from Breakingviews:
Forget the IPO, Facebook could reverse into Yahoo
By Rob Cox The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Now that Yahoo has fired its chief executive, anything could happen to the rudderless Internet hodgepodge. Private equity firms, one of Yahoo's founders and even AOL are said to be mulling bids. But consider a more radical option: a takeover by the rival most responsible for Yahoo's fall from grace -- Facebook.
It's of course easy to marshal arguments why Facebook's creator, Mark Zuckerberg, should avoid staining his company Yahoo purple. The social network is already growing rapidly. Revenue doubled in the first half to $1.6 billion with profit of nearly half a billion.
Moreover, Facebook is a private company without the $20 billion or so of cash needed to buy Yahoo. Since Facebook is just starting to profitably harvest its audience of 750 million users, the firm should stick to its knitting, or so the argument goes.
But Facebook has the ingredients to make Yahoo succeed, starting with a clear mission. Yahoo has struggled to articulate a vision beyond being the first page people see when they open a browser. Beyond that, nothing binds Yahoo's pieces -- news, photo albums, stock quotes, email, job listings and entertainment -- together. They look like orphaned applications for a social network.
What unifies Yahoo's bits and bobs is a relatively robust display advertising platform. In an overall crummy second quarter, display revenue increased 5 percent to $467 million. Facebook is still building out its capacity to sell such ads. A combination would make a compelling pitch to advertisers.
In search, both have a common nemesis in Google. They also have a shared partner in Microsoft, which owns a piece of Facebook and whose Bing search engine collaborates with Yahoo.
M & A wrap: A Buffett bailout for BofA
Warren Buffett’s Berkshire Hathaway will invest $5 billion in Bank of America, stepping in to shore up the company in the same way he helped prop up Goldman Sachs during the financial crisis.
Bank of America shares rose 20 percent in pre-market trading on the news. Shares for the largest U.S. bank by assets have lost roughly a third of their value in August, and half their value since the beginning of the year.
The news of Steve Jobs’s resignation had many of his peers weighing in on the Apple co-founder’s legacy. Former Google CEO Eric Schmidt said Jobs is the “most successful CEO in the U.S. of the last 25 years,” while former eBay CEO Meg Whitman said his contributions are “unparalleled in the business world.”
Samsung Electronics Co reiterated on Thursday it is not interested in buying Hewlett-Packard Co’s PC business, shooting down persistent market talk the South Korean firm may snap up the unit to become the world’s top PC maker.
The deadline for initial bids in the auction for Hulu was extended until the end of the week to allow interested parties more time to examine the online video site’s financial information, according to people familiar with the situation. Yahoo, Google Inc, DirecTV and Amazon.com were among the parties preparing to submit an offer for the U.S. online company, the people said.
Is there a future for Morgan Stanley and Goldman Sachs? That’s the question WSJ’s Dennis Berman tackles on Mean Street.
Deals wrap: Copycats sure to follow LinkedIn
A day after LinkedIn’s shares more than doubled in their public trading debut, analysts are scrambling to explain why the stock exploded and figure out what happens next.
The professional networking site’s IPO was being closely watched by Facebook, Groupon, Twitter and Zynga to gauge investors’ appetite for Internet companies.
Facebook COO Sheryl Sandberg described a public offering of Facebook shares as “inevitable,” while Evelyn M. Rusli over on DealBook predicts a surge in Internet IPO’s but doesn’t think the market is setting itself up for another tech bubble burst.
It wasn’t just the big four social media sites waiting to go public that were salivating at LinkedIn’s record day, would-be rivals to LinkedIn were also giddy with excitement.
As for future opportunities for investors, Shira Ovide of WSJ.com gives her three reasons to be wary going forward. Nigam Arora of Seeking Alpha also advises investors to be cautious but gives four low risk ways to make money from LinkedIn.
One of the more interesting comparisons to LinkedIn’s meteoric rise in its debut comes from WSJ.com. At one point yesterday LinkedIn’s valuation was roughly $10 billion, trading at nearly 41 times its 2010 net revenue. If Apple were trading at the same multiple, it would have a market value of $2.7 trillion.
In other news John Malone’s Liberty Media Corp has proposed to buy Barnes & Noble for $1.02 billion, nine months after the largest U.S. bookstore chain put itself up for sale.
Deals wrap: Blavatnik’s Access Industries wins bid for Warner Music
Russian-born billionaire Len Blavatnik’s Access Industries has won control of Warner Music Group with an offer of $8.25 a share, according to a source familiar with the matter. The agreement would set the world’s third-largest music company’s enterprise value at approximately $3.3 billion.
