DealZone

Deals wrap: M&A is back

Dealmaking is back on the agenda as CEOs step up the hunt for ways to put a multitrillion-dollar cash pile to work, triggering the busiest January for M&A in 11 years.

If ProLogis and AMB Property’s recently announced talks on a “merger of equals” pan out, AMB Property is likely to be the real buyer and ProLogis the target, investors and Wall Street analysts said.

Sara Lee plans to split into two separate public companies focusing on North American meats and international coffee after takeover bids it received were not enough to entice it to sell the company.

Buying Ocado, the loss-making British online grocer, would give Amazon.com the model for cutting-edge customer service it would need to crack the market for selling groceries. The question is, will it take the plunge?

LinkedIn plans to raise up to $175 million in an initial public offering, according to a regulatory filing.

Facebook is not worth $50 billion, according to a Bloomberg poll.

Deals wrap: Taxing Sara Lee

Avoiding being clobbered with a huge tax bill is a key consideration in deciding on a sale, break-up or spin-off for a large company like Sara Lee.

Activist investor William Ackman and Vornado’s Chief Executive Steven Roth will join the board of J.C. Penney next month, the department store operator said.

Google needs to buy a Groupon clone, reports GigaOM.

The retail sector is ripe for M&A activity, reports Morningstar.

Deals wrap: A rock & roll deal

Warner Music Group is looking for potential buyers and Goldman Sachs is advising on the process, a source familiar with the matter said.

Rumbles of shareholder dissent show drugmaker Sanofi-Aventis is walking a tightrope as it enters the endgame in its drawn-out bid for biotech Genzyme.

A group of companies led by Brazilian beef processor JBS has arranged a financing package to bid for all or parts of Sara Lee, a source with direct knowledge of the situation told Reuters.

Success is bringing new headaches for small hedge funds, reports the NYT.

Deals wrap: Breaking up the conglomerates

Another breakup wave is hastening the end for some conglomerates. The financial benefits of specialization have long been in style, writes Breakingviews columnist Robert Cyran.

Banks will meet in New York City today to make their case for the right to sell the Treasury’s stake in AIG, three people familiar with the matter said.

Despite all the rhetoric about restricted lending, Chinese banks don’t seem to be listening.

Marathon Oil said it would split off its refinery and pipeline operations into a stand-alone company.

Banks should put their cash to work on acquisitions, analyst Meredith Whitney tells CNBC.

Deals wrap: AIG makes the sale, probably

AIG accepted a $2.16 billion cash offer for its Taiwan Nan Shan Life unit from a group led by local conglomerate Ruentex. Regulatory issues have dogged the sale of the unit and might yet delay it further.

Sara Lee could fetch more from an outright sale than if it were split up, but only if it can find a buyer that wants a wide array of assets, write Martinne Geller and Jessica Hall.

Asia’s private equity industry has quickly turned into a sellers’ market, as firms cash out of investments made on the back of the region’s robust economic growth. Private equity funds in China are nervously eyeing a push by the country’s top securities regulator to gain oversight of the fast-growing sector, fearing increased scrutiny and tougher new rules.

The NYT’s “Deal Professor” digs into the regulation surrounding an IPO.

Google’s employee no. 13 talks to peHUB about “sudden wealth syndrome.”

Deals wrap: Genzyme addresses investors

Genzyme, which is fighting off a hostile $18.5 billion bid from Sanofi-Aventis, will on Monday take another stab at persuading investors that its experimental multiple sclerosis drug is worth more than Sanofi’s projections.

AT&T said it agreed to buy spectrum licenses in the Lower 700 MHz frequency band from Qualcomm for $1.93 billion, to provide advanced 4G mobile broadband.

Sara Lee has been in talks to sell itself to Brazilian meat producer JBS, but the pair are at odds over price and it is unclear if a deal can be reached, a source familiar with the situation said on Sunday.

“Groupon has built a new channel into the heart of the the world’s economic activity: Small businesses,” writes John Battelle in Searchblog.

from Reuters Breakingviews:

Norway SWF wages lone governance crusade

Norway's $420 billion oil fund is rattling the cage of some of the foreign companies in which it has invested. As a shareholder it deserves praise for putting its head above the parapet. But as a sovereign wealth fund it is treading a fine line.

Norges Bank Investment Management (NBIM) has been stung into action by a combination of domestic political pressure to account for its investments and heavy losses on some parts of its extensive external investment portfolio.

NBIM has publicly chastised Volkswagen for its plans to take over Porsche assets as part of a cosy merger between the two German carmakers. A detailed letter to VW Chairman Ferdinand Piech, published in full on its website, doesn't mince words.

The fund's list of gripes is pretty long, ranging from conflicts of interests, a lack of transparency, questionable financial and strategic logic for the deal to concerns about the treatment of minority shareholders.

NBIM's intervention may well be too late to have any effect on the outcome of the planned tie-up. Only legal action by the fund, which had a 0.35 percent stake in VW at the end of 2008, could prevent the deal.

Nevertheless, the VW letter goes further than NBIM has before in openly criticising one of the companies in its extensive portfolio of 8,000 equity investments. This is unlikely to be a one-off, as NBIM is attempting to raise its profile.

At a presentation in London last week it laid out the tools it has at its disposal for achieving its goals. These include dialogue and engagement, contact with regulators, proxy voting, shareholder proposals and legal action.

Everybody Likes Cake

More big consumer brands are being dealt across the Atlantic. With Kraft’s bid for Cadbury churning, consumer goods giant Unilever plans to pay 1.275 billion euros ($1.87 billion) for a chunk of Sara Lee’s personal care brands, helping the cake maker sheds non-core businesses to focus on food. Sara Lee shareholders are sweet on the deal – bidding the stock up more than 9 percent in early trade. In a space reserved for winners and losers, this deal looks like it has natural benefits for both parties.

The asset sale is quite a bit less rich than the chocolate deal, which is for the whole of Cadbury rather than just its brands, the soap business brings with it a fresh scent of a recovery in deals activity. It is the first major acquisition for the Anglo-Dutch company’s new Chief Executive Paul Polman, and Sara Lee’s CEO Brenda Barnes is still only half-way through her business-shedding exercise.

Credit Suisse analyst Charlie Mills said the price Unilever is paying of 10 times core operating profit, or EBITDA, is not huge by industry standards, reflecting the fairly disparate collection of assets. Brylcream hair gel is part of the mix.

“We’re not convinced that this is the greatest collection of assets but another acquisition shows Unilever still moving from the back foot (cost cutting and disposals) to the front foot (volume growth and acquisitions),” he said. It may also be worth remembering that the deal speaks to Unilever’s business. It is built on brands, whereas Sara Lee is a brand unto itself.

So far as markets are concerned, Sara Lee is the winner here. Having been able to find a buyer for a huge chunk of assets it had on the block, it is now going to be able to buy back more stock and preserve its 11-cent quarterly dividend.