Archive for July 9th, 2008
Posted by: in Latest News
Filed under: Deals, Merrill Lynch (MER)
As expected, New York Mayor Mike Bloomberg’s blind trust is interested in buying Merrill Lynch & Co. (NYSE: MER)’s 20% stake in Bloomberg LP for between $4.5 billion and $5 billion, according to The New York Post.
The acquisition would give Bloomberg total control over his namesake media company and my employer for seven years. Merrill, of course, also is looking to unload its 49% stake in Blackrock Inc. (NYSE: BLK) to shore up its balance sheet. No word on potential buyers there.
As I posted yesterday, Mike Bloomberg is a logical buyer for the Merrill stake in his company. Bloomberg has the right of first refusal of the sale as well, which probably scared away the few other potential buyers that were out there. Bloomberg LP also prides itself on being a private company that marches to the beat of its own idiosyncratic drummer.
Merrill shareholders, including a close relative, haven’t had too much to smile about lately. Shares of the New York-based investment bank are down more than 41% this year. Obviously, it’s selling its assets from a position of weakness. The New York mayor will gain control over his media empire at a bargain that would have been unimaginable a few years ago.
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Posted by: in Latest News
Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO), Time Warner (TWX)
There has been pressure on the shares of Time Warner (NYSE: TWX) for a couple of days now. This day the stock is down almost 30 cents to $14.09 after losing about 40 cents yesterday. Lehman put out a rough report on media stocks yesterday, which didn’t help the company’s cause.
The real reason that Time Warner shareholders may be sullen is that they’re concerned about a possible Yahoo! (NASDAQ: YHOO) buyout of AOL, rumored to be in the works. Analysts think that AOL might be worth $10 billion. Most experts considering such deal figure see Yahoo! giving Time Warner a 30% stake in Yahoo! in exchange for all of the AOL assets.
The deal is a bad one because Yahoo!’s stock is a poor currency. With such a huge position, it would be nearly impossible for Time Warner to liquidate its stake. The news of an AOL deal in place of a Microsoft (NASDAQ: MSFT) buyout of Yahoo! at $33 would nearly certainly hammer Yahoo! shares and might even push them below $15.
The most significant concern for investors holding Time Warner stock is that Yahoo! has demonstrated that it is badly run and still struggling to significantly improve its revenue growth. Getting a piece of a broken company might get AOL a new home, but what Time Warner shareholders would get in return would probably not be worth much.
Douglas A. McIntyre is an editor at 247wallst.com.
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Posted by: in Latest News
Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO), Motorola (MOT), Blockbuster Inc ‘A’ (BBI)
Here’s a novel idea. Massive Yahoo! (NASDAQ: YHOO) shareholder Legg Mason thinks more investors would support Carl Icahn’s effort to control the portal company if the raider won’t sell out to Microsoft or anyone else for under $33. At $32.99 it’s no deal.
Legg Mason’s Bill Miller told Reuters, “The difficulty with Icahn is he’d have more shareholder support if he would state he wouldn’t sell the company for less than $33.”
Fair enough. One of the problems with hooking up with raiders is that they often fail. Microsoft (NASDAQ: MSFT) has already indicated it would pay $33 for Yahoo!. Why should shareholder take less?
Miller may be thinking of Icahn’s current deals to pressure Motorola (NYSE: MOT) and Blockbuster (NYSE: BBI) to improve “shareholder value”. Neither one of those have done well. Investors who followed Icahn in have lost plenty of money.
Legg Mason’s comment makes sense. “Put up or shut up:”
Douglas A. McIntyre is an editor at 247wallst.com.”
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Posted by: in Latest News
Filed under: Before the bell, Deals, Google (GOOG), Apple Inc (AAPL), Merrill Lynch (MER), EMC Corp (EMC), Raytheon Company (RTN)
 Before the bell: Futures lower as oil rises, despite Alcoa earnings
Nearly two years after Google Inc. (NASDAQ: GOOG) purchased YouTube for over $1.6 billion, it seems that it is not the cash cow Google had hoped it could become. Getting ad revenue from YouTube, The Wall Street Journal states, is not an easy task. Despite the site’s popularity with surfers, it isn’t popular with huge corporate advertisers. World-wide revenue from YouTube ads is likely to total about $200 million for the full year, less than Google’s expectation. Google has been trying to show it is not a one-trick pony, YouTube was critical in that.
According to The New York Post, “A blind trust run by Mayor Bloomberg is willing to pay between $4.5 billion and $5 billion to buy Merrill Lynch (NYSE: MER)’s 20 percent stake in Bloomberg LP.”
