DealZone

BCE deal gets a busy signal

bce.jpgBanks financing the $34.8 billion private equity buyout of BCE have been hammering away all weekend to win higher interest rates, tighter loan restrictions and stronger protections that far exceed the original terms, according to the New York Times. Citing people on both sides of the transaction, the paper said talks began to fray late on Friday but lasted all weekend. “It’s patently obvious that the banks have no intention of closing the deal,” said one executive who read the revised terms. Investors have long worried that the massive private equity buyout might be repriced, delayed or abandoned altogether. Looming over the discussions is the spectre of the Clear Channel deal, in which some of the very same lenders also tried to back out, producing an ugly tangle of court cases that was only resolved last week.

Microsoft said it proposed an alternative deal to Yahoo rather than a full acquisition, but a person who knows the mind of Carl Icahn, the man driving trying to unseat Yahoo’s board, said the move was likely to prompt the billionaire investor to nudge Yahoo back toward Google. This source isn’t just familiar with the matter, but has a taste for rustic allusions: “Microsoft is trying to get the milk without buying the cow, and if you look at Icahn’s history, he has never been used that way.” Microsoft did not clarify what that alternative deal might be.

Facebook founder and CEO Mark Zuckerberg stressed his company’s independent spirit, after a report said the social networking site might be sold to software giant Microsoft, which is hunting for ways to beef up its Internet business. “You can tell, from our history and what we’ve done, that we really wanted to keep the company independent, by focusing on building and focusing on the long-term,” Zuckerberg told Reuters while in Japan to launch a Japanese language version of Facebook. Microsoft already has a small stake and the Wall Street Journal said this month the software giant, with the Yahoo deal in limbo, had approached Facebook to gauge its interest in a full takeover.

U.S. diversified manufacturer Manitowoc has increased its bid for British kitchen equipment maker Enodis to $2.1 billion to trump a rival offer. Manitowoc, which makes cranes and restaurant equipment, said it was offering 294 pence a share for Enodis, topping an agreed bid of 282 pence a share from U.S. rival Illinois Tool Works. The offer from ITW beat an earlier bid of 260 pence a share from Manitowoc. Enodis, which makes fryers for fast food groups such as McDonald’s and Burger King, will also pay an interim dividend of 2 pence a share.

Other deals of the day:

* The direct banking arm of Dutch financial services group ING Group is offering 416 million euros ($644 million) in cash for Germany’s Interhyp to expand its global business.

Wagging the dog

Follow Carl, from the Good Dog, Carl series of Classic Board Books published by Farrar, Straus & Giroux, 1989Yahoo has struck an advertising partnership deal with WPP Group that will let WPP units GroupM and 24/7 Real Media buy ads on Yahoo’s online ad exchange. Yahoo said the deal would first involve WPP units GroupM and 24/7 Real Media. It may be a stretch to expect this shake off the dogs of war unleashed by Carl Icahn, who is trying to unseat the Yahoo board for its failure to deal with a $47.5 billion unsolicited takeover bid from Microsoft. If the ad tie-up deal with Google that’s still in the trial phase hasn’t done so, why would a deal with WPP? But at the same time, Yahoo CEO Jerry Yang can hardly be seen to be sitting on his hands.

Warren Buffett’s Berkshire Hathaway has pulled out of the bidding in Royal Bank of Scotland‘s 7 billion pound ($13.62 billion) auction of its UK insurance business, according to the Financial Times. Berkshire told the FT it had looked at the business, which includes the insurers, Direct Line and Churchill, but had decided not to bid, without giving a reason.

Japan’s Bridgestone said it was forming a strategic alliance with rival Toyo Tire & Rubber aimed at coping with high materials prices and intensifying competition. The two companies plan to team up in developing advanced tire technology and procuring raw materials. They will also use each other’s production facilities and said they would take stakes in each other worth 8 billion yen ($76 million).

Waiting for Icahn, Day 99

icahn2.jpgOk, we understand that Carl Icahn has been a little bit busy, as today’s Yahoo news illustrates. But ever since that memorable February day when he promised to deliver his trademark brand of incisive commentary to the blogosphere, we’ve been waiting. For 99 days now we’ve checked out The Icahn Report, only to find that same taunting message: “Blog coming soon.”

