M&A

shrijit_s · Aug 24, 2006

Weyerhaeuser, Canada's Domtar to Merge Paper Assets

Aug. 23 (Bloomberg) -- Weyerhaeuser Co., the world's biggest lumber company, scrapped plans to sell its paper division and will combine the company with Canada's Domtar Inc. in a $3.3 billion transaction.

The merger would create North America's largest maker of paper used in facsimile and copying machines, the companies said today. Federal Way, Washington-based Weyerhaeuser will spin off its 55 percent stake in the new venture to shareholders, receive $1.35 billion in cash and nominate a majority of board members.

Chief Executive Officer Steven R. Rogel is unloading assets that led to a $580 million first-quarter loss and forced him to shut plants and cut jobs. Weyerhaeuser's shares rose to a six- week high today and are up 12 percent since Aug. 14 on speculation the company may be a takeover target.

``The status quo wasn't palatable for Weyerhaeuser or Domtar,'' said Don Roberts, an analyst at CIBC World Markets in Ottawa. Roberts has a ``sector perform'' rating on shares of both companies. ``Weyerhaeuser would have liked to have sold the business. Domtar couldn't afford to buy it.''

Forest-products companies have struggled to boost their stocks because of low paper and lumber prices, excess production capacity and increasing costs for raw materials, natural gas and shipping, leading to a jump in mergers and acquisitions.

Reviewed Alternatives

``We have investigated every conceivable form of transaction and spoke with many players,'' Rogel said in a telephone interview. ``This transaction we selected to do together with Domtar was by far the best transaction.''

The deal with Domtar was structured to be tax-free for Weyerhaeuser and its U.S. shareholders, Rogel said. Weyerhaeuser will either spin off its stake in the new venture to its shareholders or arrange a ``split off'' to give investors the option to exchange Weyerhaeuser stock for the new Domtar shares.

Weyerhaeuser had a record loss in the first quarter after a $746 million reduction in the value of the fine-paper unit, which Rogel said in April that the company may sell or close.

The combination will generate annual savings of as much as $200 million for the new company, which will have about $6.5 billion in annual sales and would be run by Domtar Chief Executive Officer Raymond Royer.

Weyerhaeuser shareholders, in addition to receiving $1.35 billion in cash, will get shares in the New Domtar valued at about $1.93 billion, based on Domtar's closing price yesterday.

Shares of Montreal-based Domtar today fell 22 cents, or 2.9 percent, to C$7.43 on the Toronto Stock Exchange. The decline was the biggest since July 31, reflecting disappointment by some investors that the company isn't cutting surplus capacity.

Keeping Mills

``Investors are basically saying, `Oh shoot,' Domtar wasn't able to unload its mills,'' said Gavin Graham, director of investments in Toronto for Guardian Group of Funds, which manages about $5.3 billion.

Caisse de Dépôt et Placement du Québec, which owns 15 percent of Domtar, said it was ``favorable'' to the transaction. The Caisse, Canada's largest institutional investor, said it would study the details before announcing a final judgment.

Shares of Weyerhaeuser rose $1.32, or 2.2 percent, to $61.35 in New York Stock Exchange composite trading, after reaching $62.30, the highest since July 3.

Weyerhaeuser rose 5.2 percent yesterday on speculation the company may be a takeover target. Falling wood-product prices and slowing U.S. home building may make Weyerhaeuser vulnerable to a takeover, Deutsche Bank Securities Inc. analysts Mark Wilde and Christopher Chun said in a note to clients. Before today, the stock was down 7.5 percent in the past year.

shrijit_s · Aug 28, 2006

Mylan to Pay $736 Million for Matrix From Newbridge

Aug. 28 (Bloomberg) -- Mylan Laboratories Inc., the second- largest U.S. generic drugmaker, will buy control of Matrix Laboratories Ltd. for as much as $736 million, the biggest acquisition of an Indian pharmaceuticals company.

Mylan will acquire 51.5 percent of Matrix from shareholders including Singapore's Temasek Holdings Pte and Newbridge Capital LLC at 306 rupees ($6.6) per share, the companies said in a statement. The Canonsburg, Pennsylvania-based Mylan offered to buy a further 20 percent stake at the same price, a 10 percent premium to the stock's closing price in Mumbai on Aug. 25.

Indian companies offer lower production costs and standards that meet U.S. Food and Drug Administration approval to overseas drugmakers seeking to be more competitive. Generic drugs, or low-cost copies of brand-name treatments, form 50 percent of prescriptions in the U.S. from 18 percent in 1984, Mylan said.

``There will definitely be a broadening of the market of Matrix and it will give more depth, reach and coverage for the company,'' said Viswanathan Vasudevan, who helps manage $185 million at Aquarius Investment Advisors Pte in Singapore. Mylan will ``get a base in a place like India where labor is cheap and use India as a base for distribution through Asia.''

Shares of Matrix, India's seventh-biggest drug company by market value and based in Secunderabad, rose 3.3 rupees, or 1.2 percent, to 280.45 rupees at 10:36 a.m. local time on the Bombay Stock Exchange, having risen as much as 7.2 percent earlier.

Temasek, Newbridge

Rachel Lin, a spokeswoman for Temasek Holdings Pte, referred questions on the transaction to spokesman Mark Lee, who didn't return a message left on his mobile phone seeking comment. Temasek and Newbridge own about 40 percent of the Indian company. Mylan will also buy shares from N. Prasad, Matrix's chairman. He will retain a 5 percent stake in Matrix after the transaction.

Matrix, which bought Belgium's Docpharma NV in July last year, expects the financial resources from Mylan will allow the company to increase manufacturing and product development and expand Docpharma's portfolio and presence across Europe. The company will also be able to increase sales of its AIDS drugs, it said in the statement on PR Newswire.

Mylan and Matrix together will have about 5,100 employees in 10 countries.

Founded in 1961, co-founder Milan Puskar is chairman of Mylan, which is the biggest maker of generic skin patches in the U.S. The company makes 140 generic products to treat diseases including angina and diabetes. Barr Pharmaceuticals Inc. is the biggest U.S. generic drugmaker by market value, and Israel's Teva Pharmaceutical Industries Ltd. is the world's biggest.

Emerging Markets

Buying a stake in Matrix will give Mylan access to emerging pharmaceutical markets including India, China and Africa as well as Europe, through Docpharma.

In South Africa, the Indian drugmaker has allied with Aspen Pharmacare Holdings Ltd., Africa's biggest maker of generic medicines, to supply ingredients to make AIDS drugs. Matrix said in April last year it was buying a 50 percent stake in Aspen's wholly owned unit, Fine Chemical Corp., in South Africa.

Matrix said in September last year it agreed to buy a 60 percent stake in China's MCHEM Pharma Group Ltd. to broaden its supply of raw material used to make AIDS drugs.

The Indian company will also help Mylan get access to altered versions of existing drugs which cannot be easily copied. Matrix will benefit from a strong presence in the U.S., the world's biggest drugs market, expansion of manufacturing capacity and expertise in product development.

Mylan is seeking to gain ground against the big generic drugmakers such as Teva and Novartis AG. Teva obtained rights to sell generic Zocor when it bought Miami-based Ivax Corp. in January. Teva has spent almost $11 billion to stay ahead of Basel, Switzerland-based Novartis AG in the generic drug market and expand operations in the U.S., where it introduced seven drugs this year as of the first week of the month.

Merrill Lynch & Co. and its Indian unit DSP Merrill Lynch Ltd. advised Mylan on the transaction. DSP Merrill Lynch will advise on the open offer. ABN Amro Holding NV and UBS AG advised the sellers.

shrijit_s · Aug 28, 2006

A Big Banking Merger

Intesa to Purchase Rival Sanpaolo for EU29.6 Billion

Aug. 28 (Bloomberg) -- Banca Intesa SpA plans to buy smaller competitor Sanpaolo IMI SpA for 29.6 billion euros ($37.8 billion) to create Italy's biggest bank, with about 13 million customers.

Intesa offered 3.115 of its shares, or 15.78 euros, for each Sanpaolo share, the companies said in an Aug. 26 statement. The bid is 2 percent less than Turin-based Sanpaolo's closing price of 16.10 euros. Sanpaolo shares are up 9.8 percent since the banks said they were considering a merger. The stock of Milan-based Intesa jumped 8.5 percent.

``The deal forms a big Italian bank and avoids having these companies fall in the hands of foreign ones,'' said Filippo De Luca, who helps manage $1.15 billion, including Intesa shares, at Lugano, Switzerland-based LMF Servizi Finanziari SA. ``The new bank will be strong in the north, the richest part of the country, and also have a presence in southern Italy.''

The purchase, the biggest bank takeover in Europe since Royal Bank of Scotland Group Plc's $37.8 billion acquisition of London- based National Westminster Bank Plc in 2000, will create an Italian lender with a market value of about 65 billion euros, ranking it among the top 10 banks in Europe.

Intesa Chief Executive Officer Corrado Passera will oversee the combined company, which will have twice as many customers in Italy as UniCredit SpA, the country's biggest bank by assets. Together, Intesa and Sanpaolo will have about 20 percent of Italy's banking market. The combined company expects to earn about 7 billion euros by 2009.