If you missed it Tuesday, VMware (NYSE: VMW) sank over 24%, taking EMC Corp. (NYSE: EMC) shares down 11% with it. The drop is attributed to two main issues, “VMware’s warning that revenue for the current year will fall short of expectations,” and doubt “EMC would spin out the remainder of VMware’s shares.” But this morning, after the abrupt replacement of co-founder and CEO Diane Greene by former Microsoft Corp. official Paul Maritz, Wall Street still doesn’t seem to be fully satisfied.
According to Bloomberg, Raytheon Co. (NYSE: RTN), maker of the Tomahawk missile and Patriot air- defense systems, plans to capture a more massive share of the $9 billion professional instruction market. Raytheon next week will open a global training division, which plans to use expertise culled from working with NASA and General Motors Corp. (NYSE: GM).
And in Apple Inc. (NASDAQ: AAPL) news, seems everyone is gearing to Friday’s release of the 3G iPhone:
- The Wall Street Journal writes of the Newer, Faster, Cheaper iPhone 3G
- The New York Times states that For iPhone, the ‘New’ Is Relative
- And USA Today claims that Apple’s new iPhone 3G: Still not perfect, but really close
Meanwhile, in deal news, the $2.13 billion bid of WPP Group Plc, the world’s second- largest advertising company, for Taylor Nelson Sofres Plc has turned hostile as WPP took it to investors following its rejection. The hostile bid values Taylor Nelson at a 52% premium over its closing price on April 28, the day before London-based Taylor Nelson said it was in merger speaks with German competitor GfK AG.
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Posted by: in Latest News
Filed under: Before the bell, Earnings reports, Deals, Market matters, Alcoa Inc (AA), Sears Holdings (SHLD), Economic data, Oil, Federal Reserve
U.S. stock futures were lower early Wednesday morning as oil prices rebounded following Iran testing a long-range missile. Oil has dropped over $9 the past two days, allowing the market Tuesday to stage a rally on financials. This day, ahead of the crude inventory report, it seem oil will renew its center stage focus, damping mood despite somewhat encouraging results from aluminum giant Alcoa Tuesday after the close.
On Tuesday, after having a shaky begin, U.S. stocks closed with significant gains after Federal Reserve Chairman Ben Bernanke stated the Fed will try to further help brokerages with emergency funds to tap. This helped financials rally from current doldrums. Of course, having oil prices easing by the biggest two-day drop in nearly four months helped push stocks higher as well. The Dow industrials ended 152 points higher, or 1.36%, the Nasdaq Composite rose 51 points, or 2.28%, and the S&P 500 added 21 points, or 1.71%.
But oil prices this morning are again moving higher after Iran test-fired nine missiles, renewing fears of a conflict that could cut global oil supplies. Also this day, traders are waiting for the weekly report on fuel inventories from the U.S. Department of Energy due at 10:30 a.m. EDT.
In corporate news, Alcoa Inc. (NYSE: AA) shares were almost 3.5% higher in after-hours trading following the report of its second-quarter results Tuesday after the close, which kicked off the second-quarter earnings period. While the aluminum giant posted a drop in quarterly profit on higher costs, it beat Wall Street estimates. Higher prices couldn’t offset enough the higher costs, which will likely continue.
Meanwhile, retail continues to hurt with chain Steve & Barry’s close to filing for bankruptcy. The Wall Street Journal states that Sears Holdings (NASDAQ: SHLD) is interested in acquiring some of the clothing chain’s labels.
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Posted by: in Latest News
Filed under: Deals, Products and services, Management, Marketing and advertising
According to a Billboard report Tuesday morning, Live Nation Inc. (NYSE: LYV) “has entered into a long-term global partnership” with Canadian rock band Nickelback, following other high profile acts U2, Madonna, and Jay-Z. The reported $50-$70 million deal is set to commence after the band finishes its current deal with Road Runner Records, a record label in the Warner Music Group Corp. (NYSE: WMG), and will include three tours and albums with the possibility of a fourth left open. Virtually each aspect of the band’s career will be managed and distributed via Live Nation, and the band will start touring in Live Nation venues as soon as next year.
Reuters further reports that the band has two albums and a greatest hits album left with Road Runner Records, with the band’s last album selling 10 million duplicates. The news source speculates that the deal could be expensive if the band’s new albums in the future fail to deliver the success that the band has enjoyed to date. The deal also throws into question the value of Road Runner Records after Warner Music Group bought the label in December 2006 for $73.5 million. Despite other high profile artists, Nickelback is the label’s most successful act.
Live Nation has raised the stakes for music companies since beginning to sign major artists last year. By offering services for almost each aspect of those acts’ careers, Live Nation means managing careers are simplified in theory. In addition, the growth of the digital music market has made it easier for the company and the acts it signs to distance the services from the tendencies associated with music companies and traditional recordings deals. Unfortunately, since the deals have yet to commence for any artist, the success of deals such as this have yet to be seen.
