Soaring premiums point to M&A bubble 21 May 2007 Deal volumes have long ago passed the levels reached during the last merger peak. But now bid premiums are higher too. There are good reasons why activity should be stronger today. But there are no good reasons for valuedestructive deals.
Law firm IPO could reshape the industry 21 May 2007 Australian law firm Slater & Gordon is seeking a stock market listing. Now some US firms are discussing the idea. The American Bar Association currently forbids US firms from public offerings. But the reasons it gives are outmoded.
TPG and Goldman rush into $28bn Alltel buyout 21 May 2007 A quick bid by the private equity consortium for the US wireless firm allowed it to tap easy credit and get a head start over rival bidders. Yet telecom groups aren t traditional buyout candidates due to heavy capital expenditure. A trade sale could have generated more value.
Sarkozy reassures markets with Airbus visit 21 May 2007 The French president s visit to the troubled aircraftmaker was an early test of whether he sticks by his protectionist campaign rhetoric. For investors, the result was a relief. Sarko refused to meddle in management and said the French state should one day get out. Quite right.
Siemens squeezed in CEO choice 21 May 2007 The German conglomerate needed a dynamic leader who had not been seduced by the cosy national governance style. Peter Loescher, Austrian hierapparent at US Merck, fits the bill. But Siemens is a complicated business and it s a big promotion for him.
Profumo goes extra mile to bag Capitalia 21 May 2007 The Unicredit boss looks generous in paying E22bn for the Italian bank. Capitalia investors will get the bulk of the deal s synergies. But getting the deal done quickly has cut the risks of a rival bid or loss of political support. It also frees Profumo for his next deal.
Does Lehman need a transformative deal? 21 May 2007 With the bank s stock price and revenue growth lagging peers over the past year, talk is swirling of potential mergers or even a sale. But nobody wants a DLJ redux. Better options might be a merger with UBS s banking operations or Cazenovestyle venture with HSBC.
Algeria could be Europe’s unlikely saviour 21 May 2007 Political stability is returning, as evidenced by the uneventful election which returned the ruling coalition. Opening up Algeria to foreign investment would provide Europe a major alternative gas supplier to Russia.
GE plastics deal highlights Immelt’s dilemma 21 May 2007 The conglomerate sold the division to the Saudis for $11.6bn. That s as much as 45% more than investors valued it in the GE portfolio. This is the problem GE faces. As its businesses grow but stock remains flat, the premium to the sum of its parts has disappeared.
China arrives late to the buyout party 21 May 2007 Beijing is investing $3bn of its huge foreignexchange reserves in Blackstone. This will add further firepower to private equity. But talk of a market meltup is overdone. History shows that foreigners often arrive when bubbles are near their end.
Microsoft $6bn aQuantive purchase looks desperate 18 May 2007 The software giant, which has avoided large acquisitions, is offering a stonking 85% premium for the internet ad agency. The ongoing internet ad firm land grab left it little strategic choice. Too bad the deal doesn t solve Microsoft s larger problem.
EMI opens books to Warner at last 18 May 2007 The UK music group has finally decided to let its rival into the data room. EMI boss Eric Nicoli looks ready to launch a fullblown auction. Even minus synergies, buyout firms think they can match Warner s 260p informal offer. Nicoli s task is to pressure Warner into paying more.
Who should run the World Bank? 18 May 2007 The ideal candidate has financial experience and the gravitas to tussle with entrenched bureaucracy. Larry Summers would ve been good. Even better would be Bob Rubin. He has none of the Bushbaggage that hampered Wolfowitz. It would also give him a graceful exit from Citi.
Bernanke should prick the buyout bubble 18 May 2007 The Fed chairman is worried about the risks of lending to LBOs. The dangers are certainly increasing. However, regulators failed to restrain the subprime bubble. A buyout bust would have a greater impact on the financial system.
Russia looks to be a submerging market 18 May 2007 The country s $22.5bn lawsuit against Bank of New York is just the latest blow to foreign property rights. Only in the current bubble will foreigners invest in a country without them. Once oil prices dip, Russia will be in deep trouble.
