June 27 - Reuters (U.K.) - Merger activity in the United States dropped 29 percent in the second quarter, faring better than the 40 percent global slump, as corporations filled the void left by buyout firms and targeted big consumer brands such as Anheuser-Busch Cos Inc. and Wm. Wrigley Jr Co.
"Strategic buyers see an opportunity here due to the absence of the financial buyers. For the last 24 months, prior to the downturn, strategic buyers were getting outbid by financial buyers. That's not happening now," said Bob Filek, a partner with PricewaterhouseCoopers' transaction services.
During the first half of the year, private equity deal volume dropped 85 percent in the U.S. and 76 percent globally, according to Thomson Reuters data released on Friday. Read More.
Showing posts with label strategic buyers. Show all posts
Showing posts with label strategic buyers. Show all posts
Monday, June 30, 2008
Monday, June 23, 2008
Private equity Asia – the market today
June 23 - FinanceAsia.com - Asia has been an area of focus for a number of global and local private equity players for many years. The credit crunch has prompted an even larger number of financial sponsors from the US and Europe, and the advisers who look to work with them, to ramp up their Asian presence and make it a key market for their business. Of course, simply increasing presence and capital available in Asia will not be enough for private equity players to succeed in the region.
Asia continues to present some formidable challenges to private equity investment. While these vary from country to country, generally speaking they include a combination of cultural, commercial and regulatory factors that get in the way of successfully investing and successfully exiting in a time honoured fashion. In many markets, and in particular in the two markets which dominate Asian investing - China and India - this means that even the basic LBO deal model that has served private equity so well in the US and Europe often cannot be used. Having said that, certain innovative (and highly structured) solutions have been developed to overcome this issue in India. Read More.
Asia continues to present some formidable challenges to private equity investment. While these vary from country to country, generally speaking they include a combination of cultural, commercial and regulatory factors that get in the way of successfully investing and successfully exiting in a time honoured fashion. In many markets, and in particular in the two markets which dominate Asian investing - China and India - this means that even the basic LBO deal model that has served private equity so well in the US and Europe often cannot be used. Having said that, certain innovative (and highly structured) solutions have been developed to overcome this issue in India. Read More.
Thursday, June 19, 2008
Corporate acquirers line up for M&A buffet
Deal volume rises, multiples fall, morsels abound
June 16 - Financial Week - Dealmakers say this is the best corporate mergers and acquisitions market they've seen in years, now that the buyout boom is over and deal prices are starting to inch down.
“It is the year of the re-emergence of the strategic buyer,” said Howard Lanser, director at investment bank Robert W. Baird. “When the economy slows, the strong companies with strong balance sheets are at an advantage in terms of being able to pursue strategic acquisitions.”
Corporate buyers have been especially busy chasing companies worth less than $1 billion, which this year have fetched, on average, multiples of 11.1 times trailing earnings before interest, taxes, depreciation and amortization, according to data from Robert W. Baird. That is down from 11.4 times EBITDA such companies were selling for in 2007. A seemingly slight decline, but significant because it indicates prices are starting to dip after rising in 2006 and 2007. Read More.
June 16 - Financial Week - Dealmakers say this is the best corporate mergers and acquisitions market they've seen in years, now that the buyout boom is over and deal prices are starting to inch down.
“It is the year of the re-emergence of the strategic buyer,” said Howard Lanser, director at investment bank Robert W. Baird. “When the economy slows, the strong companies with strong balance sheets are at an advantage in terms of being able to pursue strategic acquisitions.”
Corporate buyers have been especially busy chasing companies worth less than $1 billion, which this year have fetched, on average, multiples of 11.1 times trailing earnings before interest, taxes, depreciation and amortization, according to data from Robert W. Baird. That is down from 11.4 times EBITDA such companies were selling for in 2007. A seemingly slight decline, but significant because it indicates prices are starting to dip after rising in 2006 and 2007. Read More.
Thursday, May 01, 2008
Companies Are Proposing Mergers Again. Be Afraid
April 30 - Deal Journal Blog (WSJ) - The good news: companies are negotiating mergers again. The bad news: these so-called strategic buyers don’t always seem to be acting very strategically.
Consider the Deal Journal’s “Say What?” deal of the day: today’s $465 million tie-up between United Online and FTD Group. United Online provides Internet access through its NetZero and Juno services, and flowers are sometimes sold over the Internet. Voila, an Internet marriage. Is it 1999 again?
