M&A

shrijit_s · Oct 17, 2006

Tata Steel of India Offers 4 Billion Pounds for Corus

Oct. 17 (Bloomberg) -- Tata Steel Ltd. made a 4.05 billion- pound ($7.56 billion) bid for Corus Group Plc, the largest U.K. steelmaker, which would be the biggest foreign takeover by an Indian company.

Tata, based in Mumbai, offered 455 pence a share in cash for the company, London-based Corus said in a statement today. Shares of Corus were at 481 pence as of 3:24 p.m. in London, valuing the company at 4.28 billion pounds. Tata Deputy Managing Director T. K. Mukherjee confirmed the offer in a telephone interview in London following Corus's announcement.

Purchasing Corus would propel Tata to sixth from 56th in world rankings and allow it to make higher-margin products. Corus will get access to the world's fifth-biggest iron-ore deposit. Steelmakers want to boost bargaining power over clients and suppliers to take advantage of growing global demand. Mittal Steel Co. bought Arcelor SA this year in a $38.3 billion deal.

``The merger with Corus gives Tata Steel a foothold in Europe, while Corus gets access to cheap iron ore resources,'' said Prashant Kothari, a fund manager at Prudential ICICI Asset Management Co. in Mumbai. Prudential ICICI has $6.6 billion in assets in India, including 1.1 million Tata Steel shares, according to data compiled by Bloomberg.

Shares of Corus have gained 18 percent since India's Business Standard reported on Oct. 4 that Tata may bid as much as 580 pence a share for the steelmaker, 27 percent higher than Tata's offer announced today. Corus said Tata's proposal is a ``recommended offer,'' signaling that discussions are at an advanced stage. ``There can be no certainty that an offer will be made,'' Corus added.

Higher Offer?

Tata shares gained 4.35 rupees, or 0.9 percent, to close at 515.7 rupees on the Bombay Stock Exchange. The stock has gained 36 percent this year, valuing the steelmaker at 299.3 billion rupees ($6.61 billion).

``We have already said before that we are looking for opportunities, including Corus,'' Mukherjee said.

With Corus shares trading higher than Tata's offer, ``investors are speculating that Tata will have to raise the offer,'' Richard Brakenhoff, an analyst at Rabo Securities, said in an interview from Amsterdam.

Mittal's offer for Arcelor was 4.56 times the Luxembourg- based company's earnings before interest, taxes, depreciation and amortization, or Ebitda. Tata's offer is 4.84 times Corus's Ebitda, based on the U.K. steelmaker's earnings in the 12 months through June 30. Tata values the offer at $10 billion, including debt, it said today.

Emerging Muscle

``The $9 billion to $10 billion valuation being talked about is not very cheap,'' said Jon Thorn, who manages about $250 million in Indian stocks at India Capital Fund Ltd. in Hong Kong. The Corus assets ``are hard to find and I'm sure they represent value for Tata Steel. I don't expect the deal to face problems.''

A takeover of Corus by Tata would further the muscle of steelmakers from outside developed countries. Emerging economies now account for six out of the 10 biggest steelmaking nations. China alone makes almost a third of the world's steel. Mittal Steel, now the world's largest producer, started with an Indonesian steel plant and Arcelor proposed merging with Russia's OAO Severstal before accepting Mittal's bid.

Corus was created through the combination of British Steel Plc and the Netherlands' Royal Hoogovens in 1999. Shares of the company fell as low as 18 pence in 2003 after the company had four consecutive annual losses. Chief Executive Officer Philippe Varin, who took over in 2003, has returned the company to profit after job cuts and plant closures. He has also sold the group's aluminum business and reported record earnings last year.

U.K. Union

Corus is of ``vital strategic importance'' to the U.K. economy, and ``we believe that this is a matter on which the U.K. government should have a view as part of their economic strategy for the country,'' Michael Leahy, general secretary of London-based Community, the U.K.'s main steel union, said in a e-mailed statement today. ``We would also expect there to be guarantees on the terms and conditions of employment for Corus's U.K. employees, particularly on pay and pensions.''

Tata Steel is controlled by Tata Group, which had sales of $18 billion in the fiscal year ended March 31, 2005, equal to 2.8 percent of India's gross domestic product. The company, founded 138 years ago, controls 93 businesses, including in software, engineering and chemicals.

Tata Steel, founded in 1907, employs 38,000 people, compared with 41,200 at Corus. Tata Steel has expanded in Southeast Asia by acquiring Thailand's 1.2 million metric-ton Millennium Steel PCL and Singapore's 2 million-ton NatSteel Ltd.

World Demand

World steel demand is expected to expand by 8.9 percent this year, compared with 4.1 percent last year, according to the Brussels-based International Iron & Steel Institute.

Tata Steel, which produces 5 million tons a year of steel in Jamshedpur in east India, plans to increase output to 30 million tons over the next decade by building new plants and acquiring rivals. The expansion may cost as much as 700 billion rupees, according to the latest annual report.

Steel Authority of India Ltd. is the country's biggest steelmaker. It is 86 percent owned by the government.

Corus produced 18.2 million tons of steel last year, mostly from plants in the U.K. and the Netherlands. The construction industry accounts for 30 percent of its sales, engineering 20 percent and automotive 16 percent. About 80 percent of its sales are made in Europe and 8 percent in Asia.

shrijit_s · Oct 20, 2006

Its finally here. The largest Indian deal is here. Tata Steel is buying a company 5 times its size. As of now the Corus board has recommended the offer. First we have to wait and see if there's any other offer frm other companies. CSN of Brazil and Severstal's names are doing the rounds.

Secondly we have to wait and see how TISCO is going to finance this deal..Will keep you updated

Tata Steel Agrees to Buy Corus Group at $7.6 Billion
By Debarati Roy

Oct. 20 (Bloomberg) -- Tata Steel Ltd. agreed to buy Corus Group Plc after the board of U.K.'s largest steelmaker accepted a 4.03 billion-pound ($7.6 billion) takeover offer to create the world's fifth-biggest producer. Tata shares rose.

Tata, India's second-biggest steelmaker, offered 455 pence a share in cash for Corus, Managing Director B. Muthuraman said in a phone interview from London.

Tata, based in Mumbai, wants to add European operations to its mills, furnaces and iron-ore mines at home. Steelmakers want to boost bargaining power over clients and suppliers to take advantage of growing global demand. Mittal Steel Co. agreed to buy Arcelor SA this year in a $38.3 billion deal.

Shares of Corus closed at 478.5 pence in London yesterday, a sign that some investors anticipate a higher price from Tata or another bidder. Tata Steel shares rose as much as 3.9 percent, and traded 3 percent higher on the Bombay Stock Exchange at 516 rupees at 12:26 p.m. local time, valuing the Indian steelmaker at $6.6 billion.

A takeover of Corus would be Chairman Ratan Tata's biggest move yet outside India. It would also be the largest foreign takeover by an Indian company.

Russia's OAO Severstal and OAO Novolipetsk Steel won't rule out making a bid, the Financial Times said on Oct. 18. Cia. Siderurgica Nacional SA, Brazil's fourth-largest steelmaker, also is preparing an offer, Metal Bulletin reported on Oct. 18, citing a person close to the situation.

Financing

Tata Group will provide about $1 billion in cash toward the acquisition and the steelmaker will borrow $2.5 billion, the Business Standard reported today. A further $5.5 billion will be borrowed using Corus's future earnings as collateral, the newspaper said. The so-called leveraged buyout would be the largest by an Indian company.

Shares of Corus have risen 17 percent since the Business Standard reported Oct. 4 that Tata may bid as much as 580 pence a share, 27 percent higher than the agreed offer. Tata said on Oct. 18 it valued the offer at $10 billion, including debt.

Buying Corus, the former British Steel Plc, would propel Tata to fifth from 56th among the world's producers. Tata would combine plants in India, home to the world's fifth-biggest iron- ore deposit, with Corus furnaces from the U.K. to Norway.

Tata Steel, founded in 1907, has 38,000 people, compared with 41,200 at Corus. Tata spends $67 a ton on manpower, less than $137 a ton at Corus and about $100 for Arcelor, Mumbai- based brokerage Batlivala & Karani said in a note today.

Group Control

Corus was created through the combination of British Steel and the Netherlands' Royal Hoogovens in 1999. Chief Executive Officer Philippe Varin, who took over in 2003, has returned the company to profit after job cuts and plant closures.

Tata Steel is controlled by Tata Group, which had sales of $18 billion in the financial year ended March 31, 2005, equal to 2.8 percent of India's gross domestic product. The Tata Group, founded 138 years ago, controls 96 companies, including software, engineering and chemicals businesses.

Deutsche Bank AG and ABN Amro Holding NV are advising Tata. Credit Suisse Group and HSBC Holdings Plc are working with Corus. JPMorgan Cazenove is Corus's corporate broker.

The success of Mittal Steel's hostile takeover of Arcelor is spurring alliances in the steel industry, as producers seek to erect defenses against rival bids. Lakshmi Mittal, chairman of Arcelor Mittal, the world's largest steelmaker, said in a television interview on CNN last month that steel companies around the world must brace for more mergers.

Nippon Steel Corp., the world's second-largest steelmaker, today said it's in talks to expand an alliance with South Korea's Posco. Nippon Steel is asking domestic rivals to help block a hostile bid from abroad, and Posco has said it may buy back shares to increase the company's market value.

Nippon Steel and Posco signed a five-year strategic tie-up agreement in 2000 and extended the accord last year.

shrijit_s · Oct 27, 2006

Cemex Makes Unsolicited $12.8 Billion Bid for Rinker

Oct. 27 (Bloomberg) -- Cemex SA, the world's third-largest cement maker, made an unsolicited $12.8 billion offer to buy Australia's Rinker Group Ltd. in what would be the biggest ever acquisition in the building-materials industry.

Monterrey, Mexico-based Cemex bid AU$17 ($13) per share for Rinker, 27 percent more than the Sydney-based company's closing price yesterday. American depositary receipts of Rinker, the top supplier of concrete blocks, pipes and other construction materials in Florida, rose as much as 35 percent to $72.

Chairman Lorenzo Zambrano's offer continues a strategy that over the past 20 years has propelled Cemex to a global competitor from a small producer in northern Mexico. Zambrano, 62, is going after Rinker because of its business in the U.S., which accounts for 85 percent of the Australian company's earnings.

``Cemex sees this as an opportunity to pick up a world- class asset,'' said Christopher Palmer, who helps manage $2 billion in emerging market equities, including shares of Cemex, at Gartmore Investment Management in London. ``They have a strong track record in buying globally.''

`Too Early'

Rinker said it's not ready to respond to Cemex's bid.

``It's far too early for our board to have made a response,'' said Rinker spokeswoman Debra Stirling said in a telephone interview. She said the offer was unsolicited.

In a filing to the U.S. Securities and Exchange Commission, Rinker said it was ``not aware of any matters'' of an offer by Cemex after the Wall Street Journal earlier today reported the possibility of an offer.

