Unstructured Finance

For the gadget that has everything

bag.jpgWhen it’s time to accessorize, don’t forget your gadgets! For the gadget that has everything now come pouches, bags and sleeves to clothe your iPod, XBox or laptop. At the Magic Marketplace apparel trade show in Las Vegas this week, Tandy Brands Accessories, a major accessories supplier for retailers like Target, Wal-Mart Stores, Kohl’s and J.C. Penney, launched its NextGen line.  

The idea of protecting your gadgets in streamlined, modern-looking cases must make sense to some people, because Best Buy this fall will begin carrying a line of Liz Claiborne bags, cases and covers for electronics.  “Every year, we’ve been hearing at holiday that electronics were the big winners. We decided we needed to accessorize those electronics,” said Dan Weaver, vice president of design for Tandy’s men’s division.

Accessories as a category are generally insulated from fluctuations in consumer spending since people may forgo a full outfit but won’t feel guilty if they buy a bag, a belt or other small item.“Times are tough but our price points in categories are still accessible,” Weaver said. “I think overall the apparel industry will feel a pinch but I think we will be ok with accessories.”

Retailers have been receptive to the line — in colors like black, red and grey — and are doing tests for this holiday season, he said. Bags are the biggest sellers since everyone has a laptop these days, while Target has been buying cellphone holders and has asked Tandy for some new categories, he added.

Electronics have already made their presence felt in apparel. A variety of clothing lines offer jackets and other garments with a sensor panel sewn in the sleeve that allows you to control your iPod. Wires are also hidden internally within the clothing.

Come labor on: arbs bet LBOs get done

wpe47480.jpgArbitrage spreads, which measure the difference between the current and offered price of an acquisition target, have tightened on some closely watched leveraged buyouts — meaning investors are betting Wall St. will get to work closing the deals. 

Earlier this month the spreads had widened as tightening credit markets and fears of a global liquidity crunch turned a normal summer slowdown in mergers and acquisitions into a deep freeze

But arbs are growing confident again. Alliance Data, being acquired by Blackstone, has allowed the private equity firm to purchase shares before closing and said Blackstone had committed capital to complete the deal — positive signs that an arbitrage trader said were being reflected across LBOs. 

Slowest August since ’04

3157582-main_beach-east_hampton.jpgHistorically, August is a dull month for dealmakers as Wall Street heads to the Hamptons and European CEOs go on holiday. But this August marked the slowest pace for mergers since 2004, according to research firm Dealogic.

Hampered by tightening credit markets, which made it difficult to borrow money to fund deals, global mergers and acquisition volume dropped 25 percent from 2006. Worldwide M&A totaled $183.3 billion, which was the slowest August since 2004 and the weakest monthly tally since July 2005, Dealogic said.

In the U.S., merger activity dropped to $53.9 billion, down 22 percent from August, 2006. This month’s deals included private equity group TPG’s $395.5 million agreement to buy Midwest Air Group and pharmacy-benefits manager Medco Health Solutions Inc.’s pact to buy PolyMedica Corp. for $1.2 billion.

TXU checks off buyout hurdles

txu.jpgIt’s been a good week for TXU. The Texas power company was saved from having to jump one hurdle between it and the closing of its $32 billion buyout and easily made it past another.

And the arbitrage spread on the deal – an indication of how likely investors believe a deal is to go through - shows it. It has narrowed to under 3 percent, which is considered within a normal deal range and a far cry from the 9 percent it was hovering at just a few weeks ago when it was seen as one Wall Street’s at-risk LBOs .

Its largest shareholder, Franklin Resources, has decided it will back the $69.25 offer from private equity firms Kolhberg, Kravis Roberts and Co and TPG Capital, reversing its earlier position that the number was too low. The shareholder vote is set for Sept. 7.

DealZone M&A Briefing: Lone Star, Gottschalks

accredited1.jpgLone Star Funds, which has been seeking to abandon its purchase of Accredited Home Lenders Holding Co, is set to buy the struggling subprime mortgage lender for a reduced price of $8.50 a share. Accredited shares closed on the Nasdaq at $6.31 on Thursday.
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Vivendi dismissed recent speculation it was interested in buying German Pay TV broadcaster Premiere.
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Big U.S. and Canadian investors are set to push for the merger of TSX Group Inc and Montreal Exchange Inc. The exchanges have been in serious talks since this summer, the Globe and Mail reports.
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Nortel has joined the line of interested suitors in Tellabs Inc, according to a report in Web site Light Reading. Citing an unnamed Wall Street source, the telecom-industry focused Web site said Nortel is prepared to pay as much as $7.4-billion.
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With some deals looking shaky, the Deal Journal reports that peddlers of M&A rumors are starting to rear their heads again, noting that shares of Newmont Mining soared on rumors it would be bought by Barrick Gold for as much as $25 billion.
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China’s economic boom is driving up prices for bilingual bankers. Hedge funds and private equity firms, which are starting to source deals in China, are poaching bankers from Wall Street firms, making the hunt for already scarce talent even tougher.
***
Thailand is pressuring Exxon and Chevron to make good on a pledge made 15 years ago to float shares in their local oil refineries in Bangkok next year. Many foreign investors are wary about Thailand after last year’s military coup.
***
The storm in global credit markets has stalled Japanese leveraged buyouts and left banks exposed to unwanted risk, although deep-pocketed and conservative local banks are expected to act as a buffer. Deals disrupted by the credit squeeze include the syndication of buyout debt for MBK Partners’ acquisition of software firm Yayoi, Advantage Partners’ purchase of Tokyo Star Bank Ltd and Liberty Global Inc’s capital-raising, according to financial sources.
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Gottschalks Inc said it ended a strategic review that included a possible sale of the company, and decided to focus on a revised business plan to improve sales and operating performance as it posted a quarterly loss significantly wider than what analysts expected.

