M&A "clear day" defenses can cloud investor rights 17 Dec 2014 Anti-takeover protections adopted before threats arise are more apt to weather legal scrutiny. It’s one reason Allergan was able to resist Valeant’s $52 bln bid. When triggered reactively, they’re considered unfair surprises. Either way, shareholders often get unneeded cover.
Chinese companies will mostly stay at home in 2015 17 Dec 2014 Even with a slowing economy the People’s Republic offers lots of growth for home-grown corporations. Hostile regulators, stronger rivals, and cultural differences discourage foreign expansion. Though some will take the plunge anyway, in most cases overseas growth can wait.
Repsol takes risky $13 bln bet on Talisman 16 Dec 2014 The Spanish oil group is paying a big premium for the Canadian producer. The deal adds diversification after Argentina expropriated its YPF unit but also brings problematic North Sea assets. Repsol is hoping for a Talisman turnaround and an oil price recovery. Both are uncertain.
BT makes biggest possible call on UK mobile 15 Dec 2014 The telco is nearing a 12.5 bln stg purchase of EE from Orange and Deutsche Telekom. That’s a surprisingly high 7.9 times EBITDA. Still, cost savings will help. And if BT wants to be big in mobile, buying the biggest UK network with the best mobile broadband offering makes sense.
BC Partners strains at the leash for PetSmart LBO 15 Dec 2014 The private equity firm has come out on top in an $8.7 bln auction of the biggest U.S. pet-store chain. It’s 2014’s largest buyout. But paying 9.1 times trailing EBITDA looks loose. And while plenty of banks are offering financing, the debt levels could make regulators bristle.
European telecoms will dial up more deals 15 Dec 2014 Investors have brightened as M&A has swept the sector. Thanks to BT, Britain is up next. More mergers could follow in France, Italy and Belgium. What’s not to like? Well, windfalls from big cross-border deals looks distant and valuations already price in most of the good news.
Technip’s M&A ambitions need firmer foundations 15 Dec 2014 The French oil services company has dropped plans to buy rival CGG. Relieved shareholders pushed the thwarted bidder’s shares up 7 pct: scepticism about pairing an engineer with a marine surveyor was rife. Technip still wants to diversify. It will have to make a better case.
Binding Staples to Office Depot only easy on paper 11 Dec 2014 Activist Starboard may push for a $13 bln merger of the last two big U.S. office supply chains. Cost cuts enable Staples to pay a big premium and still generate good returns. Regulators might object, though, and too much debt is a risk with competition from Amazon and Wal-Mart.
BG’s $5bln sale bodes well for Aussie M&A pipeline 10 Dec 2014 The British energy group is selling its Australian gas transmission conduit to APA for a higher price than expected. It’s another example of infrastructure assets fetching rich valuations. Amid red-hot investor demand, 2015 promises to be another bumper year for deals down under.
Merck gives in to M&A frenzy risk assessment 9 Dec 2014 Just hours after unveiling its $8.4 bln acquisition of Cubist, a judge invalidated patents owned by the antibiotics maker. Potential lost sales are reflected in the billions erased from Merck’s market value. The known liability was appraised through a rose-colored merger prism.
Haitong’s global ambitions start from low base 9 Dec 2014 The Chinese broker has scooped up bailed-out Portuguese lender Espirito Santo’s investment bank for $466 million. Though the brand is dented and many staff have quit, it brings a toehold in London and New York as well as Lisbon. It’s a safer way to build an international network.
Saint-Gobain’s deal cunning could backfire 8 Dec 2014 The French materials group is seizing control of Swiss peer Sika by paying $2.8 bln for a minority family stake which has majority voting rights. Sika’s board is laudably indignant. And Saint-Gobain’s tactics have a hidden cost of upsetting other investors and the target’s staff.
Walgreen-Boots deal sturdy enough to foil critics 4 Dec 2014 A pension fund adviser says the U.S. pharmacy chain is overpaying for the rest of its Swiss-based peer. The complaint is a little confusing, though concerns about risk seem valid. With a big shareholder and activist Jana already on board, the transaction will be tough to derail.
Canary Wharf bid short on tactics and value 4 Dec 2014 Qatar Investment Authority and Brookfield Property have gone hostile with a raised 2.6 bln stg offer for Songbird, owner of London’s easterly finance district. Bypassing the board is not how to buy key UK infrastructure. And the 34 pct premium ignores the Wharf’s trophy status.
Hawaii electric-bank conglomerate gets sunny split 4 Dec 2014 The rise of solar power helped force Hawaiian Electric to sell itself to $46 bln utility NextEra. The $3.5 bln deal also puts an end to the Aloha State utility’s anachronistic ownership of a bank. The 15 pct plus surge in HEI’s stock price shows the warmth of investors’ welcome.
CVC may find Sky is the limit in gaming punt 4 Dec 2014 The buyout firm is paying $940 mln for 80 pct of the online gaming arm of satellite broadcaster Sky. The 15 times trailing EBITDA price tag reflects the rapid growth of internet betting. But Sky’s minority stake and board representation could complicate CVC’s investment.
Blackstone and GIC strike new sort of partnership 3 Dec 2014 The buyout firm is offloading U.S. industrial property rollup IndCor to the Singaporean fund for $8.1 bln, a year after the two shook hands on a $2.8 bln London sale. Divergent investment goals could mean both sides prosper and that Blackstone exits through GIC’s door yet again.
Chipmaker merger of equals may grapple with bugs 2 Dec 2014 Cypress and Spansion are uniting in a $4 bln deal with a balanced structure. Ownership and the board will be split evenly. Cypress, however, is paying a small premium and keeps the CEO and headquarters. The financial logic computes, but control usually ends up a feature in M&A.
Japanese drugmaker strikes yet another costly deal 2 Dec 2014 Otsuka’s $3.5 bln purchase of Avanir prolongs a track record of overpriced M&A for Japan’s pharmaceutical firms. Granted, the company needs new offerings before the patent expires next year on its blockbuster schizophrenia drug. But this transaction smacks of desperation.
Market too cool on Aviva-Friends tie-up 2 Dec 2014 Some investors see another value-destructive UK insurance merger. At about 20.5 bln stg, the pair is worth no more than before the deal leaked. But even if synergies are worth less than the 1.8 bln stg claimed, the fact they come from fund management as much as IT is cheering.