Deals wrap: Microsoft acquires Skype for $8.5 billion
Microsoft plans to buy internet telephone network Skype for $8.5 billion, the biggest purchase ever for the world’s largest software company as it seeks to regain ground on growing rivals. The money-losing Skype has 145 million users on average each month and has gained favor among small business users. The deal would also give Microsoft a foothold in the potentially lucrative video-conferencing market. Skype, which is minority owned by eBay, allows people to make calls at no charge but also offers some paid features.
This article in the Guardian by Graeme Wearden asked telecoms analysts what they think about the Microsoft-Skype deal.
Reuters columnist Felix Salmon gives his opinion on how being public eases acquisitions for companies, using the Microsoft-Skype deal and Facebook’s earlier interest in Skype as an example. Salmon writes that had Facebook been public, it could have snapped up Skype itself instead of having Microsoft buy it to keep it out of Google’s hands.
Deutsche Boerse’s works council is refusing to back a merger proposal with NYSE Euronext, according to two people familiar with the company’s thinking. The exchange is close to releasing a formal statement on behalf of the management and supervisory board, a formal part of German corporate governance in a takeover situation.
Buyout firms Blackstone and KKR are weighing up offers for France Telecom’s stake in Mobistar, sources familiar with the situation said. The deal could value Belgium-based Mobistar at more than 3 billion euros ($4.3 billion).
Chemicals group DuPont said it was confident its increased $6.4 billion offer for Danisco would succeed, after a hedge fund stoked uncertainty over the takeover. DuPont affirmed that its revised bid of 700 Danish crowns ($135) per share for Danisco was its “best and final” offer.
Upscale handbag maker Coach is planning to list shares on the Hong Kong Stock Exchange, a move the New York-based company said reflected the importance of China’s luxury market. Last month, Coach said sales at its Chinese stores open a year had risen by a double-digit percentage.
Deals wrap: Blackstone expands property empire
Blackstone has struck a deal to buy nearly 600 U.S. shopping malls and other properties from Australia’s Centro Property Group for about $9.4 billion, a person with direct knowledge of the transaction told Reuters on Monday.
Large financial institutions may need to make significant and potentially costly structural modifications to comply with new rules, bank regulator Sheila Bair told the Reuters Future Face of Finance Summit on Monday.
A new J.P. Morgan investment fund that targets privately held Internet and digital media firms is in talks to acquire a hefty stake in social networking and micro-blogging service Twitter, people familiar with the matter told the Financial Times. According to the report, the fund hopes to acquire 10 percent of the Internet messaging service for $450 million, which would value the company at about $4.5 billion.
“Glencore is priming analysts with in-depth briefings on its business ahead of a possible mega-float which could involve Qatar taking a stake in the world’s largest commodities trader,” write Reuters correspondents Kylie MacLellan and Regan Doherty. If it goes ahead, an IPO of privately held Glencore could value the company at as much as $60 billion according to Liberum Capital estimates, making it one of Europe’s biggest listings ever.
Ventas said it will buy Nationwide Health Properties for about $7.4 billion in stock, creating the largest healthcare real estate investment trust in the United States.
Imprisoned fraudster Bernard Madoff has been in a talkative mood lately. First came his headline-grabbing interview with the New York Times last month, in which Madoff claimed many of his biggest victims – banks and hedge funds – were complicit in his crimes, saying they “had to know” about his massive Ponzi scheme. In a new interview with New York magazine’s Steve Fishman, Madoff discusses in more detail how his massive fraud was a “nightmare” for him and that “even the regulators felt sorry for me”.
Deals wrap: AOL looks to Huffington Post
AOL will buy The Huffington Post for $315 million, relying on the high-profile liberal pundit who co-founded the influential website to rescue it from the dustbin of Internet history. The Wall Street Journal looks at the good and the bad of the deal. Felix Salmon asks if AOL is really the right parent for the unique and very valuable Huffington Post Media Group.
Danaher agreed to buy medical diagnostics company Beckman Coulter for $5.8 billion cash, moving further into its growing medical technology business.
Blackstone Group has taken a majority stake in San Diego’s historic Hotel del Coronado. The private equity firm has been active in buying U.S. commercial real estate such as hotels, retail property and warehouse space from distressed owners and others who need cash.
