Korean chat app sends mixed valuation messages 28 May 2014 Kakao is going public in a $3.3 bln reverse takeover. That’s just one sixth of what Facebook paid for WhatsApp. The Korean app rules its home market and is profitable, but its metrics offer few clues for valuing rivals. Putting a price on mobile chat is still anybody’s guess.
Pilgrim’s Pride positions itself atop food chain 27 May 2014 The U.S. poultry group is offering $6.4 bln for Hillshire Brands, two weeks after the sausage maker proposed to buy Pinnacle Foods. The earlier deal hasn’t satisfied investor palates. Intended or not, though, it did at least smoke out a strategically and financially superior bid.
Failed bid would leave Astra under pressure 26 May 2014 Pfizer looks foolish for the way it handled a $119 bln offer for the UK drugmaker. But its shares have barely suffered. Astra remains independent and yet it is now under more scrutiny. Some of its shareholders welcomed a possible takeover - and could again.
Dull industrials could make shiny tax-arb targets 22 May 2014 Juiced up on drug deals that promise big tax savings, like Pfizer’s bid for Astra, bankers are pitching copycat transactions before Congress gets wise. Tyco, Ingersoll-Rand and Pentair went abroad during a previous exodus and may tempt acquirers seeking inversions of their own.
M&A targets can get stiffed when they "go shop" 22 May 2014 The tactic of seeking bids after signing up a buyer is meant to ensure top dollar. More often, it leads to low offers and sale prices, new research shows. Deals like Media General’s buyout of Lin Media suggest sellers are wising up, though, portending better value for investors.
Hess $2.9 bln sale vindicates high-octane activism 22 May 2014 The oil industry laggard will shed its retail outlets to refiner Marathon and focus on lucrative exploration. Hedge fund Elliott can take credit for the transformation that has allowed Hess to catch up with rivals. It’s more evidence that uppity investors can drive useful change.
Cheap Japanese debt is secret sauce in Ragu sale 22 May 2014 Mizkan, a closely held rice-vinegar maker, is buying Unilever’s U.S. Ragu and Bertolli brands for $2.15 bln. Paying 3.6 times sales in the mature pasta-sauce market looks rich. For the Japanese buyer, the flavour is sweetened by low rates and a shrinking domestic market.
Astra-Pfizer needs a fresh start later in the year 21 May 2014 Some shareholders want the UK pharma company to talk to its American suitor now. But there is no honest route to a higher bid until August. Talks in the dying days of the bid timetable could actually delay a full move. An amicable cooling off period is the best plan.
Valeant’s slashing could trigger FDA lashing 20 May 2014 The Canadian pharma M&A machine buys rivals and strips costs to the bone. It promises to cut Allergan’s R&D spending from $1 bln to $200 mln and still develop drugs. That doesn’t look sustainable. It may not be enough to even finish studies on existing drugs that regulators require.
Loophole offers Pfizer risky way back into AZ deal 20 May 2014 The U.S. pharma group noted that it could technically make a higher offer for Astra if the target first agreed to its “final” $119 bln proposal. After this dodge, Astra could accept the real, higher price. But the UK takeover watchdog would almost certainly reject such cunning.
KKR’s $3.1 bln bid pours pressure on Treasury Wine 20 May 2014 The Australian wine producer has rebuffed an opportunistic offer from the U.S. buyout firm. The former Foster’s unit is a persistent underperformer. Treasury’s new CEO needs to quickly demonstrate his turnaround credentials, or let KKR try to squeeze out some value instead.
Chastened AT&T enlists new team for fresh fight 19 May 2014 None of the three banks that worked on the telecom giant’s botched bid for T-Mobile US is back for the DirecTV deal. Instead, Lazard is sole adviser, aiding AT&T for the first time in 20 years. CEO Randall Stephenson also has more lawyers. Fresh eyes may help see things through.
Pfizer spins $100 bln-plus deal as inessential 19 May 2014 Not many companies could back off an aggressive 12-digit shopping spree with credibility intact. But with its offer for AstraZeneca rejected, Pfizer’s shares are roughly back where they started. Its pre-existing plan to eventually break itself up makes the UK deal look optional.
AstraZeneca gets a summer reprieve 19 May 2014 The UK pharma group rejected Pfizer’s latest $117 bln approach, but indicated the U.S. suitor’s price was almost acceptable. Strong cancer trial data in June could protect Astra’s independence. Even if the target’s resistance weakens, Pfizer has boxed itself in until August.
Pfizer’s new AZ pitch is as unfriendly as it gets 19 May 2014 The U.S. drugmaker says it won’t go hostile for AstraZeneca, but has upped its non-binding takeover proposal to $117 bln, declared it “final” and slammed the board. The UK group is under real pressure to show it’s worth more. Yet Pfizer’s aggression is also an obstacle to talks.
AT&T puts shareholders on hold for DirecTV 19 May 2014 Its $67 bln offer to buy the satellite TV operator comes with an unexpectedly robust $1.6 bln of cost savings. Even so, these don’t quite cover the 30 pct premium AT&T is paying and will be spent on rural broadband service anyway. Customers and regulators get the first call.
Red Lobster sale leaves fishy smell at Darden 16 May 2014 The restaurant conglomerate is selling its floundering seafood chain for $2.1 bln, pre-empting a non-binding vote on the separation forced by activists. Engaging with agitators doesn’t always bring harmony – ask Sotheby’s – but Darden’s siege mentality exposes its board and CEO.
Orange talk shows Bouygues’ pull on French state 16 May 2014 The former monopoly could buy the telecoms arm of the French construction company. Bouygues is also crucial to Alstom’s fate. Martin Bouygues failed to bag mobile operator SFR. But he’s been remarkably adept at using that defeat to get the French government onside.
France plays to type with unneeded takeover decree 15 May 2014 The extension of the French government’s powers to oppose unwanted takeovers by foreign firms simply codifies current practices, but it won’t enhance the country’s reputation as a place to do business. With growth stalling, Paris has more important economic challenges.
QE forces investors to applaud M&A 14 May 2014 Nowadays, bidders’ shares rise on news of a deal. The reverse used to be true. Equity market enthusiasm reflects relief that cash piles are finally being used. But unless M&A has become less risky, weaker balance sheets and value-destructive bids augur ill for credit quality.