Unstructured Finance

Looking for a Sun Valley deal

The logo on the door of the Sun Valley resort, site of the 26th annual Allen & Co conference in Sun Valley, Idaho July 8, 2008. REUTERS/Rick Wilking  At Sun Valley, so far, it’s the fabricated deals that are getting the headlines. News Corp is not in talks to sell MySpace, despite the rumors. View article Read More

BP boss Tony Hayward is in the Middle East in a quest for cash to ward off takeovers. What’s in it for sovereign wealth funds in the oil-rich area? Diversity, says Reuters reporter Natsuko Waki. View article

The hedge fund industry has seen inflows of roughly $30 billion since last summer but British firm Man Group is not following the trend. Outflows from institutions have shrunk from year-ago levels but private investors are now pulling money out. View article

Now that the “world’s largest IPO” headlines  have been written about Agbank,  do the big numbers add up? View FT article

WSJ has some interesting predictions on who will be cutting steak with Warren Buffett this year. No one has  admitted yet to paying $2.6 million for a lunch date with the Oracle of Omaha.  View WSJ article

Catching the wave

SurferDistressed debt investors are pinning their hopes on a second wave of insolvencies in 2010 after banks’ refusal to write off bad loans made 2009 something of a damp squib.

Market participants at the launch of Debtwire’s European Distressed Debt survey in London today could not hide their frustration at the sticking plaster approach that has been applied to many ailing companies. “Some of these capital structures are irretrievably broken and it doesn’t do any good to pretend that they’re not,” said Richard Nevins, senior partner at Cadwalader, Wickersham & Taft.

The majority of survey respondents expect European restructuring to peak in the first half of 2010 as the economy improves and quantitative easing is withdrawn. Companies that have limped along through the downturn by stripping costs to the bone may struggle to build inventories and sales growth without a cash injection.

The afternoon deal

china screensThe Chinese media sector may seem an unlikely place to make money, given the government’s approach to censorship, but  Reuters’ George Chen finds the private equity industry is hungry for pre-IPO companies in an area with big potential.  Read Chen’s story: China media sector: A magnet for private equity funds and the factbox about China’s media industry.

Related stories from Reuters include:

Baidu to launch online video site for premium content

China video site PPLive eyes profits in 2010

Microsoft pegs China search market as top priority

More background:

China says 5,394 arrested in Internet porn crackdown (Reuters)

China pushes global channels for media (China Daily)

China regrets over WTO appeal ruling on publication imports (China Daily)

Senior Chinese leader urges better media supervision (Xinhua)

Fuzzy Logic? What’s bad for Live Nation and Ticketmaster isn’t bad for business

Live Nation, Ticketmaster deal gets green light in UK

Britain’s Competition Commission did an about-face last night, giving its blessing to the proposed merger of live music giants Live Nation and Ticketmaster. What’s nearly as surprising as the reversal is the starkly negative reasoning behind the decision.

UK regulators had said in October they was concerned about the move to combine the world’s largest concert promoter with the leading ticketing group, saying fans could wind up paying more to see their favorite artists. Certainly artists, fans and politicians have been lined up against the deal, so the backbone to resist the merger seemed solid enough.

But on second thought, the Commission said the new entity would not have the incentive to hurt rivals, in particularly an existing partner of Live Nation’s. “We found that, in most of these cases, the merged entity would suffer significant and immediate losses, with very uncertain prospects for long-term gain … Therefore, we concluded that it was unlikely that the merged entity would harm other ticketing agencies, promoters and venues in these ways.”

No longer just a dumb pipe

Comcast’s deal to buy a majority stake in NBC Universal from General Electric should put to rest fears at the cable operator that King Content will kill its business. But even if it becomes a thoroughfare of programming genius, the new venture will still have to convince a skeptical marketplace. The train wreck of Time Warner-AOL threw the idea of new media into financial purgatory.

Just how the venture will wring savings from its disparate businesses and avoid suffocating regulatory scrutiny are issues that could also create Comcastic headaches.  Robert MacMillan points out on our Mediafile blog, with a sensible dose of skepticism, that the new venture is affirming its commitment to local news, in effect, promising to keep the garden hoses pumping even as it primes for a media gusher with big-ticket programming.

Still, while making a new media juggernaut could still turn out to be a pipe dream, Comcast CEO Brian Roberts (pictured above) cannot be faulted for allowing his company to get stuck in a dumb pipe nightmare.