Zambrano, 62, would increase annual revenue with Rinker to more than $23 billion from $15 billion in 2005, and boost the workforce to 67,000 in 50 countries from 52,600 now. Cemex's earnings before interest, taxes, depreciation and amortization -- a measure of cash flow known as Ebitda -- in the U.S. also would rise to 20 percent of the company's total from 10 percent.

Cemex already is the largest cement maker in the U.S. and is the world's third-largest after Jona, Switzerland-based Holcim Ltd. and France's Lafarge SA.

Hector Medina, vice president of Cemex planning and finance, said the company wanted to consult with Rinker's board but was forced to make the announcement because of ``rumors in the market.''

`Fair Offer'

``This is a full and fair offer and we're confident it will be well received by Rinker's shareholders,'' Medina said on a conference call with analysts and investors this morning.

``Certainly, we would hope for a friendly deal,'' Zambrano, who took over as Cemex's chief executive officer in 1985, said on the call. New York-based Citigroup Inc. and JPMorgan Chase & Co. are advising Cemex.

Rinker ADRs traded at $71.48, a rise of $18.08 from yesterday, at 12:05 p.m. in New York. Rinker's shares rose 0.83, or 6 percent, to AU$14.70, before Cemex announced its offer.

Cemex's shares traded in the U.S. fell 30 cents, or 0.9 percent, to $31.70. Shares of Hanson Plc, a London-based building materials company, fell 34 pence, or 4.6 percent, to 710 pence, after the Rinker offer dashed speculation Cemex would buy Hanson.

The transaction would be the largest acquisition in the building materials market, beating Lafarge's $9.5 billion purchase of U.K.'s Blue Circle Industries Plc in 2001. It also would be the largest by a Mexican company, surpassing Cemex's $5.8 billion purchase of the U.K.'s RMC Group Plc in March 2005.

Florida, Arizona

Rinker, which was spun out of sugar and building materials group CSR Ltd. in 2003, also sells gravel, cement and asphalt used in roads and bridges. Most of the company's sales come from Florida and Arizona, according to Cemex. The acquisition would make Florida Cemex's largest market in the U.S.

``Rinker's position in the U.S. is a good complement to ours,'' Zambrano said on the conference call. ``This acquisition is fundamentally about value creation, not size.'' He also said the purchase would give Cemex an introduction into China, where Rinker operates four concrete plants.

Zambrano said it's too early to determine if U.S. regulators will force Cemex to sell assets because of the acquisition.

Cemex plans to squeeze $130 million of annual savings from Rinker in three years by deploying teams of cost-cutting specialists. The company's post-merger teams helped ring $360 million of annual savings from RMC, higher than the $200 million of savings when Cemex announced the purchase in September 2004.

``They have a great ability to adapt its management style and techniques to local market condition,'' Gartmore said.

To prepare for the purchase of Rinker, Cemex reduced its net debt by more than $3 billion to $7.1 billion from $10.4 billion at the end of March 2005 when it completed the purchase of RMC. The transaction will be funded totally with debt and Cemex won't sell any shares to pay for Rinker, Medina said.

Cemex said it will take two years following the acquisition of Rinker to bring down its net debt to 2.7 times Ebitda. At the end of September, Cemex's debt was 1.8 times Ebitda.

Cemex reported yesterday third-quarter net income rose 24 percent to $836 million from a year ago and Ebitda climbed 10 percent to $1.11 billion.

shrijit_s · Nov 15, 2006

Deutsche Boerse May Drop Takeover Bid for Euronext, People Say

Nov. 15 (Bloomberg) -- Deutsche Boerse AG, Europe's largest stock exchange, may withdraw its bid for Euronext NV five months after its smaller rival agreed to a takeover offer by NYSE Group Inc., three people with knowledge of the matter said.

The German exchange may hold a press conference in Frankfurt as soon as today to discuss its plans, said the people, who declined to be identified before a public announcement. No final decision has been made at this point, they said.

Euronext, operator of the Paris, Amsterdam, Brussels and Lisbon bourses, in June recommended NYSE Group's offer and rebuffed a bid from Frankfurt-based Deutsche Boerse. Since then, Deutsche Boerse Chief Executive Officer Reto Francioni, 51, has tried to persuade Euronext shareholders and European policy- makers to back its bid, without raising the offer.

``To have any chance of winning Euronext away from the Americans, Deutsche Boerse would have to raise its offer significantly,'' said Angela Knight, chief executive officer of the London-based Association of Private Client Investment Managers and Stockbrokers, which represents brokerages in Europe and the U.K. ``If the Germans drop, it opens the door for NYSE to take Euronext.''

The German company is considering pulling the bid following a meeting of its strategy committee, the people said. Executives of Deutsche Boerse, which owns the Frankfurt Stock Exchange, don't want to increase the bid, said the people.

`Nail in Coffin'

Euronext, led by Jean-Francois Theodore, 59, has vowed to press ahead with the planned combination with NYSE, which operates the New York Stock Exchange, and has said it will hold a shareholder vote on the takeover next month.

Euronext spokeswoman Eilis Murphy and NYSE Group spokesman Eric Ryan declined to comment. ``Our offer for a combination with Euronext stands,'' said Deutsche Boerse spokeswoman Candice Adam.

Since the German exchange announced its revised offer on June 19, NYSE shares have rallied 70 percent, more than twice the gain by Deutsche Boerse, making the U.S. company's offer more attractive. At current prices, Deutsche Boerse's proposal would be valued at about 10 billion euros, compared with about 10.6 billion euros for NYSE Group. That difference is one reason Deutsche Boerse may drop out, the people said.

``The Deutsche Boerse effort has been in the process of unraveling over the last couple of weeks, and the final nail in the coffin was the significant improvement in NYSE shares recently,'' said Thomas Caldwell, chairman of Toronto-based money manager Caldwell Securities, which owns shares in NYSE Group and Euronext.

shrijit_s · Nov 15, 2006

US Airways Proposes $8 Billion Delta Air Takeover

Nov. 15 (Bloomberg) -- US Airways Group Inc. made an unsolicited takeover offer for bankrupt Delta Air Lines Inc. in a transaction valued at $8 billion in stock and cash that would create the world's largest airline.

Delta's creditors would get $4 billion in cash and 78.5 million US Airways shares worth about $4 billion based on yesterday's closing price, US Airways said today. The proposal comes 14 months after US Airways exited bankruptcy by combining with America West Holdings Corp. to become the seventh-largest U.S. airline. Delta is the third-biggest carrier.

Delta Chief Executive Officer Gerald Grinstein declined to enter into merger talks, telling US Airways CEO Doug Parker in an Oct. 17 letter ``it would not be productive.'' Delta's creditors endorsed that view, Grinstein wrote in the letter, which was contained in a federal filing.

A merger would vault the combined company past AMR Corp.'s American Airlines as the world's biggest carrier, based on miles flown by paying passengers through September. The combination would take advantage of a recovery in U.S. airlines on strong travel demand and cost cutting.

``This would be a very sensible move, but fiendishly complicated,'' said Richard Aboulafia, vice president of Teal Group, a Fairfax, Virginia-based consultant. ``Complicated by issues of seniority, culture, fleet, route networks -- and that's just scratching the surface.''

Shares of US Airways rose as high as $53.10 today before regular trading opened on the New York Stock Exchange. The stock fell 60 cents to $50.93 yesterday.

Bankruptcy Exit

Delta plans to emerge from bankruptcy next year. Since filing for Chapter 11 in September 2005, the third-largest U.S. carrier has cut unprofitable flights, reduced labor costs and shed aircraft.

Citigroup Inc. has committed $7.2 billion in financing for the proposed merger, US Airways said. Delta's unsecured creditors would own 45 percent of the combined company, which would operate under the Delta name.

US Airways said a merger would provide $1.65 billion in annual cost savings for the two companies.

The combined company would be ``a more effective and profitable competitor in the current fragmented marketplace,'' Parker said. The merger would eventually boost earnings per share by 40 percent at Tempe, Arizona-based US Airways, Parker said in a conference call.

Route Strengths

The merger would help heal a troubled U.S. airline industry, said Vaughn Cordle, chief executive of the consulting firm Airline Forecasts in Clifton, Virginia. The major carriers haven't done enough to sustain themselves in the long run, Cordle said.

``With all the major restructuring that occurred, the big network airlines have way too much leverage,'' Cordle said in an interview. ``There's no way they can earn their way back to a healthy balance sheet before this cycle.''

US Airways and Delta both have strong route networks on the U.S. East Coast, while US Airways also has a strong West Coast presence. Delta has been building its international system, adding more than 70 new routes since 2005.

Delta has major airport operations in Atlanta, Cincinnati, Salt Lake City and New York, while US Airways has hubs in Phoenix, Philadelphia and Charlotte, North Carolina.

``We can put the two networks together and optimize them,'' Parker said in an interview. ``As we do that, we can actually fly to 100 percent of the cities we serve today with two networks, with 10 percent fewer airplanes. That's a lot of savings.''

Separately today, British Airways Plc, Europe's third biggest airline, said it bought AMR's 1 percent stake in Iberia Lineas Aereas de Espana SA to maintain its two seats on the company's board.

shrijit_s · Nov 16, 2006

Clear Channel Agrees to Be Bought by Lee, Bain for $19 Billion

Nov. 16 (Bloomberg) -- Clear Channel Communications Inc., the largest U.S. radio broadcaster, agreed to a leveraged buyout by Thomas H. Lee and Bain Capital Partners LLC that values the company at about $19 billion.

The firms will pay $37.60 a share, about 10 percent more than yesterday's close, the San Antonio-based company said today in a statement. The company also said it plans to sell 448 of its 1,150 radio stations and all its 42 television stations.

Clear Channel put itself up for sale last month after asset sales and share buybacks failed to boost the stock price. The company lost more than 60 percent of its market value since 2000, as radio advertising sales stagnated and listeners migrated to the Internet, satellite radio and iPods. The buyers are betting they can slice costs and stem the slide.

``The anticipation is that market right now is undervaluing these radio assets and that they will be more valuable three years out,'' Dave Novosel, an analyst with the independent bond research company Gimme Credit, said before the deal was announced.

Clear Channel shares have fallen 13 percent in the past three years. The stock jumped $1.53 to $35.65 in early New York Stock Exchange composite trading, giving it a market value of $17.6 billion. Clear Channel also has about $8 billion in debt.

Matt Benson, a spokesman for Thomas H. Lee, declined to comment. Alex Stanton, a spokesman for Bain, wasn't immediately available to comment.

End of Control

Bain and Lee beat a consortium that consisted of Blackstone Group LP, Kohlberg Kravis Roberts & Co. and Providence Equity Partners Inc. Under the terms of the agreement, Clear Channel can seek other offers and negotiate a new agreement until Jan. 5.

The sale marks the end of Mays family control over the company founded by Lowry Mays in 1972 with his friend Red McCombs. The two men started the company with one radio station and took it public in 1984. After the Telecommunications Act in 1996 allowed operators to have more than two FM stations in a market, Clear Channel went on a buying spree, bringing its station total to 1,150 from 43 in 1995.

