posted by Reuters Staff on Jun 29
Toll Brothers Chief Executive Robert Toll is seeing a link between Chinese people wearing Gucci sunglasses and a business opportunity. And that’s one reason he is about to send a team to scout out possible homebuilding joint ventures in China’s first and second-tier cities, Toll said at the Reuters Global Real Estate summit.
China’s a solid prospect for Toll because its expanding and aspiring middle class has already encountered the company, which bills itself as “America’s luxury homebuilder,” on the Internet, he said.
Click here to hear Toll on why he sees brand-happy Chinese as Toll Brothers buyers.
posted by Jonathan Keehner on Jun 29
The Reuters Real Estate Summit held in New York this week had a clear message for property dealmakers: If you’re waiting for the M&A cycle to kick into high gear, it could be a while. In fact, it’s more likely the cycle is headed for a dry spell, they said.
Indeed, with commerical property investors spooked by CMBS concerns and homebuilders seeing another year of slumping markets, the M&A outlook at the summit this week wasn’t too hot.
But there may be deals elsewhere in the industry. Companies specializing in real estate advisory and other real estate related services — like Chicago-based Jones Lang LaSalle – could peak the interest of big investment companies looking for a purchase. Executives at the summit spoke about the possibility of large commercial banks or asset managers beefing up real estate capabilities by buying a real estate advisory or real estate services firms.
Advisory firm Grubb & Ellis‘ vice chairman Howard Grufferman sees real estate service companies becoming a part of bigger investment firms — noting that the number of such specialized service providers is limited.
And muted M&A doesn’t mean there won’t be consolidation: tough markets could cause some companies — especially the over-levered — to go out of business or become easy takeover targets in a recovery.
“I would expect consolidation, not necessarily because (companies) are bought but also because they go out of business,” the CFO of Hovnanian Enterprises, the sixth largest US homebuider, told the summit. “I think there will be opportunities once we can clearly see that the market has bottomed.” He also had a few things to say about the bad timing of a Hovnanian Florida deal.
posted by Caroline Humer on Jun 29
First-half mergers & acquisitions hit another record breaking through the $1 trillion mark, thanks largely to deals for financial companies, according to preliminary numbers from Dealogic.
Takeovers of U.S.-based banks and other financial institutions rose to $157.48 billion during the first half, up from $90.59 billion a year earlier, to take the lead spot from telecommunications companies. Buyouts of First Data and Sallie Mae topped the sector rankings. To see a table of Dealogic’s breakdown of first half M&A activity click here.
Telecommunications dropped almost by half during the same period, falling from its spot as the most active sector during the first half of 2006 to the sixth-most active sector by volume so far this year with $80.72 billion worth of deals. Alltell’s sale helped keep the sector from falling off the charts altogether. ? ? ? ? ? ? ? ? ? ?
The two big sector gainers during the quarter were real estate and technology, where deal values nearly tripled. Dealogic said $107.09 billion worth of real estate deals, were announced, including Tishman Speyer’s and Lehman’s planned purchase of Archstone-Smith, while technology companies went for a total of $104.56.
posted by Megan Davies on Jun 28
Has the private equity boom peaked? That was the hot topic at a Wall Street Journal conference on Wednesday, which hosted financial industry titans such as Henry Paulson, Lloyd Blankfein and Carl Icahn.
According to billionaire financier Icahn (left), the answer is yes, as shareholders are balking at selling companies too cheap.
“They’ve had a walk in the park for years, but now shareholders are waking up to the fact that we’re not going to sell it to you so cheap,” Icahn said. “And interest rates could start creeping up.”
Blankfein, who runs Goldman Sachs, the top advisor to buyout firms, had a different opinion. He thinks the leveraged buyout trend is not “going out of style.”
Wobbles are being seen in financing of some leveraged buyouts. Ahold’s U.S. Foodservce postponed the financial backing of $7.1 billion LBO due to weak market conditions, sources told Reuters Loan Pricing Corp on Tuesday.
Meanwhile, the shares of Blackstone are off their IPO high amid tax concerns and worries the private equity boom may be off its peak. It finished its first day at $35.06 but closed on Thursday at $29.69.