Comcast, GE and Kraft await Europe’s pleasure

The defining deals of the week, Kraft’s now officially hostile bid for Cadbury and a deal to sell a majority stake in NBC Universal to Comcast, hinge on decisions of Europe Inc, so they could well drag on many more weeks.

This morning, Kraft formally bid for Cadbury with the same offer mooted two months ago, before today’s put-up-or-shut-up deadline. Cadbury has already said no to these terms, and can be expected to do so again. But the sinking expectations that Kraft might pay more, and the lack of any other buyers coming forward, don’t help to make the case for a successful hold out by Cadbury executives.

Over the weekend we learned that GE and Comcast agreed on a valuation of around $30 billion for a joint venture between NBC Universal and Comcast, ironing out what has been a key obstacle in talks so far. But French media conglomerate Vivendi, which owns 20 percent of NBC Universal, has not yet agreed to a deal, a source said.

Did he say IPO?

Speaking in New Delhi, General Electric CEO Jeffrey Immelt said “Discussions are ongoing whether it is an IPO or another partnership,” in response to a question on whether GE was talking to Comcast to sell a stake in the fourth-placed TV network and movie studio. With Vivendi possibly just a couple weeks away from unloading its 20 percent stake in the NBC venture, and all the talk this week about Comcast gathering coins to add the content trove to its cable mix, it might seem as if Immelt is trying to conjure something like a rabbit from a hat – or a peacock from a beret.

GE and Comcast are discussing a deal under which the largest U.S. cable firm would take control of 51 percent of NBC Universal with GE, which has the right of first refusal to pick up Vivendi’s stake if the French company exercises its annual option to sell, taking the rest. “The capital markets have definitely improved,” Immelt said. There is reason to see stability and some optimism for the future,” he said.

Set aside for a moment that the sickly advertising market that NBC already faces. The market for IPOs is picking up nicely right now, but is still in an early stage of recovery, making do with a ragtag bunch of real estate investment trusts and Chinese new-market plays. What effect do you think a big media play splashing into that pool would have on investor demand for new issues?

Deals du Jour

General Electric Co’s (GE.N) Jeffrey Immelt has just come out to say it is holding discussions on partnerships or an IPO for its NBC Universal unit. Sources familiar with the talks have told Reuters that GE and cable operator Comcast Corp (CMCSA.O) are discussing a deal.

Mexican brewer FEMSA (FMSAUBD.MX)(FMX.N) has talked with Britain’s SABMiller Plc (SAB.L) and Heineken (HEIN.AS) from the Netherlands about a possible sale of beer operations that could be worth billions of dollars, a source familiar with the situation told Reuters.

Last but not least, the UK Takeover Panel has given Xstrata PLC (XTA.L) a deadline to “put up or shut up” on its proposal to merge with rival miner Anglo American (AAL.L).

Deals du Jour

French food group Danone has agreed to sell its 51 percent stake in its joint ventures with China’s Wahaha group, putting an end to legal proceedings related to the disputes between the two. In 2007, Danone accused Wahaha of illegally setting up parallel business outside their ventures. 

McGraw-Hill Cos is leaning toward selling its money-losing BusinessWeek magazine to Bloomberg LP, a person familiar with the matter tells Reuters. Bloomberg Markets, a financial news magazine that produces feature stories, and the 80-year-old BusinessWeek could be blended to make a title that would expand Bloomberg’s presence beyond its financial data clients and reach a mainstream audience.

For more on these stories and the rest of the latest deals news from Reuters, click here .

Deals du Jour

The world’s second largest confectionery group Cadbury has rejected a $16.7 billion bid approach by Kraft Food. But North America’s top food group still hopes it can clinch a deal to create a global powerhouse in snacks and quick meals.

For more from Reuters on the latest deals, click here.

Below is a round-up of all the market chatter from the press on Monday:

* South Korea’s No. 4 lender Hana Bank will buy a 18.44 percent stake in the Bank of Jilin in northern China for $316 million, said Yonhap news, citing an unnamed Hana Bank official.

* Russian billionaire Oleg Deripaska’s carmaker, GAZ, the Russian industrial partner in a Magna-led bid for Germany’s Opel, is not interested in an equity stake in Opel, Deripaska told Vedomosti newspaper.

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