Unstructured Finance

Deals wrap: Shell games

A new Reuters investigative report takes a deeper look at a niche industry of advisers who specialize in so-called “reverse merger” deals that use shell companies to give clients easy entry into U.S. capital markets. As correspondents Nanette Byrnes and Lynnley Browning report, more than 400 Chinese companies have been listed in the U.S. over the course of the last decade by way of this back-door method. But, as their investigation shows, a recent “spate of spectacular collapses of Chinese stocks listed on American exchanges has cost U.S. investors billions of dollars” and sparked multiple investigations into the practice.

Job cuts are on the way at HSBC. Europe’s biggest bank announced plans to axe 30,000 positions between now and the end of 2013 as it retreats from countries around the globe where it is struggling to compete. The first 5,000 cuts came as part of the company’s restructuring efforts across Latin America, the U.S., Britain, France and the Middle East. The bank, which posted a surprise rise in first-half profit on Monday, is reversing a strategy that had been criticized for “planting flags” around the world. CEO Stuart Gulliver’s far-reaching plan unveiled three months ago aims to slash costs and he intends to sell, shut or slim down retail banking in 39 countries. HSBC said on Sunday it would sell 195 U.S. branches to First Niagara Financial for about $1 billion in cash, and close another 13 of the 470 sites it had.

Peabody Energy and ArcelorMittal launched a hostile $5.2 billion bid for Macarthur Coal after the Australian target’s board said the approach undervalued the company and it was working on attracting a rival offer. Peabody, the largest U.S. coal company, and ArcelorMittal, the world’s top steelmaker, have been courting Macarthur to secure its resources of pulverized coal, a key steelmaking ingredient, but talks to get the backing of Macarthur’s board collapsed over the weekend.

Lansdowne Partners, one of Europe’s biggest hedge fund firms, has sold its $850 million stake in Goldman Sachs as part of a move out of investment banks burdened by regulation and into retail banks, a source close to the situation told Reuters.

A report emerged late last week on tech blog Boy Genius Report that cited an unproven source saying Apple is in talks to buy U.S. bookseller Barnes & Noble. Technologizer’s Harry McCracken takes a look back at the long list of past Apple acquisition rumors to make a point about how often they turn out to be untrue.

Deals wrap: Copycats sure to follow LinkedIn

A day after LinkedIn’s shares more than doubled in their public trading debut, analysts are scrambling to explain why the stock exploded and figure out what happens next.

The professional networking site’s IPO was being closely watched by Facebook, Groupon, Twitter and Zynga to gauge investors’ appetite for Internet companies.

Facebook COO Sheryl Sandberg described a public offering of Facebook shares as “inevitable,” while Evelyn M. Rusli over on DealBook predicts a surge in Internet IPO’s but doesn’t think the market is setting itself up for another tech bubble burst.

Deals wrap: Blockbuster year for M&A?

A man and child look out over destroyed homes after a tsunami and earthquake in Sendai, northeastern Japan March 12, 2011. REUTERS/KyodoDespite upheaval in the Middle East and Japan, worldwide M&A have risen 58 percent to $717 billion so far this year, according to preliminary data from Thomson Reuters, marking the best start to a year since 2007 and building on last year’s tentative recovery. Analysts expect to see continued strong activity in mining and energy, but some warned it’s still too early to see the full implications of the recent crises.

Deal-making in Asia got off to a strong start in 2011, with cashed-up companies tapping investment opportunities in sectors from energy to industrials, and bankers say the transaction pipeline for the rest of the year looks healthy.

Executives at boutique investment banks see an increasing number of clients wanting their advice after a Delaware ruling last month accused large investment bank Barclays Capital of conflicts of interest.

Deals wrap: Icahn turns inward

Investor Carl Icahn speaks at the Wall Street Journal Deals & Deal Makers conference, held at the New York Stock Exchange, June 27, 2007.  REUTERS/Chip East Seems billionaire investor Carl Icahn has had enough of managing money for outsiders. The 75-year-old stock picker dropped a bit of surprising news on Tuesday when he said he plans on returning all of his clients’ money, making him the latest in a string of investors to do so.

Barnes & Noble’s bid to reinvent itself as a formidable competitor in the burgeoning e-books sector is off to a solid start. Its Nook is the second best-selling e-reader on the market behind Amazon’s Kindle, and the book chain’s chief says it has 25 percent of the e-books market.  So why can’t the bookseller find any buyers? Reuters correspondents Phil Wahba and Jessica Hall take a closer look in a new piece.