Job Reductions

Passera, 51, has been under pressure to make a purchase since UniCredit leapfrogged Intesa after its 19 billion-euro purchase of Germany's HVB Group in June 2005. Then, in December, ABN Amro Holding NV of the Netherlands took control of Italian regional lender Banca Antonveneta SpA and France's BNP Paribas SA in February agreed to buy Banca Nazionale del Lavoro SpA, Italy's sixth-biggest lender, for 9 billion euros.

The combination of Intesa and Sanpaolo will yield about 1.3 billion euros of savings by 2009, with about 75 percent coming from measures such as combining computer systems and reducing administrative expenses. Intesa expects a one-time pretax cost of about 1.5 billion euros to pay for the combination and may return excess capital to shareholders, the banks said Aug. 26.

Intesa and Sanpaolo may shut as much as 10 percent of the combined company's 6,000 branches in Italy, the banks said. As many as 10,000 jobs may be eliminated as the companies close or sell overlapping branches and assets, estimate Keefe, Bruyette, & Woods analysts Marcello Zanardo and Jean-Pierre Lambert. Intesa and Sanpaolo together employ 102,000 people.

Italian Union

Sanpaolo Chairman Enrico Salza told la Repubblica in an interview published today that job cuts will happen ``on a small scale'' and there are no plans for major reductions. Italy's FIBA union representing banks and insurers said Aug. 25 that the merger was ``positive'' and any staff cuts would have to be negotiated.

Bank of Italy Governor Mario Draghi in May called on Italian banks to grow to compete in the European market and pledged to extinguish Italy's past of protectionism. Draghi, a former vice chairman of Goldman Sachs Group Inc., in January replaced Antonio Fazio, who quit amid two criminal probes into his efforts to block foreign bids for Italian lenders.

``Draghi made it clear that the Italian banking system needed consolidation,'' said Karim Bertoni, who helps oversee $14.6 billion at Banque Syz & Co. in Geneva. ``He also made it clear that he wasn't going to keep the foreigners out.''

Sanpaolo CEO Alfonso Iozzo, 63, in June hired Citigroup Inc. to advise on possible alliances. For Intesa, the combination comes after it earlier this year failed to buy Rome-based Capitalia SpA when Passera was rebuffed by Capitalia CEO Matteo Arpe.

`Point of Strength'

Iozzo will sit on the boards of the combined company, the banks said.

``A great banking group has come into being, which in terms of dimensions and human and professional resources, will constitute a point of strength for our country's economy and will be able to act as a protagonist on the European scene,'' Intesa Chairman Giovanni Bazoli told reporters on Aug. 26 in Milan.

Bazoli, 73, will head the new supervisory board and Salza, 69, will be chairman of the management board. The combined bank's legal headquarters will be in Turin. Management will be based in Milan.

The deal has already won the support of Italian politicians. Finance Minister Tommaso Padoa-Schioppa said on Aug. 24 that he looks ``positively upon the birth of a large Italian bank that is big enough to be able to play an important role in the European and international market.''

Banks' Shareholders

France's Credit Agricole SA will be the new bank's biggest shareholder, with a 9.1 percent stake. Paris-based Credit Agricole, which owns almost 18 percent of Intesa, yesterday approved the ``outline'' of the merger and said it wants a guarantee of a solution to ``safeguard and enhance'' its position in Italy.

The bank may agree to sell its stake in return for the right to buy as many as 700 of Intesa and Sanpaolo's excess branches in Italy, as well as other businesses, Italy's MF reported Aug. 25.

Compagnia di San Paolo, an Italian banking foundation, will be the second-largest shareholder of the company, with a 7 percent stake. Assicurazioni Generali SpA, Italy's largest insurer, will own 4.9 percent. Santander Central Hispano SA will own 4.2 percent.

The transaction won't affect plans for the stock market listing of Eurizon Financial Group, Sanpaolo's asset management and insurance unit, Sanpaolo said on Aug. 26.

Intesa will issue 5.84 billion new shares as part of the transaction, which is expected to be completed by the end of 2006 or early next year, the companies said. Shareholders will vote on the merger in December.

Gruppo Banca Leonardo SpA and Merrill Lynch & Co. are advising Intesa in the transaction. Sanpaolo is advised by New York-based Citigroup.

pratik_mehta7 · Aug 28, 2006

hey Shrijit.....you will soon get a new merger...which...will make this thread more intersting...this will concern to KPOs....and lets see......what happens.....

shrijit_s · Aug 28, 2006

pratik_mehta7 said:
hey Shrijit.....you will soon get a new merger...which...will make this thread more intersting...this will concern to KPOs....and lets see......what happens.....

Hey
Hmm are you talking of an Indian company?????????

shrijit_s · Aug 28, 2006

Kinder Morgan Accepts Increased Bid of $15 Billion

Aug. 28 (Bloomberg) -- Kinder Morgan Inc., operator of 43,000 miles of North American oil and gas pipelines, agreed to a sweetened $15 billion takeover from a group led by co-founder and Chairman Richard Kinder that is taking the company private.

The new offer of $107.50 a share compares with the $100-a- share bid made in May, Houston-based Kinder Morgan said today in a statement. The buyers also will assume $7 billion in debt, bringing the transaction's value to $22 billion, the largest- ever pipeline acquisition.

The bid by Richard Kinder, Goldman Sachs Group Inc., insurer American International Group Inc., Carlyle Group and Riverstone Holdings LLC comes amid rising petroleum demand globally. That has driven $40.5 billion in proposed energy takeovers this year, 60 percent ahead of 2005's pace. Prices for natural gas, the fuel carried by many of Kinder Morgan's pipelines, have climbed 9.4 percent since the buyout group's offer was first announced three months ago.

``This is a good price for the company as a publicly traded entity based on where it had been,'' said Robert Lane, an analyst at Sanders Morris Harris Group in Houston who rates Kinder Morgan shares at ``hold'' and doesn't own any. ``You have to remember it was trading down at $85 when the deal was made.''

Kinder Morgan's shares have climbed 23 percent since the offer on May 29, representing a gain of $476 million for Kinder, who owned an 18 percent stake in Kinder Morgan as of a June filing. Kinder, 61, will remain chairman and chief executive and will reinvest all his shares, according to the statement.

Shares Rise

The deal values Kinder's stake at $2.58 billion. Co-founder Bill Morgan, his son Mike Morgan and director Fayez Sarofim are also among the Kinder Morgan investors.

Shares of Kinder Morgan rose $2.54, or 2.5 percent, to $104.24 at 10:38 a.m. in New York Stock Exchange composite trading.

The company manages Kinder Morgan Energy Partners LP, an operator of pipelines and fuel terminals.

The purchase agreement includes a $215 million breakup fee, Kinder Morgan said today in a filing with the U.S. Securities and Exchange Commission.

At least five lawsuits were filed after the initial offer, seeking a higher price for shareholders, according to statements by law firms. The buyout group may have been waiting for those suits to be certified by the courts to announce its higher bid, Sanders Morris Harris's Lane said.

shrijit_s · Aug 30, 2006

Russia to Create World's Biggest Aluminum Maker

Aug. 30 (Bloomberg) -- Russia's two biggest aluminum companies plan to combine and create the world's largest producer of the metal, giving President Vladimir Putin influence over world aluminum prices.

Putin approved a proposal for OAO Russian Aluminium, known as Rusal, to buy smaller rival OAO Sual Group, said a presidential spokesman who asked not to be identified because the accord hasn't been announced. Swiss commodity trader Glencore International AG's alumina assets will also be included for a stake in the new company, he said.

By adding Sual, valued at $3.3 billion on Russian stock exchanges, Rusal owner Oleg Deripaska will create a company that pours more aluminum than Alcoa Inc., now the world leader. Putin has been consolidating the energy and metals industries under state-aligned companies as surging oil and commodities prices underpin Russia's eight-year economic boom.

``The government's long-term drive has been to establish national champions, as we have seen'' in energy, said Tim Brenton, political analyst at Renaissance Capital in Moscow. ``It's Russia's long-term strategy to project power abroad through these companies.''

Rusal, Sual and Glencore signed a non-binding accord Aug. 25, the Financial Times reported earlier today. Rusal, controlled by Deripaska through his holding company, Basic Element, will buy Glencore's alumina assets by issuing new shares and will own 64.5 percent of the new company, with Sual 21.5 percent and Glencore 14 percent respectively, the FT said.

Metals Consolidation

Soaring commodity prices have caused metals and mining companies worldwide to consolidate, with more than $100 billion of takeover offers made this year. Aluminum prices have gained 9.2 percent in London since Jan. 1, trailing the 68 percent jump in copper and a more than doubling in nickel.

Aluminum gains have been limited as China, the world's largest producer and consumer of the metal, has raised production, curbing imports. The combined Russian companies would produce about 11 percent of the world's aluminum, excluding recycled material.

Deripaska met Putin three weeks ago, one of the Russian leader's regular gatherings with the country's most powerful businessmen. Rusal's owner was added yesterday to the committee organizing Russia's bid to host the 2014 Winter Olympics in the Black Sea resort of Sochi.