Warren Buffett’s Berkshire Hathaway will buy the 19.9 percent it does not own of Wesco Financial, in a deal worth about $547.6 million, the companies said.
Deals wrap: Vedanta makes bid for Cairn India
India-focused miner Vedanta Resources is reportedly close to buying a 51-percent stake in oil producer Cairn India for $8 billion to $8.5 billion, a source familiar with the matter told Reuters. While neither Cairn Energy nor Vedanta would comment, the source said the deal is expected to be announced on Monday.
Cairn India was boosted by a huge oil find in Rajasthan that turned the company into a major oil producer and, according to Reuters, the deal “would be the diversified miner’s (Vedanta) first move into oil and gas.” Read the Reuters factbox on Cairn India here.
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Google has been on a spending spree lately and folks are wondering who it will buy next? After paying $182 million for Facebook-app maker Slide earlier this month and reportedly making a buyout offer to Jambool, CEO Eric Schmidt recently told Bloomberg he has doubled the pace of acquisitions after some of Google’s internal projects failed.
PE Hub replayed a nice interview with David Lawee, Google’s VP of corporate development, on what the search giant looks for in acquiring companies.
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IBM announced it will buy software company Unica Corp for about $480 million in cash, reported Reuters. IBM will pay around $21 per Unica share, which sent Unica’s share price soaring 117 to as high as $20.78 in morning trading on the Nasdaq.
from Breakingviews:
Blackstone finds the bright side of conflicts
Caveat emptor won't apply much in Blackstone's latest deal. The firm's advisory team was hired to sell U.S. fabric maker Polymer Group. Now, one of its private equity funds has emerged as the most likely buyer of the $450 million company. It's the kind of situation that earned Goldman Sachs a spanking in the past. But so long as Polymer and Blackstone come clean about how events transpired, everyone should wind up happy.
Banks are more likely to find themselves in this kind of entanglement than private equity firms. Goldman, above all, has struggled periodically to manage such conflicts of interest. The firm's British team received a famous "spank from Hank" -- then Goldman-boss Paulson -- amid an outcry it had not put clients first after its investment arm became a suitor for several publicly traded companies, including airports operator BAA.
The Polymer situation sounds far less sticky for Blackstone. Still, investors on both sides could be forgiven for seeking reassurances. Polymer's minority shareholders need to know that Blackstone worked hard to find a buyer and that its bid provides optimal value -- and is preferable to keeping the company independent. Limited partners in Blackstone's fund will want to be convinced of the investment logic and satisfied the deal isn't just a way to bail the firm's advisory side out of a busted auction.
That concern is especially acute given that Polymer's controlling shareholder is another buyout shop, MatlinPatterson. With credit still thawing slowly and equity markets fickle, private equity firms have struggled to get deals done. Instead, they've bought and sold portfolio companies from each other to generate fees and return cash to investors.
Early signs are at least encouraging. Blackstone hadn't planned to enter the auction, a person close to the deal says, but Polymer wanted the firm as a suitor because of its track record in chemicals. And Polymer's board has hired another firm to evaluate the deal. Stranger things have happened in the name of greed, but it's hard to imagine Blackstone boss Steve Schwarzman jeopardizing his firm's reputation over a few hundred million dollars.
Deals wrap: Who’s tuning into RadioShack?
Blackstone Group and TPG Capital are unlikely to continue to pursue a possible bid for RadioShack, two sources familiar with the situation said. The electronics company had a handful of private equity firms circling but interest appears to be waning. * View article
Private equity firms have incentives both to buy and sell right now. Pressure is on to invest billions of dollars raised in 2006-2008 as the end of those funds’ investment periods approach, while funds are also keen to sell or take public existing investments to reward under-pressure investors. * View article
Hedge funds have cut back their bets over a volatile summer for financial markets, worried that big swings in investor sentiment are playing havoc with their carefully-researched trades. * View article
Andrew Ross Sorkin takes a closer look at Playboy and asks, Why should Hefner have all the fun? * View NYT article
In giving its Asia chief executive the chop, AIG may have unlocked two deals. First, the flotation of its AIA division in Hong Kong, which should now go ahead after a false start. Second, an eventual merger between AIA and the Asian portion of its big rival — and recent failed suitor — the UK’s Prudential. * View article
Goldman builds exposure to China insurance market
Having taken a nibble at the Chinese insurance market in December, helping number three life insurer China Pacific Insurance list a $3.1 billion IPO in Hong Kong in December, Goldman Sachs is taking a bigger bite at that most promising and enticing of global investments, China’s financial products industry.
