Unstructured Finance

Walgreen’s shiny new purchase

Walgreen officially owns New York’s Duane Reade drugstore chain as of Friday, less than two months after the deal was announced.  Walgreen, which got its start in Chicago and is based in a nearby Illinois suburb, is now the biggest drugstore operator in New York City after adding 258 Duane Reade stores, two distribution centers and a corporate office to its 70 stores in the area.

A small percentage of Duane Reade’s stores are rather snazzy, some new and others renovated, and stand out compared to other drugstores, including Walgreens stores, in the Big Apple.  Those makeovers and Duane Reade’s strong push into private label products were some of what attract Walgreen, which is working on its own store upgrades. (But there are still dozens of Duane Reade stores that have yet to get a makeover.)

Duane Reade foodReuters recently toured one of the newest Duane Reade stores, in Chelsea.  We thought those of you outside of New York might like a glimpse into what the stores are like.

Here’s part of the fresh food area at the store.  This shop is a bit different, with most of the first floor dedicated to groceries.  It feels more like a mini-supermarket than a drugstore or convenience store, complete with prepared salads, sushi and even gourmet rice pudding.  One floor below, shoppers can buy toiletries, visit a doctor and browse a cosmetics section that’s a bit more like a department store than a drugstore, complete with makeovers.  Oh, and they can also get prescriptions filled, which is one area where Walgreen is expected to overhaul operations with its expertise.Duane Reade Look Boutique

The deal cost $618 million, plus the assumption of debt which Walgreen plans to repay or redeem soon.  One thing the company won’t get — at least for now — is savings from any naming synergies.  Duane Reade will keep running under its own name and chairman and CEO, John Lederer, while Walgreen considers “the most effective way to harmonize both brands over time.”

DealZone Daily

Japan’s Monex Group will buy the securities unit of Orix Corp for about $246 million in stock, in a deal that will create the country’s second-largest online broker.

By forming a broker with more than $23 billion in client assets they will be able to cut systems and other costs and beef up product and service line-ups, they said.

In other M&A news reported by Reuters and other media:

Speculation about a possible takeover of UK retailer Debenhams was raised after private equity firm TPG sells its 9 percent stake, the FT says.

Dr Reddy’s surges on Glaxo report

Dr Reddy’s shares hit an intra-day high of 900 rupees on Friday before closing 3.6 pct up at 865.45 rupees.

Shares in the drugmaker jumped to a 3-1/2-year high on a report that GlaxoSmithline is in talks to buy a 5 percent stake in the company for $150 million.INDIA-CHILDREN/UNICEF

At a time when firms are competing to increase their share in the global healthcare industry, the proposed move will bring a lot of mileage for both firms.

Keeping score: UK M&A, Asian tech and US debt

Here are the highlights from this week’s Thomson Reuters investment banking scorecard:

Cadbury deal lifts UK M&A to $168.8 billion

The $19.3 billion offer by Kraft Foods for UK confectioner Cadbury lifted UK target M&A to $168.8 billion for the year-to-date period, an increase of 19% over last year. The transaction could rank as the second largest non-government acquisition in the UK this year after Xstrata’s $42.5 billion bid for Anglo American in June.

UBS, which advised on both the Cadbury and Anglo deals as well as the UK government investments in Lloyds Banking Group and RBS, leads the year-to-date UK target league table with $124.6 billion from 21 announced deals.

The bulls and bears on equity rallies and M&A

Rising stock markets and talk of improving economic confidence have prompted a barrage of analyst notes on how the M&A market is picking up.  Check out what I wrote on the subject earlier Thursday .

Here’s a few quick points from others:

Citigroup said that as global economic indicators stabilize, financing markets reopen and equity markets recover, hostile takeovers may be poised for a sharp resurgence. “Indeed, many recent high profile M&A transactions have been unsolicited or hostile in nature,” a note said.

My colleague Quentin Webb talked about mergers and aggravation, or hostile bids,  in July.

Keeping score: US leads M&A, Securitizations, National Express

An Iraqi worker adjusts an oil pipe at Nahr Al-Umran gas refinery in Al-Dier District, northern Basra July 17, 2009. REUTERS/Atef HassanHere are the highlights from this week’s Thomson Reuters Investment Banking Scorecard:

- US M&A Accounts for the Majority of Weekly Worldwide Activity

US M&A activity was worth $13.9 billion for the week, bolstered by a flurry of deal announcements ahead of Labor Day in oil and gas, media and pharmaceuticals.  Goldman Sachs and Bank of America Merrill Lynch each advised on just over $9 billion in deals this week.

 

- Government Program Lifts Weekly US ABS Volume to $16.4 billion

The weekly volume of US asset-backed securities totaled $16.4 billion, powered by $14.2 billion of offerings eligible for Term Asset-Backed Securities Loan Facility (TALF).  Multi-billion dollar securitizations from the likes of Citigroup, Bank of America and Ford brought year-to-date ABS volume to $110.5 billion, a 28% decrease from last year at this time when issuance totaled $154.1 billion.

Deals du Jour

A man carries a cardboard with a picture of a mobile phone inside a hall of the upcoming CeBIT fair in Hanover March 2, 2009. REUTERS/Hannibal Hanschke (GERMANY)

Portugal Telecom <PTC.LS> and Spanish firm Telefonica <TEF.MC> have both agreed to sell their 32.2 percent stakes in Moroccan telecoms firm Meditel to local investors in a deal likely to be closed by the end of the year

Reports suggest that online telephony firm Skype is set to be sold to private investors by its current owner eBay, with further details likely to be announced today. Sources indicated to the New York Times that co-founder of Netscape, Marc Andreessen is among the group of investors.

For the latest news from Reuters on mergers and acquisitions click here.

Here are some of the stories reported in today’s press (some external websites may require subscriptions):

Green shoots?

We’re hardly out of the woods yet, but more and more fund management companies are beginning to feel confident enought to say conditions are improving, if only very slightly.

rtr1phbsToday Crosby Asset Management stuck its neck out.

“A modest, but noticeable, improvement in the operating environment was discernible,” it said in its half-yearly report, adding that business at its wealth managment unit “is showing modest signs of improvement”.

Crosby must think this can’t come soon enough. Assets have slumped from $2.2 billion in Q1 2008 to $600 million, while it has said it will close almost all remaining funds from its high-profile but ill-fated acquisition of funds from Forsyth Partners in 2007. In the meantime it is reducing costs and realising assets “wherever possible” and surely hoping those shoots don’t wither.

Exporting Insight

bny-mellon-buys-insight1BNY Mellon Asset Management which today acquired Lloyd’s fund management unit- Insight Investment- for 235 million pounds is betting on a boom in liability driven investment (LDI) to boost its coffers over the coming years.

 

Vice chairman Jon Little told us that Insight’s fixed income and absolute return businesses were expected to grow rapidly, but it’s Insight’s LDI business that seems to have played the decisive role in the deal.

“Over time most pension plans will look at some form of LDI type investment strategy – so this is a huge market for us. And this is not a trend just in the UK. It is an emerging theme in the US, Holland, Germany and Japan,” Little said.

Deals du Jour

Citigroup plans to sell 20 businesses in consumer finance, many of them located in Europe, its chief executive Vikram Pandit said in an interview with Singapore’s Business Times

He said the move was due to the shift in the consumer finance market where “there is less funding availability and they are probably less robust as businesses.”

Pandit also said that the group’s capital position following the completion of the exchange of preferred shares for common equity in July, reflected an “incredible financial strength.”

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