M & A wrap: Plan B for ING
Dutch financial services group ING Group has scrapped plans for a separate trade sale of its Belgian insurance business, worth 500 to 750 million euros, a person familiar with the deal said on Wednesday.
Sears “has been a mismanaged asset,” Gregory Melich, an analyst at International Strategy & Investment, said in a Bloomberg Television interview yesterday. “A lot of traditional department stores have reinvigorated themselves through merchandising, through changing their locations; you think of Macy’s. You haven’t seen that from Sears.” Yesterday the largest U.S. department store chain reported that it would close as many as 120 locations after same-store sales fell 5.2 percent in the eight weeks ended Dec. 25.
Whirlpool investors–already burned by a sagging stock in 2011–aren’t spending time trying to figure out what the impact of Sears’ planned store closings will be. They’re just bailing out, reports the Wall Street Journal. As Whirlpool has seen weak demand of its own this year, investors are seemingly done for now in waiting for turnaround signs. Shares are off 7 percent today to $47.57, pushing Whirlpool’s stock price down more than 46 percent for 2011.
Deutsche Boerse and NYSE Euronext have extended the deadline for completion of their planned merger to March 31 next year as they seek to convince European regulators to back the $9 billion deal.
Deal Book asks, how do you go from being one of the country’s most-renowned and respected business leaders to landing on the list of the Worst C.E.O.’s of 2011? Sydney Finkelstein, professor of strategy and leadership at the Tuck School of Business at Dartmouth College and author of “Why Smart Executives Fail” presents his list of the worst C.E.O.’s of 2011.
DealZone Daily
Friday’s highlights from Reuters:
The energy, finance, technology and healthcare industries are expected to be the hottest areas in a dealmaking market that in 2010 is likely to expand gradually from this year’s depressed levels. M&A totals $1.968 trillion so far in 2009, down 32 percent from full-year 2008 and down 53 percent from the record high in 2007, according to data from Thomson Reuters
A dizzying recovery in financial markets this year has upended the usual pecking order for fee-making in investment banking and turned the bonuses flowing from those fees into political dynamite. The shape of the fee pool has really changed materially over recent years,” said Simon Warshaw, co-head of investment banking for Europe, the Middle East and Africa (EMEA) at Swiss bank UBS, ranked fifth for global equity capital markets (ECM) issues and fees this year. Read the story here.
And in news elsewhere:
The disposals Lloyds has agreed to as compensation for taking state aid were a “very fair deal” but it has no plans to sell the assets off soon, the banking group’s chief executive told the Financial Times. Read the report here.
DealZone Daily
Thursday’s highlights:
National Australia Bank made a surprise trump bid for AXA Asia Pacific Holdings’ Australian and New Zealand units on Thursday, in a cash deal that would value all of the target firm at around $12 billion. The bid tops an offer from Australian life insurer AMP Ltd, which had faced resistance from AXA Asia Pacific’s independent directors who were looking for a higher offer.
Private equity firm Apollo Management said it had agreed to buy Ohio theme-park company Cedar fair for $635 million. The total deal is valued at $2.4 billion including the refinancing of the firm’s outstanding debt.
And in news elsewhere:
Bailed out U.S. insurer American International Group plans to file a prospectus for a multi-billion dollar IPO of its Asian life insurance unit before Christmas, the Financial Times reported on Thursday. The Hong Kong IPO of American International Assurance is expected to raise $10 billion to $20 billion, the paper said.
Deutsche Bank has emerged as a key bidder for commodities trading company RBS Sempra. RBS said it was selling its 51 per cent stake in the commodities trading company in November, which it jointly owns with Sempra Energy, the FT said.
R.I.P. Salomon Brothers
It’s official: Salomon Brothers has been completely picked apart.
Citigroup’s agreement to sell Phibro, its profitable but controversial commodity trading business, to Occidental Petroleum today puts the finishing touches on a slow erosion of a once-dominant bond trading and investment banking firm.
When Sandy Weill (pictured left) staged his 1998 coup – combining Citicorp and Travelers, Salomon Brothers was a strong albeit humbled investment banking and trading force. Yet little by little, a succession of financial crises, Wall Street fashion and regulatory intervention has whittled away at the once-dominant firm.
Not long after the Citigroup was formed, proprietary fixed income trading – once the domain of John Meriwether, was shut down after the Asian debt crisis fueled losses that Weill could not stomach.
The Salomon name disappeared long ago as investment bankers and underwriters were rebranded Citigroup Global Markets.
Now Phibro, the former Philips Brothers that merged with Salomon in the early 1980s, is to be cast off because its energy traders made too much money when the rest of the bank suffered losses and required a $45 billion of taxpayer bailout.
from Summit Notebook:
Tax evaders on the run
By Neil Chatterjee The U.S. has promised it will hunt down tax evaders. And it seems tax evaders are on the run. DBS bank, based in the growing offshore financial centre of Singapore, told Reuters it had been approached by U.S. citizens asking for its private banking services. But when told they would have to sign U.S. tax declaration forms, the potential clients disappeared. Swiss banks also approached DBS on the hope they could offload troublesome U.S. clients to a location that so far has not been reached by the strong arms of Washington or Brussels. DBS said no thanks. In fact many private banks and boutique advisors now seem to be avoiding U.S. clients. Will this spread to other nationalities, as governments invest in tax spies and tax havens invest in white paint? Is this the end of offshore private private banking?
Phew! Due diligence done at last
Lloyds’ deal to buy HBOS was sealed in the time it takes to sup a few cocktails with Gordon Brown. But poring through the gung-ho mortgage lender’s books took nine whole months and many thousands of man hours.