Mays's son, Chief Executive Officer Mark Mays, has since sold 10 percent of the company's outdoor-advertising unit, Clear Channel Outdoor Holdings Inc., to the public, in 2005, and spun off its concert division, now Live Nation Inc., in an effort to boost the share price.

The deal leaves current executives in charge of the company, including Mark Mays and his brother Randall Mays, 41, who is chief financial officer. Mark, Randall and Lowry Mays own about 7 percent of the shares.

As part of the deal, they agreed to reduce the payments they could have received as part of a change of control, Clear Channel said.

Profit Rises

Clear Channel third-quarter profit rose 8.2 percent on higher advertising sales from its radio stations. Profit from continuing operations climbed to $185.9 million, or 38 cents a share, from $171.8 million, or 32 cents, a year earlier. Sales increased to $1.79 billion from $1.68 billion.

By selling the company to buyout firms, the Mays family followed a trend among media companies. Univision Communications Inc., a Los Angeles-based television and radio broadcaster, in June agreed to sell itself to a group of firms for $12.3 billion. Tribune Co. is also considering a sale.

Private equity firms are on a record run of purchases. After raising $170 billion so far this year, buyout companies have spent $425 billion on acquisitions.

Goldman Sachs Group Inc. advised the company on a potential sale. Lazard Ltd. advised the special committee of the board that considered the bids. The Wall Street Journal reported Nov. 14 that the three Mays executives who are directors did not participate in the vote on the buyout. The company declined to comment on the report.

Buyers Before

The firms competing for Clear Channel have been buyers of media companies before.

Providence Equity, based in Providence, Rhode Island, Boston-based Thomas H. Lee Partners and Fort Worth, Texas-based Texas Pacific collaborated on the acquisition of Univision. Texas Pacific had been part of the Providence consortium bidding for Clear Channel before withdrawing sometime before the deadline for offers, people briefed on that decision said.

Thomas Lee, Bain and Providence bought Warner Music Group, the fourth largest record company in the world, from Time Warner Inc. in 2004 for $2.6 billion and took it public last year. The firms own more than 62 percent of the shares.

Boston-based Bain, Thomas H. Lee and New York-based Blackstone teamed up a year ago with Cumulus Media Inc. to buy Susquehanna Pfaltzgraff Co.'s radio unit for $1.2 billion.

Clear Channel will likely lose its investment-grade credit rating because of the amount of debt needed to fund the purchase. The firms will raise the money in the company's name.

The company's 5.5 percent notes due in 2014 fell 8.3 cents on the dollar yesterday to 84.5 cents, as the yield rose to 8.23 percent, according to Trace, the bond reporting service of the NASD.

``That type of debt will lead to a very low credit rating for the company,'' said Novosel. ``Bondholders will be hurt.''

shrijit_s · Nov 22, 2006

Qantas Approached by Macquarie Bank, Texas Pacific

Nov. 22 (Bloomberg) -- Qantas Airways Ltd., Australia's biggest airline, received a takeover approach from Macquarie Bank Ltd. and Texas Pacific Group that would rival the US Airways Group Inc.'s bid for Delta Air Lines Inc. as the biggest in aviation history.

The proposal is ``conditional upon the support of the Qantas board,'' Sydney-based Macquarie, the nation's biggest investment bank, said in a statement today. Qantas shares jumped 15 percent, valuing the airline at A$9.9 billion ($7.6 billion).

Qantas has reported 13 straight years of profit and last month raised its earnings forecast, withstanding an industry slump that triggered $40 billion of losses by global airlines since 2001. Macquarie's plan drew criticism from lawmakers and labor unions concerned a takeover may lead to the breakup of a company that has been an Australian icon since its founding in 1920.

``It's hugely ambitious,'' said Matt Crowe, a transport analyst at JPMorgan Chase & Co. in Sydney. ``You've got the unions to get on side, the government to keep on side; it would be a landmark transaction and I don't think anyone's ever done anything like it.''

Texas Pacific founder David Bonderman bought Continental Airlines Inc. in 1993, when the U.S. carrier hadn't produced a profit in 15 years. Two years later, it was making money and in 1998, he sold his stake for about $700 million, a 10-fold return. The Fort Worth, Texas-based buyout firm has also invested in America West Airlines Inc., Ryanair Holdings Plc and Tiger Airways Pte.

The approach is ``incomplete and is being investigated,'' Qantas said in a statement. Edna Hedstrom, a Melbourne-based spokeswoman for Texas Pacific, declined to comment.

Protected Market

Buying Qantas would be a departure for Macquarie, which typically targets essential infrastructure assets such as airports, toll roads and water utilities that offer predictable returns.

Macquarie last month led a group that agreed to buy Thames Water, the U.K.'s largest water services company, for $9.1 billion. Cintra SA and Macquarie Infrastructure Group in June paid $3.8 billion for a 75-year lease on the Indiana Toll Road, the largest U.S. highway privatization.

Still, Qantas's dominant position in Australia makes it a less risky proposition. The airline carries two of every three domestic travelers, and one of every three travelers leaving Australia.

``Australia is a fairly protected domestic market and Qantas is in a pretty good position,'' said Peter Drolet, an analyst at UOB Kay Hian Ltd. in Hong Kong.

The government this year rejected Singapore Airlines Ltd.'s request to fly from Australia to the U.S., a route served directly only by Qantas and UAL Corp.'s United Airlines.

``This is an offensive move on an Australian icon, the Flying Kangaroo,'' said Barnaby Joyce, a Nationals Party Senator from Queensland state, referring to the company's logo. ``Something has to be done to protect the national interest.''

Ownership Limits

Qantas stock rose 65 cents to A$5 at the 4:10 p.m. market close in Sydney, and reached a high of A$5.25, making it the third-most traded stock on the Australian Stock Exchange. Before today, Qantas stock had risen 7.8 percent this year, trailing the benchmark S&P/ASX 200 Index's 14 percent gain.

The perceived risk of owning Qantas's bonds jumped on concern the bidders would sell more debt upon a successful takeover. Credit- default swaps on $10 million of Qantas bonds rose 75 percent to $53,500 from $30,500 yesterday, according to prices from JPMorgan. An increase in the cost of the contracts indicates a deterioration in credit quality; a decrease suggests improvement.

Any deal would have to be structured to overcome government- imposed shareholder limits on Qantas that restrict a single investor to a 25 percent stake, and cap total foreign ownership at 49 percent.

Macquarie Bank Chief Executive Officer Allan Moss, 57, may also face political and labor union opposition to a takeover.

`Icon Companies'

``We're opposed to any takeover, cost-cutting, breakup profiteering by merchant bankers and private equity,'' said Doug Cameron, secretary of the Australian Manufacturing Workers Union in Sydney which represents 1,500 Qantas workers. ``There are too few Australian icon companies now.''

Qantas, which stands for Queensland and Northern Territory Aerial Services, started with two war-surplus 100 horsepower biplanes, serving the outback. Scheduled passenger flights started in 1922 and international services started in 1935, taking four days to fly from Brisbane to Singapore.

It now has a fleet of 213 planes flying more than 5,000 domestic and 700 international flights a week.

Qantas has dodged the worst of the airline industry's woes, reporting a profit every year since 1994, including record earnings in 2004 and 2005 as Chief Executive Officer Geoff Dixon, 66, cut jobs and started discount carrier Jetstar to fly less profitable routes and win new customers.

One Rival

Qantas enjoys a duopoly in the domestic aviation market, where discount carrier Virgin Blue Holdings Ltd. is the only competitor with a national network.

Dixon last month raised his fiscal 2007 profit forecast, saying earnings will rise this year, after falling 30 percent in 2006. Jet kerosene prices in Singapore have fallen to $73.80 a barrel, from a record $93 on Aug. 8.

Qantas ``is probably one of the best run airlines in the world,'' said Mark Daniels, who manages the equivalent of $2.7 billion at Aberdeen Asset Management in Sydney, including Qantas shares.

A bid would swell the record $162 billion of takeovers announced in Australia this year. Buyout offers for Australian companies have surged to $27.3 billion, from $1.4 billion in 2005, according to data compiled by Bloomberg. Global aviation takeover offers have climbed to $21.2 billion this year, compared with $4.4 billion in 2005.

US Airways last week made an unsolicited $8.78 billion offer for bankrupt Delta Air Lines that would create the world's largest carrier. Last month, Ryanair made a hostile $1.9 billion offer for Ireland's Aer Lingus.

Qantas's BBB+ credit rating, the third-lowest investment grade, may be cut by Standard & Poor's, the ratings company said today, because a successful leveraged buyout might lead to a ``significant weakening'' in the company's credit quality.

In leveraged buyouts, firms put up a little of their own money and borrow the rest, piling debt onto the target company.

n.murria · Nov 23, 2006

hello sir !!

'm a new member of this forum .will u tell me how i use this forum nd i want 2 download some topics but i can't y ???

bmsguru · Nov 24, 2006

same answer 2 u........go on d project link...ryt click...save target as......n save where u want ( not applicable 4 IIM projects cos ur new member)

shrijit_s · Nov 28, 2006

Iberdrola Buys Scottish Power for 11.6 Billion Pounds

Nov. 28 (Bloomberg) -- Iberdrola SA, Spain's second-largest power company, agreed to buy Scottish Power Plc for 11.6 billion pounds ($22.5 billion) to gain customers and power plants in the U.K. and North America.

Scottish Power shareholders will get 777 pence a share, 16 percent more than the Glasgow-based utility's share price on Nov. 7, the day before it said an approach was made. The offer includes 400 pence in cash and 0.1646 of a new Iberdrola share for each Scottish Power share, plus a 12 pence-a-share special dividend, Iberdrola said today in a U.K. regulatory filing.

``It's geographically a good fit in the U.S.,'' said Antonio Gallego, who helps manage $7.6 billion at Gesfinmed in Alicante, Spain. ``Entering the U.K. market will help Iberdrola be less dependent on Spain, and gaining extra size makes the company less likely to be taken over.''

European utility takeovers this year have surged 33 percent to more than $200 billion as companies seek to add customers before energy markets open to full competition next year. E.ON AG, whose bid a year ago for Scottish Power was rejected, is offering 37.1 billion euros ($48.7 billion) for Spain's Endesa SA. France's Suez SA and Gaz de France SA also plan to merge.

Shares in Scottish Power, the U.K.'s fifth-largest energy provider, traded at 739.5 pence, or 4.8 percent below the offer price, in London as of 10:03 a.m. Bilbao-based Iberdrola's shares fell 87 cents, or 2.7 percent, to 31.88 euros in Madrid.

Wind-Power Investments

Acquiring Scottish Power will give Iberdrola 5.2 million customers and 6,200 megawatts of power-generation capacity in Britain, including wind-driven electricity turbines. The company also owns part of the U.K.'s transmission grid and distribution network, which is the link that carries electricity from the grid to users. Scottish Power operates power-generation and gas-storage facilities in the U.S. and Canada.