Other comments on private equity made at the conference::
Glenn Hutchins, co-founder and managing director of Silver Lake, said he didn’t foresee a blowup of the private equity industry although he expects the industry will see some unsuccessful deals. He added that he would not be worried until he saw underlying economic problems.
NYSE Euronext Chief Executive John Thain, when asked if he was concerned whether the private equity boom was becoming too heated, said the wider issue was the availability of capital that is allowing buyout firms to take companies private.
“I don’t think it’s a question of the private equity boom. There is a tremendous amount of liquidity available so there’s a lot of leverage that’s available at very low cost. So I think the place to be concerned is — what takes some of the steam out of the availability of liquidity? That’s much more the issue than the private equity … Liquidity is fueling private equity — but it’s really the excessive amount of leverage at very low cost.”
Richard Breeden, CEO, Breeden Capital Management and former chairman of the U.S. Securities and Exchange Commission: “What I do hope is that our market continues to be strong for private equity to generate value and also for larger shareholders in public companies to continue to create value. All markets and everyone benefits when new value is created.”
Stephen Lerner, assistant to the president of the Service Employees International Union, or SEIU, which represents 1.8 million workers: ”What we’re saying is what is happening in private equity is critical to the future of America and we need to have a conversation about how we make sure that workers and other people aren’t left behind by the buyout boom.”
(Additional reporting by Anupreeta Das)
posted by Dan Wilchins on Jun 28
While hedge funds were collapsing around him, Rich Marin, head of the asset management unit at Bear Stearns Cos. stole a few moments to see a movie and blog about it, the New York Times reported on Thursday.
Two Bear Stearns-managed hedge funds lost big money in April, and in June, Bear bailed one of them out and decided to let the other fail. Over the weekend of June 17, while Bear Stearns executives were scrambling to save the funds, Marin took a few hours off to watch the new Kevin Costner thriller “Mr. Brooks,” the New York Times reported, and later wrote about it in his blog, Whim of Iron.
You’ll have to take the Times’ word for it–the blog is “gone, gone, gone” from the public Web and can now only be seen by people who receive a special invitation by Marin. But his blogging profile is still public. Like most blogger profiles, it includes a Q&A section, which opens with this gem:
Your people want to make a statue in your honor. What will it be made out of and what victory will it commemorate? Motorcycle Parts…..the victory of uniqueness triumphing over boredom
Marin may view himself as an original, but his taste in music and books is anything but–he likes to rock out to Billy Joel and Meatloaf, and among his favorite books is the Da Vinci Code.
Photo of Meatloaf courtesy of Rockyarchive.com
posted by Reuters Staff on Jun 27
Boardroom politics may have been her nemesis at Hewlett-Packard, but that hasn’t stopped former HP Chairman and CEO Carly Fiorina from appreciating the role boards play in bringing about change. That’s why she’s serving on a number of them, Fiorina said at the Wall Street Journal Deals and Deal Makers Conference on Wednesday.
Fiorina is using them to push causes close to her heart, including eliminating poverty and increasing the number of women in boardrooms, she said. “If you don’t get women involved, solutions don’t happen as fast,” she said. Although women have made some progress, she added, it’s still “clearly not a meritocracy.”
Some of these ideas have made their way into her memoir, Tough Choices, in which she also talks about steering HP through the tech slump and the merger with Compaq. Fiorina was fired from HP in 2005.
Fiorina said she often gets asked whether she will get into politics, but said she has no plans so far.
Her presidential candidate favorite? Arizona Republican Sen. John McCain.
McCain strikes her as the kind of person who knows “the only way to solve problems is to find common ground with people” who don’t necessarily share the same point of view.
- Reporting by Anupreeta Das
posted by Jessica Hall on Jun 27
The volume of mergers and acquisition is expected to soar through the end of 2007 as deal values soar, and any potential slowdown in activity will face a soft landing rather than a market meltdown, according to the Transaction Services group of PricewaterhouseCoopers.
Last week, Thomson Financial said global corporate merger activity in the first half of 2007 surged 53 percent to a record-high $2.5 trillion, exceeding the previous record of $1.9 trillion set in the first half of 1999.