``We expect and hope that Mr. Deripaska will take the combined company public,'' Vladimir Zhukov, senior analyst at Alfa Bank in Moscow, said today in an interview. ``He'll make much more money having his company public.''

shrijit_s · Aug 31, 2006

Goldcorp Agrees to Buy Glamis in $8.6 Billion Deal

Aug. 31 (Bloomberg) -- Goldcorp Inc., Canada's third- largest producer of the metal, agreed to buy Glamis Gold Ltd. for about $8.6 billion as a four-year rally in metal prices spurs mining companies to consolidate.

The stock offer values each share of Reno, Nevada-based Glamis at $51.49, 33 percent higher than the Aug. 30 closing price, the companies said today in a statement. Glamis holders will get 1.69 shares in Toronto-based Goldcorp for each share. Shares of Glamis rose to $48 in New York.

Goldcorp will boost output by more than a third and add mines in Nevada and Honduras at a time when gold is near its highest price in a quarter century and production costs are rising. The deal would be the industry's second-largest ever, after Barrick Gold Corp. bought Placer Dome for $10.4 billion in March to become the world's largest gold producer.

``It's consolidate, or be consolidated,'' John Meyer, an analyst at Numis Securities Ltd. in London, said in an interview. ``There's a growing realization that in fact higher metals prices are here to stay for some time.''

Shares of Glamis rose $9.14, or 24 percent, to $48 at 9:18 a.m. in New York before the opening of U.S. exchanges. Goldcorp fell $1.72, or 5.6 percent, to $28.75 in New York. Goldcorp has rallied 37 percent this year, and Glamis is up 41 percent.

More Mergers

There have been more than $100 billion of takeover offers in the mining industry this year, data compiled by Bloomberg shows. Inco Ltd., the world's second-largest nickel miner, faces takeover offers from Phelps Dodge Corp. and Cia. Vale do Rio Doce. Russia's two biggest aluminum companies are planning to combine to create the world's largest producer of the metal.

``Consolidation is occurring in all the mining industries, and it's occurring in gold, alumina, steel and base metals,'' said Gavin van der Wath, Sydney-based vice president of global mining sales at RBC Capital Markets. ``At the moment, it may be easier to buy than to build with the spike in capital costs.''

The combined Goldcorp will be the world's fifth-largest gold producer based on estimated 2007 production, said Joseph Danni, vice president of corporate relations at Glamis, over the phone. It will rank behind Barrick, Newmont Mining Corp., AngloGold Ashanti Ltd. and Gold Fields Ltd., he said.

The deal, which is expected to be completed in November, will leave Goldcorp's shareholders with 60 percent of the combined company.

Merrill Lynch Canada Inc. and CIBC World Markets Inc. are Goldcorp's advisers, and J.P. Morgan Securities Inc. and Orion Securities Inc. are advising Glamis.

Gold Rally

Gold for immediate delivery in London gained $3.01, or 0.5 percent, to $622.29 an ounce, taking its gain this year to 20 percent. The metal reached a 26-year high of $730.30 in May. Gold prices have gained for five consecutive years.

Gold may reach $680 by the end of the year, said David Gornall, head of bullion and foreign exchange at Natexis Commodity Markets in London.

``This is all about economies of scale and maximizing your return. There are horrendous start-up costs associated with building a new mine,'' Gornall said today.

Goldcorp was the world's second-lowest cost producer in the first quarter, while Glamis was No. 7, according to World Gold Analyst magazine. Glamis had the third-biggest production gains in the quarter, and Goldcorp the ninth-biggest.

Rising Costs

Capital costs have jumped as much as 30 percent in mining projects worldwide as miners compete for labor, equipment and raw materials.

Both companies also have no forward sales of production, allowing them to reap the full benefit of any increase in price, according to Jonathan Barratt, head of foreign exchange and metals at Tricom Futures Pty. in Sydney.

``Both these companies have been touted as potential takeover targets, and what better way to enhance their own viability than by combining?'' said Alfred Wong, who holds both stocks among the $12 billion managed at UOB Asset Management Ltd., in Singapore.

Goldcorp is targeting 1.8 million ounces of production this year, and Glamis plans to produce 670,000 ounces.

Ian Telfer, president and chief executive officer of Goldcorp, will be the chairman of the new company, and Kevin McArthur, president and chief executive officer of Glamis, will keep those titles. Telfer couldn't be reached for immediate comment.

Glamis agreed to pay a break fee of $215 million to Goldcorp under certain circumstances should the deal not be completed, and Goldcorp has the right to match any competing offers, the companies said.

The new combined company will have proven and probable reserves of 41.1 million ounces of gold, and a measured and indicated resources base of 14 million ounces.

shrijit_s · Sep 6, 2006

Phelps Dodge Calls Off Inco Deal, Clears Way for Vale

Sept. 5 (Bloomberg) -- Phelps Dodge Corp. dropped its $18.2 billion friendly takeover of Canadian nickel-miner Inco Ltd., whose shareholders support a competing cash bid from Brazil's Cia. Vale do Rio Doce, the world's largest iron-ore producer.

Vale has offered C$86 ($77.40) a share to acquire Inco and become the world's fourth-largest mining company. Phoenix-based copper producer Phelps Dodge, which had offered cash and stock valued today at about C$90, said in a statement that it may get $475 million as compensation from Inco. Phelps shares jumped to a three-month high.

Copper and nickel prices surged today, extending a five- year rally in metals that has spurred more than $100 billion of mining-industry takeover offers in 2006. Vale emerges as a likely winner in a 10-month competition for Canadian nickel deposits that began with Inco's failed bid for Falconbridge Ltd. and later drew offers from Xstrata Plc and Teck Cominco Ltd.

``In the absence of a higher offer, it's a virtual certainty that CVRD will get enough shares tendered to their offer at the end of September,'' said analyst Lawrence Smith of Blackmont Capital Inc. in Toronto, who rates Inco a ``hold'' and doesn't own shares.

Shares of Phelps Dodge rose $2.73, or 3 percent, to $93.48 at 4 p.m. in New York Stock Exchange composite trading. Toronto- based Inco fell 26 Canadian cents, or 0.3 percent, to C$85.60 on the Toronto Stock Exchange. Vale rose 43 centavos, or 1 percent, to 42.19 reais.

Vale Talks

Inco, in a statement, said it ``continues to be open to entering into discussions or negotiations'' with Vale, whose offer values the company at about C$19.3 billion. The offer, subject to Canadian government approval, expires Sept. 28.

Fernando Thompson, a spokesman for Rio de Janeiro-based Vale, declined to comment. Vale Chief Executive Officer Roger Agnelli told analysts during a mine tour in Brazil yesterday that the offer for Inco was ``fair'' and ``not cheap,'' said Uniao de Bancos Brasileiros SA analyst Rodrigo Barros.

Inco paid Phelps Dodge a $125 million breakup fee and said it may pay $350 million more if another deal is concluded by Sept. 7, 2007. Inco Chief Executive Officer Scott Hand, 64, said investors indicated they would reject the offer of 0.672 of a Phelps Dodge share and C$20.25 in cash for each Inco share.

``It was very clear from the proxies we received that Inco shareholders were not going to support the Phelps Dodge transaction,'' Hand said in a statement. Inco investors were scheduled to vote on the offer Sept. 7, and two-thirds of its shareholders needed to approve for the deal to proceed.

No Support

``It was a virtual certainty they weren't going to get enough shareholder votes,'' said Blackmont Capital's Smith. Before Vale's bid was announced Aug. 11, the value of the Phelps Dodge offer had dropped below C$76 as copper prices declined, sending the company's shares lower.

Phelps Dodge Chief Executive Officer J. Steven Whisler, 51, said his plan to acquire Inco and create North America's largest mining company became too costly after iron-ore producer Vale made its bid.

``The synergies available in a two-way combination with Inco were much smaller than those available in a three-way combination,'' Whisler said today in a statement.

Phelps Dodge also faced opposition from its investors, including its second-largest largest shareholder, Atticus Capital LP. Atticus spokesman Robert Coburn had no immediate comment.

``I'm happy that the management decided to exercise discipline in terms of where they would walk away from the deal,'' said Osman Arain, a fund manager at New York-based Clear Asset Management LLC, which sold Phelps Dodge shares about a month ago. Whisler deserves ``credit for walking away when it didn't make sense for Phelps Dodge to keep pursuing the deal.''

shrijit_s · Sep 13, 2006

Will keep updated as and when the deal takes place

MAN May Buy Scania to Become Europe's Top Truckmaker
Sept. 13 (Bloomberg) -- MAN AG, the German maker of commercial vehicles, may buy Swedish competitor Scania AB to become Europe's largest manufacturer of heavy trucks and buses.

Shares of Soedertaelje, Sweden-based Scania surged 8.3 percent to a record, giving the company a market value of 84.4 billion kronor ($11.6 billion). MAN said in a statement today a combination with Scania would be ``compelling.''

MAN Chief Executive Officer Hakan Samuelsson wants to grow to challenge DaimlerChrysler AG and Volvo AB, Europe's largest truckmakers. A combined MAN and Scania would leapfrog to the top spot in European sales. Last year the two sold 76,469 buses and trucks over 16 tons in western Europe compared with 56,900 units for DaimlerChrysler, the current leader. The combined company would still trail DaimlerChrysler and Volvo worldwide.