Iberdrola, the world's largest owner of wind-driven turbines, aims to add capacity, especially in the U.S., where earlier this year it bought three wind-park developers. Chairman Ignacio Sanchez Galan is also developing wind-energy sites in France, Greece and Brazil. The utility is carrying out studies for a city government in northern China to develop as much as 1,000 megawatts of wind power plants there by 2010.

Galan plans to have 10,000 megawatts of renewable energy plants by 2011, more than double Iberdrola's 4,500 level. He agreed in October to buy turbines from Gamesa Corporacion Tecnologica SA, valued at as much as $4 billion to install in the United States, Spain, Mexico and elsewhere in Europe. Iberdrola is Gamesa's largest shareholder.

Wind-Power Investments

Scottish Power is also investing in wind power. It's building a 322-megawatt onshore wind-power plant, which would be among the biggest in Europe. Its total wind-turbine capacity in the U.K. is 344 megawatts, and it operates or has approval for 808 megawatts, representing more than 80 percent of its 2010 target. PPM Energy, Scottish Power's unit in the U.S., has more than 2,000 megawatts of wind energy in operation or under construction, its Web site says.

``It's the renewables business in the U.S. that's attractive for Iberdrola,'' Andrew Moulder, a senior utilities analyst at Creditsights Inc. in London, said today in an interview.

The bid values Iberdrola's target at about 11 times earnings before interest, tax, depreciation and amortization, or Ebitda, compared with 6 times Ebitda for E.ON's bid for Spain's Endesa. Scottish Power would be the world's third-largest takeover of a utility, after Endesa and the Suez-Gaz de France transaction.

`Expensive Deal'

``It's an expensive deal for Iberdrola,'' said Creditsights' Moulder. Iberdrola expects to save 130 million euros annually after absorbing Scottish Power. The deal will immediately add to earnings per share, Galan said in a conference call today.

Scottish Power rejected an 11.3 billion-pound bid from Germany's E.ON last November. Ian Russell, Scottish Power's chief executive officer at the time, called the bid too low. In January, Philip Bowman replaced Russell as CEO. As head of Allied Domecq Plc, Bowman sold the U.K. liquor maker last year to Pernod Ricard SA for $13.3 billion after a month-long bidding process.

European utilities have also drawn interest from investment companies and buyout firms seeking predictable revenue and earnings growth.

In October, Arcapita Bank BSC, the Bahrain-based buyout firm, agreed to buy British utility Viridian Group Plc for 1.62 billion pounds as Middle East stock markets dropped.

Macquarie Bank Ltd., Australia's largest securities firm, in the same month led a group that agreed to buy RWE AG's Thames Water unit for 4.8 billion pounds.

Iberdrola was advised by ABN Amro Holding NV, and Scottish Power was advised by Morgan Stanley.

shrijit_s · Dec 4, 2006

Bank of New York Agrees to Acquire Mellon Financial

Dec. 4 (Bloomberg) -- Bank of New York Co. agreed to buy Mellon Financial Corp. for about $16.5 billion, creating the biggest custodian of assets for institutional investors almost a decade after Mellon rejected an unsolicited bid from the bank.

The stock-swap merger links New York's oldest bank, founded by Alexander Hamilton in 1784, with the institution that helped finance the steel industry in the 1900s. The combined company will safeguard $16.6 trillion for institutions, topping JPMorgan Chase & Co. as the world's largest custody bank. It will manage $1.1 trillion in invested assets and have revenue of about $12 billion a year, the companies said today in a statement.

``This is going to create a financial powerhouse, a global financial-services company that's going to be very competitive in asset management and asset servicing,'' said Gerard Cassidy, an analyst at RBC Capital Markets in Portland, Maine, who rates both companies ``sector perform'' and doesn't own their shares.

The companies said they will cut pretax costs by about $700 million a year, or about 8.5 percent, in part by shedding about 3,900 of their 40,000 employees over three years. Restructuring charges from the merger, which the companies expect to complete by July 1, 2007, will be about $1.3 billion, they said in the statement.

Mellon's shares gained $1.95, or 4.9 percent, to $42 at 10:14 a.m. in New York Stock Exchange composite trading. Bank of New York jumped $3.41, or 9.6 percent, to $38.89, the biggest advanced in more than five years.

Kelly Takes Reins

Before today, shares of Mellon Financial had risen 17 percent this year, giving the company a market value of $16.5 billion. Bank of New York's market capitalization had risen 11 percent to $26.7 billion.

Bank of New York's shareholders will own about 60 percent of the combined company, to be known as Bank of New York Mellon Corp. Bank of New York shareholders will receive 0.9434 share for each of their shares and Mellon shareholders will get one share for each share they own in Pittsburgh-based Mellon, the companies said in a statement today.

Robert Kelly, the 52-year-old chairman and chief executive officer of Mellon, will become CEO of the new company, which will be based in New York. Thomas Renyi, 60, chairman and CEO of the Bank of New York, will be executive chairman for 18 months and then retire.

Renyi exited the retail banking business in October by swapping Bank of New York's 338 branches for JPMorgan's corporate-trust division. Renyi said at the time that the deal would allow the company to focus on custody and asset management.

`The Right Time'

In 1998, Bank of New York offered to pay $23 billion for Mellon Bank Corp., a bid that was rebuffed by then-Mellon Chairman Frank Cahouet.

``Both companies are very different companies than they were 10 years ago,'' Renyi said on a conference call. ``Now is the right time'' to combine.

Kelly came to Mellon in February from Wachovia Corp. amid pressure from shareholder Highfields Capital Management LP to split the company in two and find a merger partner for its fund division, which includes Dreyfus Corp. He joined Wachovia predecessor First Union Corp. in 2000 and oversaw First Union's purchase of Wachovia in 2001.

``He was there to do acquisitions,'' Bove said. ``The company needed to get bigger.''

More Consolidation

Kelly rejected the Highfields' call, saying that the businesses were complementary. Last month, he announced plans to curb costs, expand outside the U.S. and improve mutual-fund returns. Mellon was among top bidders for MFS Investment Management, the Boston-based mutual-fund unit of Sun Life Financial Inc. In October, the Canadian insurer decided not to sell MFS.

In 2001, Mellon sold its consumer-banking unit for $2.1 billion to Royal Bank of Scotland Group Plc. Since then, it has shed other assets, including its human-resources outsourcing business in 2005.

The merger may trigger more deals among custody banks, Thomas McCrohan, an analyst Janney Montgomery Scott LLC in Philadelphia, said in an interview. Shares of Boston-based State Street Corp., the third-largest custody bank, climbed $2.79, or 4.5 percent, to $64.29. Chicago-based Northern Trust Research Corp., which had $3.3 trillion in custody assets as of Sept. 30, rose $1.59, or 2.8 percent, to $58.06.

``The transaction will amplify the rationale for the custody business to further consolidate,'' said McCrohan, who rates Bank of New York shares ``buy'' and doesn't own any.

Earnings Impact

The merged Bank of New York and Mellon will generate 38 percent of revenue from security-issuing, trade-clearing and treasury services. Asset management and private wealth management will account for 29 percent of revenue, and asset servicing 28 percent.

The transaction will reduce Bank of New York's earnings in 2007 and add to them in 2008, the statement said. Excluding non- cash items such as amortization of intangibles, the deal will add to earnings of both companies in 2007.

``The organic growth of our respective companies is already strong, and the cost savings and revenue synergies opportunities are excellent.'' Kelly said in the statement.

Hamilton founded Bank of New York following the American Revolution to help establish credibility for the country's monetary system, according to Hoover's Inc. Five years later, Hamilton became the first U.S. treasury secretary and negotiated a $200,000 loan -- the first by the new U.S. government -- from Bank of New York.

Long Legacies

The company went on to provide financing for the War of 1812 and the U.S. Civil War, and in 1878 became a Treasury depository for the sale of government bonds. Bank of New York survived the market crash of 1929 and paid dividends through the Depression.

Bank of New York started making acquisitions after World War II to start offering investment-trust services. The company bought New York-based rival Irving Trust in a hostile takeover in 1989.

Mellon was founded in 1869 by Judge Thomas Mellon, who then gave control of the company to his son Andrew. The bank helped finance Pittsburgh-area companies including Alcoa Inc. and Bethlehem Steel Corp., according to Hoovers. Andrew Mellon later became Treasury secretary in the administrations of U.S. presidents including Warren Harding.

The Mellon family gave up managing control of the company in 1967.

Bank of New York's financial adviser was Goldman Sachs Group Inc. and its legal adviser was Sullivan & Cromwell. Mellon was represented by investment banks UBS AG and Lazard Ltd, and the law firms Simpson Thacher & Bartlett LLP and Reed Smith LLP.

shrijit_s · Dec 11, 2006

Tata Raises Offer for Corus to Top Rival Bid by CSN

Dec. 11 (Bloomberg) -- Tata Steel Ltd. raised its offer for Corus Group Plc., the U.K.'s largest steelmaker, by 10 percent to 4.7 billion pounds ($9.2 billion), to thwart a bid by Brazil's Cia. Siderurgica Nacional SA.

Tata increased its bid to 500 pence a share in cash, the Mumbai-based company said in an e-mailed statement yesterday. That's 5 percent more than the 475 pence CSN said Nov. 17 it was prepared to offer. London-based Corus is recommending the new Tata bid, the biggest takeover by an Indian company.

CSN and Tata want to buy Corus to add mills in Europe that supply automakers Ford Motor Co. and Volvo AB and to boost their bargaining power with raw material suppliers. Surging demand has spurred $78 billion in transactions in the industry this year.

``This will put CSN on a back foot in terms of tactics for the takeover battle,'' said Jon Thorn, who manages $250 million at India Capital Fund Ltd., in Hong Kong. ``What this says to CSN is that they won't acquire Corus cheaply.''

Tata Steel shares fell as much as 3 percent on the Bombay Stock Exchange and traded at 468.5 rupees, down 2.8 percent, at 10:16 a.m. Mumbai time. The stock has dropped 5.4 percent since the steelmaker announced its first bid on Oct. 20. Corus shares have gained 5.6 percent over the same period, and closed at 500 pence on Dec. 8.

Get Bigger

Tata's bid would be the second-biggest in the industry this year, behind Mittal Steel Co.'s $38.3 billion takeover of Arcelor SA. Arcelor Mittal makes up about 10 percent of world output and steelmakers want to get bigger, partly to cut costs of buying raw materials such as coal and iron ore. Cia. Vale do Rio Doce, BHP Billiton Ltd. and Rio Tinto Group control three- quarters of the global iron-ore trade.

Corus shares have traded as high as 507.75 pence, signaling investors may expect a bidding contest. Standard Life Plc, the biggest investor in Corus, said on Oct. 20 that Tata's first offer undervalues the Anglo-Dutch steelmaker. Buying Corus would make Tata or CSN the world's fifth-largest steelmaker.

CSN, based in Rio de Janeiro, will make a formal offer for Corus this week, the Sunday Times of London reported yesterday, without saying where it got the information. A call to CSN's press office after Tata Steel's announcement wasn't answered.

