Unstructured Finance

DealZone Daily

Australia’s competition watchdog blocked National Australia Bank’s $13 billion agreed deal for wealth manager Axa Asia Pacific Holdings, opening the door for rival bidder AMP to make a comeback. Australia’s competition regulator defied expectations it would give conditional approval for a deal, instead issuing a flat rejection on the grounds a tie-up would hurt competition for retail investors.

British train and bus operator Arriva said it is in advanced talks with Deutsche Bahn about the German state rail company’s 775 pence a share bid, valuing the company at 2.7 billion euros including debt.

European consumer goods group Unilever will kick off the sale of its frozen food arm Findus next week, expecting to draw bids from private equity groups including Permira, Lion Capital and BC Partners.

For other deals news, click here.

More M&A and corporate finance news from other media:

U.S. government controlled insurer AIG is considering pursuing Goldman Sachs over losses incurred on $6bln on mortgage-backed securities. The move follows the SEC’s decision to file civil fraud charges against Goldman and could spark actions from other investors who have lost money, the FT writes.

Guy Hands’s Terra Firma may ask investors for 360 million pounds – three times the amount previously suggested — to see troubled music group EMI through its debt obligations until 2015, Bloomberg reports.

Keeping score: Food and drink M&A, sovereign debt

Highlights from the Thomson Reuters Investment Banking Scorecard:

“Food and beverage accounts for 10% of M&A

Coca Cola’s $12.1 billion offer to purchase Coca Cola Enterprises, an Atlanta-based producer and wholesaler of bottled beverages, brings the total of M&A activity in the food and beverage sector to $32.4 billion, an increase of 257% compared to the same period in 2009.

Deals in the food and beverage industry account for nearly 10% of all global activity this year and are second only to activity in the oil and gas sector.  Credit Suisse, an advisor to Coca Cola Enterprises, ranks as the top advisor in the food and beverage industry with $26.7 billion from 11 deals for year-to-date 2010.

European issuers power agency and sovereign debt market

This week’s $6.2 billion sovereign debt offering from the United Kingdom bolsters Europe’s stronghold in this market.  For year-to-date 2010, European countries have issued nearly 78% of all sovereign and supranational debt with 285 issues and proceeds of $206.5 billion.  The Americas region follows in second place with $23.3 billion from 52 issues. This week’s offering is the largest debt issue in the United Kingdom this year and the seventh largest agency and sovereign offering in Europe.

DealZone Daily

Kraft’s acquisition of Cadbury is expected to trigger the next blockbuster sale in the global corporate bond market as the company refinances an $11.5 billion bridge loan used to temporarily fund the deal.  The world’s second largest food group Kraft is expected to have no trouble drawing demand for a bond sale, thanks to its investment grade ratings. Read the Reuters story here.

Private equity giant KKR is to launch a partnership to invest in consumer services, education and media businesses, a source familiar with the situation said on Monday. It will launch the business with Jonathan Grayer, former chairman and CEO of Kaplan, a unit of Washington Post Co.  Grayer was CEO of Kaplan for 14 years in 2008.

And in other media:

American International Group has decided not to sell its aircraft leasing unit International Lease Finance Corp, the Financial Times said, citing people close to the situation.  AIG has realised that it will not reap a big profit from the divestment of the business, ptompting it to scrap the sale plans.

As downturn takes toll, food bank volunteers become clients

foodThe longest recession since the Great Depression has taken an exacting toll on Americans and their ability to put food on the table. Families who once considered themselves solidly middle class are now signing up for food stamps or turning to food banks to feed themselves in the face of lost jobs or cut wages.

“These are our neighbors, our friends, the people we go to church with,” said Margaret McKenna, president of the Walmart Foundation, of the number of Americans who are going hungry. “This is not like this is the other, people we don’t know. These are people we do know.”

Food stamp enrollment has reached record numbers, while a  survey by Feeding America, the nation’s largest domestic hunger relief organization, found that 99 percent of participating food banks reported a surge in demand for emergency food assistance in the past year. Ninety-eight percent of food banks said that demand is being driven by first time users.

