Mining M&A frenzy to continue

January 16 - National Post (Canada.com) - The only certainty in an uncertain market is that the wave of mining takeovers will continue. That's the opinion of mining analysts at Citigroup Global Markets, who cite a number of reasons why: soaring cash balances, few reinvestment opportunities, frictional barriers to new capacity, and aggressive forays by sovereign investors.

They calculated that mining companies have more than US$300-billion available for M&A, about half of which would come from borrowings. That alone is about 36% of the entire sector size. Read More.

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.

Plenty of possible M&A in forestry sector

January 14 - National Post (Canada.com) - Call it green or call it black – Richard Kelertas thinks you should be able to find some colour other than red in forestry stocks this year.

Sino-Forest Corp., Catalyst Paper Corp. and TimberWest Forest Corp. top the list of buys for 2008 at Dundee Securities. The analyst’s top sells are Fraser Papers Inc., Tembec Inc. and AbitibiBowater Inc.

“Our current picks favour timber/log and private timberland since markets are currently experiencing uncertainty and volatility, Mr. Kelertas said in a recent research note. “With the steady and reliable returns that private timberland and log/plantation development provides investors over time, we are quite comfortable with our call.” Read More.

What to Expect As Deal Makers Revise Strategies

January 14 - WSJ - What separates a good year in mergers-and-acquisitions from a bad one? By the Pavlovian measure of Wall Street, it is simple: The more deals, the better the year. But 2007 revealed the fallacy of this approach. Buyers gorged on cheap credit, overpaying along the way. Some raced to rip up transactions signed months earlier. More deals, more problems.

In this piece, the second annual M&A Buyer's Guide, it is worth remembering the distinctions between the Street and the rest of us. Here are four major themes for the year ahead, all of which show that a good year or bad... Read More (subscription required).

Outlook 2008: Three Ways to Profit From A Takeover Market That’s Alive and Well

January 14 - Monday Morning - Elvis might be dead. But the mergers and acquisitions (M&A) boom certainly is not. While it’s an admittedly Contrarian stance, I’m convinced the deal-making environment will be even better in 2008 than it was in 2007.

That’s significant, considering that the latest figures from Thomson Financial confirm that 2007 - despite the gummed-up credit markets - was the best year ever for worldwide M&A deals. Total deal volume checked in at $4.5 trillion, up 24% from the previous high-water mark set in 2006. U.S. deal volume also hit record levels last year, jumping 9% to reach $1.61 trillion.

To understand our optimism, let’s examine the catalysts at work in the New Year. There’s a strong incentive to tune in and pay attention: If we’re right, investing in eventual takeover stocks nets investors an average single-day gain ranging from 43.5% to 53.7%, according to recent data from FactSet MergerStat LLC. Read More.

M&A Accounting Standards Revamped

January 11 - Web CPA - The International Accounting Standards Board has issued a revised version of its standards for accounting for business combinations such as mergers and acquisitions, in coordination with the Financial Accounting Standards Board, in a move that will highlight the expenses of business combinations that used to be considered assets.

While FASB has not yet issued its own revised standards, they're expected to closely resemble the new ones released by the IASB. The two boards are working together on a convergence process that will ultimately unite International Financial Reporting Standards with U.S. generally accepted accounting principles.

"Investors and their advisers have a difficult enough job assessing how the activities of the acquirer and its acquired business will combine," said IASB Chairman Sir David Tweedie in a statement. "But comparing financial statements is more difficult when acquirers are accounting for acquisitions in different ways, whether those differences are a consequence of differences between U.S. GAAP and IFRS, or because IFRS or U.S. GAAP are not being applied on a consistent basis." Read More.

Bankers See Modest Growth in Tech M&A for 2008

January 9 - Gigaom - Bankers’ optimism about technology M&A is starting to wane, according to a newly issued report from tech research shop The 451 Group. The firm’s analysis calls for “slowing expansion” in 2008, due primarily to the credit crunch, which is having a dampening effect on the number of leveraged buyouts sought by private equity firms.