``There's a 50-50 chance CSN will try to outbid them,'' said Michelle Applebaum, who runs her own steel research firm in Highland Park, Illinois.

Tata Steel Deputy Managing Director T. Mukherjee, speaking by mobile phone in Jamshedpur, India, refused to comment today.

`Substantial Increase'

Corus Chairman Jim Leng said in the statement the new Tata Steel offer is ``a substantial increase,'' and the Anglo-Dutch steelmaker is recommending the revised bid to shareholders.

Credit-default swaps based on 10 million euros of Corus debt rose 1.8 percent to 181,000 euros on Dec. 8, according to Bloomberg data. An increase in the cost of the contracts indicates deterioration in credit quality.

Both Tata Steel and CSN may face investors concern over their bids. Tata is India's second-largest steelmaker, and CSN is Brazil's fourth largest.

Standard & Poor's had placed Tata's debt rating at ``BBB'' with negative implications and said a revision in the initial offer for Corus may have an ``adverse impact'' on the company's funds. Moody's Investors Service said Oct. 18 it may cut the company's Baa2 rating as the deal may ``constrain financial strength.''

Tata Steel, which was borrowing 3.3 billion pounds for the initial bid, has said additional funding for the new offer will be provided for by Standard Chartered Bank Plc. and Standard Chartered First Bank Korea Ltd. Tata Steel shares are the third- worst performers on India's benchmark index in the past three months.

`More Leverage'

``The balance sheet for Tata is stretched significantly even by the old bid, but they have the ability to put more resources in and get more leverage,'' said India Capital's Thorn. ``But the management is first rate. If you like the story, you won't mind funding it at a higher price, and it still makes sense even here.''

CSN's offer hinges on getting the support of Corus's pension trustees, who could refuse to approve it to the U.K.'s pensions watchdog, the Sunday Times said. Corus's pension plans have liabilities totaling 13 billion pounds.

``The steel industry is still very segmented, and if companies consolidate, there will be a lot of benefits,'' said Park Sung Mee, a steel analyst at Deutsche Securities Korea Co., in Seoul. ``The effects are becoming greater as bigger consolidations occur.''

Three Years

Buying Corus will help Chairman Ratan Tata add finishing mills in Europe to plants in India, the world's second fastest growing economy, and home to the world's fifth-biggest iron-ore deposit. The new company will have combined revenue of $24.4 billion, with two-thirds sales in Europe, Tata said Oct. 20.

``Corus is a long-term strategic move as a group chairman Ratan Tata has to think three, four years beyond,'' said Jayesh Shroff, a fund manager with Mumbai-based SBI Funds Management, which has $3.45 billion in assets including 1.33 million Tata Steel shares. ``The way steel industry is panning out, I think size is the key. The immediate short term effect, however, may be negative as finances could be stretched.''

Still, CSN said Nov. 23 it's a better ``fit'' for Corus than Tata. Brazilian steelmakers, bolstered by record profits, are turning to North America and Europe for deals because of limited growth at home.

``We are ready to grow internationally because we need to complement our domestic market,'' Jose Marcos Treiger, CSN's head of investor relation, told reporters Nov. 23. ``There will be a lot of synergies'' between CSN and Corus.

Iron Ore

CSN produces enough iron ore from its mines in Brazil to supply all of Corus's requirements, CSN Chairman and Chief Executive Officer Benjamin Steinbruch said in a statement Nov. 17. CSN owns 3.8 percent of Corus, the company said.

Prices of iron ore have risen for four straight years and gained 19 percent to a record this year, spurring companies to seek alliances that will cut costs and secure iron ore supplies.

Corus was created through the combination of British Steel and the Netherlands' Royal Hoogovens in 1999. Chief Executive Officer Philippe Varin, who took over in 2003, has returned the company to profit after job cuts and plant closures.

Lazard Ltd. is the lead financial adviser to CSN. Goldman and UBS AG are also CSN's corporate brokers. Credit Suisse Group, JPMorgan Cazenove and HSBC Holdings Plc. advise Corus. Deutsche Bank AG and ABN Amro Holding NV are advising Tata.

Latest Update - Cia. Siderurgica Nacional (CSN) of Brazil has raised its offer for Corus Group Plc, the U.K.'s largest steelmaker, to 515 pence ($10.07) a share, topping Tata Steel Ltd.'s improved bid

shrijit_s · Dec 14, 2006

Qantas Agrees to Macquarie's A$11.1 Billion Buyout

Dec. 14 (Bloomberg) -- Qantas Airways Ltd., Australia's largest airline, accepted a sweetened A$11.1 billion ($8.7 billion) buyout led by Macquarie Bank Ltd. and Texas Pacific Group, in what would be the world's biggest aviation takeover.

The agreement was struck less than a day after Qantas rejected an initial offer, as the bidders dropped conditions allowing them to walk away or be paid a breakup fee if the deal collapsed. They also increased the offer by 10 cents to A$5.60 a share cash, Sydney-based Qantas said in a statement today.

The buyers will get control of an airline that's forecast a 14th straight annual profit, withstanding an industry slump that triggered $40 billion of losses by global carriers since 2001. The bid extends the busiest year of aviation deals since at least 2000. UAL Corp.'s United Airlines and Continental Airlines Inc. are in discussions to create the world's largest carrier, people familiar with the talks said yesterday.

``Qantas has a strong position in the domestic market and no other airline in the world has that kind of franchise,'' said Jason Teh, who helps manage the equivalent of $4.3 billion at Investors Mutual Ltd. in Sydney, including Qantas shares. ``There's other assets within Qantas that the market doesn't value appropriately.''

The airline's shares traded below the offer price on concern the government may block the takeover as being against the national interest. Qantas carries two out of three domestic passengers and has sent planes to evacuate Australians from Asia after terrorist attacks and the 2004 tsunami.

Government Review

``Public support will be critical,'' said Fabian Babich, a transport analyst at BBY Ltd. in Sydney. ``If the public can't see the benefits from the bid, the federal treasurer will likely have a bias toward blocking it.''

Qantas shares rose 21 cents, or 4.1 percent, to A$5.30 at 3:31 p.m. in Sydney. The buyout offer is 29 percent more than the stock traded at Nov. 21, when Qantas first said it had been approached.

Treasurer Peter Costello last invoked national interest powers to block Royal Dutch/Shell Group's bid for Woodside Petroleum Ltd., which controls Australia's largest natural gas reserves.

Costello said in a statement today that the Foreign Investment Review Board will examine the proposal.

``I don't believe that aviation policy which is set by governments should take any consideration into the ownership of a particular entity provided it conforms itself to the regulations of a country,'' Chief Executive Officer Geoff Dixon said in an interview today. ``Qantas is still the same company.''

The airline, known as ``The Flying Kangaroo'' for its red tail logo, has become an Australian icon since it was founded in the Queensland outback in 1920.

``You might as well put a lone star on the tail instead of the kangaroo,'' Barnaby Joyce, a Nationals party senator from Queensland, said in a phone interview. ``We used to look after our own but that's no longer the case with Qantas.''

Dixon to Stay

Dixon, who has run Qantas since 2001, will remain in the job for a further three years. The airline's executives will take a 1 percent stake in the buyout group. Dixon, 67 next week, stands to earn up to A$60 million in bonuses, which he says will be put into a charitable trust.

He said the new owners have no plans to break up the airline, send maintenance jobs overseas or cut regional services.

``It's probably the most recognizable brand in the country and there's no doubt that Australians want to make sure that the brand stays and isn't tarnished,'' said Michael Birch, who manages the equivalent of $120 million at Wallace Funds Management in Sydney. Qantas will keep its existing logo.

Macquarie, Australia's largest investment bank, will have a stake of less than 15 percent in Qantas to avert competition concerns. Macquarie's airport investment fund is the biggest shareholder in Sydney Airport, where Qantas is based.

David Bonderman's Texas Pacific and Canada's Onex Corp. will hold a 37.5 percent stake between them. Bonderman bought Continental in 1993, returned the carrier to profit in 1995 and sold out for a 10-fold return three years later.

Other foreign investors will hold 11.5 percent.

Credit Risk

Sydney-based Allco Finance Group and Allco Equity Partners will take a 35 percent stake, ensuring Qantas remains majority Australian owned, as required by law.

UBS AG and Carneige, Wylie & Co. advised Qantas. The buyout group was advised by Macquarie Bank.

The offer values Qantas at 17.5 times forecast earnings for 2007, compared with Singapore Airlines Ltd., which trades at 13.4 times forecast earnings, and Cathay Pacific Airways Ltd. at 15.4 times, according to data compiled by Bloomberg.

The perceived risk of owning Qantas bonds rose today on concern the buyout group will load the airline up with debt. Credit-default swaps based on $10 million of Qantas bonds rose to $203,000 from $125,000 at the close in Sydney yesterday, prices from UBS show. An increase in the cost of the contracts indicates a deterioration in the company's perceived credit quality.

Moody's Investors Service yesterday said it may cut the Baa1 rating assigned to Qantas if the bid succeeds.

Christmas Rush

More than $12 billion of takeovers have been announced this week as companies rush to get deals done before the Christmas break, capping a record year for acquisitions in Australia.

Transurban Group today agreed to buy Sydney Roads Group for $990 million to become the biggest owner of tollroads in Australia. ABC Learning Ltd., the world's largest publicly traded child-care provider today announced $522 million of acquisitions in the U.S., U.K., New Zealand and Australia.

Yesterday, QBE Insurance Group Ltd., Australia's largest property and casualty insurer, agreed to buy U.S.-based Praetorian for $800 million in its biggest purchase, and buyout firms CCMP Capital Asia Pte and Pacific Equity Partners agreed to buy New Zealand's Independent Distillers Group in a deal estimated by analysts to be worth about $870 million.

Proposed takeovers announced in Australia this year have climbed to $183 billion, compared with $111.9 billion in 2005, according to data compiled by Bloomberg.

shrijit_s · Dec 15, 2006

Japan Tobacco to Buy Gallaher for 7.5 Billion Pounds

Dec. 15 (Bloomberg) -- Japan Tobacco Inc., the world's third-largest cigarette maker, agreed to buy Gallaher Group Plc for 7.5 billion pounds ($14.7 billion) in the nation's biggest overseas takeover.

Shareholders of Gallaher, the maker of Benson & Hedges cigarettes in Europe, will get 1,140 pence a share in cash, the Tokyo-based company said in a statement today. Merrill Lynch & Co. will provide financing for the acquisition.

Buying Gallaher would add to Japan Tobacco's sales in Russia as demand slows at home because of higher cigarette taxes that have increased prices. Directors at the Weybridge, England-based company accepted the offer, which analysts said may spur a competing offer from Altria Group Inc. or buyout firms.

``Gallaher isn't a worldwide brand, but it's strong in Russia where Japan Tobacco is also expanding,'' said Tokushi Yamasaki, a food and agriculture analyst at Daiwa Institute in Tokyo. ``The price may increase because of possible counter bids,'' he said.