The NYTimes’s Ben Protess shines a light on Len Blavatnik, chairman of Access Industries and the new controlling stakeholder of Warner Music Group. Well-known for his investing prowess, he came to America as a penniless teenager and after building a fortune on oil and metal companies, he’s worth roughly $10 billion.
In this analysis by Jennifer Saba, she argues that as Internet giants Google and Facebook slug it out to seal a deal with Web video conferencing service Skype, Facebook looks likely to be the more aggressive suitor, not to mention a better fit.
Investors frustrated in their attempts to buy some of the hundreds of failing U.S. banks are testing a new approach. Rather than wait for an ailing bank to be seized by regulators and sold off to a rival, dealmakers are touting a $6.5 million bankruptcy sale as a way to attract new investors able to infuse banks with life-saving capital.
Ailing carmaker Saab has asked Sweden’s debt office to approve a change in ownership so Chinese group Hawtai and U.S. investment fund Gemini can help get production restarted. Saab owner Spyker Cars said this week that the privately-owned Hawtai was eyeing an investment of 150 million euros ($210 million).
In a recent post, Breakingviews’ Robert Cyran sets out why he believes the merger between drugstore chain CVS and pharmacy benefit manager Caremark never made sense, and why the $50 billion company could be worth $13 billion more if it were carved up.
Deals wrap: Facebook, Google dueling suitors for Skype
Internet giants Facebook and Google are separately considering a tie-up with Skype after the Web video conferencing service delayed its initial public offering, two sources with direct knowledge told Reuters. A Skype deal could be valued at $3 billion to $4 billion, according to one of the sources.
Swiss commodity trader Glencore’s planned $11 billion listing was fully covered on its first day as investors rushed to take part in the mega-float, two sources close to the deal said on Thursday. Investors placed orders for all the shares on offer, including a 10 percent overallotment option, sources said, adding it was too soon to say where in the indicated 480-580 pence ($0.79-0.95) range the shares would be priced.
Warner Music Group could reach a deal to sell itself as soon as close of business on Thursday when the board meets to make a final decision, according to two sources. The world’s third largest music company is expected to be sold for over $3 billion and leading the bidding is Russian-American industrialist Len Blavatnik’s Access Industries.
Shareholders in Actelion threw their weight behind the management of Europe’s largest biotech company, rejecting proposals by activist investor Elliott Advisors as a battle for control came to a head. New York-based hedge fund Elliott has urged the Swiss biotech group to seek a buyer after a string of product setbacks and has accused Actelion of pursuing a high-risk strategy that has eroded shareholder value.
Looking back over April, a month that has seen 31 companies file to go public in the U.S., this piece by Gwen Robinson for FT.com’s Alphaville explains the significance of the bumper crop of IPOs filed this month, including RenRen, Dunkin’ Donuts and Glencore, and why the recent IPO mania seems to be a global trend.
from MediaFile:
Tencent, De Wolfe among interested buyers for Myspace
De Wolfe and Murdoch in happier times (Photo: Reuters)
Chinese Internet holding company Tencent, Myspace founder Chris De Wolfe and Myspace's current management team are among the 20 odd names kicking the tires at the once might social network to see whether it's worth buying outright or partnering in some sort of spin-out with current owner News Corp.
Tencent has previously said it is interested in possible US acquisitions.
The names come up in Reuters' Special Report on 'How News Corp got lost in Myspace', a behind the scenes tale on how the focused Facebook beat the partying Myspace. (We have the story in a handy PDF format here)
In the story, we highlight some of the key problems Myspace faced, some well-known and some not often mentioned:
- It was built on a poor technology base which couldn't keep up with the fast-evolving Web 2.0 environment
Deals wrap: Singapore Exchange’s ASX bid in trouble
Consolidation in the Asian exchanges industry hit a roadblock on Tuesday when Australia said it intends to reject Singapore Exchange’s proposed $7.8 billion bid for Australia’s ASX on “national interest” grounds.
Although a final decision has yet to be made, share moves hinted that the market doubts the deal can be salvaged. All eyes will now be on other major exchange deals awaiting approval from regulators and politicians.
Texas Instruments is buying National Semiconductor for $6.5 billion, paying a hefty 78 percent premium to merge two of the industry’s oldest firms into a dominant force in analog microchips.