While two-thirds of bankers expect an expansion in their deal flow in 2008, a mere 13 percent (or four times as many as last year) are forecasting a decline in their business. And although corporate buyers still plan on picking up customers and new technology through acquisitions, with 45 percent expecting to increase their M&A activity, prices are likely to drop. For second-tier and me-too startups and their venture investors, that means the end of the Web 2.0 gravy train could be fast approaching. Read More.

End of '07 saw increased M&A, IPO movement

January 9 - Massachusetts High Tech - Two Massachusetts technology companies were among the largest venture-backed liquidity deals during the fourth quarter 2007, nationally the most active fourth quarter since 2000, according to a new report by Dow Jones VentureSource.

The July acquisition of Cambridge-based Alantos Pharmaceuticals Inc. by California-based giant Amgen Inc. for $300 million was the eighth-largest merger and acquisition deal in the nation. At the same time, Burlington-based Nuance Communications Inc.'s $293 million purchase of Woburn's VoiceSignal Technologies Inc. in August ranked No. 10, Dow Jones reported. Read More.

Private Equity, Overall M&A To Decline Due To Weak Economy, Credit Crunch

January 11 - CNN Money - What the credit crisis couldn't do to the private-equity market -- knock it to the canvas for a 10-count -- a looming recession might.

Most M&A experts predict a continuation of the slowdown that hit during the latter half of 2007, when the credit crunch dried up private-equity funds and all but obliterated what had been the busiest deal-making period ever.

Now, with fears of a recession growing stronger by the minute, the outlook is even more bleak. Read More.

Low expectations for bank M&A activity in first half of 2008

January 9 - FT.com - Despite the collapse of bank stocks in 2007, few industry observers predict there will be a rash of mergers and acquisitions by regional and community banks.

Deals announced last year are falling through. Targets are holding out for the high valuations their peers enjoyed in the deals of yesteryear. Bidders are sitting on the sidelines hoping for even more dramatic declines in targets’ stocks.

Executives, bankers and analysts say all involved, bidders and targets alike, are discouraged by their own depressed stock prices, weak earnings and credit uncertainties. Read More.

India’s first private equity fair

January 9 - Gujarat Global - A Mumbai based company has come up with a novel idea to help mid-size companies get private equity fund. The company Yen Expo is going to hold a fair in Mumbai on February 27 which will provide a B2B platform to over 25 companies to show case their business and growth plans to 150 private equity funds from India and abroad.

The CEO of the company Arun Chandrachud said that it would be win win situation for both companies and the funds. Yen would charge industry a flat fee for the services it would offer. To help companies become Investment Ready, Yen has tied up with the Indian Institute of Management, Ahmedabad. For the fair, Yen has decided to shortlist 25 companies with the help of IIM A. Read More.

FOCUS, LLC Releases 2008 Middle Market M&A Forecast

January 7 - Business Wire - FOCUS, LLC, a national investment banking firm providing merger, acquisition and corporate finance services to middle market companies, released its predictions for the 2008 middle market mergerand acquisition (M&A) industry.

Drawn from the collective insights of FOCUS' 30 investment bankers, the forecast outlines the 10 most pressing issues for U.S. middle market companies, which include increasing foreign investments and "green" deals, changing demographics and upcoming slowdowns. The forecast can be downloadable for free at http://www.focusbankers.com/. Read More.

Raising capital likely tougher this year

January 8 - Globe and Mail - After another record-breaking year for raising capital in 2007, private equity funds are in for a much tougher slog this year due to continuing effects of the credit market collapse.

A whopping 1,279 new funds are out worldwide trying to raise a total of $698-billion (U.S.), nearly double the amount sought at this time last year when market conditions were much better, says British-based research firm Private Equity Intelligence.

Many funds are holding interim closings, letting them start investing while trying to reach their fundraising targets. Read More.

Economic forecast: A year of volatility

January 5 - The Kansas City Star - Our experts predict a volatile year as the economy flirts with recession, banks scramble for capital and the Federal Reserve tries to pump confidence back into credit markets.