Jury selection in the trial against Galleon Group hedge fund founder Raj Rajaratnam kicks off the action today in a case at the heart of the biggest insider trading investigation in a generation.

Check Out Line: Showdown at the Barnes & Noble corral

barnes1Check out Barnes & Noble’s victory at its annual meeting.

Shareholders of the U.S. bookseller had to choose between dissident investor Ron Burkle and Chairman Len Riggio as a bitter proxy battle between the chain’s top two stakeholders came to a head.

And the winner of the “gunfight” was Barnes & Noble, whose slate of directors won election.

Burkle, whose Yucaipa Cos owns 18.8 percent of Barnes & Noble shares, had been on a slate of three nominees seeking seats on the board, including the one held by Riggio, the man who built the chain into the largest U.S. specialty bookseller and the company’s largest shareholder with a 28.2 percent stake. Three of the nine board seats were up for a vote.

Deals wrap: Aussie coal is hot

A coal excavator loading coal at one of Macarthur Coal's mines  in Queensland is seen in this undated photograph obtained April 9, 2010. REUTERS/Macarthur Coal/HandoutAround $7 billion of Australia’s coal assets are in the crosshairs of predators from Seoul to Shanghai, as Asia jostles for supplies to feed its burgeoning needs, pushing up bid valuations for Australian coal miners. *View article *View factbox

Barnes & Noble’s predicament is sounding like Blockbuster’s — meaning, unfortunately, the fading video rental chain not a successful movie. The U.S. bookseller’s cash flow is sinking and technological shifts look set to worsen that. What exactly the bookseller can do is unclear. *View column

Bernard Madoff had the big numbers attached to his crime but Kenneth Starr’s alleged Ponzi scheme has celebrities. Vanity Fair takes a look into Starr’s world. *View Vanity Fair article

Check Out Line: Borders launches e-bookstore … finally

bgp1Check out Borders Group finally launching its e-bookstore.

The No. 2 U.S. bookstore chain’s electronic bookstore comes nine months after rival Barnes & Noble debuted its Nook e-reader and three months after Apple introduced its popular iPad tablet computer, allowing both companies, and Amazon.com, which sells the Kindle e-reader, to get a head start.

No worries, says Borders, which saw sales at its namesake superstores open at least a year and on its website fall 11.4 percent in the first quarter.

“We’ll take market share just by turning it on,” said Mike Edwards, president of Borders Inc, the company’s main operating business.

Check Out Line: Ron Burkle invests in yet another challenged company

AmericanApparelCheck out Ron Burkle’s continued affinity for companies in trouble.

The supermarket magnate has taken a 6 percent stake in American Apparel, according to a regulatory filing on Thursday. That’s the billionaire’s latest investment in iconic companies that just can’t seem to get back on track. 

The apparel maker and retailer, founded and run by the colorful, often scandalous Dov Charney, came close to tripping a loan covenant with its creditors but reached a deal yesterday, averting disaster.

Burkle has also upped his stake in Barnes & Noble, whose sales are still trending downward despite the popularity of its Nook e-reader, in recent months and is battling with the Riggio family for control of the bookseller. He owns nearly 20 percent of Barnes & Noble and fought, unsuccessfully so far, to double his take without triggering a poison pill. Tuesday’s annual shareholder meeting promises to be colorful.

Check Out Line: The latest bookseller boss shakeup

EARNINGS/Check out the new guy in charge at Barnes & Noble.

On Thursday, Barnes & Noble named William Lynch, the (young) father of its Nook e-reader, as its new chief executive.  Outgoing CEO Stephen Riggio — the chairman and founder’s brother — is sticking around as a vice chairman.

Barnes & Noble appears to be betting that the Nook will be a prime source of future growth.  Lynch, 39, called e-books “key to our future” during a morning conference call.

Lynch’s appointment comes less than two months after smaller rival Borders saw its CEO leave after a year.

Check Out Line: Power plays in the air

walgreen1Check out the power plays going on in the consumer world.

Walgreen said it will buy Duane Reed for $618 million in cash, catapulting the largest U.S. drugstore operator into the top spot in the New York City area. The deal price also includes the assumption of $457 million in debt.

Duane Reed is owned by private equity firm Oak Hill Capital Partners and operates 257 drugstores in the New York metropolitan area. Duane Reade will continue to operate under its brand name, and Walgreen expects to retain the employees at its stores, pharmacies and distribution centers.

Walgreen operates 70 stores in the New York area, including a multi-floor outlet in the heart of Times Square across the street from a Duane Reade store.

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