Japan Tobacco shares closed 18,000 yen, or 3.1 percent, higher at 597,000 yen in Tokyo. Gallaher added 3 pence to 1,154 pence at the close in London yesterday.

Shares of Japan Tobacco have surged almost 15 percent since Dec. 6, when it was named as a bidder for Gallaher by the Financial Times. The Japanese company named Gallaher as a potential target last year after Turkey rejected its $1.2 billion bid for state-run cigarette maker Tekel.

Rival Bidders?

Japan Tobacco is probably ``bidding this much and then they'll see who else comes out of the woodwork,'' said Stuart Fraser, who helps manage about 20 billion pounds at Brewin Dolphin Securities Ltd. in London, including Gallaher shares. Altria Group Inc. or private-equity companies could be rival bidders, Fraser said.

Merrill will lend about $10 billion to finance the acquisition, two people with direct knowledge of the matter said today. The investment bank was hired as the sole financial adviser for the acquisition, said the people, who declined to be identified before the official announcement.

Camel, Winston

Japan Tobacco, whose brands include Seven Star, paid $8 billion in 1999 for international rights to Camel, Winston and other RJR Nabisco brands.

That was the second-largest overseas acquisition by a Japanese company after NTT DoCoMo's $9.8 billion purchase of a stake in AT&T Wireless Corp. in 2001, according to data compiled by Bloomberg.

``When Japan Tobacco bought RJR, it was expensive because the transaction value was 15 times more than then RJR's EBITDA, and the assumed offered price for Gallaher was about 11 times,'' Daiwa Institute's Yamasaki said. This time, ``it's not too expensive because the acquisition price among cigarette makers is about 11 times,'' he said.

Japan Tobacco said in July it planned to raise production in Russia by more than 40 percent as demand in its home market shrinks. The company said it already has capacity to make 70 billion cigarettes a year at its plant in St. Petersburg.

Emerging markets are attracting tobacco companies as western Europe cracks down on smoking.

German Smokers

German Chancellor Angela Merkel is trying to persuade regional leaders to outlaw smoking in restaurants, schools and other public places, and the U.K. and France plan bans this year.

``Russia and Ukraine are the two markets where the potential Gallaher plus Japan Tobacco combination looks most interesting,'' said David Ireland, an analyst at ABN Amro in London. ``We see a high chance of the bid being successful.''

Last year, Altria bought Indonesia's PT H.M. Sampoerna for about $5 billion. Six years ago, Gallaher bought Liggett-Ducat Ltd., Russia's biggest cigarette company.

First-half profit at Gallaher rose 17 percent to 185 million pounds as it sold more tobacco in former Communist countries, while price wars in Spain and Austria weighed on earnings in western Europe.

Tobacco consumption in western Europe has fallen 2 percent to 2.5 percent annually in the past several years, according to British American Tobacco Plc.

Japan Tobacco expects the sales of the number of cigarettes to fall 1.1 percent to be 176 billion cigarettes in Japan, while those overseas to rise 0.4 percent to 239 billion cigarettes in the year ending March 31. The company's return on assets was 6.7 as of March this year, compared with 1.18 in March 2002, according to Bloomberg data. or 1 percent, to 2,015 pence.

Altria's Motivation

Altria, the world's largest traded cigarette maker, may fight Japan Tobacco for Gallaher, according to Credit Suisse analyst Filippe Goossens. Buying Gallaher would also give Altria's Philip Morris unit a bigger operation in the U.K., where Imperial Tobacco is the market leader, the analyst has said.

For Altria, ``it would be the sort of transaction that they could possibly succeed at,'' said Thomas Russo, who manages more than $3 billion at Lancaster, Pennsylvania-based Gardner Russo & Gardner, including 4.2 million Altria shares as of September.

Altria has said it will decide by Jan. 31 on when it will spin off its Kraft Foods Inc. unit. Chief Executive Louis Camilleri has had a two-year plan to separate Philip Morris, the maker of top-selling Marlboro cigarettes, from Kraft, the world's second biggest food company, to distance it from the threat of tobacco lawsuits.

``It's company policy to not comment on purely speculative matters of this kind,'' Altria spokeswoman Dawn Schneider said.

shrijit_s · Dec 15, 2006

Blackstone, Ambani Plan $14 Billion India Telecom Bid

By Denise Kee and Chitra Somayaji

Dec. 15 (Bloomberg) -- Blackstone Group LP, manager of the world's biggest buyout fund, and Reliance Communications Ltd. may offer at least $14 billion to buy Hutchison Essar Ltd., two people with direct knowledge of the transaction said.

New York-based Blackstone and Reliance Communications plan to bid for all the shares in the Indian mobile-phone operator owned by Hong Kong billionaire Li Ka-Shing and Essar Group, as early as next week, the people said, requesting anonymity before an official announcement. UBS AG is financing the bid, they said.

A purchase would give Reliance Communications, controlled by billionaire Anil Ambani, 50 million users in a market that's forecast to expand the equivalent of the populations of the U.S. and France by 2010. Blackstone joins Citigroup Inc. and Providence Equity Partners Inc. in investing in the world's fastest-growing mobile-phone market.

``Earnings growth in the telecom sector comes from two things: new subscribers and new services,'' Cyrus Mewawalla, head of telecommunications research at Westhall Capital Ltd. in London, said in an e-mail to Bloomberg. ``Indian mobile operators like Hutchison Essar have both.''

The addition of subscribers at more than double last year's pace has boosted values of telecommunication-operations in India, with shares of Reliance Communications and larger rival Bharti Airtel Ltd. outperforming the benchmark Sensitive Index.

`Best Time to Invest'

India added a record 6.79 million wireless users last month, the Telecom Regulatory Authority of India said this week, boosting penetration of telephone services to 16.6 percent from 11 percent a year earlier, as the new mobile users helped offset a fall in fixed-line connections.

``There has never been a better time in the Indian telecom- industry's history,'' said Shubham Majumder, an analyst at Macquarie Securities Ltd. in Mumbai, with an ``outperform'' rating for Bharti Airtel shares. ``The market is on the cusp of huge growth over the next two to three years.''

Accelerating growth and increased investor attention prompted Idea Cellular Ltd., an Indian mobile-phone operator owned by the Aditya Birla Group, to sell stakes to private equity firms including Providence Equity Partners and a unit of Citigroup in recent months. The operator now plans to raise as much as $643 million through an initial share sale.

Blackstone and Citigroup are also investing outside India's telecommunications sector as the government seeks $320 billion to build ports, airports and roads. The U.S. firms are in talks with the government to start a $5 billion infrastructure fund, Arvind Mayaram, joint secretary at the finance ministry in New Delhi, said today.

Competing Bids

Texas Pacific Group may also make an offer for Hutchison Essar, the Wall Street Journal reported on Dec. 7. Carlyle Group and Kohlberg Kravis Roberts & Co. are also in talks, the Press Trust of India reported today, without saying where it got the information.

Shares of Reliance Communications rose 4.31 percent to a record 466.65 rupees on the Bombay Stock Exchange today, valuing the company at about $21 billion. The shares have gained 60 percent since they began trading March 6, outpacing the 27 percent rise in the Sensex during the same period.

``We don't comment on speculation,'' Gaurav Wahi, the Mumbai-based spokesman for Reliance Communications, said in an interview today. Mickey Shiu, a spokeswoman in Hong Kong for Hutchison Telecommunications International Ltd., and Vikash Saraf, chief executive officer of Essar Teleholdings Ltd. in Mumbai, also declined to comment.

Li's Hutchison Telecommunications, which owns 67 percent of the Indian venture, has been embroiled in a dispute with India's Essar Group since the end of July, when the deadline for a transaction allowing Hutchison Essar to acquire wireless operations in Mumbai from Essar expired.

Investment Plan

Hutchison Essar in September 2005 had agreed to pay about $1.15 billion in cash and assumed debt for the stakes in BPL Mobile Communications Ltd., which operates in Mumbai, and BPL Mobile Cellular Ltd.

Hutchison Telecommunications and Essar at that time planned to make their venture India's second-largest mobile-phone operator, with a 58 percent share of the market in Mumbai.

In August, an Indian court barred Essar from selling the mobile-phone assets in Mumbai to another company until the dispute is settled, which refusing to stop Essar from scrapping the sale agreement with Hutchison Essar.

Hutchison Essar, which began operations in 1994 with a cellular license for India's commercial hub of Mumbai, ended November with 22.3 million subscribers and operations in 16 of India's 23 telecommunication zones. The company's one million new users last month gave it a market share of almost 16 percent.

Hutchison Telecom's 67 percent stake in the Indian venture includes the 12.3 percent held on its behalf jointly by Hutchison Essar Managing Director Asim Ghosh and Analjit Singh, chairman of health-care company and insurer Max India Ltd.

India, which aims to have 500 million mobile-phone subscribers by 2010, will begin offering handsets for 1,000 rupees ($22) each within the next year, federal Minister for Communications and Information Technology Dayanidhi Maran said yesterday, following a meeting with Ambani, Bharti Airtel Chairman Sunil Mittal, Qualcomm Chief Executive Officer Paul Jacobs and other telecom industry chiefs.

The industry's growth this year has helped boost shares of Bharti Airtel by 77 percent in the past year, compared with a 48 percent gain in the Sensex.

shrijit_s · Dec 19, 2006

Statoil to Buy Hydro's Energy Unit for about $28 billion

Dec. 18 (Bloomberg) -- Statoil ASA, Norway's state- controlled oil company, agreed to buy Norsk Hydro ASA's energy business for about $28 billion as supplies from domestic fields peak and competition intensifies for drilling contracts from Russia to Venezuela.

Combining the two largest oil producers in Norway, the world's third-biggest crude exporter, will give them control of about 70 percent of the country's output, as prices stay above $60 a barrel. A bigger Statoil will be better placed to compete with BP Plc, Royal Dutch Shell Plc and OAO Gazprom for reserves.

``We're getting a large Norwegian oil company that will be more competitive,'' said Tom Rathke, finance director of Vital Forsikring ASA in Oslo, which manages about $9.6 billion in stocks, including 13 million Hydro shares and 7.3 million Statoil shares. ``This is very good for the shareholders.''

Owners of Hydro will get 0.8622 of a share in the new company for each Hydro share, the companies said today at a presentation. They will also keep ownership of Hydro's aluminum company, the world's fourth-largest producer of the metal. Statoil owners will keep their holdings in the new company on a one-for-one basis.

Hydro shares surged 21 percent to 188.5 kroner today in Oslo. Statoil stock fell 1.7 percent to 170 kroner. Norway's government owns 71 percent of Statoil and 44 percent of Hydro.

Government Stake

Shareholders of Statoil will hold 67.3 percent of the new company, with Hydro's owners holding 32.7 percent. The Norwegian state will own about 62.5 percent. It aims to raise this stake to 67 percent ``over time'' and will ask for permission from parliament, a government statement said.

``There's no doubt that the battle for resources is hard, so it's an advantage that they are becoming one large company,'' Norwegian Energy Minister Odd Roger Enoksen said today in Parliament. ``This has strong support from the government. It's an aggressive move.''

