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Tag >> acquisitions
Sep 14

Corporate VCs make value-destroying deals

Posted by annearf in venture capitalstartupscorporationsacquisitions


Independent venture capital firms aren't the only ones making VC investments. Many corporations also have their own investment operations.  Usually aimed at eventually buying the most promising startups, these entities often aren't run as independent business units.

Only their bets don't usually pay off, at least not for shareholders.

Jun 01

China acquisitions of foreign companies reach new record

Posted by mcole in protectionismmergerglobal economyenergyDealsChinaCashacquisitions


China has increased its appetite for foreign companies.

Outbound acquisitions by Chinese companies have swelled five times to $28.4 billion so far this year (as of May 24) compared with $5.8 billion during the same period last year, according to Thomson Reuters.

Apr 13

Banks look to monetize tax losses

Posted by Ron F in Wells Fargo, TaxJP Morgan ChaseIRSGoldman SachsDeutsche BankderivativescomplianceBanksacquisitions

Ron F

The way I read this Felix Salmon column posted yesterday, it sounds like Goldman Sachs, JP Morgan and Deutsche Bank are counting on the Treasury to let banks traffic in operating losses, which is normally against IRS rules.

According to the column, which is based on a report in the Financial Times, banks such as Goldman Sachs, JPMorgan and Deutsche Bank have been touting new product ideas to banks that will be hit by new international capital rules known as Basel III.

Mar 04

All-cash deals don’t portend an end to cash hoarding

Posted by MQuinn in recoverymergersdividendsDealsCashbuybacksacquisitions


We in the financial press are often guilty of overzealousness in our trend-spotting attempts. And we can be just as guilty of overanalyzing -- and under-analyzing -- the tealeaves laid out by those trends.

The Wall Street Journal on Thursday ran a story with a lead of "One year removed from the trough of the recession, American corporations continue to hoard more cash than ever. There are now tentative signs that they are finally comfortable using the money to do some shopping."

I'm just as eager as anyone to see a strong economic turnaround and certainly an uptick in deal-making is a sign that companies are more confident. But pointing to an increase in all-cash deals does not signify companies are at all willing to dip into their cash piles.

Jan 15

Apple polishes its acquisition skills

Posted by MQuinn in Steve Jobs, M&A;, GoogleDealsCashAppleacquisitions


BusinessWeek has a story asking, "Is Apple Ready for Merger Mania? " As a sign that it might be, the article points out that last year Steve Jobs and Co. hired a Goldman Sachs investment banker, Adrian Perica, to help it with deal making.

No doubt the acquisition wheels have sped up at Apple: Three of the 11 deals done under Jobs' leadership have come in the past five months, including the largest since his return, the $275 million purchase of Quattro Wireless.

Dec 15

Exxon's announced deal already boosts XTO's credit

Posted by mcole in mergers and acquisitionsenergydebtCredit Ratingscredit default swapCreditacquisitions

The acquisition of XTO Energy announced Monday by Exxon Mobil shows once again that cash is king. The deal is already boosting XTO's credit profile, yet won't damage Exxon's, thanks to the latter's cash reserves.

Exxon plans to buy XTO for $41 billion, including the assumption of $10.2 billion of debt. The deal, which will be financed purely with stock, will strengthen Exxon's natural gas production business.

Spreads on XTO's bonds tightened from 128 basis points over Treasuries to about 60 basis points on Monday, according to Dow Jones Newswires.

"With Exxon one of the four U.S. non-financial companies carrying the top credit rating of triple-A, and with XTO bonds rated toward the bottom of the investment-grade ladder, the news was a boon to XTO bond holders," the story noted. That means debt will become a lot cheaper for XTO, which is already trading like a triple-A company in the credit default swap market.

Yet Exxon can easily afford the doubling of its debt load, to close to $20 billion, as a result of the deal. "When measured against large cash reserves of approximately $12.5 billion, the combined entity's pro forma net debt is low on an absolute basis at just $7.34 billion," noted Fitch Ratings in a press release.

Fitch anticipates that the company will continue to be managed conservatively and will maintain high levels of financial flexibility post integration, allowing it to preserve its AAA rating. 
Nov 05

Buffett: Bull or Bear?

Posted by HJohnson in Warren Buffett, M&A;, economyDealsacquisitions


Warren Buffett's huge bet on Burlington Northern Santa Fe is proving to be kind of like a Rorschach test. People see in it what they want to see.

Is the acquisition, the biggest ever for Buffett: a) a big "Booyah" on the U.S. economy? b) the biggest and most expensive mistake that Buffett ever made? c) a way to make Berkshire Hathaway more diversified, more like a traditional conglomerate, and better for a non "seer" CEO to oversee? (as Liam Denning mused in the Wall Street Journal) or d) the most bearish U.S. economy deal ever?

Nov 05

Buffett's railroad acquisition could jeopardize Berkshire's AAA

Posted by mcole in Warren BuffettS&P;Creditacquisitions


Investors cheered the Berkshire Hathaway's investment in railroad company Burlington Northern Santa Fe, but Standard & Poor's sees it as detrimental to the Warren Buffett's company and placed Berkshire's AAA on Credit Watch Negative.

Investing in railroads may be so last century (or actually the one before last) but other observers lauded Buffett's move.

Oct 19

Throwing out the models on You Tube

Posted by Ron F in TechnologyGoogleDealsCashacquisitions

Ron F

I'm trying and failing to make sense of Eric Schmidt's admission in court earlier this month that Google paid a premium of roughly 165 percent for You Tube.

As Schmidt characterized the deal during a patent dispute with Viacom, he felt that You Tube was worth only $600 million to $700 million based on its revenues. But he was willing to pay $1.65 billion for the company because of its success at signing up users in the Internet video space.

Oct 02

Details of Dell’s crush on Perot

Posted by MQuinn in M&A;, DellDealsacquisitions


Dell's $4 billion acquisition of Perot Systems apparently made so much sense that the computer maker was trying to strike it for two years.

As my colleague John Goff pointed out when the deal was announced last month, the purchase of Perot has seemed like a destined deal ever since Hewlett-Packard acquired IT services leader EDS in May 2008. Turns out it was earlier than that.

In a filing with the Securities and Exchange Commission made on Friday, Perot said that Dell senior management initiated conversations with Perot's management in March 2007 about a possible acquisition. The two sides talked into April, but no specific terms were ever discussed.

The discussion ended at that point, but would start again in late 2007 and last through early 2009. Again, no specific terms would be discussed. "Representatives of Perot Systems indicated that it was not the right time for Perot Systems to pursue a sale transaction," according to the filing.

That's pretty much all that's said about those first two years of talks. But let's read between the lines a bit.

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