Actually, dot-com mash-up synergies are part of United Online’s stated reasoning, as seen in the conference call to discuss the deal with analysts. United touted its “proven marketing expertise to attract consumers to FTD’s websites and thousands of member florists while cross-selling FTD products to United Online’s existing member base of more than 50 million accounts that have similar demographic characteristics as FTD’s customer base.” Read More.
Consider the Deal Journal’s “Say What?” deal of the day: today’s $465 million tie-up between United Online and FTD Group. United Online provides Internet access through its NetZero and Juno services, and flowers are sometimes sold over the Internet. Voila, an Internet marriage. Is it 1999 again?
Actually, dot-com mash-up synergies are part of United Online’s stated reasoning, as seen in the conference call to discuss the deal with analysts. United touted its “proven marketing expertise to attract consumers to FTD’s websites and thousands of member florists while cross-selling FTD products to United Online’s existing member base of more than 50 million accounts that have similar demographic characteristics as FTD’s customer base.” Read More.
Wednesday, January 16, 2008
Banking M&A Likely to Decline in 2008
Analysts See M&A Volume Among Banks to Decline in 2008 Amid Credit Concerns
January 15 - Associated Press - Fewer buyers and uncertainty surrounding credit markets will likely lead to a decline in bank consolidation in 2008, analysts said.
"There will very likely be a decline in deal activity simply because banks have fairly significant credit concerns," Keefe, Bruyette & Woods Inc. analyst Robert Hughes said. Banks are struggling to understand their own credit issues, so they are unlikely to take others as well, Hughes said in an interview.
A smaller number of bank chief executives believe merger and acquisition activity will increase in 2008 compared with 2007, according to a UBS study. Read More.
January 15 - Associated Press - Fewer buyers and uncertainty surrounding credit markets will likely lead to a decline in bank consolidation in 2008, analysts said.
"There will very likely be a decline in deal activity simply because banks have fairly significant credit concerns," Keefe, Bruyette & Woods Inc. analyst Robert Hughes said. Banks are struggling to understand their own credit issues, so they are unlikely to take others as well, Hughes said in an interview.
A smaller number of bank chief executives believe merger and acquisition activity will increase in 2008 compared with 2007, according to a UBS study. Read More.
Thursday, December 27, 2007
Semiconductors: Healthy M&A Prospects
S&P says some recent deals show that chip companies are finding attractive prices and ways to improve by combining
December 26 - Business Week - S&P Equity Research continues to have a positive fundamental outlook on the technology sector and recommends overweighting it, despite recent volatility and negative price performance. Scott Kessler, Standard & Poor's group head for technology coverage, thinks the stocks have been reflecting the potential for a U.S. recession. However, he also believes the sector should continue to benefit from longer-term trends, such as strong international demand, notable new products and upgrade cycles, and a likely growing corporate focus on productivity in light of economic uncertainties.
Further, Kessler believes that tech sector merger-and-acquisition activity among strategic partners will continue, despite the credit crunch, reflecting healthy fundamentals and prospects, strong corporate balance sheets, and ample opportunities to generate related shareholder value. Read More.
December 26 - Business Week - S&P Equity Research continues to have a positive fundamental outlook on the technology sector and recommends overweighting it, despite recent volatility and negative price performance. Scott Kessler, Standard & Poor's group head for technology coverage, thinks the stocks have been reflecting the potential for a U.S. recession. However, he also believes the sector should continue to benefit from longer-term trends, such as strong international demand, notable new products and upgrade cycles, and a likely growing corporate focus on productivity in light of economic uncertainties.
Further, Kessler believes that tech sector merger-and-acquisition activity among strategic partners will continue, despite the credit crunch, reflecting healthy fundamentals and prospects, strong corporate balance sheets, and ample opportunities to generate related shareholder value. Read More.
Tuesday, December 18, 2007
M&A seen slowing in U.S. next year
After two record-breaking years, U.S. merger and acquisition activity will likely subside in 2008 as the credit crunch sidelines private-equity firms and an economic slowdown quells other deals.
December 17 - MarketWatch - Still, companies that were out-bid by buyout firms in recent years could make more acquisitions next year, helping to keep activity at healthy, if not record-breaking, levels, experts said.