``There is a clear-cut case for MAN to continue to grow and to take over the image leader, which is Scania,'' said Peter Schmidt, managing director at Automotive Industry Data, a consulting company in Warwick, England. ``The opening of central Europe has made it a much bigger market.''

Shares of Scania, Europe's sixth-largest truckmaker, rose 32.5 kronor to 422 kronor. Shares of Munich-based MAN fell 53 euro cents, or 0.9 percent, to 60.12 euros in Frankfurt. The stock is up 33 percent this year, valuing MAN at 8.82 billion euros ($11.2 billion).

Scania Chief Executive Officer Leif Oestling won't be available for comment today, Cecilia Edstroem, the truckmaker's communications chief, said in a telephone interview, declining further comment.

Sales Target

Samuelsson said in March he plans to increase MAN's worldwide sales to at least 100,000 trucks by 2010 from 68,209 vehicles last year. He has sold or spun off units, including the printing press division, since taking over in January 2005 to raise cash for acquisitions and pay for a new assembly plant near Krakow, Poland, and a joint venture with Force Motors Ltd. in Indore, India.

Samuelsson, who is Swedish, joined MAN in 2000 to run the commercial-vehicles division. Before that, he spent 23 years at Scania, ending his tenure there as the research and production chief.

A combined MAN and Scania would still rank behind Volvo and DaimlerChrysler in worldwide sales. MAN and Scania sold 120,775 heavy trucks and buses worldwide last year, according to their annual reports. That compares with the 225,054 vehicles that Volvo sold. MAN and Scania also don't sell any commercial vehicles in the U.S., the world's largest market.

shrijit_s · Sep 16, 2006

Freescale to Be Sold to Blackstone for $17.6 Billion

Sept. 15 (Bloomberg) -- Freescale Semiconductor Inc. agreed to a takeover by private-equity firms led by Blackstone Group LP for $17.6 billion in the biggest technology buyout ever.

The shareholders of the chipmaker will be offered $40 a share in cash, a 36 percent premium over Austin, Texas-based Freescale's average closing price in the 30 trading days ended Sept. 8, the company said in a statement today. The board of directors approved the buyout after Freescale said Sept. 11 it was in talks ``relating to a possible business transaction.''

Blackstone, whose $15.6 billion buyout fund is the world's largest, along with Texas Pacific Group of Fort Worth, Texas, Washington-based Carlyle Group and Permira Advisers LLP in London topped a rival bid by Kohlberg Kravis Roberts & Co. and other firms. The chipmaker said it's allowed to solicit other proposals and would pay a $300 million fee if it accepts another offer.

``We might get a competing bid in here that could push the number even a little higher,'' said Doug Freedman, an analyst at American Technology Research in San Francisco, who has rated the shares ``buy'' since Sept. 12. ``The company has a longer-term acquisition strategy that is probably better executed in private, rather than the public forum, where you have everyone concerned about quarterly results.''

Glaston Ford, a Freescale spokesman, declined to comment.

Freescale shares rose $2.44, or 6.5 percent, to $39.60 in New York after the official close of U.S. exchanges. The stock closed at $37.16 today, down 41 cents, in regular New York Stock Exchange composite trading.

Record Buyouts

Private equity firms and management have announced a record $358 billion worth of acquisitions this year, surpassing last year's total of $275 billion, according to Bloomberg data, driven by record fund raising and cheap financing. The Freescale buyout will beat the $11.3 billion that private equity firms paid last year for software maker SunGard Data Systems Inc.

Freescale, which was losing money before its split from Motorola Inc. in 2004, returned to profitability in each of the eight quarters since by cutting expenses and increasing sales. Once considered too risky for buyouts, technology suppliers with established records are now being pursued for their earnings growth. Freescale is the world's 10th-biggest chipmaker.

Competing Firms

Blackstone's group may be challenged by New York-based KKR, Menlo Park, California-based Silver Lake Partners, Boston-based Bain Capital and London-based Apax Partners Worldwide LP.

Last month, KKR, Silver Lake and Bain agreed to buy Royal Philips Electronics NV's semiconductor unit for $4.3 billion and last year acquired Agilent Technologies Inc.'s consumer- semiconductor unit for $2.66 billion.

Blackstone's technology buyout group is led by senior managing director Chip Schorr, a former managing partner for technology and telecommunications at Citigroup Venture Capital Equity.

Officials for each of the private-equity firms declined to comment.

Freescale's profit has gained as it trimmed manufacturing costs and sales of wireless and mobile products expanded. It has cut 1,000 jobs since October 2004, sold a factory in China and increased production at other sites. Net income more than doubled to $260 million in the second quarter on sales that rose 8.6 percent to $1.6 billion.

The company makes chips for mobile phones, cars and consumer electronics. Customers include Motorola, Sony Corp., Whirlpool Corp., and General Motors Corp. and Ford Motor Co.

Chief Executive Officer Michel Mayer, 46, took over in May 2004 and inherited the plan to spin out from Motorola. He previously served as general manager of International Business Machine Corp.'s microelectronics division.

Low Rates

Buyout firms have been able to take advantage of low borrowing rates which has helped them make the biggest acquisitions ever this year. HCA Inc., the biggest U.S. hospital operator, is being acquired for about $33 billion, including assumed debt, by Bain, KKR, Merrill Lynch & Co. and HCA co- founder Thomas F. Frist Jr. The deal tops the $31.3 billion that KKR paid for RJR Nabisco Inc. in 1989.

U.S. company loans rated two or three levels below investment grade pay an average spread of 1.97 percentage points over a benchmark rate, down from more than 3 percentage points in 2003, according to Standard & Poor's data. The record is 1.5 percentage points paid in April.

Goldman Sachs Group Inc. advised Freescale and Wilson Sonsini Goodrich Rosati Professional Corp. was the company's legal adviser. Credit Suisse Group, Citigroup Inc. and Blackstone Corporate Advisory Services advised the Blackstone- led buyout group and Skadden, Arps, Slate, Meagher & Flom LLP was the group's legal adviser.

Credit Suisse and Citigroup will arrange the debt financing of the takeover, according to a company filing.

shrijit_s · Sep 18, 2006

Scania Rejects Truckmaker MAN's EU9.6 Billion Offer

Sept. 18 (Bloomberg) -- Scania AB, Sweden's No. 2 truckmaker, rejected a 9.6 billion-euro ($12.1 billion) takeover offer from German commercial-vehicles manufacturer MAN AG. Investor AB, Scania's second-largest shareholder, rejected the bid as too low.

Scania's board ``unanimously decided not to support'' the MAN proposal, Scania said today in a statement, without specifying its reasons for the rejection. MAN offered 0.151 new ordinary shares and 38.35 euros in cash for each Scania share, the Munich-based company said in a statement today. The offer is worth 48 euros or 442 kronor per share, MAN said.

``The takeover has to be a friendly one for it to work and for the synergies that MAN has hinted at to be realized,'' said Erhard Schmitt, an analyst at Helaba Trust in Frankfurt, who has a ``sell'' rating on MAN shares. ``If Scania's management is against the deal, then those savings will be at risk.''

MAN Chief Executive Officer Hakan Samuelsson, who is Swedish, wants to takeover his former employer and challenge DaimlerChrysler AG and Volvo AB, Europe's biggest truckmakers. A combined MAN, Europe's third-largest truckmaker, and Scania would leapfrog to the top spot in European sales.

``Scania and MAN are two very profitable companies and the industrial fit is excellent,'' Samuelsson said in a separate statement. ``The new group will be a European champion and a global player positioned to achieve profitable growth in existing and new markets.''

Shares of Scania, Europe's sixth-largest truckmaker, have risen 48 percent this year to 424.5 kronor, giving the company a market value of 85.2 billion kronor ($11.7 billion). Cecilia Edstroem, Scania's corporate communications chief, declined further comment.

Volkswagen, Investor

Volkswagen AG and Investor are critical to a deal because together they control 53.3 percent of the truckmaker's voting rights. Volkswagen, Europe's largest carmaker, holds 34 percent of Scania's voting rights and 18.7 percent of equity. Stockholm-based Investor has 19.3 percent of the voting rights and 10.8 percent of Scania's capital.

Investor, controlled by Sweden's Wallenberg family, today said it rejected the offer ``because it did not reflect the fair value and potential of Scania,'' the company said in a statement on the Waymaker newswire today.

``We will provide a statement at the latest tomorrow,'' Christine Ritz, a Volkswagen spokeswoman, said in a telephone interview.

The offer represents a premium of 39 percent and 36 percent for A and B shares in Scania, respectively, based on the three months volume weighted average prices to Sept. 11, the last trading day prior to the temporary suspension of trading in Scania stock, MAN said. The offer is conditional upon a 90 percent acceptance level and is expected to be completed before year-end.

Renault Stake

MAN has agreed to buy 5.7 million Scania shares from Renault SA, representing 2.85 percent of the shares and 5.18 percent of votes, it said today.

MAN aims to cut spending by 500 million euros annually within three years time, the company said today. Integration of Scania within MAN would cost 150 million euros over two years.