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Posted by: in Latest News
Filed under: Deals, Law, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Anheuser-Busch Cos (BUD)
 It seems that not a day goes by without some news regarding one of the largest deals Wall Street is following intently these days, InBev’s $46 billion hostile takeover bid for Anheuser-Busch Cos Inc. (NYSE: BUD).
Not long ago, Reuters reported that Anheuser-Busch filed a suit Monday against InBev NV, calling the brewer’s takeover attempt an “illegal plan and scheme” to acquire Anheuser “at a bargain price.”
It isn’t surprising the Budweiser maker has filed a suit. Only last week, when A-B officially rejected InBev’s $46 billion offer, the latter filed a suit of its own as well as launched a proxy battle, filing a consent solicitation with regulators seeking to replace Anheuser’s board. Anheuser’s suit seeks an injunction to cease InBev’s attempts to replace its board. Anheuser states it wants first to make sure certain alleged false and misleading statements are fixed.
From the lawsuit (pdf file) it seems that some of the misleading statements Anheuser is complaining about have to do with InBev’s financing possibilities and its plans for the company once it is taken over. I don’t normally read litigation documents, but the language here seems quite strong with allegations even of rumor mongering. Judge for yourself:
InBev has repeatedly proclaimed it has “fully committed” financing to fund its proposed acquisition of Anheuser-Busch. Given the current say of the credit markets, no group of lenders would unconditionally concur to loan InBev the $40 billion it will need. […]
InBev has also made false and misleading statements about its purported plans for operating Anheuser-Busch after the proposed acquisition. […] (here A-B claims the impossibility of this given InBev’s Cuban operations).
InBev’s scheme was conducted through the dissemination of false and/or misleading statements. […]
To reach its ultimate goal - the acquisition of Anheuser-Busch - InBev crafted a strategy that had as its first step the dissemination of rumors to the financial press and the investing public concerning its interest in Anheuser-Busch […]
It’s interesting to compare the two recently rejected offers Wall Street so hoped would go though. While on the Microsoft Corp. (NASDAQ: MSFT) - Yahoo Inc. (NASDAQ: YHOO) deal only investors and shareholders have opined — and taken action — so far, politicians have deemed it appropriate to speak their mind on the Anheuser-Busch - InBev deal given the Budweiser’s brand being so American.
Still, one can’t help but note the similarities between the two; most on Wall Street concur both are good deals but both are opposed by the controlling family and/or founders. One has to question at what point reasons other than what’s ideal for the company cloud their judgment. Well, if Icahn and InBev have it their way, both boards, along with their founders, will be ousted and replaced. Then we’ll see if Google Inc. (NASDAQ: GOOG) can be caught on world wide web search and if InBev has meant what it stated. In the meantime, it’s at least interesting.
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Posted by: in Latest News
Filed under: International markets, Deals, Management, Anheuser-Busch Cos (BUD)
 According to The New York Times’ DealBook blog, InBev has a significant partnership with Cuba to produce Bucanero beer, the second-largest player in the communist country’s market.
In the the beer world, this deal isn’t very important since the island has a population of about 11 million. Besides, its economy is a mess.
“Government defaulted on most of its international debt in 1986 and does not have access to credit from international financial institutions like the World Bank, which means Havana must rely heavily on short-term loans to finance imports, chiefly food and fuel,” according to Global Security Org. “Because of its poor credit rating, an $11 billion hard currency debt, and the risks associated with Cuban investment, interest rates have reportedly been as high as 22%.”
The question of what would happen to InBev’s Cuban business in the event the takeover of Budweiser is successful is an interesting one. Would the company have to divest the business to comply with the U.S. embargo or not do anything since it isn’t a U.S.-based company? Maybe the subsidiary could be operated through a non-U.S. InBev business. Regardless, it’s a solvable problem from a legal and financial vantage point.
While I have no doubt I have no doubt the Belgian brewer will gladly state “adios” to its small Cuban beer business if that’s the price it has to pay to finish its $46 billion hostile bid for Anheuser-Busch Cos., Inc. (NYSE: BUD), public relations is another matter.
The European brewer already has two strikes going against it in the court of public opinion. For one thing, it’s a foreign company trying to buy the most American of brands and politicians are already lined up against it. Democratic presidential nominee Barack Obama told reporters yesterday that it would be a “shame” if the King of Beers were sold to a foreign owner. Republican John McCain has been mum mainly because his wife Cindy’s family owns the third-largest Anheuser-Busch distributor. Leaders in Anheuser-Busch’s home state of Missouri, including Sens. Kit Bond and Claire McCaskill, are sounding the alarm bells, telling InBev “this Bud is not for you.”
In the end, the only view that’ll count is the shareholders’, particularly one big one named Warren Buffett. Unless the Oracle of Omaha is willing to add Anheuser-Busch to his stable of companies, odds are good that the company will have to say oui to InBev’s offer.
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