No one should buy AOL 13 Jan 2015 Yahoo and Verizon are the latest to be linked to the onetime internet darling. As its ad business struggles to grow, most of the company’s profit still derives from subscriptions of yore. Even using AOL to save taxes would be tough. Any takeover rationale would be a stretch.
Malaysia’s three-way bank deal trips up on itself 13 Jan 2015 Investors are cheering the apparent failure of the latest attempt to create a $20.5 bln national banking champion. Merging CIMB with two smaller rivals was always going to be tricky. Falling share prices and a tough economic outlook have upset another big government-backed deal.
Dollar stores prove more cash can make less sense 12 Jan 2015 Discount chain Dollar Tree’s $8.5 bln bid for Family Dollar may win after all. Rival suitor Dollar General offered $9.1 bln – and a higher cash stake – but probably couldn’t satisfy trustbusters without closing more outlets. The Dollar Tree deal adds up for selling shareholders.
Roche tries to recapture the Genentech magic 12 Jan 2015 The Swiss drugs giant is paying about $1 bln for up to 56 pct of cancer testing firm Foundation Medicine. The structure echoes its success taking control of Genentech in 1990 and leaving it independent. A whopping 109 pct premium reflects Roche’s mistake of low-balling Illumina.
Shire gambles AbbVie break fee on risky $5 bln deal 12 Jan 2015 The Dublin-based drugmaker is buying NPS to expand in lucrative rare drugs. The 51 pct premium is covered almost entirely by compensation from the collapse of Shire’s sale to U.S. peer AbbVie. That doesn’t much mitigate the risk of doing a deal ahead of a key regulatory ruling.
IAG can pay more for Aer Lingus 12 Jan 2015 The UK airline’s sweetened 1.3 bln euro offer for the Irish national carrier is still too low. The price covers the value of the target’s fleet, its Heathrow slots and net cash. But the modest 32 pct premium ascribes little worth to Aer Lingus’ growing operating business.
Investors drive blind in China online auto deal 12 Jan 2015 E-commerce group JD.com is buying 25 pct of car portal Bitauto for $1.2 bln. Yet two-thirds of the value is in the form of “resources”, like handing over part of JD.com’s website. Though a tie-up may make strategic sense, shareholders have to take the financial benefits on trust.
M&A at last finds a way for lawsuits to pay 8 Jan 2015 Cases challenging deals are often flimsy. Merger appraisal suits that allow investors to sue for higher prices have, though, proven strong. A ruling against Ancestry.com makes the strategy even more appealing. It’s one litigation process that doesn’t just benefit the lawyers.
Dick’s buyout has financially sporting chance 7 Jan 2015 The $6 bln U.S. golf-to-guns vendor is mulling a sale to private equity. Low debt at Dick’s Sporting Goods means even with a chunky premium, attractive returns look possible. It would, however, require healthy growth when stiff online competition is challenging many retailers.
Clunky conglomerates put on high breakup alert 6 Jan 2015 Billionaire Carl Icahn wants to separate Manitowoc’s construction cranes from its ice machines. Companies with such head-scratching pairings make easy targets for freshly invigorated uppity investors. Pitney Bowes and JBT are among those that may want to keep vigilant guard.
Coach tries LVMH model on for size with shoe buy 6 Jan 2015 The U.S. leather-goods purveyor is paying $574 mln for Stuart Weitzman, the first acquisition since its 1941 founding. While this looks like an admission its core brand has maxed out, Coach is betting it can use its know-how to expand other marques like LVMH and Kering have.
Crude slump will stoke European oil and gas M&A 2 Jan 2015 The sharp drop in the price of Brent might make it harder to get deals done in the short term. But if the downturn persists, financial distress will put some small players in play. Larger, more defensive mergers, designed to create value by sharing costs, are also possible.
Tesco will have to fight for its independence 30 Dec 2014 At $40 bln, the UK’s No. 1 grocer would be an M&A mouthful. A leveraged buyout looks tricky but strategic buyers have a rare opportunity. Tesco’s long-suffering current shareholders might jump at a chance to cash out. Much depends on the person chosen as the new chair.
M&A spin doctors could get swept up in the action 29 Dec 2014 Financial PR specialists have been buoyed by the boom in mergers and activist investing. History suggests independent outfits like Joele Frank or Brunswick may be tempted to find an investor or bigger owner. They should at least have enough deal nous to know when to sell.
Kim Jong Un could succeed where Dan Loeb failed 23 Dec 2014 While it’s unlikely the North Korean leader wants to become a new kind of activist investor – despite the generous compensation – the hacking of Sony reignites the issue of whether the Japanese conglomerate should spin off its entertainment unit as Loeb’s Third Point suggested.
Acquirers can expect more M&A investor skeptics 22 Dec 2014 There’s no reason to think the $3.2 trln pace of deals will slow in 2015, but the uproarious reception from shareholders is already showing signs of subsiding. As easy pickings of squeezing costs from overlapping operations evaporate, the laws of corporate finance will prevail.
Wall St’s $18 bln poker game has more rounds to go 22 Dec 2014 Apollo, Blackstone, Elliott and others are feuding over Caesars. Some senior bondholders in the casino group’s biggest unit back a bankruptcy that its parent’s merger with an affiliate could fund. Others may want to wait. And junior creditors have one card left: more litigation.
Pharma toys with mutually assured destruction 22 Dec 2014 Gilead lost $20 bln in value after Express Scripts ditched its hepatitis C treatment for AbbVie’s discounted drug. It may kick off widespread price wars throughout the sector. Such tactics, though, could be a strategic disaster for all concerned.
More than Slim odds America Movil buys T-Mobile 22 Dec 2014 Carlos Slim’s telecoms empire needs to reduce its dependence on Mexico. The fourth U.S. wireless carrier is cheap, parent Deutsche Telekom doesn’t want it and there’s strategic logic to a deal. The increasingly frightful competition in U.S. telecoms may be a sticking point.
Aer Lingus attractive yet tricky target for IAG 18 Dec 2014 The Irish carrier has rebuffed an approach by the owner of British Airways. At the right price, Aer Lingus looks like a natural partner for IAG. But its unwieldy shareholder structure – including a large holding by Ryanair – and anti-trust concerns will be obstacles.