DealZone M&A Briefing: Lone Star, Gottschalks

accredited1.jpgLone Star Funds, which has been seeking to abandon its purchase of Accredited Home Lenders Holding Co, is set to buy the struggling subprime mortgage lender for a reduced price of $8.50 a share. Accredited shares closed on the Nasdaq at $6.31 on Thursday.
***
Vivendi dismissed recent speculation it was interested in buying German Pay TV broadcaster Premiere.
***

Big U.S. and Canadian investors are set to push for the merger of TSX Group Inc and Montreal Exchange Inc. The exchanges have been in serious talks since this summer, the Globe and Mail reports.
***
Nortel has joined the line of interested suitors in Tellabs Inc, according to a report in Web site Light Reading. Citing an unnamed Wall Street source, the telecom-industry focused Web site said Nortel is prepared to pay as much as $7.4-billion.
***
With some deals looking shaky, the Deal Journal reports that peddlers of M&A rumors are starting to rear their heads again, noting that shares of Newmont Mining soared on rumors it would be bought by Barrick Gold for as much as $25 billion.
***
China’s economic boom is driving up prices for bilingual bankers. Hedge funds and private equity firms, which are starting to source deals in China, are poaching bankers from Wall Street firms, making the hunt for already scarce talent even tougher.
***
Thailand is pressuring Exxon and Chevron to make good on a pledge made 15 years ago to float shares in their local oil refineries in Bangkok next year. Many foreign investors are wary about Thailand after last year’s military coup.
***
The storm in global credit markets has stalled Japanese leveraged buyouts and left banks exposed to unwanted risk, although deep-pocketed and conservative local banks are expected to act as a buffer. Deals disrupted by the credit squeeze include the syndication of buyout debt for MBK Partners’ acquisition of software firm Yayoi, Advantage Partners’ purchase of Tokyo Star Bank Ltd and Liberty Global Inc’s capital-raising, according to financial sources.
***
Gottschalks Inc said it ended a strategic review that included a possible sale of the company, and decided to focus on a revised business plan to improve sales and operating performance as it posted a quarterly loss significantly wider than what analysts expected.

Blackberry buy — an addictive rumor

bberry.jpgMicrosoft late on Wednesday announced a deal to buy Parlano, a company that makes an online chat room application, for an undisclosed amount. 

The chat on Thursday though was whether Microsoft was looking at something much, much bigger — such as Research in Motion Ltd (RIM), the company that makes addictive email device the Blackberry.

Microsoft has been an active player in the M&A boom this year. In May, it announced its biggest acquisition ever with the $6 billion buy of Web advertising firm aQuantive Inc. Other deals it has done include July’s acquisition of AdECN, a stock market for buyers and sellers of Web advertising, May’s acquisition of a 4 percent stake in online jobs site CareerBuilder.com, and a deal in March to buy privately held speech technology company Tellme Networks Inc, valued at about $800 million according to sources at the time.

California style, via South Korea

surfer.jpgAbercrombie & Fitch, Hollister, American Eagle … seems like there are a lot of retailers out there that cater to teens and young adults. Right?

Well according to Women’s Wear Daily, another one is on its way.

Who.A.U. (stands for Who Are You?),  a South Korean retailer with what WWD calls “a passion for the California lifestyle,” will open its first U.S. store in Stamford, Connecticut, and plans to open 12 to 18 stores in the first year.

Daniel Pang, executive vice president of U.S. operations for Who.A.U., predicts the chain could eventually be as big as Hollister, WWD said. Hollister has 416 stores in the U.S.

Milk prices trump product recalls in parent’s worries

Which is more worrisome to U.S. parents at the moment — a slew of Chinese-made products being recalled or the rising price of a gallon of milk? It’s the milk, according to Britt Beemer, chairman of America’s Research Group, which tracks consumer behavior and surveys shoppers on a weekly basis.
 
While he said that about 6 percent of parents surveyed in recent weeks have said they are concerned about the recalls and another 30 percent say they’re “slightly concerned”, 65 percent of parents say their supermarket prices have gone up dramatically. 
 milk.jpg
“They’re talking about the fact that they’re paying $2 more for a gallon of milk today than they did a year ago,” he said. “They just can’t believe the inflation they’ve seen at the supermaket.”
 
He said that while the product recalls are troubling (Read the latest recall), very often parents are not even aware if a toy they have in their home is affected by a recall. And with so many recalls being announced, he said, it is hard for parents to keep track of them all.
 
But Beemer said that when it comes to higher grocery prices, shopppers have no doubt that they are being affected.
 
“They tell us they feel like they’re spending at least $20 more a week for groceries this year than they were a year ago,” he said.
 
And then could be bad news headed into the holiday season.
 
“I don’t want to be that lone wolf crying in the wilderness, but I do think we could see a Christmas season this year where retail sales are flat,” he said.

Clean energy spending moves beyond green hype

windmill1.jpgThere may be a lot of hype out there, but overall, venture capital and private equity firms are indeed putting more money into the green energy sector.

And while U.S.-based investment in clean energy, which includes everything from solar technology to wind farms to ethanol, has lagged Europe in the past, it is on track to surpass it in 2007 for the first time.

Venture capital and private equity firms invested $10.6 billion in the first half of 2007 in clean energy and on an annualized basis, the majority of that spending will take place in the United States this year – the inverse of last year.

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