Archive for the ‘Acquisitions’ Category

Bear Stearns, the fifth largest investment firm in the United States, was in danger of collapsing. The government stepped in to prevent a total collapse and to ensure the orderly function of the financial markets.

JPMorgan Chase was permitted to acquire Bear Stearns for $2 per share, or $236 million, which was less than 90% of the company’s value on Friday.

U.S. Treasury Secretary Henry Paulson on Monday defended government moves to rescue Bear Stearns Cos Inc (BSC.N) from bankruptcy, saying it was important to ensure the orderly function of financial markets.

Speaking to reporters following a White House meeting between President George W. Bush and his economic advisers, Paulson said those worried about the government rescue creating a “moral hazard” should keep in mind that Bear Stearns (BSC.N) shareholders face considerable losses with the sale of the investment firm to JPMorgan Chase (JPM.N) for $2 a share.

There’s something amiss when the fifth largest investment firm in our nation is only worth $236 million, yet just last month, the Yahoo board of directors refused to entertain Microsoft’s $44.6 billion offer.

That puts the value of Bear Stearns at 1/2 of 1 percent of the value of Yahoo (based on the amount of Microsoft’s offer). Yet, if they were allowed to collapse the demise of the investment firm would have had a ripple effect on thousands of businesses across the nation and it would have destroyed much of our economy.

That’s an awful lot of power for one investment firm, if you ask me, and now JPMorgan Chase, already the third largest banking institution in the United States, wields more of that power.

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I have mixed feelings about this acquisition. First of all, I have to ask the same question the journalist asks. Was it really worth it? $1 billion?!? Wow. If I was in charge of Sun Microsystems I could probably think of a number of things worth more to my company than MySQL.

Sun Microsystems’ purchase of MySQL for $1 billion is not only the largest open-source deal yet, it’s almost bigger than all previous open-source deals combined, including RedHat’s $326 million buy of JBoss, Citrix’s $500 million purchase of XenSource and Yahoo’s $350 million acquisition of Zimbra.

But the deal raises a number of questions for Sun. Was that $1 billion well spent? What will Sun do with its new database? And will the purchase improve its standing in the enterprise?

While it will take several years to see the ultimate value of the acquisition, Sun may well have overpaid, Charles King, principal analyst with Pund-IT, said in a telephone interview. “To paraphrase Sen. Edward Dirkson, a billion here and a billion there and pretty soon you’re talking real money,” he quipped.

Don’t get me wrong, I love MySQL, and use it on a daily basis, so as long as they don’t muck with it too much I will be happy. But I can’t help but wonder what their true motive is. I know they are trying to expand into more of a software market, and this acquisition is definitely going to take time to prove it was really worth it.

Countrywide is the nation’s largest mortgage lender. Countrywide is going bankrupt. Countrywide’s only hope, is Bank of America. If BofA doesn’t step in, Countrywide is toast.

A buyout of hobbled mortgage lender Countrywide Financial likely would be approved by regulators, analysts say, because otherwise the company could file for bankruptcy, injecting further uncertainty into the home-loan market.

Bank of America Corp. is in talks to acquire Countrywide, The Wall Street Journal and The New York Times reported Thursday online, citing unidentified people familiar with the deal. The transaction would put the country’s largest mortgage lender, which has experienced a surge in home-loan defaults and has seen its share price plummet, in the hands of the largest U.S. bank by market capitalization.

The question is, will they be allowed to acquire Countrywide? Current law prevents any bank from increasing their market share to more than 10 percent of total U.S. deposits. So the government has a choice. They can let Countrywide go belly-up, which would not be good for anyone involved because of the turmoil it would cause in the market, or they can allow BofA to break federal law and exceed that limit.

Federal law bars banks from making acquisitions that would increase a bank’s market share to 10 percent of U.S. deposits, and Bank of America is nearing that point at 9.88 percent. However, experts disagreed about whether deposits held by Countrywide’s federally regulated thrift, Countrywide Bank, would count toward that limit.

I don’t think they should be allowed to break the law. The law is there for a reason, and I see no point in changing the law to allow for this. Sure, the market would be thrust into turmoil, but once we cross the line of allowing financial institutions to arbitrarily break the law, where do we stop?

As a DISH subscriber, I am not too sure I am happy with this news.

AT&T Inc (T.N) is trying to put together a bid for EchoStar Communications Corp (DISH.O) before the end of the year, whetted by the satellite operator’s recent stock dip, according to Barron’s financial newspaper.

Shares of the second-largest U.S. satellite television operator fell 24 percent in one month, Barron’s said in its November 19 edition, which may make reaching an agreement on a share purchase price easier.

In the past, AT&T has supposedly offered $65 a share and EchoStar has demanded $75 a share, Barron’s said.

At Friday close, EchoStar’s stock was at $39.83 on the Nasdaq, up 32 cents on the day.

Citing a person familiar with the company, Barron’s said AT&T would like to get a deal done quickly because it wants an agreement in place before the next presidential election, when any victory for the Democrats, antitrust experts believe, would probably mean increased scrutiny of mergers and acquisitions.