The new company, which would continue to offer the MAN and Scania brands, would become a Societas Europaea, with Scania employees represented on the new supervisory board. The new company would have total sales of 18.5 billion euros annually and an operating profit, or earnings before interest and taxes, of 1.4 billion euros, MAN said.

No plants would be closed as a result of the merger, MAN said, with management positions shared between Scania and MAN ``based on the principle, `the best person for the job.''' The combined company's headquarters would be in Munich, with Scania brand headquarters in Soedertaelje.

Investment Grade

MAN is ``targeting an investment grade rating'' for the new company and will issue up to 2 billion euros in new equity, MAN said.

Samuelsson, 55, joined MAN in 2000 to run the commercial- vehicles division. He spent 23 years at Scania before that, ending his tenure there as the research and production chief. Since taking over MAN in January 2005, he has sold or spun off units to raise cash for acquisitions and to pay for a new assembly plant in Poland and a joint venture in India.

MAN's takeover bid, which would create a company with commercial-vehicle sales of more than 12 billion euros annually, would mark the first trucking industry merger in Europe in five years, when Volvo bought Renault Trucks and its U.S. subsidiary Mack Trucks in January 2001.

`Industrial Interest'

Volkswagen CEO Bernd Pischetsrieder said Sept. 4 the stake in Scania is profitable and that the Wolfsburg, Germany-based carmaker has an ``industrial interest'' in retaining it. He said he wants Volkswagen to play a role in mergers and acquisitions in the commercial-vehicle industry, possibly via the heavy-truck division in Brazil or light-truck operations in Europe.

This isn't the first time that Scania has been a takeover target. Volvo failed in an attempt to buy the smaller competitor in 1999 after the European Commission blocked the purchase because together the companies would have too dominant a market share in Scandinavia.

MAN's takeover attempt comes as truckmakers are flush with profit because transport companies are rapidly expanding their fleets and making purchases ahead of stricter European Union emission rules that take effect Oct. 1, making trucks more expensive. Sales of heavy trucks over 16 tons in Western Europe rose 7 percent in the first half to 139,803 vehicles.

shrijit_s · Sep 22, 2006

Merck takes control of biotech giant Serono
Source ::: AFP
frankfurt •

German pharmaceuticals company Merck KGaA yesterday took a majority stake in Switzerland’s Serono SA and was aiming at a full takeover worth 16.6 billion Swiss francs (10.46 billion euros, $13.32 billion).

The offer would give investors in Serono a 20-per cent premium on Wednesday’s Zurich closing price of 915 Swiss francs.

Merck said it had struck an agreement with the Bertarelli family, the majority stakeholder in Serono, and now held 64.5 per cent of Serono’s capital and 75.5 per cent of the voting rights.

Merck said in a statement it would make a public tender offer under Swiss law for the remaining shares, at 1,100 Swiss francs per share, valuing the whole of Serono at 16.6 billion Swiss francs.

The German firm failed in a bid at the start of the year to take over its German rival Schering.

It lost that bruising battle to Bayer, but it took the market by surprise with its move for Serono.

Merck will combine its licensed pharma business with Serono’s operations. The new subsidiary, Merck-Serono Biopharmaceuticals, will operate from Geneva. Its leading products will include Serono’s Rebif drug which is used in the treatment of multiple sclerosis.

Merck also has operations in the chemicals sector and is the world leader in liquid crystals, used to make plasma screens.

With the acquisition of Serono — the world’s number three in biotechnology — Merck will have a research budget of one billion euros, making it better-equipped against its bigger global competitors.

“This acquisition transforms Merck’s Pharmaceuticals business and creates a leading position in the world of biologic medicines, which helps to ensure its future through the 21st century,” said Merck chief executive Michael Roemer.

Merck shares fell more than five per cent in early Frankfurt trading on news of the deal.

The price of Serono shares rose by 18.6 per cent after trading in them was resumed in Zurich, reaching 1,085 Swiss francs at 1100 GMT.

Serono chief executive Ernesto Bertarelli said he was ready to stay on as long as necessary to ensure the company’s smooth transition into Merck’s hands.

shrijit_s · Sep 22, 2006

ONGC, Sinopec bag Colombian co for $850 mn

TIMES NEWS NETWORK[ FRIDAY, SEPTEMBER 22, 2006 12:29:28 AM]

NEW DELHI: The Indo-China joint effort is beginning to bear fruit. Oil biggie ONGC’s overseas investment arm, ONGC-VL, and Chinese oil and petrochem major Sinopec’s subsidiary, Sinopec International Petroleum Exploration and Production Corporation (SIPC), have acquired Omimex de Colombia from Texas-based Omimex Resources. The stake was acquired for $850m.

The two partners will pump in $425m each for the acquisition. This is second instance after Syria, where Indian and Chinese oil companies have together given other majors a run for their money. ONGC chairman and managing director RS Sharma told ET: “We have made a significant entry in this region with this acquisition. Our collaboration with the Chinese is strategic and we hope to take this relationship further.”

Omimex Resources, which owns 100% of Omimex de Colombia, is a privately held oil & gas exploration and production company with operations in the US, Canada and Colombia. ONGC-VL was advised by UBS Investment Bank, SIPC by Citigroup Global Markets and Omimex Resources by Scotia Waterous in the deal.

ET had first reported about the acquisition on July 20.

Omimex has oil & gas operations exclusively in Colombia. These include onshore production and exploration areas with gross proved reserves of more than 300m barrels of oil and current daily production at about 20,000 barrels.

Omimex’s assets constitute a 100% interest in the light oil Velasquez fee mineral property and a 50% interest in the Nare and Cocorna association contracts where the Colombian national oil company, Ecopetrol, holds 50%. Omimex also owns 100% of the Velasquez-Galan pipeline, which runs 189 km from the Velasquez property to Ecopetrol’s Barrancabermeja refinery.

SIPC is a wholly-owned subsidiary of China Petrochemical Corporation (Sinopec Group). SIPC is the sole specialised subsidiary of the Sinopec Group responsible for overseas investments and operations in the upstream and downstream sectors. With a global workforce of over 1,100, SIPC has 16 functional departments and more than 20 overseas branches.

SIPC continues to look for global opportunities that play to its strengths and adhere to the principle of energy diversification.

shrijit_s · Sep 25, 2006

UCB to Buy Germany's Schwarz Pharma for EU4.4 Billion

Sept. 25 (Bloomberg) -- UCB SA, the Belgian maker of the allergy drug Zyrtec, agreed to buy Schwarz Pharma AG for 4.4 billion euros ($5.6 billion) in cash and stock to gain new medicines for Parkinson's disease, epilepsy and bladder control.

Shareholders of Schwarz will get 91.10 euros a share, 20 percent more than the closing price Sept. 22, UCB said today. The Schwarz-Schuette family, which owns 60 percent of the Monheim, Germany-based company, backed the offer.

Schwarz is the third European family-owned drugmaker to sell in less than a week as the cost of developing new products swells, older medicines face generic competition and governments slash health-care spending. UCB, which faces patent expirations on its top sellers starting next year, will get three drugs that may garner more than 2 billion euros in annual revenue.

``Competition is more fierce than ever in this environment of health-care reform and rising generics, especially for small and mid-sized companies,'' said Florent Cespedes, an analyst at Natexis Bleichroeder in Paris. ``The rationale is not bad in the long term. Better to be proactive than wait for an offer.''

Schwarz, the first company to introduce a generic version of AstraZeneca Plc's ulcer drug Prilosec, is shifting from marketing medicines to developing its own products. Shareholders will get 50 euros a share in cash and 0.8735 UCB shares. Chief Executive Officer Patrick Schwarz-Schuette will get a seat on the board of the enlarged UCB.

Shares of UCB, which is based in Brussels, fell 1.63 euros, or 3.5 percent, to 45.41 euros at 10:19 a.m. Those of Schwarz climbed 12.26 euros, or 16 percent, to 87.96 euros in Frankfurt.

UCB's New Focus

``A few competitors must be sad today,'' UCB Chief Executive Officer Roch Doliveux said on a conference call.

Pfizer Inc., which bought rights to Schwarz's experimental bladder-control drug in April, was among those interested in the company, dpa-AFX newswire reported yesterday. Schwarz's shares gained 41 percent in the year ended Sept. 22 amid speculation it could become a target as consolidation sweeps the German market.

UCB, founded in 1928 as Union Chimique Belge to make industrial chemicals, chose to focus on drugs under Doliveux, with the purchase of U.K. biotechnology company Celltech Group Plc in 2004 and last year's sale of the chemicals unit.

The company needs new growth avenues because it will lose U.S. patent protection on Zyrtec next year. Keppra, the epilepsy drug that became the Belgian company's biggest seller last year, starts losing patent protection in 2008. Schwarz is close to seeking regulatory approval on an experimental epilepsy drug.

German Consolidation

``It was very difficult for Schwarz on their own to unlock their great potential,'' said Doliveux. ``Patrick Schwarz- Schuette and I know each other for a long time. Discussions have intensified over the last six months. This is not something that has happened over the past few weeks.''

