Unstructured Finance

Deals wrap: Glencore debuts while markets await LinkedIn

Commodities trader Glencore made a steady market debut with shares trading just above the widely expected launch price of 530 pence, giving it solid currency for potential acquisitions.

There was heavy interest in the stock on both the London and Hong Kong exchanges, due in part to the relatively small amount of shares being sold. Glencore’s Chief Executive and largest shareholder Ivan Glasenberg said demand for the shares “significantly” exceeded the amount available.

Analysts on Thursday said the 530 pence per share level was realistic and should mean strong aftermarket support. “Obviously everything is priced to do well. I don’t know whether five to ten percent upside is in the bag or not, but certainly they are trying to please investors with the price,” analyst Tim Dudley at Collins Stewart said.

In other news, internet companies that expect to go public in the future are eagerly awaiting market reaction to LinkedIn’s debut. The professional networking site sold shares at the top of an already raised price range in its initial public offering on Wednesday, signaling that stock investors are eager to buy shares of social networking companies even if valuations are lofty.

Although companies like Facebook, Groupon, Twitter and Zynga have significantly different business models than LinkedIn, they each tap social networks and the valuations for each are skyrocketing.

Deals wrap: Investors willing to overlook LinkedIn’s risks

LinkedIn’s IPO, which is expected to price after the close of U.S. markets on Wednesday and start trading on Thursday, appears set to be a stunning success, but it carries a number of risks that may shake up investors in the future.

Potential risks include LinkedIn’s gutsy bet on future growth, an admission that it does not expect to be profitable in 2011 and the prospect of having its site blocked, which would limit its user base and could curtail some of the potential growth so attractive to investors.

After two years of losses, LinkedIn finally made money for its common stockholders in 2010 — but then it was back to only breaking even in the first quarter of 2011. A profitable company flatlining or swinging to a loss in its first year as a publicly traded stock could prove an unwelcome surprise for investors betting on the booming growth of social media companies.

Deals wrap: Big appetite for Glencore’s IPO

Commodities trader Glencore will close the books for its planned $11 billion initial public offering a day ahead of schedule, underscoring strong investor demand for its shares despite volatile commodity markets. A source told Reuters on Friday the offer was already “multiple times covered” across the price range, but part of that success is due to the relatively small stake in the company being placed with funds and to Glencore’s size, which makes it a must-buy for many.

Takeda, Japan’s largest drugmaker, said on Friday it has not agreed to  buy Swiss rival Nycomed, following reports it was in talks to buy the privately held company for more than $12 billion. “Takeda is constantly seeking and evaluating opportunities to increase shareholder value and enhance our business through strategic investment; however, there is nothing that needs to be announced at this point,” Takeda said on its website.

Yum Brands is adding Chinese hot pot to its menu of fast-food restaurants with an offer to buy out China’s Little Sheep for $586 million, paying a premium to introduce the popular chain to a global audience and sending the restaurant’s shares to a record. Analysts said the deal was positive for both Yum Brands, the parent of KFC, Taco Bell and Pizza Hut, as it expands in China and for Little Sheep, which has more than 300 restaurants, primarily in China, as it would help save costs.

Deals wrap: Takeda offers $12 billion for rival Nycomed

Takeda Pharmaceutical is in talks to buy privately-held Swiss rival Nycomed for more than $12 billion, said sources with direct knowledge of the matter. Japan’s largest drugmaker is seeking to boost its presence in Europe and emerging markets, as well, the acquisition would help them gain a lung disease drug from Nycomed which has just been approved in the U.S. Japanese drugmakers have been actively pursuing acquisitions to boost growth as they face the loss of patent protection on key medicines.

A planned rescue deal involving Saab and China’s Hawtai Motor Group collapsed after it failed to get necessary approvals, leaving Saab’s owner, Spyker, chasing new funding alternatives to restart production at the Swedish automaker. Spyker said it was continuing talks with Hawtai, while a Reuters exclusive reported the Dutch sportscar-maker was also talking to another Chinese company, Great Wall Motor about a possible tie-up.

Glencore’s CEO Ivan Glasenberg said recent falls in commodity prices were due to “froth” in the market and had not affected strong demand for the company’s IPO. Commodity price volatility in the past week has prompted worries over Glencore’s planned $11 billion IPO, with fund managers sensing an opportunity to drive down prices. The commodities giant recently unveiled the prospectus for their IPO, detailing plans to raise funds in a dual listing in London and Hong Kong.

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