In a recent discussion, they talked about the Fed’s tightrope walk of fighting recession without feeding inflation. They weighed potential changes in the capital gains tax, parsed the impact of a weak U.S. dollar, measured prospects of foreign stock markets and mentioned a few favorite stock plays. Read More.

Large Deal Activity Will Be Hardest Hit in 2008 While Middle Market M&A Activity to Remain Steady, Says Piper Jaffray M&A Report

January 3 - PRNewswire - Credit market worries will continue to weigh on the U.S. M&A market through at the least the first half of 2008, especially with regard to large buyouts, according to a report recently released by the Piper Jaffray M&A team. The report titled, "Mergers & Acquisitions Insights: Middle Market M&A Outlook 2008," analyzes M&A activity and trends in the middle market.

Despite the credit crunch, the middle market has remained active as the total deal volume is only off 4 percent through the first nine months of 2007 compared to the same period in 2006*. While Piper Jaffray believes M&A activity in 2008 will cool from the previous year, it will remain well above the recessionary levels seen in 2002 due to the strength of the global economy. The report indicates large deal activity will likely be the hardest hit, as the "mega-buyouts" will have difficulty securing financing in the first half of the year. Read More.

Wall St M&A fees seen dropping 20 percent in 2008

January 3 - Reuters - Wall Street's fees for brokering mergers and acquisitions are likely to drop about 20 percent this year, reflecting a weaker economy and the difficulty of financing for leveraged buyouts, Sanford Bernstein analyst Brad Hintz said on Thursday.

"Merger and acquisition activity has historically been correlated with favorable economic conditions," Hintz said in a research report. The most recent boom in M&A also was driven by several years of cheap and easy debt, which allowed leveraged buyout firms to pursue deals of an unprecedented scale. Read More.

Credit crunch seen keeping financial M&A strong

'Darwinian economics' predicted to mean big changes in financial services

January 2 - MarketWatch - Merger-and-acquisition activity in the financial-services business will remain strong this year as the credit crunch creates opportunities for strong companies to bolster their market share, investment bank Freeman & Co. said Wednesday.

Disruptions caused by the meltdown in subprime mortgages will likely encourage private-equity and hedge funds to increase investments in financial services, hoping to pick up bargains, the New York-based investment boutique explained.

Indeed, buyout giant Carlyle Group is hunting for deals in the sector and in July hired Edward Kelly the former chief executive of Mercantile Bankshares, to run a new 10-person team focused on prospective financial-services transactions, according to a Wall Street Journal report. Read More.

Financial services to fuel M&A

January 3 - Financial Times - Private equity interest in financial services, particularly in the mid-market, looks set to continue in 2008, in spite of the ongoing credit crunch that continues to affect larger financial deals.

"Credit concerns make it easy for some to write off private equity this year, but we think we will see continued activity," said James Hatchley, head of Europe for Freeman, a US-based mergers and acquisitions advice business specialising in financial services. Read More.

India: M&A wave likely to continue in '08

January 1 - The Economic Times (India) - There are some things that get bigger and better with time. While the ‘better’ part may be debatable, bigger is certainly the case when it comes to mergers and acquisitions. As the new year rings in, experts are betting on another great year for India Inc in 2008.

Investment banking circles predict that sectors like IT, telecom, financial services and infrastructure will be in the midst of M&A activity in the current year. Even as sectors like retail and insurance are coming into their own, bankers feel that one can wait for more clarity in guidelines before taking a call. Read More.

Private-Equity Players Scour Financial Sector for Bargains

January 1 - WSJ - When some super-wealthy investors bought busted savings-and-loans in the late 1980s, the results became legendary. Despite the common belief that these institutions couldn't be salvaged, the thrifts revived as the U.S. economy recovered. Getting in at the bottom of the cycle produced huge gains for the acquirers.

Could a similar scenario play out in the market for subprime mortgages? That question tantalizes some of the most powerful private-equity firms. The collapse of the subprime market has triggered an enormous plunge in valuations of financial stocks. Read More (subscription required).