Wolfowitz fiasco shows World Bank’s ungovernable 18 May 2007 Its entrenched bureaucracy rejects outsiders and new ideas on development. Wolfowitz may have been the wrong man to change it from the start. Nevertheless it s questionable whether the bank has a useful future.
Clear Channel stub equity saves the day 18 May 2007 After months of negotiating, the radio company appears to have reached a $27.5bn buyout deal that appeases all parties. The clincher is a 30% slice of stub equity in the private firm. It s a deal tactic that shareholders should get used to.
Will Blackstone sweep Alliance Data into its portfolio? 17 May 2007 Shareholders are fighting buyouts left and right. But Blackstone looks set to buck the trend with its $7.8bn bid for Alliance Data. It offered a huge premium and full price for the marketing company, while taking its riskier credit card business off investors hands.
Whole Foods’ growth wunderkind days are over 17 May 2007 The organic supermarket s shares tumbled 14% in the past week as investors recognised that its highflying growth stock days are over. Whole Foods attempt to emulate the Starbucks model has failed. It s not an experience. It s a grocery store.
Bland secures legacy at BT with £2.5bn parting gift 17 May 2007 The buyback highlights the UK telecoms group s turnaround under its chairman. One of his first acts in 2001 was to ask investors for cash. But Bland hasn't exactly pushed debt to the limit. The buyback will be spread over two years. His successor inherits a strong balance sheet.
Spanish utility reshuffle leaves Repsol vulnerable 17 May 2007 Key shareholders have so far shielded the oil firm from unwanted bids during Spain s energy M&A frenzy. But Repsol s failure to seal a deal with Gas Natural means those same investors may not be so supportive for much longer.
Arcelor hedge funds protest too much 17 May 2007 When Mittal bought the company, shareholders got 11 shares for every 7 they held. Those who didn t tender are now being forced to take 8. That s not as unfair as it looks. At the time of the takeover, Mittal was pretty clear what it would do with the rump.
Private equity scales new heights in Balkans 17 May 2007 Southeastern Europe is hardly a hotbed of buyout activity. Yet Greek magnate Andreas Vgenopoulos is raising a whopping E5bn to do deals. Marfin's founder is creating a kind of Balkan Macquarie. That s ambitious but that he thinks he can do it's testimony to global liquidity.
Bank of Montreal suffers another derivatives embarrassment 17 May 2007 The Canadian bank said it lost at least 50% more on energy options than it thought last month. It relied on iffy prices from its broker. But now it says it has unearthed all the problems. Its shareholders must hope so its gaffes have already battered its reputation.
US Congress pushes the wrong trade pacts 17 May 2007 The Bush administration and Democrats in Congress agreed to let two free trade treaties proceed. But two more vital ones remain stalled. Letting pacts with Peru and Panama pass while blocking Colombia and South Korea is a win for protectionism and bad government.
A new Spitzer emerges from Ohio’s mortgage bust 17 May 2007 Ohio s AG Mark Dann is suing subprime mortgage lenders and bond houses. Dann hopes to prove criminal activity. If he succeeds, there ll be another bubble in legal fees.
Bausch & Lomb’s $4.5bn buyout is opportunistic 16 May 2007 The US contact lens group has certainly been a dog. Its fleas include improper accounting, product recalls and liability lawsuits. But Bausch & Lomb is rapidly sorting out these problems. Shareholders should demand more than Warburg Pincus is offering.
3i moves into activist stock-picking 16 May 2007 3i is raising a £400m fund to take controlling stakes in midcaps, giving it seats on company boards and access to inside information. It won t be an easy sell. But the UK private equity firm is raising a modest sum. And it s a good idea for 3i to diversify its business.
No Pac-Man for Alcan 16 May 2007 The idea of a target company turning around and bidding for a prospective acquirer is often mooted, but rarely delivered. Alcan might be tempted, but Alcoa s Pennsylvania incorporation gives it too many protections.
Indian group stumps up for premium Scotch whisky 16 May 2007 The £595m sale of distiller Whyte & Mackay to India s United Spirits provides a juicy return for the investors that backed its 2001 buyout. It gives Mallya a Scotch to push through his Indian distribution network. That's a play on rising incomes and a hedge against Indian liquor.