Lloyds Banking Group on Wednesday admitted it had finally completed due diligence on HBOS, after agreeing to buy it in a shotgun marriage last September.
“Nine months after agreeing to purchase HBOS, it has finally completed its review of the assets at HBOS. This means … it has completed its due diligence of HBOS,” said Hank Celenti, analyst at Royal Bank of Canada.
Investors were cheered when the bank said bad debts had peaked in the first half, after it took a knife to the value of the HBOS property portfolio. H1 bad debts jumped five-fold to 13.4 billion pounds, with 80 percent due to HBOS legacy assets.
It had taken a prudent view to impairments, it said, helping its shares jump 13 percent. But the shares are still less than half their value before the deal, which many investors said was good for HBOS investors and the broader economy, but not for Lloyds shareholders.
Lloyds CEO Eric Daniels admitted in February his bank had conducted 5,000 man hours of due diligence under the hurried deal, which was brokered by UK government, and he would typically have put in 3-5 times that if he’d had more time.
Deals du Jour
Citigroup plans to sell 20 businesses in consumer finance, many of them located in Europe, its chief executive Vikram Pandit said in an interview with Singapore’s Business Times.
He said the move was due to the shift in the consumer finance market where “there is less funding availability and they are probably less robust as businesses.”
Pandit also said that the group’s capital position following the completion of the exchange of preferred shares for common equity in July, reflected an “incredible financial strength.”
In other M&A related stories reported by Reuters and other media on Wednesday:
Austrian oil and gas group OMV is in talks to buy a $1.2 billion stake in Turkish fuel retailer Petrol Ofisi, OMV and Petrol’s majority owner Dogan Holding said. The move comes after OMV earlier this year sold its stake in Hungarian peer MOL after an ill-fated takeover attempt, raising money that analysts expected it to use to expand in other parts of the region. For the Reuters report click here.
India’s Bharti Airtel plans to bid for telecom operator Millicom’s Sri Lankan mobile network, the Economic Times said, citing two executives familiar with the developments.
Deals du Jour
Australia and New Zealand Banking Group Ltd will likely clinch a deal this week to buy some Asian assets from British lender Royal Bank of Scotland Group for about $775 million, a source briefed on the situation told Reuters, marking it the Australian bank’s biggest overseas purchase.
In other M&A related stories reported by other media on Monday:
British-based, US-listed cable operator Virgin Media is considering a secondary listing of its shares in London to attract UK-based investors, according to a report in the Times newspaper. Virgin will make an announcement about its decision at its second-quarter results this month, the report said.
The biggest private equity groups are sitting on $400 billion of debt that needs to be repaid over the next five years, putting the future of some of the largest buyouts in doubt, the Financial Times said, citing data from S&P LCD.
Yahoo Inc, which last week announced a Web search deal with Microsoft Corp , will invest money from reduced marketing and infrastructure costs into its display ad, content and mobile services technology, its chief executive Carol Bartz told the New York Times in an interview.
Andrew Hall, the trader behind Phibro LLC, the energy trading arm of beleaguered bank Citigroup Inc, is pushing for a “quiet divorce” from his parent company and has had preliminary talks with one potential suitor, the New York Times said.
Private equity firm Candover is considering plans to inject fresh funds to support its investment in DX Group, a UK postal services company it bought two years ago for 347 million pounds, the Financial Times reported.
Last week in columns
There’s been plenty of deal-related argument from the fast-expanding stable of Reuters columnists over the last week.
Anglo-Spanish dealmaking has a chequered recent history — look no further than Ferrovial’s (FER.MC) disastrous takeover of airports operator BAA. But this shouldn’t put British Airways (BAY.L) and Iberia (IBLA.MC) off fast tracking their planned tie-up to help stem losses, says Alexander Smith.
Tech columnist Eric Auchard says while Larry Ellison, Oracle Corp’s chief executive, “is not saying so directly yet … the unmistakable conclusion to draw is that he is ready to embark on a new wave of mergers to consolidate the business computer market, once the Sun deal closes.”
James Saft says the U.S. faces a lengthening series of request from industries and interests seeking shelter under the Troubled Asset Relief Program, most of which it should dismiss out of hand.
And Wei Gu says it’s time for Chinese banks to think local. Drawing on a Chinese idiom, she says “Chinese banks and their foreign strategic investors have been sleeping in the same bed but dreaming differently“.
Chinese banks and their foreign strategic investors have been sleeping in the same bed but dreaming differently“. There is a poet hidden in And Wei Gu, beautifully spoken.
Canary Wharf’s bankers don denim, brace for protests
Some in Canary Wharf swapped their emblematic pin-striped suits for more casual gear on Thursday as London’s banking bastion braced for anti-capitalist protesters.
“We have advised staff to dress casually and security around Canary Wharf has been tightened significantly,” said Robert Whitton, chairman of Whitton Investments, an investment management firm based in the district.
The majority of G20 protests are expected to migrate from the City of London towards the summit epicentre at the nearby ExCel complex in the London Docklands on Thursday. Businesses on the nearby Canary Wharf estate, which houses banks such as HSBC, Citi, Barclays, Bank of America and Morgan Stanley in a cluster of London’s tallest buildings, are on high alert for trouble.
“Batten down the hatches!” yelled the April 1 front page of The Docklands, a free newspaper, but by 1000 GMT on Thursday, the area around Canary Wharf Underground station seemed undisturbed, barring a few extra security guards and perhaps quieter-than-usual streets.
Did you see the protests as rather ironic especially politicallly inclined left protestors attacking a bank supported by the centre left government.