He has blamed the delay on his lawyers: “Every night, I write for an hour and they tear it up.

He has promised that the blog was “a week or two away” — that deadline passed yesterday.

Shrinking Citi

pandit.jpgCitigroup chief Vikram Pandit has sold off assets here and there in the months since taking over the top job, including stakes in CitiStreet, CitiCapital and Diners Club. But with sources saying some $400 billion of extraneous assets are going on the block, it’s fair to ask whether the head of the country’s biggest bank is being boldly aggressive or slamming the panic button.

“The only reason you’d sell off that many assets is you have a lot more losses coming than you originally thought,” said Jim Huguet, co-chief executive at fund manager Great Companies LLC, which does not own Citi shares. Since late last year, Citi has recorded more than $45 billion of writedowns and credit losses, raised more than $40 billion of new capital including $2 billion of preferred shares this week, and slashed its dividend 41 percent. The Financial Times, which first reported the story on Thursday, said the moves would take place over several years.

Global economic instability has created huge investment opportunities for China Investment Corp, but the sovereign wealth fund’s head said he will be careful not to destabilize countries where it operates. CIC paid $5 billion in December for a stake in U.S. investment bank Morgan Stanley but has otherwise kept its powder dry as Western financial institutions have sought to replenish capital depleted by big subprime credit losses. “The current international market turbulence has produced unprecedented investment opportunities,” said Lou Jiwei, head of the $200 billion sovereign wealth fund. “In the 1990s, some hedge funds exploited defects in the macroeconomic policies of some emerging economies and attacked them, which damaged their economies and caused hardship for people,” he said. “CIC will certainly never do a similar thing.”

Craigslist a runaway bride?

newmark.jpgEBay‘s lawsuit against Craigslist alleges that founder Craig Newmark and CEO Jim Buckmaster tried to dilute eBay’s 28.4 percent stake in the company after a marriage proposal. According to court papers unsealed Wednesday, Craigslist wanted out of the relationship since eBay had launched a competing product, Kijiji, but Meg Whitman countered with a bid to buy the entire company, leading to the allegedly “clandestine” meetings between Newmark and CEO Jim Buckmaster. At stake is the world’s third most valuable Web startup, as ranked by Silicon Alley Insider, valued at approximately $5 billion.

Microsoft‘s board met on Wednesday to discuss its stand-off with Yahoo, but don’t get too excited: they failed to reach a decision on what to do next, according to a Wall Street Journal report. The board is still weighing whether to adopt a hostile approach and nominate a proxy slate of directors to replace Yahoo’s board, sweeten its cash-and-stock offer for Yahoo, or possibly walk away from the deal. A Microsoft-imposed “deadline” passed last Saturday.

Three-headed canine guardian of the gates of Hell, meet controversial private security contractor Blackwater. Cerberus Capital Management is in talks to invest $200 million for a stake in Blackwater USA, ABC News reported on Wednesday, citing sources. Or, not. The Wall Street Journal confirmed that Blackwater is seeking outside investment, but quotes a Cerberus spokesman as saying the private equity firm took a look but decided to pass. As the WSJ’s Deal Journal notes, the “secretive, billionaire, former paratrooper [Cerberus' Steve Feinberg] trains his largesse on a secretive, lucrative quasi-military operations company” story was just too good to be true.

Yahoo tests Google’s waters, Microsoft’s temper

yahoo.jpgThere’s something about deadlines that sharpens the mind. Reporters know this and Yahoo is finding out with its decision to get into a Web search advertising test with arch-rival search firm Google Inc.

Yahoo is facing a three-week deadline to sit down with Microsoft, which has offered $42 billion to buy the company, and seems to be getting ever more creative in figuring out ways to resist the advances of its suitor to the North. The length of its limited test with Google? Two weeks.

Google, of course, isn’t about to object. “A long-term deal could be the only option that allows Yahoo to remain an independent company,” a person close to Google told us.