It’s another spotlight-grabbing win for veteran deal advisor Frank Quattrone, whose boutique investment bank advised National Semiconductor on the sale.
Google’s M&A machine may be slowing down after years of going full throttle as it finds itself in antitrust limbo, argues Reuters Breakingviews columnist Rob Cox
Senior dealmakers at the Reuters Global M&A Summit said Chinese firms are facing a series of regulatory and political challenges in buying U.S. companies, which is driving them to other countries that are seen as friendlier.
DealBook editor Andrew Ross Sorkin wonders why typically outspoken Berkshire Hathaway chief Warren Buffett has been so quiet about the speculations of insider trading that continue to spin around his former heir apparent David Sokol and draws up a list of questions that deserve answers from Buffett.
Deals wrap: Groupon’s new deal, a $25 billion IPO
Daily deals website Groupon, which last year turned down a $6 billion bid from Google, has held talks with banks about an initial public offering that would value the company as high as $25 billion, according to Bloomberg.
The Chicago-based company ballooned to 50 million users in 2010 and is available in 500 cities in 40 countries. Not bad considering the two-year-old start-up was valued at $1.3 billion just last April.
Shira Ovide of the WSJ.com wonders if Groupon’s massive valuation, coupled with the reported $75 billion worth for Facebook, has the makings of another 1990′s tech bubble.
The majority of Vimpelcom shareholders voted for a deal that will involve taking on $20 billion of debt and diversifying into new markets, allowing it to claim victory in its long-running battle for control of Wind Telecom.
Norway’s Telenor, which has a 36 percent voting stake, had fought a battle with fellow major Vimpelcom shareholder Alfa Group to have it blocked. But the more than $6 billion cash-and-shares bid for control of Orascom Telecom and Italian group Windis is expected to complete in the first half, subject to regulatory approvals and financing.
Finally, 2011 looks like it will be a good year for Foster’s wine. The top Australian brewer has set April 29th as the date for the vote to spin-off its wine business, which has net assets of $2.8 billion.
Deals wrap: An all-Japan exchange?
Call it the survival instinct. The flurry of mergers and alliances underway in the global exchanges industry has served as a call to action for the Tokyo Stock Exchange, which may begin merger talks with its main Japanese rival Osaka Securities Exchange as it seeks out ways to survive consolidation sweeping the sector.
Meanwhile, some of Canada’s big banks are protesting the London Stock Exchange’s proposed $3.2 billion takeover of Toronto Stock Exchange parent, TMX Group. Bank executives told a hearing that the deal threatens Toronto’s status as a global financial hub and could harm the prospects of Canadian companies looking to raise funds on public markets.
HCA, the biggest U.S. for-profit hospital chain, made history on Wednesday when it pulled off the largest private-equity backed initial public offering ever. Investors snapped up more shares than expected in the $3.79 billion IPO, shrugging off the hospital operator’s high debt levels as the market for newly traded shares heats up. Check out our list of the ten largest U.S. private equity-backed IPOs.
“Since Groupon declined a Google $6 billion buyout offer, hundreds of companies have launched, trying to emulate its business model by targeting narrow slices of the market,” writes Jessica Bruder of the NYT’s DealBook.
Starbucks is teaming up with Green Mountain Coffee Roasters to break into the fast-growing single-serve coffee market.
Deals wrap: Just one word – plastics
Plastics. They don’t glitter like gold does, but more top hedge fund managers are betting on the chemical commodities that go into making plastics and buying up shares in the companies that produce them.
The Smart Money 30, a group that includes some of the biggest stock-picking equity funds, also trimmed bets on tech giants Apple and Google while favoring General Motors and Citigroup, according to data compiled by Thomson Reuters.
What’s the easiest way to boost your company’s reputation? Buy up a top global brand. At least that’s the advice being given to top Chinese companies by the country’s commerce minister, who is urging the country’s firms to seek out new foreign acquisitions in an effort to secure more name recognition abroad.
More signs that the luxury market has bounced back from its recession-induced slump. France’s LVMH, the world’s number one luxury group, snapped up widely-popular Italian jewelry maker Bulgari in a deal valued at $5.19 billion as it aims to bulk up its jewelry business and expand in emerging markets. Some analysts say the offer could set off a new wave of consolidation in the luxury market.
Some of the hottest tech startups are clamping down on trading of their shares as the race to snap up pieces of pre-IPO companies has attracted the scrutiny of U.S. regulators, write correspondents Alexei Oreskovic and Liana Baker.
