Money no object for Middle Eastern mobile bidders 5 Jul 2006 Etisalat, the UAE mobile operator, is paying an eyewatering $2.9bn for Egypt s third mobile licence that s five times fair value. The deal is near impossible to justify on economic grounds. But it s by accepting low returns that Middle Eastern bidders have won auctions.
Credit Agricole withdrawal leaves A&L on the shelf 5 Jul 2006 The French bank is right to scrap plans to buy the UK mortgage lender. It would have paid a rich price for a weak bank in a fierce market. This should help Credit Agricole get investors onside. But without an obvious suitor, A&L may struggle to hold on to much of its premium.
Why is it so hard to make stub equity work? 4 Jul 2006 BAA investors have rejected stub equity offered by the Ferrovial consortium, even though they had asked for it in the first place. Why? The answer is that this odd, hybrid paper isn t particularly attractive.
Permira joins buyout majors with E10bn mega-fund 4 Jul 2006 What's the advantage of size? You get to go after bigger deals for sure. But it also reduces the need to join consortiums. That may be an advantage both tactically and for investors.
General Motors-Renault deal would be risky 30 Jun 2006 Attempts to replicate the RenaultNissan partnership of 1999 have failed. Just look at GMFiat or DaimlerMitsubishi. Carlos Ghosn's success with Nissan should give him an edge in making a GM alliance possible, but it won't be easy.
Will commodities M&A boom end like dotcom one? 30 Jun 2006 Companies like Phelps and Anadarko are making huge bets by financing takeovers with heaps of debt at the commodities peak. The buyers are hedging their bets. And they are buying real assets with synergies to reap. But it still looks like boomtime behaviour.
Siemens/Bayer embody new spirit of German reform 30 Jun 2006 It s not just the German football team that is enthusiastically embracing reform. So too are some of Germany s stodgiest companies. The E4.2bn sale of Bayer s diagnostics unit to Siemens brings focus to both sides and helps them to play to their strengths. It s a winwin.
Blackstone gets bargain in $4.3bn Travelport deal 30 Jun 2006 The private equity firm is acquiring Cendant s travel business for just under 8 times forecast ebitda. This may be inline with expectations. But it looks cheap when compared to the prices Cendant paid over the years to create Travelport through acquisitions.
Arcelor’s Severstal merger voted down by slim margin 30 Jun 2006 96% of EGM attendees voted against the deal. But that only amounted to 58% of total capital not that much above the 50% minimum required. This was only achieved after a shareholder rebellion and change in the board's recommendation. That shows how undemocratic the process was.
Univision sets new leverage record 28 Jun 2006 Not only are the winning bidders writing one of the largest LBO equity cheques. They're also piling on debt at a whopping 12.3 times ebitda. That was too high for some other privateequity firms. The $13.7bn Univision sale may signal the high water mark for this LBO cycle.
Suez/GdF merger comes back from the dead 28 Jun 2006 The French cabinet s confirmation it will push ahead with the privatisation of GdF after the summer makes the deal much more likely. But two big obstacles remain: EU clearance and a renegotiation of the terms. Suez may yet be able to swing both in its favour.
EMI rightly rejects Warner pacman 28 Jun 2006 Warner's offer for EMI is less generous than EMI's offer for Warner. What's debatable is if shareholders are better off buying or selling. Ultimately, some deal is likely to emerge from this complex tangle. What about exploring again a mix of cash and shares?
Barr’s $2.2bn purchase of Pliva makes sense 27 Jun 2006 The US generic drug maker fought off several competitors to buy the Eastern European firm. Contested auctions are normally bad news for bidders. But Pliva s expertise in making generic biotech drugs may mean Barr got a bargain.
Phelps Dodge’s $40bn Inco pounce looks risky 26 Jun 2006 On paper, acting as the white knight for Inco and Falconbridge adds up. The present value of synergies is some $1bn above the premiums. But the risks are legion: execution, financial and competitive. No wonder Phelps shareholders are panicking.
J&J pays whopping $16.6bn for Pfizer unit 26 Jun 2006 The US group is paying an eyewatering 25 times operating profits for Pfizer's consumer drugs division more than recent sector deals. J&J reckons it can deliver up to $600m of synergies. Those could be worth about $5.5bn not enough to justify this premium. J&J reckons it can deliver up to $600m in synergies. These could be worth up to $4.2bn not enough to justify the premium.
Hot infrastructure funds may deliver paltry rewards 25 Jun 2006 Infrastructure companies like AB Ports and BAA are boring and stable. Pay top dollar for them and it will be hard to produce juicy returns. Some funds may end up generating returns on investments that are not much better than quoted stocks but without the liquidity.
Goldman, Macquarie empty pockets for ABP 23 Jun 2006 That should be enough to outdo its rival. But Macquarie says it is not out of the race yet. Goldman Sachs has raised its offer by 8% to £2.8bn a jawdropping and nonbargain valuation of 17 times ebitda.
Has Anadarko put itself in play? 23 Jun 2006 It s long been seen as a target for a Total or Shell. And the $23.3bn takeovers of KerrMcGee and Western highlight its low valuation. But they also artfully insulate Anadarko from a takeover. A buyer would have to bid for all three firms.
Mordashov’s proposal contains worrying loophole 23 Jun 2006 The Russian s merger scheme with Arcelor could allow him to cut a sweetheart deal with a biggish shareholder like Zaleski. That could leave other shareholders out in the cold. If Arcelor s board is minded to stick with Mordashov, it must plug the loophole.
Arcelor board must demonstrate independence 22 Jun 2006 As the battle over the steel giant s future draws to an end, directors must assess dispassionately what is in shareholders best interests. The onus is on international figures, like E.on s Hartmann, to ensure that shareholder value drives the choice between Mittal and Severstal.