Norway gets about a fifth of its gross domestic product and about 61 percent of its exports from the oil and gas industry, according to Norway's statistics office.

Eivind Reiten, 53, Hydro's current chief executive, will become chairman of the combined company. Statoil's current head, Helge Lund, 44, was proposed as CEO and president.

`Strong International Player'

``From a strategic and international point of view, it makes sense'' to combine, said Bjoern Inge Toennessen, an analyst at DnB NOR Markets in Oslo, who recommends buying stock in each company. ``They become a strong international player.''

Statoil and Hydro are seeking new oil and gas deposits abroad to make up for a decline in production at aging North Sea fields. The companies have spent about $6 billion buying assets in the Gulf of Mexico in the past two years.

The combined entity would have oil and gas production of 1.9 million barrels a day in 2007 and reserves of 6.3 billion barrels of oil equivalent, the companies said.

That compares with 2005 production of 4.01 million barrels a day for BP, 3.38 million barrels a day for Shell and 2.49 million for France's Total SA, Western Europe's top three producers, according to data compiled by Bloomberg.

Statoil and Hydro have both cut production targets twice for this year, partly as a scarcity of drilling rigs and offshore services set back development of some fields. Oil prices have more than doubled in the past three years, spurring producers to spend more on exploration and production.

Share Outperformance

``The industry faces an increasingly challenging international landscape,'' a statement from the companies said.

Statoil is paying about $13.70 per barrel for Norsk Hydro's 2.05 billion barrels of oil equivalent, according to Bloomberg calculations. A year ago, ConocoPhillips paid $18 a barrel for Burlington Resources Inc. in a $35.6 billion accord.

Morgan Stanley advised Statoil on the transaction, with Goldman Sachs Group Inc. and Citigroup Inc. working for Norsk Hydro.

Shares of Statoil and Norsk Hydro have outperformed competitors in the past five years, returning an annual average of 30 percent and 22 percent, respectively. Exxon Mobil Corp., the world's biggest company by market value, returned about 18 percent per year in the period.

Mergers and acquisitions in the oil and gas industry have climbed to a record this year as companies seek to add to reserves. The value of transactions this year is about $284 billion, according to data compiled by Bloomberg. That's up from about $273 billion in 2005.

Merger Discussions

Discussions on merging Statoil and Hydro's oil and gas activities first arose in 1999, when the companies bought and split smaller rival Saga Petroleum ASA, sparking a debate on how Norwegian companies could compete in a consolidating industry. Hydro, which was founded in 1905, spun off its fertilizer unit two years ago, prompting speculation about a split of its oil and aluminum businesses.

The CEOs of both companies held talks about an ``industrial structure'' in early 2004, concluding there was no reason to proceed.

The companies' failure to get stakes in Gazprom's Shtokman gas development in October may have triggered today's merger plan, said John Olaisen, an analyst at Carnegie ASA. Statoil and Hydro were among five companies competing to develop the site until Gazprom rejected foreign partners.

``If Hydro had got a large stake in Shtokman, then I don't think this merger would have happened,'' Olaisen said in an interview. Gazprom has since said it may again consider international participation.

Metals Business

Hydro's metals unit will continue under Reiten's leadership and include Hydro's power production business.

The proposed merger must be approved by the companies' shareholders and by regulatory authorities. The transaction is expected to be completed in the third quarter of 2007.

Statoil proposed paying a 2006 dividend of 9.12 kroner a share, or 19.7 billion kroner in total. Hydro suggested paying a full-year dividend of 5 kroner a share, or 6.1 billion kroner.

The cost of credit-default swaps based on 10 million euros ($13.1 million) of Statoil debt rose 2.9 percent to 8,750 euros, according to data compiled by Bloomberg.

Credit-default swaps are financial instruments based on corporate bonds and loans that are used to speculate on a company's ability to repay debt. A price decrease indicates an improvement in credit quality; an increase a deterioration.

shrijit_s · Dec 19, 2006

Delta Air Lines Rejects US Airways Hostile Merger Bid

Dec. 19 (Bloomberg) -- Delta Air Lines Inc. rejected a hostile $8.38 billion merger proposal from US Airways Group Inc. and said it planned to exit bankruptcy as an independent company with a value of as much as $12 billion.

Delta's board said creditors would be better off without a merger. The US Airways offer is unlikely to receive antitrust approval, is based on flawed economic assumptions and would give Delta the largest debt load in the industry, Atlanta-based Delta, the No. 3 U.S. carrier, said in a statement.

Delta filed its five-year business strategy with the U.S. Bankruptcy Court in New York today, 15 months after the airline sought Chapter 11 protection. The carrier said it will leave Chapter 11 in the first half of next year and forecast net income of about $500 million in 2007 and $1.2 billion in 2010.

``We will emerge as a thoroughly new Delta that will be a strong global carrier with a solid foundation for profitable growth in a highly competitive environment,'' Chief Executive Officer Jerry Grinstein said in the statement.

Delta's board unanimously rejected the US Airways offer. The airline said its plan would let unsecured creditors recover 63 percent to 80 percent of their claims, and that Blackstone Group, a financial adviser, estimates the airline will be valued at $9.4 billion to $12 billion.

Support from creditors, who are represented by a nine- member committee, is vital because they will help set the terms of any plan for Delta to exit bankruptcy.

Creditors' Support

``We've got a very constructive relationship with our committee,'' Delta Chief Financial Officer Ed Bastian said on a call with reporters. ``They understand the great progress Delta is making. ''

Delta's shares fell 37 cents to $1.10 at 8:13 a.m. New York time in early over-the-counter trading. U.S. Airways shares fell 70 cents to $55.80 yesterday and haven't traded today.

Delta used its time under court protection to cut labor costs, ground planes and expand more-profitable international routes. The airline said today that it achieved 85 percent of the $3 billion annual cost savings goal it laid out when it filed for bankruptcy.

Delta said it hasn't had any merger talks with other airlines since US Airways' offer was made public Nov. 15 following Delta's rejection of earlier, private overtures. Delta was forced to say it would consider the offer after US Airways began courting the support of Delta's creditors.

An e-mail to US Airways wasn't immediately returned today. The Tempe, Arizona-based airline offered $4 billion cash and 78.5 million shares for Delta. Creditors would own 45 percent of the combined airline.

Debt Load

Delta said today that US Airways' plan would result in a ``precariously high'' $23 billion in debt for the combined carrier, compared with $10 billion for Delta independently.

Delta was saddled with more than $28 billion in debt when it sought bankruptcy protection. It blamed growing low-cost competition, increased fuel costs and a drop in travel following the Sept. 11 terrorist attacks. Northwest Airlines Corp. filed on the same day, in the same court, citing the same problems.

US Airways came out of bankruptcy last year for a second time when it merged with America West Holdings Corp. US Airways is now the seventh-largest U.S. airline.

``US Airways was literally on the brink of liquidation'' when it agreed to merge with America West, said Jim Whitehurst, Delta's chief operating officer. ``Our cash position is strong, our financial position is strong. This situation is very different than when America West acquired US Airways.''

The case is In re Delta Air Lines Inc., 05-17923, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

shrijit_s · Dec 29, 2006

Suez Shares Soar on Pinault EU70 Billion Bid Report

By Fabio Benedetti-Valentini and Alan Katz

Dec. 29 (Bloomberg) -- Shares of Suez SA, the world's second-largest water company, rose to a record after Capital magazine said French billionaire Francois Pinault may make a 70 billion euro ($92 billion) hostile bid.

Pinault, who controls Gucci Group, may offer to buy Suez as early as next week, Capital reported today on its Web site, without saying where it got the information. His plan is to sell the Paris-based utility's energy, environment and water businesses, the magazine added.

Suez may be a target for Pinault because its 40.1 billion- euro ($50.3 billion) government-backed merger with state- controlled Gaz de France SA has hit French legal and labor obstacles. The takeover would be the biggest this year, topping E.ON AG's 66.6 billion-euro offer for Spain's Endesa SA.

``This could unlock the Suez-Gaz de France merger story,'' said Michel Dumoulin, a fund manager at Banque Martin Maurel in Paris who helps oversee $6 billion of assets, including Suez shares. ``It's possible, but surprising. It would be positive for shareholders.'' Suez spokesman Antoine Lenoir in Paris declined to comment. Officials for Pinault didn't return calls.

Shares of Suez rose 1.18 euros, or 3.1 percent, to 39.43 euros at 2:25 p.m. in Paris and traded at an all-time high of 40 euros, taking their gain this year to more than 13 percent and giving the utility a market value of 50.2 billion euros.

`Positive Development'

``It's a very positive development that someone has dared to step up and say this is something that needs to happen,'' said Eric Knight, the chief investment officer of New York-based Knight Vinke Asset Management who on Dec. 8 took out a full-page advertisement in the Financial Times entitled ``Ten Reasons for Scrapping the Suez-GDF Merger.''

Knight said his firm holds ``just less than 1 percent'' of Suez's capital and said that the company should split its energy and environment businesses.

``If the board of Suez and management were concerned about maximizing share value, I would have split the two divisions long ago,'' Knight said.

Executives of Groupe Bruxelles Lambert SA, Suez's largest shareholder with an 8 percent stake, weren't available for comment today, said Sylvie Rododendri, an aide to GBL Managing Director Thierry de Rudder.

Brussels-based GBL is controlled by Belgian billionaire Albert Frere. GBL shares rose 1.25 euros, or 1.4 percent, to 90.75 euros as of 2:52 p.m. in Brussels today, taking their gain this year to 10 percent.

Bonds Slip

Suez's bonds slipped, with the extra yield, or spread, investors demand to buy the company's 5.75 percent securities due in June 2023 instead of government bonds rising 1 basis point, or 0.01 percentage point, to 59 basis points today, according to RBC Capital Markets. The spread narrowed 2 basis points yesterday to 58 basis points.

As part of Pinault's plan, Gaz de France would buy Suez's energy business for about 40 billion euros, Capital reported. Veolia Environnement SA would be interested in Suez's water and environment unit, the report said.

``Francois Pinault can't do the bid alone,'' said Jerome de Leusse, a fund manager with HR Gestion in Paris who owns Suez shares. Artemis Group, the Pinault family holding company, ``has no cash so it seems to me difficult to go alone but he could find partners,'' de Leusse said.

Fifth-Richest Family

Pinault, 70, belongs to France's fifth-richest family with a $7 billion fortune, according to Forbes magazine's 2006 annual survey of the world's wealthiest people. Pinault is ranked 74th in Forbes' list of the world's billionaires this year. The only Frenchman in the top 10 is Bernard Arnault, chairman of LVMH Moet Hennessy Louis Vuitton SA, the world's largest luxury-goods maker.

Capital reported that French President Jacques Chirac supports Pinault's plan. Jerome Bonnafont, a spokesman for Chirac, denied that today.

``The state's position as an investor is well-known,'' he said. ``It is a clear and determined supporter of the proposed merger between Gaz de France and Suez.''

