South Korea firms in quest for more M&A deals in U.S.

February 29 - Reuters - South Korean companies are hunting for U.S. acquisitions as subprime woes throw up opportunities to move into a market in which they would otherwise have to start from scratch, a senior investment banker said on Friday.

Demand ranges from manufacturers to banks and size from $100 million all the way up to $5 billion, ChunKee Lee, who leads Credit Suisse' South Korean operations, told Reuters in an interview.

"We do a lot of cross-border deals. Something that hadn't happened a few years ago," he said. "There are a lot of opportunities, particularly in the United States." Read More.

Paying M&A Bankers by the Hour

February 27 - Portfolio.com Blog - Should M&A bankers be paid by the hour? William Cohan thinks so, on the grounds that they would then give more impartial advice, rather than being incentivized to close every deal.

I'm not at all convinced that corporate lawyers can or should be the people providing impartial advice about whether a certain deal makes strategic or fiduciary sense. Maybe if all corporate lawyers were Wachtell - but they're not. I'm also far from convinced that slowing down the process of getting to yes or no is necessarily a bad thing, in the context of a market where the overwhelming majority of acquisitions end up failing. Read More.

Uncertainties of recession may alter M&A strategies

February 27 - The Business Ledger (Chicago) - With a looming recession creating a nebulous future for the banking and finance industries, it’s time for buyers and sellers to be more selective in maneuvering through the M&A process, said a panel of experts.

“There are no crystal balls, which means that we’re all anxiously trying to figure out what this recession is going to be like,” said Michael Kline, senior vice president of business banking for Harris Bank NA, speaking at The Business Ledger’s first Newsmakers’ Forum of 2008 at Belvedere Banquets in Elk Grove Village.

In 2001, banks persuaded consumers to pay their way out of the recession but the current housing market makes that scenario less feasible this time around, said Kline. Read More.

Why M&A Is Back, for Now

What's behind the new urge to merge? The November election, for starters

February 22 - BusinessWeek - Despite a credit crunch and recession worries, the dealmakers have returned to Wall Street.

Their current run includes Microsoft's $44 billion bid for Yahoo!. Major U.S. air carriers are reportedly talking about mega-mergers. And a wave of smaller deals has hit the headlines, including Reed Elsevier's $4 billion buyout of ChoicePoint.

So far it's a pale imitation of 2007, when private equity firms used cheap credit to gobble up company after company. That pumped up the stock market in the first half of the year, just before the credit crunch took it down again. Read More.

PE deals outnumber M&A transactions in Jan 2008: Study

February 25 - The Financial Express - Private equity placements are finding favour with India Inc with the number of such transactions surpassing that of merger and acquisition deals in the first month of this year.

Indian Companies announced as many as 60 private equity deals as against 56 M&A transactions, according to the data compiled by global consultancy firm Grant Thornton. However, the total value of PE deals was lower at 2.05 billion dollars compared to 3.01 billion dollars in M&As transactions. Read More.

Slower Tech M&A Forecast in 2008

February 20 - Red Herring - In 2008, technology mergers and acquisitions will slow their torrid pace of last year, according to researcher 451 Group.

After four years of record-setting M&A levels, culminating in 2007's $476 billion, an uncertain economy is likely to put the brakes on dealmakers in 2008, analyst Brenon Daly said.

"It's more indicative of the general economy," Mr. Daly said, noting that a "mild cool-down" could come despite Microsoft's proposed $44.6 billion blockbuster acquisition of Yahoo. "Companies don't stop buying in downturns, but they temper their purchases. We saw that in 2001 and 2002. Tech M&A won't go away." Read More.

The Other Daytona 500 Winners–Private Equity?

February 19 - Wall Street Journal Blog - Private-equity firms may be taking a beating in the financial world in recent months, but several still made their way to victory lane Sunday at the Daytona 500.

The 50th running of the Nascar race sported a one-two finish from Ryan Newman and teammate Kurt Busch that landed two Dodge cars at the top of the field. Dodge, of course, is part of Chrysler, which private-equity fund Cerberus Capital Management bought 80% of last year for $7.4 billion.

The lead sponsor of Newman’s No. 12 car? That would be wireless carrier Alltel, now a portfolio company of TPG Capital and Goldman Sachs Capital Partners. Read More.

Private-Equity Lessons

February 19 - Forbes - The global credit crunch has left its mark on private equity deal volume. But the way private equity funds respond to massive market and economic uncertainties is instructive.

