Germany’s $5 bln housing deal looks hard to topple 1 Dec 2014 Residential landlord Deutsche Annington is offering to buy rival Gagfah to create Germany’s largest real estate group and reap sizeable savings. The 18 pct bid premium seems stingy. But the price fairly reflects Gagfah’s fundamentals, and it’s hard to see anyone else paying more.
Debt powers Altice into European TMT’s big league 1 Dec 2014 Patrick Drahi’s telecom group paid $23 bln for France’s SFR and is nearing a $9 bln Portuguese purchase. More deals may follow. Cheap debt and euphoria about cable have helped. The billionaire’s team will have to excel at integration to run an empire that dwarfs many blue chips.
E.ON’s "bad power" spinoff promises little upside 1 Dec 2014 Germany’s largest utility is exiting conventional generation, bundling unwanted risk into a new company to be handed to shareholders. E.ON can concentrate on distribution and clean electricity. Both managements will benefit from focus. Still, the new entity’s prospects are bleak.
If Vodafone wants Liberty it has to get creative 1 Dec 2014 The mobile giant is eyeing cable group Liberty Global for a $90 bln-plus takeover. The strategic case is easier to make than the financial one. Regulators may be persuadable. Investors and Liberty Chairman John Malone could be colder. Vodafone has to be resourceful.
SABMiller’s Coca-Cola push is Africa buy signal 27 Nov 2014 The UK brewer and the U.S. drinks giant are merging assets in southern and eastern Africa to create a soft-drinks bottler with $3 bln of sales. SAB gets control and gains market access. The move points to the continent’s strategic potential, and similar consolidation could follow.
Investors can forgive BT going back to the future 26 Nov 2014 If the former British Telecom buys Telefonica’s UK mobile business, it will regain a unit demerged in 2001. The round-trip is unusual but forgivable. 02’s demerger delivered good returns for BT investors who kept their stock. BT refocused, and its re-entry to UK mobile is timely.
Friends Life deal terms make an auction tricky 25 Nov 2014 The UK insurer is a bite-sized acquisition for bigger European peers. But both foreign and domestic buyers can see that Aviva has offered Friends a full price that pays away lots of synergy value. And matching Aviva’s premium could be just as tough for consolidators like Phoenix.
Private equity shows signs of pre-crisis brio 25 Nov 2014 Canada’s Onex has bought Swiss packager SIG for up to $4.7 bln in a secondary buyout. It’s one of Europe’s biggest LBOs in five years and deploys pre-crisis levels of leverage. Private equity restlessness and a shortage of big targets created the conditions for a landmark deal.
BT is in strong position for mobile M&A 24 Nov 2014 The fixed-line telco has shaken up UK communications by pushing into TV and now mobile. The reward is that BT has a choice of two mobile networks to buy, O2 or EE, and few likely counter-bidders. A 10 bln stg deal would help lift sales and protect BT’s broadband business.
Aviva pays high price for Friends leak 24 Nov 2014 A fall in the UK insurer’s shares has cut the value of its possible paper offer for domestic peer Friends Life. The premium is now well below the 15 pct first mooted. Forced early disclosure means Aviva has to set out the key strategic and financial details of a tie-up – fast.
Telefonica grappling with strategic puzzle in UK 24 Nov 2014 The Spanish telco’s British mobile unit O2 is doing fine, but it will struggle to compete if customers turn to bundled offers. Buying a fixed-line player like TalkTalk would be a stretch. Best would be an outright cash sale to incumbent BT – but a stake swap is more realistic.
Indian bank M&A looks hard to copy 24 Nov 2014 Kotak Mahindra’s $2.4 billion all-share offer for ING Vysya is a rare example of consolidation amongst India’s sizeable private banks. Founder Uday Kotak needs to reduce his stake. Dutch group ING’s willingness to accept a smaller shareholding in a larger group is also key.
Aviva’s Friends tie-up is far from done 21 Nov 2014 The UK insurer wants to buy its peer for 5.6 bln stg in shares, bulking up in its challenged home market. For a 15 pct premium, Friends would get a surer future. Aviva gets some cash flow. Yet Friends’ entrepreneurial backers add complexity - and it may attract an interloper.
Endesa’s 3 bln euro quasi-IPO bucks a tough market 21 Nov 2014 The second half of 2014 has been rocky for share sales, particularly in Spain. A secondary offering of 22 pct of Spanish utility Endesa succeeded because vendor Enel wasn’t greedy. It treated the deal like a new issue. That will help if Enel wants to sell more in future.
BBVA’s timing in Turkey looks odd 20 Nov 2014 The Spanish bank is raising 2 bln euros to buy an extra 14.9 percent stake in Garanti. BBVA gets a larger share of growing earnings and board control. But it could have achieved the latter by 2016 – at a much lower cost. And Turkey’s attractions come with obvious risks.
Pharma market failure gets a charitable cure 19 Nov 2014 The Cystic Fibrosis Foundation helped fund a successful treatment for the deadly lung disease, stepping up when private investors wouldn’t. Its reward: $3.3 bln for rights to the new medication. So-called venture philanthropy could be the model for kick-starting drug development.
Deutsche trading exit as much about bank as market 18 Nov 2014 The German giant is quitting parts of a once-lucrative product it used to dominate – credit default swaps. Regulatory changes are in part to blame. CDS can still be useful tools. But weaker balance sheets than U.S. peers’ make it hard for Deutsche and European banks to trade.
Valeant’s activist deal too clever by half 17 Nov 2014 The $45 bln drug company’s tilt at Allergan alongside Bill Ackman’s Pershing Square leaves it with just a modest windfall to show for a seven-month campaign that risked legally questionable tactics. Valeant boss Michael Pearson’s M&A experiment is not one to repeat.
Bill Ackman comes out top in $66 bln pharma deal 17 Nov 2014 The activist will reap more than $2 bln from Actavis buying Allergan. It’s a steep price - cost cuts alone cannot justify the premium paid. And losing bidder Valeant has been hauled over the coals. It will, at least, get a $400 mln consolation prize from former ally Ackman.
Baker Hughes wins tactical $35 bln battle 17 Nov 2014 Playing hard-to-get squeezed a premium north of 50 pct out of Halliburton. The larger U.S. oil services group’s target of $2 bln in annual cost savings just about justifies the price it is paying. But integration challenges and competitive concerns make that look aggressive.