A record $1.5 trillion of transactions were announced in the U.S. this year, through the end of November, according to Dealogic. That's up from about $1.4 trillion during the same period in 2006, which was the highest ever at that time, the firm noted. Read More.
December 17 - MarketWatch - Still, companies that were out-bid by buyout firms in recent years could make more acquisitions next year, helping to keep activity at healthy, if not record-breaking, levels, experts said.
A record $1.5 trillion of transactions were announced in the U.S. this year, through the end of November, according to Dealogic. That's up from about $1.4 trillion during the same period in 2006, which was the highest ever at that time, the firm noted. Read More.
Monday, November 19, 2007
If Buyout Firms Are So Smart, Why Are They So Wrong?
ENOUGH already.
Private equity firms have recently been reneging on their billion-dollar buyouts as if the deals came with a 30-day money-back guarantee. They don’t. But that hasn’t stopped the biggest firms from trying to bully — yes, let’s finally call it what it is — their way out of deals.
For the last few months, private equity firms have repeatedly broken their word when breaking a deal, trying to place blame on big, bad investment banks that they said were holding them hostage by threatening to withdraw financing.
It was an easy narrative to follow, but it obscured the truth: Private equity firms, widely hailed as the “smart money,” made some lousy deals in the second half of this year, and some are now having a bad case of buyer’s remorse. They have been more than happy to break the deals and let the banks be the fall guys. Read More.
Private equity firms have recently been reneging on their billion-dollar buyouts as if the deals came with a 30-day money-back guarantee. They don’t. But that hasn’t stopped the biggest firms from trying to bully — yes, let’s finally call it what it is — their way out of deals.
For the last few months, private equity firms have repeatedly broken their word when breaking a deal, trying to place blame on big, bad investment banks that they said were holding them hostage by threatening to withdraw financing.
It was an easy narrative to follow, but it obscured the truth: Private equity firms, widely hailed as the “smart money,” made some lousy deals in the second half of this year, and some are now having a bad case of buyer’s remorse. They have been more than happy to break the deals and let the banks be the fall guys. Read More.
Thursday, November 08, 2007
Financial firms seen boosting M&A
November 7 - Reuters - While the market for mergers and acquisitions has slowed in recent months due to a credit crunch, financial services firms are expected to seek more opportunistic acquisitions, senior executives predicted at this week's Reuters Finance Summit.
Among the likely moves will be well-capitalized Asian banks looking to buy stakes in U.S. and European financial services markets through acquisitions, executives said.
And European institutions may extend their reach into the U.S. market after assets get cheaper from a falling dollar, they said. Read More.
Among the likely moves will be well-capitalized Asian banks looking to buy stakes in U.S. and European financial services markets through acquisitions, executives said.
And European institutions may extend their reach into the U.S. market after assets get cheaper from a falling dollar, they said. Read More.
Monday, October 29, 2007
Aim market: oil and gas potential M&A targets
October 29 - Telegraph (U.K.) - The oil and gas sector is set for a major M&A boom with every stock in the sector a possible bid target, according to new research from the corporate finance team at Ernst & Young.
The Alternative Investment Market (Aim) has been relatively quiet in terms of deal flow since the credit crisis hit markets over the summer. But that trend could well be reversed as the 90-plus companies in the oil exploration and production sector seem likely to go through a phase of significant consolidation.
Many of the oil prospectors on Aim are running out of cash, says Ernst & Young, and they will either have to take over rivals or be bought out themselves if they are to have a future.
Alec Carstairs, oil and gas partner at Ernst & Young, says: "A combination of weak share performance and low cash balances means that difficult times are ahead for the oil and gas juniors. Read More.
The Alternative Investment Market (Aim) has been relatively quiet in terms of deal flow since the credit crisis hit markets over the summer. But that trend could well be reversed as the 90-plus companies in the oil exploration and production sector seem likely to go through a phase of significant consolidation.
Many of the oil prospectors on Aim are running out of cash, says Ernst & Young, and they will either have to take over rivals or be bought out themselves if they are to have a future.
Alec Carstairs, oil and gas partner at Ernst & Young, says: "A combination of weak share performance and low cash balances means that difficult times are ahead for the oil and gas juniors. Read More.