Now more than ever, these funds are sticking with their winning recipe, which enables them to generate big returns from dramatic improvements in operations. The results speak for themselves. The top 25% of U.S. private equity funds raised between 1969 and 2006 have earned internal rates of return of 36% on average, through good times and bad. That's close to 10 points higher than the equivalent S&P 500 top quartile. Read More.

Oil, gas M&A undeterred by credit crunch

February 15 - Accounting Age - Mergers and acquisitions deals in the oil and gas industry were edging up slightly throughout 2007 despite the impact of the credit crunch, PricewaterhouseCooper’s latest annual analysis of M&A activity in the sector, O&G Deals, reveals.

The report shows deal totals rose from $US291.1bn to $US292.2bn year on year. There was no clear evidence of a decline in O&G deal activity in the second half of the year as the credit crunch broke, reflected in the number of 2007 final quarter deals – up 7% on the final quarter of 2006. Read More.

The drive for growth: M&A activity in the aerospace and defence sector

February 13 - Jane's Information Group - The total value of mergers and acquisitions deals in the aerospace and defence sectors worldwide remained buoyant - albeit broadly static - during 2007: USD28.86 billion compared with USD28.69 billion for the previous 12 months.

Perhaps more significantly, deal volume was strong. Jane's M&A database registered 185 deals during the year, up from 132 deals in 2006. Analysts point to interest in the sector from private equity firms and strategic investors, which went head to head in pursuit of deals; competition that - in many cases - served to drive up value.

Global M&A activity in 2007 was - once again - strongly centred on the United States. Of the USD28.86 billion invested, Jane's figures show that USD20.9 billion was invested in the US. This is compared to USD19.4 billion in 2006. Read More.

Lean year ahead for energy M&A

February 14 - FT.com - Mergers and acquisitions in the energy industry remained robust even during the financial turmoil in the second half of last year, but activity for some types of deal is likely to be weaker this year, according to a survey from PwC, the professional services firm.

Takeovers by companies from emerging markets such as China and India slowed last year and most of the biggest deals involved financial buyers or significant debt financing. Both of those factors are likely to be less evident this year because of tighter credit conditions, M&A advisers believe.

Michael Hurley, PwC’s UK head of energy, said: “It is going to be more difficult for some of the deals in downstream businesses, which are more linked to the economic cycle, to get away.” Read More.

Canada's small private equity sector stays healthy

February 12 - Reuters - Deal-making in Canada's small private equity industry remained healthy in the fourth quarter, data showed on Tuesday, even as the once high-flying sector largely ground to a halt south of the border as financing dried up.

Buyouts of Canadian companies worth $2.3 billion were reported in the three months ended Dec. 31, up 64 percent from the same quarter in 2006, Canada's Venture Capital and Private Equity Association said in a statement.

"Following the credit crunch in midsummer and the retreat within the very large mega-deal segment, many industry observers had expressed concern," said Rick Nathan, president of the CVCA and managing director of private equity firm Kensington Capital Partners. Read More.

Was a Private Equity Bid for Yahoo Thwarted by Microsoft?

February 11 - Seeking Alpha - Last week, before the Microsoft deal was rejected by Yahoo's Board, some interesting chatter was bouncing around NYC.

The latest rumor to make the rounds was that Yahoo was just about to announce a negotiated transaction for the sale of the company to an East Coast private equity firm. Then Microsoft stepped in the way. We first heard this story sometime between Mister Softee's $31/share, $44 billion hostile bid, and this weekend's rejection of that offer by Yahoo as an insufficient valuation for all of Yahoo's properties. Read More.

Michael Howell Discusses 2008 M&A Activity in the Materials Handling Industry

Panelist in Modern Materials Handling Magazine's Webinar, "Industry Outlook 2008"

February 8 - SBWIRE - Michael Howell, Managing Director and head of Downer & Company's Materials Handling Practice Team, explores M&A activity during the recent Industry Outlook 2008 webinar, presented by Modern Materials Handling magazine. The webinar was moderated by Tom Andel, Editor-in-Chief of Modern Materials Handling. Read More.

You can view and listen to the presentation by visiting the following URL: http://event.on24.com/eventRegistration/EventLobbyServlet?target=lobby.jsp&eventid=100018&sessionid=1&key=5347267F12FCA4692D1B67A2C213A8CF&eventuserid=14415072

Transportation and Logistics M&A Deal Volume Hit 20-Year High in 2007

But despite record number of deals, total deal value in 2007 saw significant drop, PricewaterhouseCoopers reports

February 7 - Supply & Demand Chain Executive - Total transportation and logistics merger and acquisition deal volume reached a 20-year high with 1,291 deals in 2007, toppling the prior record reached in 2006, according to a new report from consulting firm PricewaterhouseCoopers.

