Unstructured Finance

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?”

Hedge fund leaders duck for cover

By Matthew Goldstein

Top hedge fund managers are great at enriching themselves through savvy trades that presumably come from a keen insight into the markets and economic trends. But all too often these titans of Wall Street come up small when asked for their opinions on the pressing economic questions of the day.

That’s what happened when three Reuters reporters recently asked 30 of the top U.S. hedge fund managers to respond to a quick email survey about the political morass in Washington and the potential for a double dip recession. Less than a handful of  managers offered any thoughts on the subject. The overwhelming majority either didn’t respond, or had a representative reply that the manager was either too busy to comment, or didn’t want to participate.

I’m not going to embarrass any one by calling them out for not responding but it’s hard to fathom how some of the wealthiest people on the planet couldn’t find the time to have someone on their staff take 5 to 10 minutes out to respond to a three question survey. (We were trying to make it real easy to get some responses).

Deals wrap: Groupon, LivingSocial in buying frenzy

Group buying sites Groupon and LivingSocial are both in the process of launching multi-billion dollar IPOs, but as Deal Journal reports, the companies are also “plowing full steam ahead with deal making.”

Shares of Dunkin’ Brands shot up as much as 56 percent on its first day of trading, closing at $27.85 by the end of Wednesday’s trading session. The parent of the Dunkin’ Donuts chain said it has set a 20-year target to open 15,000 new stores in the U.S., up from its current 6,800. This would surpass rival Starbucks’ numbers.

France Telecom is looking to put its Swiss, Austrian and Portugese units up for sale. Analysts say the sell-off could raise as much as $2.9 billion and pave the way for a return to shareholders.

Deals wrap: Dunkin’ Brands IPO prices above range

There appears to be a strong demand for this week’s biggest deal. Dunkin’ Brands, the provider of sweet treats and coffee raised $422.75 million after pricing its IPO at $19 per share, well above the range set by underwriters. This gives the parent of the Dunkin’ Donuts and Baskin Robbins chains a market value of just over $2.4 billion.

This slideshow in PEHUB shows who Dunkin’ Brands’ top shareholders are.

Sources say private equity firms Centerbridge Partners and BC Partners are pursuing Caterpillar’s logistics unit, a sale that could fetch more than $1 billion. In a Reuters exclusive, several people familiar with the matter said “two or three parties remain in the auction as the bidding process for Caterpillar’s third-party logistics business has reached the final round.”

Deals wrap: Fund manager Soros ending career

Billionaire hedge fund manager George Soros will be returning capital to outsiders and ending his nearly four-decade long career. In a letter to investors, Soros’ two sons cited tougher impending regulations on the hedge fund industry being the reason for returning the money. Soros said he will now only manage money for himself.

A study has found more than one-fourth of the 94 U.S. securities fraud lawsuits seeking class-action status and filed from January to June were related to so-called Chinese reverse mergers. Despite this surge in lawsuits, investors may have trouble recouping their losses even if they win.

Walt Disney Co., the majority shareholder of India’s UTV Software Communications, is proposing to buy most of the shares it does not already own in the company and delist them from all bourses. The deal has a market value of $826 million.

Deals wrap: Hynix may finally have new owner

Shareholders of Hynix Semiconductor will take final bids for a controlling stake in the South Korean memory chipmaker, said a leading shareholder. The $2.3 billion stake sale is the third attempt by creditors-turned-shareholders to find a new owner for the company.

Dutch bancassurer ING will sell most of its Latin American operation to Colombia’s GrupoSura for $3.7 billion in a deal resulting from its state rescue in 2008. This sale now paves the way for the sale of ING’s U.S., European and Asian businesses, which are worth about 18-19 billion euros.

Internet radio service Pandora debuted last month well above its offer price but fears of the company’s chances of turning profit quickly dragged shares down. Deal Journal writes why two stock-research firms are telling investors to “scoop up” Pandora stocks, while one other notable firm is advising against it.

A bank account free from political posturing?

By Matthew Goldstein

A measure aimed at protecting companies from community bank failures may be finding new life as a way to guard against the fallout from the political squabbling in Washington, D.C. over raising the debt ceiling.

Even though much of Wall Street believes that sanity will prevail in the end and the nation’s politicians will not allow a U.S. debt default to occur next week, the level of anxiety in the financial world has risen in the past few days. And that unease has led some money managers to begin looking at a post-financial crisis measure aimed at protecting non-interest bearing bank accounts as a potential safe haven.

One trader says he is aware of at least one manager who has moved some cash into a non-interest bearing checking account that that FDIC is providing unlimited insurance on in the event of a bank failure. The unlimited guarantee by the Federal Deposit Insurance Corp. runs through Dec. 2012 and was authorized under last year’s Dodd-Frank financial reform law.

S&P as the decider?

By Matthew Goldstein

Derivatives guru Janet Tavakoli is a long-time critic of the rating agencies and in particular the role the raters played in the subprime debt crisis. And she says given the shabby job the rating agencies did in giving the green light to the subprime debt boom, it’s odd to think of firms like Standards & Poor’s playing such a big role in the ongoing US debt ceiling negotiations.

“Standard & Poor’s lost its credibility due to a long history of misrating financial products,” says Tavakoli.

The Chicago-based consultant, for now, isn’t taking position on how the on-again/off-again political wrangling in Washington over raising the debt ceiling should be resolved. But she said investors would be better off ignoring what the raters–in particular S&P–have to say on the matter.

Deals wrap: Express Scripts’ CEO steps into the spotlight

For a self-described nerdy accountant who shuns attention, Express Scripts chief George Paz just thrust himself into the limelight, reports Lewis Krauskopf. The company’s planned buy of Medco Health Solutions  met with swift opposition from consumer advocates and drug stores, signaling the beginning of what could be an ugly fight for antitrust approval.

Len Blavatnik’s Access Industries, Sony Music Entertainment and Vivendi SA’s Universal Music Group are among the music companies and private equity firms interested in buying EMI Group, people familiar with the situation said.

Apple is in early talks to join the bidding for Hulu, the online video site that Walt Disney Co, News Corp and its other owners have put up for sale, Bloomberg cited two unidentified sources as saying.

Deals wrap: Express Scripts to buy Medco

Express Scripts will buy rival Medco Health Solutions for $29.1 billion in cash and stock to create a powerhouse in managing prescription drug benefits in the United States, the companies said on Thursday. The WSJ live blogged the companies’ conference call on the merger.

Two Chinese Internet firms have postponed their U.S. fundraising plans due to volatile global markets and after a series of accounting scandals tarnished the reputation of overseas-listed Chinese companies.

Shares of real estate site Zillow skyrocketed in their market debut on Wednesday, the latest to ride a wave of dotcom exuberance while stoking fears of lofty Internet valuations.

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