Sources tell us that an investing arm of Goldman is in the final stages of an agreement to buy AXA’s $1.05 billion stake in Taikang Life, China’s No.4 life insurer. The deal would allow France’s AXA to shed a non-core asset, while granting Goldman a piece of China’s growing insurance industry, report George Chen and Michael Flaherty.
Several private equity firms, including Kohlberg Kravis Roberts & Co and Blackstone Group, competed in the Taikang auction, as did Singapore’s Temasek Holdings, sources have told them.
As we’re talking about Goldman’s private equity business, divining strategic intentions could be difficult beyond what looks like a potentially lucrative business. Might one detect the invisible hand of the Oracle of Omaha here? After all, Buffett, who took a confidence-building $5 billion stake in Goldman at the height of the crisis, is long both China and insurance.
A Goldman takeover of Taikang Life would interestingly also put it in indirect competition with near-collapsed insurer AIG, which has a piece of the Chinese life insurance market, albeit a small one, through its AIA unit, which sells life insurance in China. A potential showdown between Goldman and AIG would be interesting, given the already bitter history between the two companies; Goldman was AIG’s counterparty on many of the credit default swaps which sent the insurer to the brink of bankruptcy.
Of course, AIA might be on the verge of changing hands. That will happen if, and only if, Britain’s Prudential, the unit’s would-be buyer convinces reluctant shareholders to back the deal.
DealZone Daily
Blackstone suffered a setback when travel services provider Travelport, which it owns, pulled its $1.8 billion IPO. Travelport blamed volatile markets, but it had earlier tweaked a bonus scheme for management that investors said was overly lavish. A last-minute cut in the price range didn’t help either. Is the IPO window in Europe closing before it even opened?
Things are looking better in Asia, where AIG has made the long-awaited choice of underwriters for the listing of its Asian life insurance unit, according to our sources. The share sale could raise more than $10 billion. Elsewhere, Korea Life Insurance Co Ltd plans to raise up to $2 billion in an IPO.
For these and all other stories about deals, please click here.
And elsewhere in media (some links may require subscription rights):
Motorola Inc may spin off its TV set-top box and cellphone businesses into a publicly traded company, and sell its wireless network equipment unit, says the Wall Street Journal.
Hungarian energy group MOL is talking to Russian oil firm Surgut about buying back Surgut’s 21 percent stake in MOL for 1.4 billion euros ($1.9 billion), the Vedomosti business daily says.
Kingfisher Airlines Ltd is likely to come out with a rights issue offering shareholders one equity share for every one they hold to raise nearly 4 billion rupees ($141 million), according to the Economic Times.
DealZone Daily
For the latest deals news from Reuters, click here. And here’s the top stories from the newspapers (some external links may require subscription):
Italian chocolate maker Ferrero could be interested in Cadbury‘s gum and candy division, a unit worth about 5 billion euros ($7.4 billion), in a possible joint takeover bid, business daily Il Sole 24 Ore said on Friday.
TPG, Blackstone, Warburg Pincus, BC Partners and Advent are among the first-round bidders for discount retailer Matalan, which is being auctioned with an estimated price tag of about 1.5 billion pounds, the FT said.
Some of Goldman Sachs Group’s largest shareholders have asked the company to cut the size of its bonus pool and pass along more of its profits to investors, the Wall Street Journal said.
DealZone Daily
Reckitt Benckiser shares rise 2 percent — so markets are taking notice of the Daily Telegraph’s “latest tale” that the UK group could link up with Colgate-Palmolive. Benckiser is worth roughly $37 billion in the market, Colgate some $41.2 billion, so a deal would be humongous. And this just in: J.P. Morgan Cazenove will become a fully-owned part of J.P. Morgan, as the U.S. investment bank buys out its joint-venture partner Cazenove Group.
Finally, Blackstone Group’s Pinnacle Brands Corp is likely to buy U.S. frozen vegetable company Birds Eye Foods for more than $1.3 billion, according to the Wall Street Journal.
For the latest deals news from Reuters, click here.