"Intersections," PwC's quarterly report on M&A in the global transportation and logistics industry, shows that despite the record number of deals, total deal value in 2007 experienced a significant drop to $83 billion, down from the 20-year high of $164 billion set in 2006.

This decline was due in part to several large deals announced in 2006, including competing bids for a passenger air target and the proposed acquisition of another passenger air target, although all but one bid was eventually withdrawn, the consultancy reported. Read More.

Updata Advisors Reports on Tech M&A Outlook for 2008

February 7 - eMediaWire - Updata Advisors, Inc., a leading investment banking firm specializing in IT industry mergers and acquisitions since 1987, today released its annual outlook on merger and acquisition activity for the year ahead. The 2008 Information Technology M&A Outlook, also reviews M&A transaction and trading data in 2007 across five key technology sectors: enterprise application software, internet, infrastructure software, IT security/compliance, and IT services. Read More.

Power sector M&A reached new record in 2007 - PwC

February 5 - CNN Money - The value of worldwide mergers and acquisitions in the power sector increased by 25 pct year on year to 372.5 bln usd, said PricewaterhouseCoopers in its Power Deals annual review.

PwC said there was no indication that the credit crunch which hit the market this summer had a negative impact on M&A in power generating assets with 57 pct of the power sector deals announced in 2007 occurring in the second half of the year (441 of 768 deals).

Moreover, the number of M&A transactions in the power sector was up 73 pct in fourth-quarter 2007 compared to the same period in 2006, while the total value of deals was 21 pct higher. Read More.

Infrastructure M&A May Rise in 2008

Barrons - Many investors have found rising market volatility so far in 2008 to be profoundly discomforting and unnerving.

While we continue to closely monitor the rate and location of emerging soft spots throughout the North American, European and Japanese economies, for the best industrial-infrastructure companies, times are far from precipitous and in many cases remain profoundly bright across many sectors of their business. When chief executive officers and chief financial officers commenting on business conditions appear constructive and positive about their prospects on fourth quarter 2007 conference calls, disbelief that conditions in many industrial markets are positive... Read More (subscription required)

Morgan Keegan division reports M&A activity

February 4 - Memphis Business Journal - Shattuck Hammond Partners has announced or completed 12 health care related mergers and acquisitions during the last six months, parent company Morgan Keegan & Co. Inc. said Monday.

The deals have a combined value of almost $2.1 billion and demonstrate that the market for such activity still exists, said Michael B. Hammond, managing director for Shattuck Hammond.

"From what we're seeing so far, the turmoil in the debt markets has generally not materially impacted transactions under $500 million," Hammond said. "Based on our transaction pipeline and overall view of the health care services industry, as well as the health care M&A market, we believe this trend will continue in 2008." Read More.

Is M&A Dead?

If so, did private equity kill it?

The large number of terminated and troubled private equity acquisitions has led to talk of a fundamental shift in the way M&A deals are structured. Sellers will demand tighter terms and more favorable contracts, which limit buyer optionality. In other words, MAC clauses will become narrower and reverse termination fees will go by the wayside. So far, this restructuring has not happened.

We are, though, beginning to see sellers request a higher price in exchange for heightened buyer optionality. For an example, take a look at Golden Telecom’s response document to the tender offer by Vimpel Communications to acquire all of Golden Telecom’s outstanding shares. In the section on the history of the transaction, Golden Telecom discloses a choreographed negotiation in which Golden Telecom received an increase in the consideration paid to its shareholders in exchange for providing greater optionality for VimpelCom to terminate the transaction for failure of financing. At least that is how it is portrayed… Read More.

Can M&A save the market?

Commentary: Deal making remains robust, but can it fuel a stock rally?

January 31 - MarketWatch - A funny thing happened on the way to the recession. Someone forgot to tell the deal makers.

Despite dire predictions of a mergers-and-acquisitions slowdown, the M&A rush that fueled the market's outsized gains last year may not be slowing after all. Sure, the scope and characteristics of deals are changing, but buyouts are still taking place. This steady stream of deal making is largely thanks to the huge cash stockpile -- more than $200 billion -- of private-equity capital that's looking for a home.

The bears will probably point out that, though there may be a lot of cash on the sidelines, there is still a debt backlog of about $250 billion, according to Anthony DiNovi of Thomas H. Lee Partners, who spoke Wednesday at the Dow Jones Private Equity Analyst Conference. Read More.