Deals wrap: Bid for ING Direct USA
General Electric and Capital One have submitted bids for ING’s U.S. online banking operations in a deal worth about $9 billion, Bloomberg reports.
The frothy market for Internet IPOs is raising the specter of a bubble, underscoring how little has changed despite lawsuits and investigations in the wake of the 1990s dot-com craze.
Maple Group Acquisition Corp, which has gone hostile with its $3.7 billion offer for Toronto Stock Exchange operator TMX Group , is in talks to add at least three other financial-services companies to its consortium, the Wall Street Journal reports, citing sources.
BP is preparing to sell half of its 50 percent stake in TNK-BP to state-controlled Rosneft, the Wall Street Journal reports. The move represents an attempt to salvage a planned tie-up between BP and Rosneft, announced in January, and could be a negotiating tactic with AAR, the group of billionaires which owns the other half of TNK-BP, the Journal reports.
Chinese companies have stepped up acquisitions in Europe and the trend is expected to continue, reports the WSJ.
“In its quest to win approval of its $39 billion takeover of T-Mobile USA, AT&T just got a lot of help from its friends,” reports the New York Times.
Deals wrap: GE to slow M&A warpath
General Electric continued on its M&A warpath with a $3.2 billion agreement to acquire France’s Coverteam, a maker of automation systems used in the oil and gas sector, marking the latest in a series of deals in the energy industry. But, after some $11 billion in acquisitions in the energy sector over the past six months, GE plans to slow its pace of dealmaking, a top executive said.
Rio Tinto said it would go ahead with its A$3.9 billion ($4 billion) takeover offer for Riversdale Mining even if it ended up with a minority stake in the Mozambique-focused coal miner.
Canada’s federal election could add a fresh element of uncertainty to the London Stock Exchange‘s proposed C$3 billion ($3.1 billion) takeover of TMX Group, a deal which was already seen as far from a sure thing, writes Cameron French.
As lenders tighten mortgage standards and consumers stay on the sidelines amid a five-year slide in home prices, all-cash purchases are surging, writes Bloomerg’s John Gittelsohn. The deals are done mostly by investors who can get properties for less than buyers needing loans, fix them up and resell or rent them.
No longer just a dumb pipe
Comcast’s deal to buy a majority stake in NBC Universal from General Electric should put to rest fears at the cable operator that King Content will kill its business. But even if it becomes a thoroughfare of programming genius, the new venture will still have to convince a skeptical marketplace. The train wreck of Time Warner-AOL threw the idea of new media into financial purgatory.
Just how the venture will wring savings from its disparate businesses and avoid suffocating regulatory scrutiny are issues that could also create Comcastic headaches. Robert MacMillan points out on our Mediafile blog, with a sensible dose of skepticism, that the new venture is affirming its commitment to local news, in effect, promising to keep the garden hoses pumping even as it primes for a media gusher with big-ticket programming.
Still, while making a new media juggernaut could still turn out to be a pipe dream, Comcast CEO Brian Roberts (pictured above) cannot be faulted for allowing his company to get stuck in a dumb pipe nightmare.
Coffee wars: Peet’s, Green Mountain battle over Diedrich
There’s a big war brewing over single-serve coffee brand Diedrich Coffee Inc.
Green Mountain Coffee Roasters Inc on Tuesday raised its bid for Diedrich to $265 million, or $32 a share in cash, to challenge a sweetened offer from Peet’s Coffee & Tea Inc on Monday. Peet’s cash-and-stock offer is valued at $30.41 per share. Diedrich, which makes and sells K-Cup refills for Green Mountain Coffee’s single-cup Keurig brewer system, said its board is “continuing to analyze the two offers” to determine whether Green Mountain’s offer “continues to be a superior proposal.” Peet’s, of course, said it thinks its cash-and-stock proposal is superior “given the greater certainty of an faster closing and the potential upside for Diedrich’s shareholders through the Peet’s stock component.” It has until Friday to make a revised offer. Meanwhile, Green Mountain said its all-cash offer is better than Peet’s because Peet’s proposal is subject to market fluctuations in its stock price.
Earlier this month, Peet’s had agreed to buy Diedrich for $26 per share, in a bid to cash in on Diedrich’s status as a licensee of Green Mountain’s fast-growing single-cup coffee brewing systems. Green Mountain emerged as an interloper with a competing offer.
“Peet’s does have a sense of urgency to enter the fast-growing single cup market, and Diedrich probably is its only reasonable opportunity,” Anton Brenner of Roth Capital Partners said.
