Rumor Mill: Mergers and Acquisitions in Question
Real deals are big this week, (See “DONE DEAL! M&A Activity of the Week“), but the rumors are bigger. Here’s your Cheat Sheet to mergers and acquisitions in the rumor mill:
- After rejecting Lundin Mining’s (LUN.TO) bid, Equinox Minerals (EQN.TO) received another offer from Minmetals Resources, a business unit of China’s biggest metals trader, for $6.5 billion. This offer, according to some of Equinox’s shareholders, is simply not big enough. If Minmetals gets what it wants, it will have access to the Lumwana copper mine in Zambia and a huge copper deposit in Saudi Arabia. Equinox is definitely playing hard to get, but it may receive a higher bid. As of Thursday, Australia’s Foreign Investment Review Board said they’re okay with Minmetals buying Equinox.
- By now we all know Nasdaq (NASDAQ:NDAQ) and ICE (NYSE:ICE) made an $11.3 billion bid for NYSE Euronext (NYSE:NYX), topping Deutsche Boerse’s offer. Deutsche Boerse has not yet decided what to do about it, as it is waiting to see what NYSE Euronext board decides. Shareholders will have to decide whether they want a higher price for a bread-and-butter consolidation, or a global merger. In the first case, shareholders will be offered stock in two companies, which is pretty unusual. The board is not just thinking about price: the likelihood of getting the deal done also plays a huge role, since both deals will face different antitrust issues. As of the middle of the week, it looks like NYSE may “just say no” to Nasdaq, considering the many antitrust issues and the fact that it wouldn’t be a merger of equals (as it would with the Germans). NYSE Euronext’s board believes accepting the Nasdaq offer would go against the company’s strategy as it would divide the equities and futures businesses.
- Belgian chemicals company Solvay (SOL.F) made a $4.8 billion bid for French Rhodia (RHA.PA). Solvay has been searching for an acquisition for about a year, after it sold its drugs unit to Abbott Laboratories (NYSE:ABT) in September 2009. If the deal goes through, Solvay’s exposure to emerging markets will increase drastically: 40 percent of the combined company’s revenues will come from emerging markets. It will also allow Solvay access to specialty chemicals, which is a higher-margin business than selling chemicals in bulk.
- Everyone has something to say about the potential AT&T (NYSE:T) acquisition of T-Mobile, particularly AT&T itself. It’s spending a lot of time trying to convince the public that the merger would make our networks better and help expand to cities with imminent shortages. Critics say: of course, AT&T would say that! The possibility of an oligopoly nevertheless remains.
- Now, for more exchange news: Singapore Exchange’s (SPXCF.PK) $8.9 billion bid for Australia’s ASX (ASX.AX) may be facing a brick wall. Australia’s foreign investment watchdog claims that the deal is not in Australia’s national interest. Apparently this deal has sparked quite a bit of controversy, as many Australians don’t want foreign ownership of this exchange (sound familiar?). Australia officially blocked the deal on Friday. Only problem with this: a bunch of exchanges are merging, so what will ASX do?
- Cephalon (NASDAQ:CEPH), a biopharmaceutical company, rejected Canadian Valeant Pharmaceuticals’ (NYSE:VRX) unsolicited $5.7 billion takeover offer (which was $73 per share). Cephalon thinks the bid is far too low, especially considering it barely represents a premium over Cephalon’s one-year high.
- Tognum (TGM.SG) shareholders are underwhelmed: Rolls-Royce Group (RR.L) and Daimler (DAI.DE) launched their $4.55 billion tender offer to buy the German engine producer, but this offer isn’t any different than their initial bid. This price is a 30 percent premium over Tognum’s unaffected share price. Shareholders are left hungry for more. Will they approve?
- Grupo Televisa (NYSE:TV) will acquire a 50 percent stake in Grupo lusacell, a Mexican wireless company, for $1.6 billion. Mexico’s two largest broadcasters and Carlos Slim have been battling over how to apportion control of the telecom and broadcast market. The face-off is between Televisa and rival TV Azteca (AZTECACPO.MX) versus Mr. Slim’s companies, America Movil (NYSE:AMX) and Telefonos de Mexico (NYSE:TMX). The fight will be bitter, as the market brings in approximately $35 billion per year.
- Expedia (NASDAQ:EXPE) plans to spin off its TripAdvisor unit into a separate public company. The CEO claims that the unit is now ready to stand on its own as a pure-play media company, and could get upwards of $4 billion in the transaction. Most analysts think this would be a good thing for shareholders, since TripAdvisor is a high-growth, high-margin unit of Expedia.
- Dutch chip producer NXP Semiconductors (NASDAQ:NXPI) may be in deal talks with Intel (NASDAQ:INTC), Qualcomm (NASDAQ:QCOM), and Broadcom (NASDAQ:BRCM), after the company’s private equity owners partially listed it last summer. However, the NXP CEO doesn’t believe there will be consolidation in the semiconductor industry until it gets out of the recession. So, which is it?
- Google (NASDAQ:GOOG) is one step closer to world dominance: it may receive clearance from the Justice Department to buy airline fare tracker ITA Software for $700 million, provided that it accept some governmental antitrust conditions to protect other companies in the travel industry. If the deal goes through, Google would have access to major U.S. airline reservation systems and fare deal services, such as Kayak, TripAdvisor, and Hotwire.
- Rio Tinto (NYSE:RIO) finally got its wish: it secured more than 50 percent shareholder approval for its $4 billion acquisition of Africa-focused coal producer Riversdale Mining (RFLMF.PK). Nevertheless, Tata Steel (TATASTEEL.NS) will hold onto its share position.
- BP (NYSE:BP) will probably not be able to proceed with its $16 billion share swap with Rosneft (ROSN.ME): as of Friday, the co-owners of BP’s Russian venture TNK-BP (TNBP.ME) are pretty happy as an arbitration ruled in their favor, arguing that this share swap violated the venture’s shareholder agreement. BP still hopes to partner with Rosneft in an offshore Arctic oil exploration deal.
Interact: Which deals do you think will get done? Which are just PR from hedge funds and traders? Let us know in the comments below …
Don’t Miss: DONE DEAL! M&A Activity of the Week.