Blackstone, Bain Capital and Cinven. KKR and the Carlyle Group were also potential bid candidates. *View article*