DirecTV adds to media merger excitement
With media titans GE and Vivendi still negotiating a deal to bring cable operator Comcast into a mega-media joint venture, a management move at DirecTV is giving dealwatchers a fresh programming alternative.
Yinka Adegoke and Sinead Carew report the appointment of PepsiCo veteran Michael White (pictured below), who has no experience in pay TV, as DirecTV CEO is being read as a sign the company’s parent, Liberty Media, just wants a baby-sitter until its sells the operation in the next couple of years.
Telecom leaders Verizon and AT&T approached Liberty earlier this year, they report. Both have cross-marketing deals with DirecTV and would leapfrog the rest of the market with the addition of DirecTV’s subscriber base. But fears of insurmountable regulatory resistance put those talks on ice.
Liberty Media shareholders are set to vote this morning on a plan to split DirecTV from Liberty Entertainment — a move that Wall Street believes could pave the way for a telephone company to put in a bid for DirecTV, leading to a similar bid for smaller rival Dish Network.
If Comcast gets its content pipeline connected to NBC Universal, the pressure on the telcos to boost subscribers could get them to test the regulatory waters again.
Comcast, GE and Kraft await Europe’s pleasure
The defining deals of the week, Kraft’s now officially hostile bid for Cadbury and a deal to sell a majority stake in NBC Universal to Comcast, hinge on decisions of Europe Inc, so they could well drag on many more weeks.
This morning, Kraft formally bid for Cadbury with the same offer mooted two months ago, before today’s put-up-or-shut-up deadline. Cadbury has already said no to these terms, and can be expected to do so again. But the sinking expectations that Kraft might pay more, and the lack of any other buyers coming forward, don’t help to make the case for a successful hold out by Cadbury executives.
Over the weekend we learned that GE and Comcast agreed on a valuation of around $30 billion for a joint venture between NBC Universal and Comcast, ironing out what has been a key obstacle in talks so far. But French media conglomerate Vivendi, which owns 20 percent of NBC Universal, has not yet agreed to a deal, a source said.
So far as NBC is concerned, Vivendi is so far tres mum. Every year between mid-November and mid-December, Vivendi has to decide whether to exercise its option to sell its NBC Universal stake. Vivendi is believed to be eager to dispose of it, but nobody knows what they want for it.
GE: bringing small things to life
With talk about a multibillion-dollar deal to sell NBC Universal to Comcast burbling away, General Electric CEO Jeff Immelt popped the top on a $250 million venture fund designed to buy stakes in small healthcare technology companies.
“What we’re trying to do is embrace the venture community, try and do a series of early-stage and later-stage type investments,” Immelt said in an interview. “We don’t do everything inside our four walls.”
Competing venture capitalists might consider Immelt’s embrace more of a bear hug. GE is taking a similar approach to the energy industry. It has a stake in A123 Systems, the battery maker that was one of the best-received initial public offerings of the year. Scott Malone, our reporter who interviewed Immelt, notes that taking stakes in smaller companies rather than buying them outright gives GE more flexibility. It gains exposure to a wider array of technologies, any one of which could take off.
“GE is in the midst of a $6 billion drive to revamp its healthcare arm, called ‘Healthymagination,’ that includes rolling out products intended to help hospitals and other health providers cut costs and making investments to encourage the adoption of electronic medical records,” Malone reports.
Might be just cosmetic, but a new name would be a good place to start.
Take the word “healthy…” then add “imagination…” and
human health professionals get Healthymagination, a GE Healthcare initiative that Jeffrey Robert Immelt believes
in the power of bringing good things to life, as in life sciences.
Of course, GE knows how free and clear a woman’s breast is. However, GE’s vintage television ad, “A mammogram. Don”t put it off,” reveals how free and clear GE Healthcare’s MRI scanning products help women have a better life while combatting breast cancer at the same time.
Watch this classic mommogram-theme TV advertisement posted at the following address:
http://www.youtube.com/community
Did he say IPO?
Speaking in New Delhi, General Electric CEO Jeffrey Immelt said “Discussions are ongoing whether it is an IPO or another partnership,” in response to a question on whether GE was talking to Comcast to sell a stake in the fourth-placed TV network and movie studio. With Vivendi possibly just a couple weeks away from unloading its 20 percent stake in the NBC venture, and all the talk this week about Comcast gathering coins to add the content trove to its cable mix, it might seem as if Immelt is trying to conjure something like a rabbit from a hat – or a peacock from a beret.
