Unstructured Finance

Deals wrap: Conoco may double assets sale

ConocoPhillips, the third-largest U.S. oil company, said it might double its planned sale of less-desirable assets to $20 billion, with proceeds going to buy back stock.

Conoco is executing a plan, first announced in late 2009, to increase shareholder value through debt reduction, stock buybacks and increased dividends. Conoco did not immediately specify what might be sold, but did say those assets targeted would be mature, high-cost projects.

Consumer goods group Colgate-Palmolive has agreed to pay around $940 million for Sanex, a shower gel and deodorant brand which owner Unilever had been ordered to sell. The sale comes just a week after Unilever announced it was stepping up new product launches to drive growth.

Corporate predators could find the beleaguered reinsurance sector offers attractive opportunities, provided they have the nerve to look beyond a round of bumper claims triggered by the Japanese earthquake. “The market was turning anyway, and the earthquake will shift it, which will obviously be a good entry point for private equity and for M&A activity on a wider basis,” said Barrie Cornes, insurance analyst at Panmure Gordon.

After its acquisitions of the Huffington Post and TechCrunch last year, AOL will begin the process of overhauling its family of content sites, reported All Things Digital’s Kara Swisher. AOL chief executive Tim Armstrong will reportedly issue an internal memo detailing the closing down of “dozens of its dedicated content sites — some being shuttered completely and others integrated with existing Huffington Post sites,” writes Swisher.

Do Conoco’s asset sales offer hope for BP?

Deutsche Bank analyst Paul Sankey says the U.S. oil major may overshoot its $10 billion target for asset sale by 50 percent. He reinstated coverage of ConocoPhillips with a “buy” rating, crediting the rising premiums the company has been able to command. So far, Conoco has raised more than $5 billion from the sale of stakes in its Canadian oil sands venture, Syncrude, to China’s Sinopec and the stake in a truck stop joint venture to Pilot Travel Centers.

Sankey expects about $1.5 billion to $2 billion from Conoco’s North American assets, including $1 billion from its 25 percent interest in the Rockies Express pipeline. This would bring the total asset sale proceeds to about $7 billion this year — well ahead of the company’s target of $5 billion, he said.

Conoco has been selling to cut its spiraling debt. That may not be as dramatic an incentive as what is going on in the Gulf, but could mean BP may tap into the same demand for oil and gas assets to pay for its clean-up efforts. If you believe the forward price curve for oil, buying assets now may be the best chance to prepare for the coming price increases.