“We are moving deeper into an accelerated M&A rally, with larger transactions from bigger corporate buyers on the horizon,” said Bob Filek, a partner in PricewaterhouseCoopers’ Transaction Services group.
Greg Peterson, a partner in PricewaterhouseCoopers’ Transaction Services group, said this M&A boom will not face the hard crash that that occurred in 2001.
Large private equity funds are more diversified than they were at the start of the decade, making them better able to withstand a downturn and even profit from distressed-debt transactions, PricewaterhouseCoopers said.
Other factors that could cushion a slowdown include the diverse and expanded funding sources for M&A, a wider variety of industries with potential targets and and the many roles hedge funds are playing in the M&A market, the firm said.
“Public to private deals continue to fuel the market. The level of activity will depend on the amount of liquidity available to finance deals and the availability of targets that offer sufficient upside potential relative to purchase price,” Peterson said.
posted by Robert MacMillan on Jun 27
Any illusions that Rupert Murdoch may have had about Poland being a safe place to escape the bustle and turmoil surrounding his $5 billion bid to buy Dow Jones were dispelled on Wednesday.
Reuters reporter Gabriela Baczynska caught up with the News Corp. chief in Warsaw and got him to dish out the following points:
- He doesn’t plan to raise his bid;
- He expects approval to buy Dow Jones from the Bancroft family, which controls the company through its voting shares.
But finding him wasn’t easy. Here’s how Baczynska tracked down the mogul in the haystack:
They were already clearing up the lunch plates as I got to the Warsaw television station that is expected to relaunch under News Corp’s Fox banner in the Fall. Murdoch had left, and was expected to be in Poland only for a few hours on Wednesday.
Maybe he was at the hotel? “No”. My colleague Chris Borowski heard he was at News Corp.’s outdoor advertising unit in central Warsaw. There was another scramble in a taxi, only to see the door of a limousine closing and the car pulling away — but an executive assured me that Murdoch was still inside.
Half an hour later the elevator doors opened and Murdoch appeared, with just enough time to answer my questions. He left smiling.
*Dzikuj = “thank you” in Polish
posted by Caroline Humer on Jun 27
Looks like Devon Energy’s West African assets won’t be sold until the fourth quarter, at least according to Bear Stearns.
Devon, which announced plans for the sale in January, first indicated in a press release that the sale would take place in the second half. On a conference call that day to discuss the asset sale, Devon said they expected the deal to close “sometime in the third quarter.”
Since then, executives have said they expect the sale to close in the second half of 2007. The sale includes offshore assets that span seven countries.
But Bear Stearns said in a research note it is not expecting the assets, which span seven countries, to be sold until the fourth quarter of this year. They could generate net sales proceeds well above $1 billion, Bear said.
Devon is sticking by its timing for the second half.
“These are complicated sales and it’s difficult to predict a closing date with certainty, however we still expect to close in the second half of 2007,” according to Chip Minty, spokesman for Devon.
posted by Caroline Humer on Jun 26
Basell’s $5.6 billion offer to buy Huntsman is probably the only deal out there for Hunstman. Shares are trading at $24.28, a bit below the $25.25 offer price, indicating investors don’t expect a rival bid. And years of unfruitful merger discussions by Huntsman with other possible suitors make a competing offer now seem unlikely, Jefferies & Co. said in a report.
But the move may signal other chemical deals are in the works, it said. Basell’s decision to buy Huntsman fits with a wider trend driving M&A: upgrading commodity chemical companies by buying more specialized, and typically more profitable, chemical assets.
Jefferies’ top M&A candidate is specialty chemical company Hercules, followed by Cytec, which makes aerospace composites, mining chemicals and environmentally friendly coatings. Omnova Solutions, which makes everything from commercial wall coverings to pool liner films, could also be a target, the firm said.
And Access Industries, a conglomerate run by Russian-born investor Leonard Blatnavik that owns Basell, has already signaled its interest in other deals. Last month Access took a more than 8 percent stake in Lyondell Chemicals and bought the rights to increase that stake up to 15 percent. In a filing, Access said it might buy the whole company and combine it with Basell.