Monday, October 22, 2007
Buyers to ‘benefit’ from M&A market
October 20 - Business in Wales (U.K.) - The mergers and acquisitions market in Wales remains buoyant – despite the crisis that hit the money markets last month, an analyst said yesterday.
A study by accountants and business advisers PKF in association with Deal Drivers UK showed a slowing outside Wales after a ramping up of deals in the last quarter.
The report highlighted a “frantic pace” of deals over the past few years with the last quarter of 2006 being the high point with a record £70.9bn in deal value. Read More.
A study by accountants and business advisers PKF in association with Deal Drivers UK showed a slowing outside Wales after a ramping up of deals in the last quarter.
The report highlighted a “frantic pace” of deals over the past few years with the last quarter of 2006 being the high point with a record £70.9bn in deal value. Read More.
Wednesday, October 10, 2007
Giants move in on smaller buyouts
rOctober 10 - Telegraph (U.K.) - When Jeff Montgomery's private equity house GMT Communications cast its eye over a small Latvian telecommunications firm recently, it found itself in unlikely company.
The deal was small – requiring around €150m of equity – but among the players was Blackstone, the US private equity giant which eventually won the auction.
Go back a few months and it would have been remarkable to see a major player chasing such a deal – Blackstone has become famous for pursuing buyouts in the many billions of dollars – but, in today's climate, it is the mid-caps that are attracting all the attention. Read More.
The deal was small – requiring around €150m of equity – but among the players was Blackstone, the US private equity giant which eventually won the auction.
Go back a few months and it would have been remarkable to see a major player chasing such a deal – Blackstone has become famous for pursuing buyouts in the many billions of dollars – but, in today's climate, it is the mid-caps that are attracting all the attention. Read More.
Wednesday, October 03, 2007
More companies say, 'Let's make a deal'
October 2 - USA Today - So much for the credit crunch killing the merger boom. Canada's TD Bank said Tuesday that it's buying New Jersey-based Commerce Bancorp for $8.5 billion. That came a day after cellphone maker Nokia said it is buying digital mapmaker Navteq for $8.1 billion.
Such deals show that while merger-and-acquisition dealmaking took a breather in August and September, as some buyers had trouble borrowing money, the M&A market is on the comeback. "Suddenly things are looking good," says Richard Peterson at Thomson Financial. "Deals are getting done." Read More.
Wednesday, September 26, 2007
Smaller Oil Companies Fuel UK's North Sea Revival
September 25 - RigZone (WSJ) - Tax changes and investment incentives are transforming the landscape of Britain's North Sea -- reinvigorating Europe's second-largest oil basin after Norway and raising hopes that its long decline may slow.
The revival has taken many in the industry by surprise, because when the government in 2005 announced it would raise taxes on oil production, big international companies warned the move would discourage investments.
Two years later, the biggest oil companies are reducing their presence, but a clutch of smaller companies have moved in to fill the void. The shift in ownership suggests the government may be able to capture more revenue from high oil prices while limiting risks to its energy security needs. Read More.
The revival has taken many in the industry by surprise, because when the government in 2005 announced it would raise taxes on oil production, big international companies warned the move would discourage investments.
Two years later, the biggest oil companies are reducing their presence, but a clutch of smaller companies have moved in to fill the void. The shift in ownership suggests the government may be able to capture more revenue from high oil prices while limiting risks to its energy security needs. Read More.
Tuesday, September 04, 2007
M&A robust for tech sector
August 31 - Small Business Times - Merger and acquisition activity within the technologies service sector is robust, with strategic
buyers targeting companies that provide help desk, data center, hosting, outsourced IT departments and other services.
Strategic buyers are more active in the IT sector than private equity investors.
“The big difference is that in IT, it’s virtually all strategic buyers,” said Victoria Fox, managing director with Emory & Co., a Milwaukee-based investment banking firm. “There is really not a big private equity interest.”
Strategic buyers generally look for two things in the IT service sector – geographic location or an add-on offering they do not currently provide. Many IT service providers are trying to have as many offerings as they can for clients, making niche providers especially attractive. Read More.
Thursday, August 30, 2007
Canadian mergers hit record, but may have peaked
August 29 - Reuters - The value of mergers and acquisitions involving Canadian companies surged to a record in the second quarter, data showed on Wednesday, but that could be the peak of a year-long buyout binge.