Gaz de France hasn't changed its plan to complete the planned merger with Suez, GDF spokeswoman Sabine Wacquez said in an interview today from Paris. ``We remain in the same position as yesterday,'' she said.

A Veolia spokeswoman who declined to be identified said the company wouldn't deny or confirm an interest in Suez's environment unit.

``Veolia couldn't win all the environment assets that would make Veolia the European leader in the waste and water business,'' de Leusse said. ``European authorities would not allow that.''

Gaz de France, Veolia Shares

Shares of Gaz de France climbed 77 cents, or 2.3 percent, to 34.67 euros, while Veolia's advanced 1 euro, or 1.9 percent, to 54.60 euros.

French building company Vinci SA and the Paris-based investment company Wendel Investissement SA may also participate in the bid for Suez, Capital said.

Wendel Investissement's Chief Executive Officer Jean- Bernard Lafonta reiterated this month his company's interest in bidding for Suez's water and waste unit, daily la Tribune reported. Lafonta told La Tribune that the family-controlled company had 1.6 billion euros available for such an acquisition.

Paris-based Capital is a monthly business magazine with a circulation of about 370,000. It belongs to Bertelsmann AG-owned Prisma Presse, France's second-largest media group, behind Lagardere Media.

Suez's credit-default swaps rose to their highest since June, according to data compiled by Bloomberg. Contracts based on 10 million euros of Suez debt rose to 21,500 euros from 19,000 yesterday, according to prices from Credit Market Analysis in London. Credit-default swaps are financial instruments based on corporate bonds and loans that are used to speculate on a company's ability to repay debt. An increase indicates deteriorating credit quality.

shrijit_s · Jan 18, 2007

Tribune's Chandler Family Proposes Splitting Company

Jan. 18 (Bloomberg) -- Tribune Co.'s largest shareholder, the Chandler family, offered to buy the newspaper publisher and spin off the broadcast assets in a transaction that values the company at about $7.6 billion.

Shareholders in Tribune, owner of the Los Angeles Times and the Chicago Tribune, would get shares in a new television company and $19.30 in cash, valuing the stock at $31.70, the Chandler family trusts said in a letter to the company's advisers.

The offer is 4.5 percent more than Tribune's close yesterday and less than the $31.86 average close last month, a reflection of the declining interest in the company since it put itself up for sale in September. The Chandlers' offer would compete with a restructuring plan by billionaires Ron Burkle and Eli Broad that would value the stock at $34 a share, the Wall Street Journal reported.

``Splitting in two might increase Tribune's value,'' Michael Kupinski, an analyst at A.G. Edwards & Sons Inc. in St. Louis, said before the filing was released. ``Right now, television assets are quite attractive.''

Under the plan, released today in a regulatory filing, the Chandlers would reclaim ownership of the Los Angeles Times and gain an opportunity to recoup some of the losses from their six- year ownership of Tribune stock.

Bids for Chicago-based Tribune, the second-largest U.S. newspaper publisher and owner of 23 television stations, were due last night. Tribune also received at least one offer from a private equity firm interested in the television assets, the Journal said.

Under Pressure

Shares of Tribune, also owner of the Chicago Cubs baseball team, have declined 4.6 percent in the past year, giving the company a market capitalization of $7.2 billion. The stock rose 16 cents to $30.50 in early New York Stock Exchange trading, down from last month's high of $32.62. The shares averaged $31.86 in December.

Chief Executive Officer Dennis FitzSimons and the company's directors agreed to put Tribune up for sale under pressure from the Chandlers, who were unhappy with the slide in the stock price since they sold their Times Mirror Co. group to Tribune in 2000 for $7.5 billion.

Before putting itself on the block, Tribune had considered spinning off the TV operation to boost the stock price. FitzSimons instead decided to proceed with a $2 billion stock buyback. The Chandlers refused to participate in the buyback, a decision that allowed the family trusts to increase their stakes to about 20 percent of Tribune.

Interest in the company waned as newspaper advertising revenue cooled. Three private equity firms dropped out of the bidding this week.

Tribune spokesman Gary Weitman couldn't immediately be reached for comment. Broad and Burkle also didn't immediately return calls made to their offices after hours.

Chandlers' Offer

The Chandlers are working with two buyout firms, and said that it has debt financing from Goldman Sachs Group Inc., Merrill Lynch & Co. and Citigroup Inc. The private-equity firms weren't identified.

The Chandlers' offer would give the family about 51 percent of the newspaper assets and its backers would have the rest, the Journal reported. Tribune also owns Newsday in New York, the Hartford Courant in Connecticut and the Orlando Sentinel.

The broadcast assets would include television stations in 19 of the biggest markets, including CW affiliate WPIX in New York and KTLA-TV in Los Angeles.

The Chandler's holdings are through trusts run in part by Jeffrey Chandler, the nephew of Otis Chandler, the former Los Angeles Times publisher, who died in February. He is also the great-great-grandson of Harrison Gray Otis, a Civil War general who bought a stake in the newspaper in 1882, a year after it started publishing.

At Odds

The company and the Chandlers have been at odds over the company's future for the past year and recently resolved a dispute over jointly owned partnerships that owned real estate and Tribune stock.

That disagreement inflated the value of the stock price, the Chandlers wrote in a letter to the company's advisers.

The value of Tribune stock would otherwise be ``substantially less'' than the current price, the Chandlers said. Tribune shares were trading at about $30 before the battle became public.

The plan from supermarket magnate Burkle and real-estate investor Broad calls for the California-based billionaires to invest $500 million in the company and take a stake of more than 30 percent, the Journal reported.

Under the proposal, the group would borrow $10.5 billion to fund a $27 a share dividend payment to shareholders, leaving investors with stock worth about $7 a share, the Journal reported. The men would become co-chairmen of the company and would retain current management.

Risk Falls

Tribune's 5.25 percent bond maturing in August 2015 fell 9.5 cents to 87.5 cents on the dollar yesterday, according to Trace, the bond-price reporting system of the NASD. The yield expanded to 7.23 percent.

The perceived risk of owning Tribune's bonds fell to the lowest in more than a month. Credit-default swaps based on $10 million of the company's bonds fell to $139,335 yesterday from $145,115 a day earlier, according to data compiled by Bloomberg.

The five-year contracts, which investors use to speculate on a company's ability to repay debt, have fallen from an Oct. 30 peak of $212,625.

Independent Committee

A committee of independent directors will recommend to Tribune's board by the end of the first quarter whether to sell the company whole or in parts, keep it as it is or attempt other options such as another share buyback or a one-time dividend funded by borrowed money.

The company plans a board meeting this weekend to review the bids, the New York Times reported.

``There's a lot of speculation right now about what Tribune will do, but frankly I still like the business as it is, and I'd be quite happy if it continued in its present form,'' said Robert Torray, president of Bethesda, Maryland-based Torray LLC, which owns more than 2.1 million shares of Tribune. ``I'm not deterred, and I don't think management is either.'' The Chandlers acquired its stake in Tribune when it sold it the Times Mirror Co. in 2000 for $7.5 billion.

The buyout firms Texas Pacific Group had teamed up with Thomas H. Lee Partners LP to explore a takeover of Tribune, while Apollo Management LP had joined with Madison Dearborn Partners LLC and Providence Equity Partners Inc., according to people familiar with the bidding. Capital LLC was also pursuing Tribune, which has a market value of $7.3 billion.

Those groups dropped out, said the people, who declined to be identified because the auction is private.

shrijit_s · Jan 25, 2007

Mittal, BHP Compete for $850 Million Sesa Goa Stake

By Debarati Roy

Jan. 25 (Bloomberg) -- Arcelor Mittal, the world's biggest steelmaker, BHP Billiton Ltd. and Rio Tinto Group are competing to buy a stake in Indian iron-ore miner Sesa Goa Ltd. worth about $850 million, two people familiar with the situation said.

Japan's Mitsui Corp. is selling its 51 percent holding in Sesa Goa and may make an announcement on Jan. 29 when the board of the Panaji, Goa-based miner meets to approve third-quarter earnings, said the people, who didn't want to be identified. JSW Steel Ltd., India's fourth-biggest producer, is also bidding for the stake, Managing Director Sajjan Jindal said.

Mittal and Posco plan to spend $21 billion over the next seven years in India to tap rising demand and the world's fifth- largest iron ore reserves. Global iron-ore contract prices have jumped for five straight years, spurring more than $157 billion of takeovers last year in the mining industry.

``This is the best time for anyone who wants to exit the iron ore business since prices are at an all-time high,'' said Giriraj Daga, an analyst at Khandwala Securities Ltd., a Mumbai- based stock brokerage.

Sesa Goa Managing Director P.K. Mukherjee and a spokesman for Mitsui, who declined to be named, didn't comment yesterday.

``We don't comment on rumors and speculation,'' said Emma Meade, a spokeswoman for Melbourne-based BHP, on Jan. 23. Malay Mukherjee, member of group management board at Arcelor Mittal, also said the company won't comment. Ian Head, a spokesman for London-based Rio Tinto, declined to comment today.

Open Offer

Shares of Sesa Goa reached a record 1,964 rupees in Mumbai today, valuing the company at $1.7 billion, on speculation the winner will offer to buy more shares at a higher rate than the prevailing market price. Under Indian law, a company buying more than 20 percent of another company must make a so-called open offer to acquire an additional 20 percent of its shares.

``I would expect Mitsui to sell the shares at around 2,000 rupees apiece and the new buyer to make an open offer at an even higher rate,'' Khandwala's Daga said. That price is 70 percent more than the six-month daily average of 1,178 rupees.

Arcelor Mittal last month agreed to build a $9 billion, 12 million-ton mill in Orissa. The venture competes with Posco, the world's third-biggest steelmaker, which has planned a $12 billion plant in the eastern Indian state. Buying a controlling stake in Sesa Goa would enable Mittal to secure supplies of the steelmaking ingredient for the proposed project.

``Sesa is a very attractive company to buy for Arcelor Mittal because it already has mining rights, which are difficult to get in India,'' said Arvind Desai, head of research at Mumbai-based Niche Brokerage Pvt. ``Companies won't mind paying more for Sesa to ensure supply of raw material.''

Steel Demand

India's steel usage is forecast to rise 7.7 percent a year from 2010 to 2015, faster than the 4.2 percent annual growth globally, according to the International Iron & Steel Institute. The country's states Jharkhand, Orissa and Chhattisgarh account for 70 percent of the nation's coal reserves and 55 percent of its iron ore, according to McKinsey & Co.

Founded in 1954, Sesa Goa has iron-ore mines in the states of Goa, Karnataka and Orissa, and sold 9.6 million tons of the commodity in the year ended March 2006, according to its Web site. Mitsui, Japan's second-largest trading company, invested in Sesa Goa in October 1996, according to the Tokyo-based company's Web site.

Shares of Sesa Goa gained 56 percent since the Hindustan Times reported on Dec. 22 Mitsui plans to sell its entire stake in the company, and is the biggest gainer on the Bombay Stock Exchange-100 index this year.

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