The companies expect the transaction to generate annual cost savings of more than 300 million euros within three years. The enlarged UCB will have annual sales of more than 3.3 billion euros and a research and development budget of 770 million euros a year. UCB plans to sell new shares to help pay for the bid.

The announcement comes just days after family holders of Serono SA, Europe's largest biotechnology company, agreed to sell their stake to Merck KGaA, controlled by the descendants of founder Friedrich Jacob Merck, in a deal valued at 10.6 billion euros. Altana AG, controlled by the billionaire Quandt family, also agreed last week to sell its drug unit to Danish pharmaceuticals company Nycomed Holding AS for 4.5 billion euros.

`Long Overdue'

Family shareholders are seeking consolidation as drugmakers grapple with the rising cost of developing new medicines and increasing competition from generics.

Bayer AG, based in neighboring Leverkusen, bought Berlin- based Schering AG for 17 billion euros in June.

Drugmakers have committed $96 billion to acquisitions this year, according to data complied by Bloomberg. Companies say much of the spending will be used to acquire medicines that can sustain profit growth as patents expire on older treatments.

``What has been done in the last week has been long overdue, but the problems are by no means solved,'' said Karl Heinz Koch, an analyst at Lombard Odier Darier Hentsch in Zurich.

Rolf Schwarz-Schuette, 85, founded the company in 1946 with his father Anton. Patrick Schwarz-Schuette, Rolf's son, is the current chairman.

Transformation

Schwarz hasn't had a profit since 2003, when it made almost $1 billion in revenue from selling a generic copy of the heartburn pill Prilosec, once the world's biggest-selling medicine. The company used income from that product to fund development of its own drugs.

The bet has provided Schwarz with medicines analysts say may triple annual revenue over the next five to 10 years.

The company won permission to sell its Neupro skin patch for Parkinson's disease in Europe last February. Schwarz- Schuette estimates the drug may generate up to 350 million euros a year in sales. That may rise by 300 million euros if Neupro also shows it can fight restless leg syndrome.

In April, Schwarz sold Pfizer rights to the experimental bladder-control drug fesoterodine for as much as $210 million before royalties.

Pfizer

Pfizer, the world's biggest drugmaker, is paying Schwarz to eliminate a potential competitive threat to its Detrol, the most-prescribed medicine in the world to treat an over-active bladder, according to the New York-based company's 2005 annual report. Pfizer agreed to pay the German company a share of sales from the medicine as well as royalties on Detrol sales.

Schwarz is close to asking regulators to approve the third, and potentially biggest, of its new therapies, the epilepsy drug lacosamide. The company had sought a partner to help market the product, which may also help treat pain associated with advanced diabetes and other ills.

Schwarz estimates lacosamide sales may reach $1 billion a year. The drug would compete with Pfizer's Lyrica and products by Eli Lilly & Co. of Indianapolis and Paris-based Sanofi- Aventis SA.

Rothschild advised Schwarz Pharma, while Lazard Ltd. and Braveheart Investment Group advised UCB. BNP Paribas SA and Fortis agreed to provide credit to finance the transaction.

shrijit_s · Sep 26, 2006

Acciona May Increase Endesa Stake, Threaten E.ON Bid

Sept. 26 (Bloomberg) -- Acciona SA, the Spanish builder that yesterday bought 10 percent of Endesa SA, said it has financing to double the stake, threatening E.ON AG's 26.9 billion-euro ($34 billion) bid for the nation's largest power company.

Acciona may even increase its holding to almost 25 percent, the Madrid-based company said today in a filing. Caja Madrid, Spain's No. 2 savings bank, also owns 10 percent of Endesa, raising the prospect that they form a Spanish alliance that could impede a takeover. Germany's E.ON today said it's not dropping out.

Endesa's shares rose as much as 12.6 percent, their most ever, on speculation E.ON Chief Executive Officer Wulf Bernotat may raise his bid while lobbying Spain's government for support. Spanish Prime Minister Jose Luis Rodriguez Zapatero has opposed E.ON's takeover on the grounds Endesa is ``strategic'' for Spain.

``If Acciona teams up with several other Spanish shareholders that would be a clear obstacle for E.ON,'' said Pedro Real de Asua, who helps manage the equivalent of $8.4 billion for Barclays Fondos in Madrid, including Endesa shares. ``If E.ON boosts the offer significantly, they may still win.''

Endesa shares surged as much as 3.70 euros to 33.10 euros in Madrid and traded at 32.58 euros at 3:56 p.m. Acciona paid 32 euros per Endesa share, 26 percent more than E.ON's offer. E.ON fell as much as 3.8 percent to 92.34 euros in Frankfurt.

Acciona's Strategy

Acciona, Spain's fourth-biggest construction company, rose 3.9 percent to 116 euros.

Acciona, 60 percent-owned by the family of its chairman, Jose Manuel Entrecanales, owns stakes in 152 wind-energy farms in nine countries, three biomass plants, and is building a solar thermal electric-power plant in the Nevada desert in the U.S.

With partner Grupo Ferrovial SA Acciona diverted a Madrid highway underground in recent months, using the world's biggest tunneling machine, weighting 4,364 metric tons (9.6 million pounds), to bore holes 15-meters (50-feet) in diameter.

``Acciona could be trying to create a group that ensures Endesa remains Spanish,'' said Javier Ruiz, an analyst at Ahorro Corporacion Financiera SV SA in Madrid. ``E.ON must increase its offer to have a chance'' in persuading investors for its plan.

The German utility said it wouldn't withdraw its bid.

``E.ON reaffirms its strong commitment in pursuing its offer for Endesa and expects to meet all requirements to proceed shortly,'' the Dusseldorf-based company said in an e-mailed statement today. E.ON's offer hinges on acquiring at least 50.01 percent of Endesa's shares, it reiterated.

European Union Backs E.ON

European Union regulators today ordered Spain to remove restrictions on E.ON's offer bid, seeking to break down barriers in the EU's 250 billion-euro energy industry.

E.ON's offer topped an earlier cash-and-stock bid by Spain's Gas Natural SDG SA that is worth 23 billion euros. Bernotat said in August he would consider increasing the offer if Gas Natural and E.ON were allowed to improve their bids.

E.ON still lacks endorsement from Spain's government. ``I am delighted to have large Spanish companies that can compete in international markets,'' Spanish Finance Minister Pedro Solbes said today in Madrid.

The price of credit-default swaps on Endesa's 8 billion euros of bonds today rose almost 2,000 euros, or 15 percent, to 18,000 euros, the highest in six weeks, according to data compiled by Bloomberg. That suggests that investors perceive a greater risk in owning the debt.

Endesa's Defense

Acciona's purchase was carried out independently from any other party, Juan Jose Muro-Lara, the company's head corporate development, said on a conference call today. The builder may be able to block E.ON by allying with other Endesa shareholders. Caja Madrid hasn't said if it will back a takeover, and the Spanish government also owns 2.95 percent of Endesa.

Muro-Lara said Acciona doesn't plan to make a public offer, which is mandatory if Acciona reaches 25 percent.

Endesa currently limits investors to 10 percent of voting rights, regardless of the size of their stakes. E.ON's offer is contingent on the scrapping of that provision, a move that would itself require the backing of more than 50 percent of voters.

E.ON's bid ``is in danger of failing,'' said Antonio Gallego, who helps manage $7.6 billion in stocks and bonds, including Endesa shares, at Gesfinmed in Alicante, Spain. ``They need to recalculate everything.''

Muro-Lara said Acciona expects to get approval within about four weeks from the Spanish energy regulator to increase the Endesa holding above 10 percent.

``It's a unique opportunity to invest in excellent energy assets in a leading company,'' he said. ``It's a long-term acquisition for Acciona.''

Builder's Diversification

Like other Spanish builders, Acciona is investing profits from a domestic building boom in industries that may offer greater profit margins and faster growth. It has already targeted the energy market with a 2 billion-euro investment in wind power.

Endesa, led by Chairman Manuel Pizarro, has also filed more than 30 lawsuits since September against Gas Natural's bid, two of which led to courts suspending that offer. The lawsuits have also created a roadblock for E.ON, which can't complete its takeover until the Gas Natural suspension is dropped, according to a securities-regulator ruling.

shrijit_s · Sep 27, 2006

E.ON Raises Endesa Bid as Rival Investor's Stake Threatens Deal

By Kristian Rix and Joao Lima

Sept. 27 (Bloomberg) -- E.ON AG, Europe's largest utility, raised its hostile bid for Endesa SA, Spain's biggest power company, by 38 percent to counter an effort by a Spanish construction company that threatens to block the acquisition.

Germany's E.ON, attempting the world's largest utility takeover, increased its cash offer to 37.1 billion euros ($47.1 billion), or 35 euros a share, the company said in a statement yesterday. Acciona SA, Spain's fourth-largest builder, this week bought a 10 percent stake in Endesa for 32 euros a share and yesterday said it may more than double the holding.

E.ON Chief Executive Officer Wulf Bernotat and Acciona are fighting for control of Endesa after Spanish government attempts to block the German purchase were thwarted by the European Union. Spanish Prime Minister Jose Luis Rodriguez Zapatero has opposed E.ON on the grounds Endesa is ``strategic'' for Spain.