Companies announced transactions worth C$202 billion ($191 billion) in the quarter, more than double the previous record of C$89 billion set in the third quarter of 2006, according to joint Financial Post and Crosbie & Co. data.
Even without the boost from two blockbuster transactions -- the announced buyouts of telecommunications group BCE Inc and aluminum producer Alcan Inc. -- the three-month period to June 30 would still have been a record. Read More.
Companies announced transactions worth C$202 billion ($191 billion) in the quarter, more than double the previous record of C$89 billion set in the third quarter of 2006, according to joint Financial Post and Crosbie & Co. data.
Even without the boost from two blockbuster transactions -- the announced buyouts of telecommunications group BCE Inc and aluminum producer Alcan Inc. -- the three-month period to June 30 would still have been a record. Read More.
Thursday, August 16, 2007
New BCG Study Identifies Major Trends That Will Continue to Drive M&A Through Volatile Financial Markets
Despite Near-Term Slowdown in Deal Making, Most Sectors Expected to Keep Consolidating as Private Equity Firms Remain Influential Players
Report Shatters Several M&A Myths and Sheds Light on Keys to Success in Increasingly Tough Market
August 15 - Marketwire - One of the largest-ever studies of mergers and acquisitions, conducted by The Boston Consulting Group (BCG), identifies several trends that will continue to drive high deal flow, albeit at a reduced rate, through current volatility in the global financial markets.
The study, published in a new BCG report entitled "The Brave New World of M&A: How to Create Value from Mergers and Acquisitions," is based on a detailed analysis of more than 4,000 completed deals between 1992 and 2006. It is believed to be the largest nonacademic study of its kind.
"We are seeing a return to normalcy, which is healthy," said Jeff Gell, a Chicago-based partner and coauthor of the report, upon its release. "Prices and leverage will come down slightly, but volumes will remain high as the strategic need for most deals is still present. Companies are still sitting on excess cash that they need to deploy, and private equity funds still have large war chests that they need to put to work."
Report Shatters Several M&A Myths and Sheds Light on Keys to Success in Increasingly Tough Market
August 15 - Marketwire - One of the largest-ever studies of mergers and acquisitions, conducted by The Boston Consulting Group (BCG), identifies several trends that will continue to drive high deal flow, albeit at a reduced rate, through current volatility in the global financial markets.
The study, published in a new BCG report entitled "The Brave New World of M&A: How to Create Value from Mergers and Acquisitions," is based on a detailed analysis of more than 4,000 completed deals between 1992 and 2006. It is believed to be the largest nonacademic study of its kind.
"We are seeing a return to normalcy, which is healthy," said Jeff Gell, a Chicago-based partner and coauthor of the report, upon its release. "Prices and leverage will come down slightly, but volumes will remain high as the strategic need for most deals is still present. Companies are still sitting on excess cash that they need to deploy, and private equity funds still have large war chests that they need to put to work."
Wednesday, August 01, 2007
Corporate Buyers Hit Gas on Deals
July 31 - Wall Street Journal - With deal-related financing markets in disarray, private-equity buyouts are being delayed around the world, giving corporate buyers an advantage over the cash-rich private-equity firms for the first time in years.
Consider Virgin Media Inc. The British cable-television operator is proceeding with an auction of the company after already having received this month a nearly $10 billion takeover approach from Washington private-equity firm Carlyle Group. That could benefit the cable-industry players exploring a bid, a list that includes Liberty Global Inc., Time Warner Cable Inc. and Comcast Corp.
Carlyle and a competing consortium of four private-equity firms will likely have trouble making a firm bid until credit markets calm and banks are able to sell the stockpile of debt building up on their balance sheets, people close to the matter say. The cable companies, though, likely could plow ahead. Read More.
Consider Virgin Media Inc. The British cable-television operator is proceeding with an auction of the company after already having received this month a nearly $10 billion takeover approach from Washington private-equity firm Carlyle Group. That could benefit the cable-industry players exploring a bid, a list that includes Liberty Global Inc., Time Warner Cable Inc. and Comcast Corp.
Carlyle and a competing consortium of four private-equity firms will likely have trouble making a firm bid until credit markets calm and banks are able to sell the stockpile of debt building up on their balance sheets, people close to the matter say. The cable companies, though, likely could plow ahead. Read More.
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