Kraft unwraps bid

Kraft Foods posted its offer to Cadbury shareholders with terms unchanged on Friday, triggering a two-month, 10.1 billion pound takeover fight for the British chocolate company.
Read the story here

The formal bid matches its indicative offer, worth 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share, which the U.S. food giant said valued Cadbury at 713 pence.
For the full prospectus, go to Kraft’s transaction website. Link here

A rival bidder could reveal its hand any time within the next 60 days, under UK takeover rules. Italy’s Ferrero and U.S.-based Hershey are considering making a bid. Analysts say the two could team up.

Kraft’s anti-climax?

North American food giant Kraft is due to post its offer documents to Cadbury shareholders by Dec. 7, but this latest milestone in the 10 billion pound takeover saga may turn out to be more damp squib than giant Toblerone.

Kraft could indeed post the documents ahead of time as the Times reported this week. With no significant changes to the structure or value of the offer anticipated, the event is unlikely to captivate or move the markets, however.

Keeping the terms exactly the same would be typical behaviour for Kraft, as we said last month here. The company formalised its indicative offer in the hope that no rival bidders would emerge to pressure it to up its bid. Despite Wispas — sorry, whispers — about Hershey, Nestle, and Ferrero, no rival has come forward yet.

Michael Pollan: “What’s in the beef?”

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Photo by Kris Krüg

Where does your burger come from? Journalist and food writer Michael Pollan has traced back the source of much of what we eat, and says that the ultimate answer is oil. Pollan, author of The Omnivore’s Dilemma, argues that it takes massive amounts of petroleum-derived fertilizers and pesticides to run industrial farms and feed lots, with dire consequences for human health and the Earth’s climate.

Check out Pollan’s multimedia presentation below, from the Poptech conference in Camden, Maine last month.

[Editor's note: After some Reuters fact-checking, Pollan withdrew his Poptech assertion that "A vegan in a Hummer has a smaller carbon footprint than a meat-eater in a Prius," and his statement has been edited out of the video. The erroneous meme has nevertheless continued to spread on Twitter]

Irene prepares to tough it out

It looks like Kraft CEO Irene Rosenfeld is getting ready to play hardball with her reluctant target, British chocolate maker Cadbury.

Cadbury investor Mario Gabelli will be disappointed in the short term – he wanted a small kiss from Irene after all - but a formal offer from the North American food group sets in motion an 88-day process under UK takeover rules.

That should give Kraft plenty of time to sweeten its offer to something starting with an eight – the 800p per share bar regarded by many as the minimum price needed to tempt Cadbury to the negotiating table.

But will shareholders back hunger fight?

The world needs to spend $83 billion a year to ensure it can produce enough food amid a changing climate for its growing population by 2050, the UN’s Food and Agriculture Organization estimates.
    
Rich countries have pledged more than $22 billion over three years to help small, impoverished farmers grow and sell more by investing in seeds, fertilizer, roads and marketing infrastructure.
    
GATES/Philanthropists have thrown their weight behind the goal. Bill Gates challenged research companies last week to make new technologies available to small farmers without charging them royalties. (Click on the link at the bottom to see his full speech to the World Food Prize forum.)

Corporations have said they see themselves as part of the fight too, particularly when it comes to research. But Robert Thompson, a former World Bank official, says he’s pessimistic the private sector will be able to contribute enough. “Their shareholders won’t stand for them solving all the problems of the developing countries, and giving it away,” he told Reuters.
    
Thompson“It’s going to take subsidies or at least a public sector contribution to engage their research horsepower,” said Thompson, now an agriculture professor with the University of Illinois, who has pushed for more spending on agricultural development for 40 years.
    
Agribusiness should be motivated to get involved in developing countries because they represent a future growth market for their products, Thompson said. “They should be willing to accept lower return on their own investments as an investment in the longer term, but we have to keep the short time horizon of the U.S. investment community in mind,” he said.
    
“Shareholders are brutal on companies that don’t meet their short-term profit expectations. In that sense, perhaps some of the European companies like Syngenta, BASF or Bayer … may have a little more license, if you will, to take a longer-term perspective than some of the U.S. publicly traded companies.”

Below: Bill Gates addresses World Food Prize forum in Des Moines, Iowa.

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