E.ON doesn't ``want to give Endesa or the Spanish government any excuse to turn down the bid,'' said Ulf Moritzen, who helps manage the equivalent of $7.6 billion, including E.ON and Endesa shares, at Nordinvest in Hamburg. ``Bernotat is a power man and he's sick of this game. He likes to get what he wants.''

The German utility has the backing of the European Union, which yesterday ordered Spain to remove restrictions on its bid. EU regulators are seeking to break down barriers in the region's 250 billion-euro energy industry and stop national governments from interfering with foreign takeover bids.

E.ON Obstacles

Spain's National Energy Commission in July had approved E.ON's bid subject to 19 conditions, including selling some of Endesa's nuclear power and coal plants.

The European Commission, the EU's executive arm, is considering suing France over a law protecting 11 designated strategic industries from foreign takeovers, ranging from computer network security to casinos.

Acciona said it may boost its holding to almost 25 percent in Endesa and has secured financing for 20 percent. Caja Madrid, Spain's No. 2 savings bank, also owns 10 percent of Endesa, raising the prospect that they form a Spanish alliance that could impede a takeover.

``If Acciona teams up with several other Spanish shareholders that would be a clear obstacle for E.ON,'' said Pedro Real de Asua, who helps manage the equivalent of $8.4 billion for Barclays Fondos in Madrid, including Endesa shares.

Iberdrola, Union Fenosa

Actividades de Construccion & Servicios SA, Spain's largest builder, is buying 10 percent of Iberdrola SA and plans to merge the utility with Union Fenosa SA to create the nation's biggest power provider, according to two officials briefed on the proposal.

ACS is paying 3.3 billion euros for the shares in Iberdrola, Spain's No. 2 utility. That equals 37 euros each, or 11 percent more than yesterday's closing price. ACS wants to then combine Iberdrola with electricity supplier Fenosa, which ACS controls, according to the people, who asked not to be identified because the plan hasn't been announced. Iberdrola said no agreement has been reached on a merger.

Acciona's purchase was carried out independently from any other party, Juan Jose Muro-Lara, the company's head of corporate development, said on a conference call yesterday. The builder may be able to block E.ON by allying with other Endesa shareholders. Caja Madrid hasn't said if it will back a takeover, and the Spanish government also owns 2.95 percent of Endesa.

Voting Restrictions

Muro-Lara said Acciona doesn't plan to make a public offer, which is mandatory if Acciona reaches 25 percent.

Endesa currently limits investors to 10 percent of voting rights, regardless of the size of their stakes. E.ON's offer is contingent on the scrapping of that provision, a move that would itself require the backing of more than 50 percent of the voters.

E.ON's American depositary receipts erased gains in the U.S. after the announcement of the higher offer, falling to the equivalent of 93.46 euros. The company's shares in Germany yesterday closed 2 percent lower at 94.09 euros.

Shares of Endesa climbed 11 percent in Madrid to 32.50 euros. The company's U.S. shares jumped to the equivalent of 34.81 euros after European trading had closed.

Endesa spokesman Gabriel Castro declined to comment on the higher bid by E.ON. Nobody at Acciona was available to comment immediately when contacted by Bloomberg News.

shrijit_s · Oct 16, 2006

Popolare Verona to Acquire BPI for EU8.2 Billion

Oct. 16 (Bloomberg) -- Banco Popolare di Verona e Novara Scrl agreed to buy Banca Popolare Italiana Scrl for 8.2 billion euros ($10.3 billion) to create Italy's fifth-biggest bank, with more than 2,100 branches extending from Milan to Sicily.

The offer values Popolare Italiana at 12 euros a share, 16 percent higher than the closing price on Oct. 13, the Lodi, Italy-based bank said in a statement today. The bid includes a special dividend worth as much as 2.2 euros a share.

Banking takeovers in Italy have reached a record $79 billion this year, after the December departure of Bank of Italy Governor Antonio Fazio, who had opposed foreign acquisitions and blocked some domestic deals. Popolare Italiana put itself up for sale after posting a 744 million-euro loss in 2005 amid a failed bid for Banca Antonveneta SpA and the arrest of former Chief Executive Officer Gianpiero Fiorani.

``Popolare Italiana is a bank that's been put back together,'' said Claudio Morsenchio, who helps manage the equivalent of about $750 million, including shares in Popolare Italiana, at Banco Emiliano Romagnolo SpA in Bologna, Italy. ``This jump in size is definitely positive, especially considering the experience of Popolare di Verona in bringing home recent acquisitions.''

Popolare di Verona Chief Executive Officer Fabio Innocenzi, who has been shedding costs after a series of mergers, is also weighing a combination with insurer Societa Cattolica di Assicurazioni Scrl. The lender, founded in 1867, has almost doubled its branches to 1,140 since its 2001 purchase of Banca Popolare di Novara.

Special Dividend

Popolare Italiana and Popolare di Verona will create a holding company and give investors 0.43 of a new share for every Popolare Italiana share, and one of its shares for every Popolare di Verona share. Popolare Italiana will also pay out a dividend of as much as 1.5 billion euros.

The lenders plan to trim 220 million euros in annual costs and add 280 million euros in revenue by 2010. They will spend 300 million euros on costs related to the integration and Innocenzi will head the new bank.

``The number of employees should slowly fall in the course of three to four years, but without forced layoffs,'' Popolare Italiana Chairman Piero Giarda said in an interview today.

Shares in Popolare di Verona dropped 1.47 euros, or 6.5 percent, to 21.33 euros at 4:12 a.m. in Milan, giving the bank a market value of 8 billion euros. The shares have risen 25 percent this year, beating the 19 percent increase in the 76-member Bloomberg Europe Banks & Financial Services Index.

Shareholder Vote

Popolare Italiana stock rose as much as 6.3 percent to a four-year high of 11.04 euros, and was trading at 10.81 euros at 4:13 p.m., giving the company a market value of 7.4 billion euros.

Shareholders of the two banks will vote on the transaction by the end of February, the lenders said today. Cooperative lenders, known in Italy as ``popolari'' banks, give one vote to each investor, regardless of the number of shares each owns. The acquisition must be approved by a majority of Popolare di Verona shareholders and by two-thirds of the Popolare Italiana investors present at the assembly, the companies' statutes show.

``We're confident that we have the arguments to convince our investors,'' Giarda said. He added that the combination of the lenders' retail networks presents only a ``negligible'' overlap and probably won't create antitrust problems.

Italian Mergers

Many of Italy's biggest banks have been involved in mergers since the resignation of Fazio. Mario Draghi, a former vice chairman of Goldman Sachs Group Inc., said soon after taking over at the Bank of Italy that he favored mergers.

Sanpaolo IMI SpA, the country's No. 3 lender, last week accepted Milan-based Banca Intesa SpA's $41 billion takeover offer. The deal follows UniCredit SpA's purchase of Germany's HVB Group and the acquisitions of Italian banks by three foreign lenders.

There have been $79 billion of announced takeovers involving an Italian bank this year, almost twice the amount of all of 2005, data compiled by Bloomberg show.

Popolare Italiana's Fiorani was arrested amid an investigation involving possible breaches of securities laws during the failed bid for Antonveneta. ABN Amro Holding NV of the Netherlands won the battle to takeover Antonveneta in December.

Popolare di Verona's bid comes at a premium to the prices paid in recent bank deals in Italy. The lender is paying 2.9 times Popolare Italiana's book value, compared with the 2.5 times book value ABN Amro paid for Antonveneta and the 2 times book value that BNP Paribas SA spent to acquire Banca Nazionale del Lavoro SpA earlier this year.

`Growth Prospects'

``In valuation terms this looks like recent bank acquisitions in eastern Europe, but without the growth prospects,'' Simon Adamson, an analyst with Credit Sights, wrote in a note today.

Popolare Italiana's deposit base suffered under Fiorani as he tapped retail customers for 3.8 billion euros in new equity to fund a string of acquisitions. The bank this year sold assets including its Banca Italease SpA unit and a stake in RCS MediaGroup SpA as it sought to rebuild its finances and repair its image.

``Popolare di Verona is reaping the fruits of Fiorani's expansion,'' said Roberto Lottici, who helps manage 600 million euros, including Popolare di Verona shares, at Banca Ifigest in Milan. It is ``just the banking group that was needed in Italy.''

Popolare Italiana's new management, under Chief Executive Officer Divo Gronchi and Giarda, restated the bank's 2004 profit to reflect a loss of 26.6 million euros and took 1 billion euros in writedowns and provisions last year. The managers have been working to cut its cost of funding by boosting customer deposits and lowering its loan exposure to large clients.

Reorganization

Gronchi has ``done a great job in restructuring the bank,'' said Fabrizio Spagna, managing director of Axia Financial Research in Padua, Italy.

The lender considered merger options with Banca Popolare dell'Emilia Romagna Scrl, Banche Popolari Unite Scrl and Banca Popolare di Milano Scrl before deciding on Popolare di Verona at the weekend.

