Lessons from France’s telco merger fumble 4 Apr 2016 Shares in French telecom operators dropped sharply after Orange and Bouygues called off a 10 bln euro deal. The end of a price war would have benefitted the sector. But the scale of the disappointment raises questions about whether consumers would have been much better off.
ThyssenKrupp could break steel’s first-mover issue 1 Apr 2016 The German engineer and Tata Steel are talking about pooling European steel assets, says a German press report. Closing plants would be politically fraught – look at the row over Tata’s UK operations. But it’s necessary, and Thyssen has shown restructuring mettle before.
Anbang risks a Year of the Stalking Horse 1 Apr 2016 The Beijing insurer has inked smaller deals, but it just abandoned its $14 bln offer for Starwood, citing “market conditions.” Anbang’s emergence nevertheless helped the U.S. hotelier wrest sweeter terms from Marriott. It’s a modern hazard for buyers up against Chinese rivals.
New M&A marriage vows raise cost of fooling around 31 Mar 2016 Markit must ensure the CEO of merger partner IHS gets the top job or risk breaking the combined company’s bylaws. AbbVie gave the boss of Pharmacyclics similarly ironclad rights. A rise in stock deals is forging stronger prenuptial agreements for so-called social issues.
French telco unwind would be missed opportunity 31 Mar 2016 Orange and Bouygues are in make-or-break talks to seal a deal. Their terse statements after months of discussions have spooked the market, with shares in all four French operators tumbling, because a tie-up might benefit all. But obstacles like governance and valuation remain.
Politics, not finance, is key question for Anbang 31 Mar 2016 The ambitious Chinese group could probably buy U.S. hotelier Starwood for $14 bln without breaching limits on insurers’ overseas assets. Raising the necessary funding would be doable, too. The real issue is whether Anbang can keep China’s government onside.
Sharp take-under oddly denotes Japanese success 30 Mar 2016 Foxconn has clinched control of the ailing Japanese display maker for a reduced $3.5 bln. Fixing Sharp will be a tough task for the Taiwanese giant led by Terry Gou. But this historic, if somewhat ugly and complicated deal, is Exhibit A that Japan Inc is capable of reform.
Starwood can easily answer the $4.64 question 28 Mar 2016 That’s how much more per share a new cash bid from China’s Anbang is worth over an agreed deal with Marriott. The $14 bln offer is 6 pct sweeter but also comes with financing and regulatory uncertainties. Given the heavy interest from rival hoteliers, Starwood can afford the risk.
Dell’s Perot sale augurs poorly for EMC deal 28 Mar 2016 The computer company is offloading its consulting arm to Japan’s NTT Data for $3 bln, a quarter less than it paid in 2009. Proceeds from what had been Dell’s biggest acquisition are to help it buy EMC for some $60 bln. The outcome, however, is hardly a good ad for its M&A nous.
Playboy’s $500 mln price tag has no clothes 24 Mar 2016 The magazine which recently ended its nude centerfold tradition may be on the block again, supposedly after interest in founder Hugh Hefner’s mansion flushed out potential buyers. Based on comparable valuations and sales of publishing brands, the price talk seems like delusion.
Bad Finance: M&A synergies deserve large salt dose 24 Mar 2016 Energy Transfer Equity’s expected EBITDA boost from its deal to buy Williams Companies just went from $2 bln a year to under a tenth of that – even before closing. Many mergers fail to capture cost savings, and most fall short on revenue gains. Skeptical analysis is required.
Energy Transfer scorches its own Williams earth 24 Mar 2016 The buyer is slashing expected merger synergy benefits by 90 pct and warning of big reductions at its target’s Oklahoma operations. It may put pressure on Williams to return to the negotiating table. For now, ETE seems more hostile to the deal than its reluctant seller ever was.
Italian bank revolutions set unappetising template 24 Mar 2016 Banco Popolare and BPM have sealed the first merger in Italy’s mutual reform. Yet mooted cost savings don’t look generous enough to offset messy governance and tough capital needs. That’s not great news for others, particularly stragglers like Monte dei Paschi di Siena.
German M&A rules leave targets worse off 24 Mar 2016 An attractive tie-up of U.S. cash dispenser Diebold and German rival Wincor Nixdorf was left hanging in the balance because of safeguards meant to protect minorities. The deal stacks up strategically and financially. Rules and taxes that prevent sensible value creation don’t.
Yum’s China growth goals face market reality check 24 Mar 2016 The U.S. fast-food giant may sell up to 20 pct of its Chinese unit to private investors before spinning it off. On current trends the stake could fetch $2.4 bln, Breakingviews calculations suggest. To do better, Yum’s more ambitious targets will have to survive China’s slowdown.
U.S. gene tester puts China bids under microscope 23 Mar 2016 Affymetrix is in a bind. Rival Thermo Fisher made a solid $1.3 bln offer that’s now below the target’s share price. Former bosses swooped in with a higher non-binding bid backed by little-known Chinese funders. The board must choose – and fast. The question: Does it feel lucky?
When a 90 pct takeover premium isn’t enough 23 Mar 2016 That’s what Premier Foods, the UK owner of Mr Kipling cakes, has knocked back from $12 bln rival McCormick. It sounds crazy. Yet the suitor can clearly afford much more. Premier’s low valuation explains the gap. The board is doing shareholders’ work for them.
Bang & Olufsen buyout hinges on China bass boost 22 Mar 2016 The Danish electronics maker is in bid talks with Chinese luxury distributor Sparkle Roll. Both companies’ business models are under pressure. At B&O’s inflated $447 mln price it would be hard to make a deal stack up – unless sales can be massively increased in China.
Marriott’s Starwood deal suffers China syndrome 21 Mar 2016 To trump an interloping bid from Beijing’s Anbang, Marriott raised its offer for its hotelier rival to $13.6 bln. Even with more cost cuts, the math suggests significant value destruction. Anbang may have reasons to pay up, but Western buyers can’t be so careless of shareholders.
IHS-Markit $13 bln merger is long on hope 21 Mar 2016 A bigger, diverse data company could cross-sell to different clients, the theory goes. Markit’s shareholders could end up roughly 10 pct better off. But extra revenue of $100 mln looks aspirational. Big share buybacks and high debts could hobble investment in new products.