Bank on Banking » Merger

Merger News: Cisco’s New Star – Starent

IBanker — Tue, 13 Oct 2009 21:29:12 +0000

Puns aside, for all of you technology fans, among the flurry of recent technology consolidation activity comes another multi-billion dollar deal: Cisco has agreed to purchase Starent, a company that makes infrastructure equipment used by cell phone companies to offer enhanced voice and data services including video messaging and the internet, for $2.9 billion or $35 per share (a 21% premium over the previous closing price).

The deal is expected to close by Q2 of 2010 and Cisco expects the transaction to realize a profit within 2 years of acquisition. Once complete, the former Starent will become the Mobile Internet Technology group within Cisco’s “service-provider business,”and will be led by Starent’s CEO, Ashraf Dahod. It’s not the biggest or the most exciting technology merger, but it clearly shows that Cisco meant it when it said that it would become more aggressive towards acquisition opportunities during the economic downturn.

Cisco To Acquire Starent

Merger News: Sprint to Buy Virgin Mobile

IBanker — Fri, 31 Jul 2009 01:29:43 +0000

Refusing to give up, Sprint has taken yet another big step towards either complete failure, competitive wireless player with the $483 million acquisition of Virgin Mobile announced two days ago. Just how smart of a move is this, only time will tell. We can tell, however, that the acquisition price values Virgin Mobile at $5.50 per share, or a 31% premium over the previous day’s closing price. Although a few analysts think it is a good move, and a decent price, I’m not as convinced. There is tremendous competition in the wireless phone business right now, and a 31% bump in a stock that has already been on the rise the past several days (probably due to rumors), based on big anticipated cost savings (back office, marketing and network costs), and a continuing dominance in the pre-paid minute business, seems just a bit ambitious. But hey, I haven’t seen the numbers, projections, plans or meetings, so maybe it is a huge find and a bargain.

Regarding the new company, Sprint will keep the Virgin Mobile name, and retain its chief executive, who will continue to run the business. The plan is for Virgin Mobile to remain its own brand with its own name, only now coupled with deeper pockets and increased support from its soon-to-be parent, Sprint-Nextel.

Sprint Takes Another Crack At It

Merger News: Microsoft and Yahoo Make a Deal!

IBanker — Thu, 30 Jul 2009 03:45:54 +0000

All I can say is…it sure took long enough. After months and months of negotiating, bidding, rejecting, reneging and crying, it is finally done. No, not a merger, bur rather a strategic alliance, if you will, between two of the industry’s powerhouses, to form, ideally, an entity capable of eventually challenging Google (though combined, they still control less than half of the market share that Google controls – 65% vs. a combined 28.4% or so – go figure).

Getting specific for a second, the deal is a 10-year contract in which Yahoo will use the Bing platform on their sites, license their software to Microsoft to be used as Microsoft wishes, and will handle the sales of search ads for both companies. In exchange, Yahoo gets to be good pals with Microsoft, and will receive 88% of the search ad revenue from their sites for the first 5 years. The changes will mainly take place behind the scenes, so user confusion should be minimal.

Although Microsoft believes that this will catapult them beyond Google, analysts aren’t so sure, as many believe the real issue is in coming up with new ideas, not picking up a few %age points in market share through an alliance – we’ll see though – perhaps collectively they can come up with some strong ideas. According to shareholders, Microsoft has made a good deal (share price is up on the news), but Yahoo could have done much better (share price is down…pretty hard…on the news) – but these things are fickle; sentiment changes quickly around here. Personally, I like it – not necessarily the financials of it, but rather the idea of coming together to, hopefully, develop something better, something innovative, and something that presses Google to really do the same.

Bing! Microsoft and Yahoo Together At Last!

Mergers News: IBM Making a Move

IBanker — Wed, 29 Jul 2009 01:10:47 +0000

IBM has agreed to buy the software developer SPSS for $1.2 billion in an all-cash big time offer (in this market, anything north of $1 billion is big time). SPSS makes software that analyzed statistical data to cast predictions on everything from scientific research to marketing, government and even education. The $50 per share offer promises a 42% premium over SPSS’ closing price (7/27/09); the deal is expected to close by year end.

With anticipated growth in the field, IBM seems to believe they are getting a bargain (although $50 per share will be the highest price the stock has ever seen) and is eager to expand its position in the business-analytics technology space. If nothing else, this acquisition will further prove just how cash armed and purchase-ready tech firms are becoming in this, perhaps, cheap market.

IBM goes big…well…at least they’re going

Merger News: BlackRock Makes Their $13.5 Billion Move!

IBanker — Fri, 12 Jun 2009 02:17:49 +0000

As you can probably tell from the title, BlackRock has agreed to purchase Barclays’ asset management unit, BGI, for $13.5 billion to become the world’s largest money manager through the largest merger in the fund-management industry. BlackRock will pay $6.6 billion and cash, and the remaining $6.9 billion in stock (approximately 37.8 million shares) to finance the acquisition. Of the $6.6 billion, $2.8 billion will stem from the sale of equity to institutional investors and another $2 billion will come from, surprise, surprise, loans from Barclays and other banks – now that’s having your cake and eating it too. The transaction, considering the stock portion of the deal, will give Barclays a 19.9% stake in BlackRock For more information on the merger, see the article below, as well as my previous post on the merger.

BlackRock to Buy Barclays Asset Management Fund

Merger News: Blackrock Frontrunner For Barclays Asset Management Unit

IBanker — Sat, 06 Jun 2009 21:14:13 +0000

With hopes held high that the M&A market will come booming back (although May was the worst single month in over 10 years – on a fee basis – for merger and acquisition activity, See Article), I think that it is a good time to start a Merger News category to compliment the general In the News category – what are your thoughts? Before anyone asks, I will not be covering every M&A deal in the market, or even anywhere close to every deal (I am but a single man after all). Instead, when I happen to spot an M&A deal that looks interesting, a deal that I think will be a good interview conversation piece, or one that I think will have a strong impact on the market, I’ll absolutely put a quick recap together for the site. If anyone knows of any deals that they think would be of interest to the rest of the readers, by all means shoot me an email with your recap, or just the parties involved and if it looks good, I’ll be sure to post it as well. Now, onto the deal at hand.

BlackRock Inc has both shown an interest in, and is the leading bidder to purchase, the asset management unit of Barclays Plc, Barclays Global Investors (“BGI”), for more than $10 billion. The talks are in the early stages, and there is no exclusivity agreement between Barclays and BlackRock at this point. In fact, the Bank of New York Mellon Corp has also expressed a potential interest in the asset management unit. A purchase by BlackRock would bring their total assets under management up to $2.81 trillion dollars, and help them to expand their presence outside of the U.S.

After passing on government assistance, and suffering nearly $19 billion in credit losses and writedowns, Barclays’ capital ratios lag behind those of RBS and Lloyds and, as such, Barclays needs to raise fresh capital. Barclays is rumored to be expecting around $12 billion for BGI, and may intend to hold a 20% stake in the unit post acquisition – if BlackRock, or any other firm for that matter, is willing to swallow that pill, then this would be the largest acquisition in the fund-management industry to date.

Blackrock: We Want It!