Popolare di Verona was advised by Goldman Sachs Group Inc., Credit Suisse Group and the Italian firm Borghesi, Colombo e Associati. The bank's legal adviser was Pavesi, Gitti e Verzoni. Mediobanca SpA and Rothschild et Cie. advised Popolare Italiana.

shrijit_s · Oct 17, 2006

Macquarie Buys RWE's Thames Water for $8.9 Billion

Oct. 17 (Bloomberg) -- Macquarie Bank Ltd., Australia's largest securities firm, led a group that agreed to buy RWE AG's Thames Water unit for 4.8 billion pounds ($8.9 billion), the third acquisition of a U.K. water utility this month.

Macquarie Bank will acquire 11 percent of the U.K.'s largest water services company, with two funds managed by the Sydney- based bank and other unnamed investors holding the rest, Macquarie said in a statement today. RWE, Europe's third-largest utility, is selling Thames to focus on gas and power markets.

Thames Water, which also attracted a bid from British financier Guy Hands, offers investors revenue from 13 million customers in an industry where returns have outpaced those of oil. Those gains persuaded three buyout firms to lead $26.5 billion of water industry takeovers in the U.K. this month.

``The regular cash flows these assets generate enable Macquarie to put them into funds that investors will support,'' said Rob Patterson, who manages the equivalent of $2.5 billion at Argo Investments Ltd. in Adelaide, including Macquarie stock. ``They've missed a couple of deals lately and it's good to see that they've got one, and this is a big one.''

Macquarie Bank, the world's largest private manager of infrastructure, has bundled more than $66 billion of assets into funds it oversees for investors, including the Indiana Toll Road in the U.S. The Thames Water purchase is part of a record $151 billion of takeovers announced in Australia this year.

`Hundreds Of Millions'

The Bloomberg World Water Index of 12 utilities has gained 40 percent in the past year, outpacing a 19 percent gain for the Morgan Stanley Capital International World Index and a 4 percent decline in oil futures in New York. European utility takeovers this year have jumped 22 percent in value to about $185 billion.

RWE will book a gain of at least ``hundreds of millions'' of euros, the Essen, Germany-based company said in a statement. The sale of Thames Water, which has net debt of 3.2 billion pounds, is expected to be completed by the start of December. Including debt, the takeover will be the biggest by an Australian company.

Macquarie said buyers of Thames Water include closely held Macquarie European Infrastructure Fund and Macquarie European infrastructure Fund II, both managed by the bank and which invest in transport, ports, ferries and utilities. The bank will pay 250 million pounds for its stake.

Thames Water Earnings

Thames Water reported a 31 percent rise in net income to 246 million pounds in the year ended March 31, according to the company's financial statements. Sales rose 18 percent to 1.4 billion pounds, though Thames cautioned of challenges to earnings amid rising pension costs and one of the most severe droughts in the region since records began in 1897.

Macquarie Bank agreed to sell its holding in South-East Water Ltd., the U.K.'s second-largest water-only utility, earlier this month. Melbourne-based Hastings Funds Management Ltd. agreed to buy South-East Water for 665 million pounds.

3i Group Plc and partners last week raised their offer for AWG Plc, the U.K. owner of Anglian Water, to 2.25 billion pounds to discourage rival bids.

Macquarie Bank stock rose 58 cents, or 0.8 percent, to A$71.08 at 2:45 p.m. in Sydney. The bank ranks first in Australia for advisory work on acquisitions this year, working on 57 transactions worth $42.2 billion, according to data compiled by Bloomberg.

`Significant Step'

The bank, which failed in a 1.5 billion-pounds bid for London Stock Exchange Plc earlier this year, completed more than 260 transactions worth more than A$115 billion ($86.7 billion) in the 16 months ended July.

``RWE did well to get this much,'' said Andrew Moulder, senior utilities analyst at London-based Creditsights Inc. ``Now the question is what will it spend the money on.''

RWE, Germany's largest power producer, plans to invest the sale proceeds in natural-gas or power companies in central and eastern Europe as markets open to full competition next year.

``The sale of Thames Water is a significant step in the realization of our strategy to focus on our core business in the electricity and gas markets in Europe,'' RWE's Chief Executive Officer Harry Roels said in a separate statement.

Macquarie Bank, Carlyle Group and Morgan Stanley are among buyout firms and investment banks trying to raise about $20 billion to invest in U.S. water companies, roads and airports, Chris Leslie, chief executive officer of Macquarie Infrastructure Partners fund, told a London conference last week.

`Crucial Area'

``Water is clearly becoming a more obviously crucial area,'' said Neil Berlant, managing director of the water group at Los Angeles-based investment-banking firm Seidler Cos., which doesn't own shares of RWE or Macquarie. ``The perceived value is climbing and that offers the prospects for these buyers to have substantial growth in profit.''

RWE got at least three takeover offers in August of about 7 billion pounds each for Thames, including debt, three people with knowledge of the sale said at the time. These included bids from Hands's Terra Firma Capital Partners Ltd. and from a UBS AG fund teamed with the Gulf state of Qatar, according to the people.

shrijit_s · Oct 17, 2006

Chicago Merc to Buy Board of Trade for $8 Billion

Oct. 17 (Bloomberg) -- The Chicago Mercantile Exchange agreed to buy the Chicago Board of Trade for about $8 billion, creating the largest exchange for futures contracts on stocks, bonds, currencies and commodities.

Investors will receive 0.3006 share of CME Class A common stock, or about $151.27, for each share or an equal amount in cash, the companies said in a statement today. That's about a 12 percent premium to yesterday's closing price. The company, to be called CME Group Inc., will be 69 percent owned by shareholders of the Chicago Merc, the biggest U.S. futures market.

The takeover will end more than a century of competition between the two exchanges, which started out trading commodities and pioneered financial futures in the 1970s. Markets worldwide are combining as trading becomes increasingly electronic and investors seek to reduce the cost of buying and selling.

``They have put together the dominant global exchange in the futures market and looking at their competitive position, you have to say that they are very well positioned,'' said Ryan Caldwell, an analyst at Overland Park, Kansas-based Waddell & Reed Financial Inc., which oversees about $45 billion, including shares of both exchanges.

Shares of CBOT Holdings Inc., the parent of the Board of Trade, rose $16.57, or 12 percent, to $151.08 at 10:27 a.m. in New York Stock Exchange composite trading. The company first sold shares to the public at $54 each in October 2005.

Chicago Mercantile Exchange Holdings Inc. shares climbed $8.80, or 1.8 percent, to $512.05. They've climbed 64 percent in the past year.

Estimated Savings

The company will be led by Craig Donohue, chief executive officer of the CME. Terrence Duffy will become chairman of CME Group. CBOT Chairman Charles Carey will serve as vice chairman.

``We expect to build on our proven track records of growth and innovation,'' Duffy said during a conference call with investors and analysts. ``They say that timing is everything. The time is now.''

Global futures trading has more than doubled over the past five years to 3.96 billion contracts in 2005, boosted by electronic trading that has made futures buying and selling more accessible to more investors and easier to perform with computer programs.

The combination is expected to add to earnings in 12 to 18 months after the transaction is completed. The companies anticipate pre-tax cost savings of more than $125 million beginning in the second full year following the closing.

Grain Contracts

The Chicago Board of Trade started in 1948 trading grain contracts while the Merc was founded as the Chicago Butter and Egg Board in 1898. The Merc introduced the trading of financial futures in 1972, with currency contracts, and the Board of Trade followed with the first interest-rate futures in 1975 and Treasury-bond futures two years later.

In 1981, the Merc started Eurodollar futures for near-term interest rate contracts based on the London Interbank Offered Rate. It's now the most traded futures contract in the world.

Chicago Board of Trade also said today that third-quarter profit more than doubled on increased trading volume across all product categories, higher average exchange fee rates and lower costs. Net income climbed to $48.8 million or 92 cents a share, from $19.8 million, or 40 cents, a year earlier. Revenue rose 45 percent to $163 million.

`Execution Story'

``There are a lot of reasons to like this deal, including greater scale, further diversification of the product set, and potentially conservative cost savings assumptions,'' said Christopher Allen, a New York-based Banc of America Securities analyst with a ``neutral'' rating on the stocks of both companies, in a research note. ``But it does create some challenges, including the law of large numbers and a shift in CME's story from a growth-focused story to an execution story.''

The merger will help the Chicago exchanges compete with Intercontinental Exchange Inc., which owns Europe's biggest energy market and agreed last month to by the New York Board of Trade. Exchanges from the New York Stock Exchange to Frankfurt- based Deutsche Boerse AG are combining in response to investor pressure for lower trading costs.

Lehman Brothers Holdings Inc. and William Blair & Co., and law firm Skadden, Arps, Slate, Meagher & Flom LLP advised the CME, while JPMorgan Chase & Co. and Mayer, Brown, Rowe & Maw LLP advised CBOT. Lazard Ltd. and Latham & Watkins LLP advised a `special transaction committee' of the CBOT.

The transaction is expected to be completed by the middle of 2007, pending regulatory approval. The combination may not face opposition from regulators because of increased competition among exchanges for business.

``There will be new players that spring up, this is only strengthening our domestic marketplaces,'' said Warren West, head trader at Philadelphia-based Greentree Brokerage Services Inc. and a former floor trader at the Chicago Board of trade. ``You still have a number of places where commodities and trade. There will be more cross border mergers.''

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