In the past, I never had a good experience with AT&T. I wonder if the new AT&T is better? If not, I may find myself checking out DirecTV in a year or so.

I love Burt’s Bees lip balm. It’s an awesome product. I dunno though. Mentioning Clorox in the same sentence with Burt’s Bees just stings. Really bad.

Clorox Co (CLX.N) on Wednesday posted a quarterly profit that was little changed but beat analysts’ estimates, and said it will acquire privately owned Burt’s Bees to enter into the natural personal care business.

Clorox said it will buy Burt’s Bees, which makes lip balm, soaps, and other products from natural ingredients, for $925 million net of an additional $25 million for expected tax benefits.

Excluding one-time acquisition costs, Clorox expects the deal to be neutral to earnings in fiscal 2008 and add “solidly” to earnings in fiscal 2009.

Now there’s a company where I do not want to see cross-product advertising. Ha!

GDF merges with Suez

Gaz de France (GAZ.PA) and Suez (LYOE.PA) on Monday agreed to create the world’s third-largest listed power and gas company after President Nicolas Sarkozy stepped in to prevent the 18-month old deal from collapsing.

The politically charged “merger of equals,” delayed by disputes over valuation and control, will be on the basis of 21 Gaz de France shares for 22 Suez shares and involves the partial spin-off of Suez’s water and waste-management activities.

General Electric buys Sondex

U.S. conglomerate General Electric Co. (GE.N) has agreed to buy British maker of oilfield services equipment Sondex Plc (SDX.L) for 288.7 million pounds ($583.1 million) in cash, the two companies said on Monday.

General Electric, whose interests span technology, media, energy and financial services, will pay 460 pence a share for Sondex, which designs, makes and markets electro-mechanical based equipment for oilfield service companies.

Otherwise, it was a pretty uneventful weekend.

Here’s a subprime lender that has found a way out. They are suing the firm that agreed to purchase them, even thuogh their company value has completely tanked.

Accredited Home Lenders Holding Co. (LEND.O) said on Monday it had sued private equity firm Lone Star Funds, seeking to force it to complete the $400 million takeover of the money-losing subprime mortgage lender.

Lone Star had agreed in June to pay $15.10 per share for San Diego-based Accredited. On Friday, however, Lone Star said it would not go through with the buyout, citing a “drastic deterioration in the financial and operational condition of the company.”

Accredited said on Monday that the merger agreement “expressly provides that Lone Star may not refuse to honor its obligations based on any deterioration in the business.” If shareholders tender more than half of Accredited shares by Tuesday, all conditions of the merger will be met, Accredited said.

Shares of Accredited were down fell about $3.21, or 36 percent, at $5.70 in premarket electronic trading.

Ouch. If the merger agreement states they can’t back out, even for “deterioration in the business”, that’s going to hurt.

It appears the acquisition of the Wall Street Journal by News Corp. is a done deal.

A century of Bancroft-family ownership at Dow Jones & Co. is over.

Rupert Murdoch’s News Corp. sealed a $5 billion agreement to purchase the publisher of The Wall Street Journal after three months of drama in the controlling family and public debate about journalistic values.

The deal has been approved by the boards of both companies, which met separately over the past few hours, according to people familiar with the situation. The two companies are expected to sign a merger agreement and issue statements in the next few hours.

One of the oldest and best-known franchises in the newspaper industry, beset in recent years by business pressures, now enters a new era as part of a world-wide media conglomerate. Mr. Murdoch said yesterday he could add four pages of news coverage to the Journal.

I think it was ridiculous the way the Bancroft family members (the ones against the deal) made such as issue of this, when the News Corp. bid was the only serious offer on the table.

The Bancroft family is now deciding whether or not to approve the bid from News Corp.

The family that controls Dow Jones & Co (DJ.N) expects to decide by early next week if it wants to sell the company to Rupert Murdoch’s News Corp (NWSa.N) for $5 billion, a source familiar with the matter said on Tuesday.

The Bancroft family holds 64 percent of Dow Jones’s voting shares and their adviser, Hemenway & Barnes lawyer Michael Elefante, is canvassing family members this week to see if they would approve the bid.

The process should be complete around the beginning of next week, the source said, who asked not to be named.

What do you think they’ll do? Me? I predict the sale will go through, with approximately 28% of the shareholders voting against the sale.

It seems the Dow Jones board of directors has accepted Rupert Murdoch’s buyout offer. There is no guarantee the Bancroft family will vote to sell, but it does look good for News Corp.

Dow Jones & Co. Inc.’s board of directors on Tuesday accepted a buyout offer from Rupert Murdoch’s News. Corp. and recommended the Bancroft family, which controls 64% of the voting shares, approve the $5 billion deal, according to a Dow Jones statement.

Two members of the 16-member board, Leslie Hill and Dieter von Holtzbrinck, abstained from the vote and Christopher Bancroft, who has been seeking alternatives to Murdoch, left the meeting early, The Wall Street Journal reported in its online edition.

The Bancrofts were said to be deeply divided and it was impossible to predict if family members would follow the board’s recommendation and vote to sell Dow Jones, according to media reports.

[Source: MarketWatch]