GE and Comcast are discussing a deal under which the largest U.S. cable firm would take control of 51 percent of NBC Universal with GE, which has the right of first refusal to pick up Vivendi’s stake if the French company exercises its annual option to sell, taking the rest. “The capital markets have definitely improved,” Immelt said. There is reason to see stability and some optimism for the future,” he said.
Set aside for a moment that the sickly advertising market that NBC already faces. The market for IPOs is picking up nicely right now, but is still in an early stage of recovery, making do with a ragtag bunch of real estate investment trusts and Chinese new-market plays. What effect do you think a big media play splashing into that pool would have on investor demand for new issues?
GE Finance and the road to recovery
If you needed a sign that banks are becoming more confident on the finance biz, take a look at what analysts are saying about General Electric this morning. The clouds that have hung over the industrial conglomerate’s finance arm through the financial crisis, are starting to break up, say Goldman Sachs and Deutsche Bank. GE’s stock put on 4 percent on the comments before the market opened.
With support seen waning for regulatory reforms that would require such GE to dump its finance arm, Goldman boosted the bank’s rating on the GE stock to a “buy” from “neutral”. Deutsche was also upbeat. Both noted that allowing GE to keep the business would give it more strategic flexibility and Goldman had estimated that a forced break-up could cost GE equity holders $40 billion.
GE Capital is the biggest drag on the company, which is trying to wind the unit back to represent no more than 30 percent of earnings, down from half before the crisis. There is little doubt that government intervention elsewhere has been bitter medicine, even if it was seen as necessary to sustaining the financial system. Signs that politicians are releasing their supportive stranglehold on the sector, such as allowing TARP paybacks, are likely to be pointed to as signs of a broader recovery.
I want to see some concrete evidence that GE deserves to be a buy instead of speculation.
I get tired of those who call themselves analysis, who are suppose to be PROFESSIONALS saying a stock is a buy and it goes the wrong way.
They are asleep at the wheel or more likely want to like by the corporation they are rating or I hate to say being paid off to rate them high—we do not anymore Enrons.
Truth in tender offers? An eyewitness account.
U.S. Securities regulators on Thursday sued a well-connected Kuwaiti financier, saying he reaped millions in suspicious profits after false takeover reports briefly sent shares of Harman International Industries soaring this week.
Reuters reporter Ransdell Pierson was in the office working the Sunday shift when he received a fax with the purported takeover offer. Unable to verify the authenticity of the fax, Reuters did not publish the story. Here is Ransdell’s first person account of what happened, and a copy of the fax. Would you have questioned its veracity?
Ransdell Pierson:
I was scouring newspapers on a Sunday shift in the Reuters New York bureau and waiting for news about distressed lender CIT Group, when the phone finally rang and broke my reverie. “Newsroom,” I said, and the caller replied, “Your Jeddah bureau is closed today. Can I send you a fax?” The male caller, who I imagined to be a middle-aged office aide frustrated by the thankless chore of delivering his fax, said it was a press release about a deal. Something about one company buying another for about $3 billion. “If it’s such a big transaction, shouldn’t this news be coming over the PRNewswire or BusinessWire?” I asked him. He explained that it was the weekend, so faxing a press release was the best route. I gave him a fax number and he called back, irritated the document hadn’t gone through. I gave him another fax number and he soon called back again, more irritated than before. So I gave him the number of a third Reuters fax machine, but told him that it needed to include contact information for all the parties. “Otherwise, we can’t authenticate it.” “OK, you’ll have it,” he replied.
But when the single-sheet document arrived seconds later, it was bereft of any contact info. Topped by a legitimate-looking APG logo [standing for Arabian Peninsula Group] , it described an offer by the group to buy U.S. stereo equipment maker Harman International Industries. It was plausibly well written, so I did not dismiss it out of hand. But I was skeptical.
Finding no references to the Arabian group in the Reuters databases or Google, and unable to reach any Harman officials for verification, I was glad I hadn’t sent any headlines out about the “deal” on the Reuters wire.
I followed up by calling my editor at home and telling him about the calls, and the fax. He said the 100 percent premium for Harman, in this economy, seemed outlandish. “I’m sure it’s a hoax.” Even so, the last thing I did that night, after going home, was to do one last Google search — to see if any other news organizations had carried the “news.” The headline from the press release did appear on one or two websites, but not on any major news organizations. I slept well.
