Posts for Ticker ‘CCU’

Media Digest 5/29/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, Yahoo! (YHOO) says Microsoft (MSFT) is not longer anxious for a merger.

Reuters said Exxon (XOM) investors voted to keep the chairman and CEO jobs together.

Reuters reports that China will put in a windfall profits tax to keep prices from rising.

The Fed may raise rates to keep inflation down.

Clear Channel (CCU) said its buy-out would close in Q3.

The Wall Street Journal writes that oil production from exporters can no match demand.

The Wall Street Journal writes that Dow Chemical (DOW) increased prices of some products up to 20%.

The Wall Street Journal writes that the SEC will propose rules for credit rating agencies to create a new set of graded for complex financial  instruments.

The Wall Street Journal writes that Heinz will raise its forecasts.

The Wall Street Journal reports that the head of United (UAUA) will meet with the head of US Air (LCC).

The Wall Street Journal writes that GM (GM) is preparing to cut costs.

The Wall Street Journal reports that the FCC may ask the winner of future airwave auctions to offer free interenet.

The Wall Street Journal writes that Boston Scientific (BSX) will pay Medtronic for patent infringement.

The New York Times writes that UPS (UPS) and DHL may have a joint cargo shipment deal.

The FT writes that investors are preparing for a US rate increases.

The FT writes that banks are launching a central clearing house for derivatives.

The FT writes that company treasurers are turning to money managers for better returns.

Douglas A. McIntyre

Posted on: May 29, 2008 – 3:03 am in Press Digest, , , , , , , , , ,

Bell Canada (BCE): The Battle For The Last Great LBO

The skulduggery of banks who want out of LBOs is already widely known, and expected. Big financial companies have tried to put the legs out from under a deal to take Clear Channel (CCU) private, and now appear ready to take a powder on the contract to buy-out Bell Canada (BCE).

Leaving aside the ethics of the matter, although that is hardly fair, the $51.8 billion which was offered for BCE was expensive. It was, according to the Guinness Book Of World Records and other sources, the largest deal of its kind, ever.

Now, banks, including Citigroup (C), which does not have much of a reputation left at any level, want better terms including higher interest rates. According to The New York Times "The negotiations over the Bell Canada buyout began to fray late Friday."

The whole matter is likely to end up in court with the LBO firms in the deal, which include Providence Equity Partners and Madison Dearborn Partners, filing suits to close the deal. BCE may take legal actions as well.

A BCE lawsuit may be the wild card in the fight. That suit could be brought in Canada, giving the company a home court advantage. There is question of whether Canadian courts would be less forgiving than their counterparts in the US. That means the banks could be in for more trouble than the expected.

When the BCE deal was announced, shares got above $44. If the courts in Canada start to move in the direction of forcing a deal to be closed on terms similar to those in the original contract, the final price may not be far from that number.

Douglas A. McIntyre

Posted on: May 19, 2008 – 4:43 am in Mergers and Buy Outs, , ,

Media Digest 5/14/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, lenders and Clear Channel (CCU) have reached an agreement for an LBO of the company.

Reuters writes that Carl Icahn may mount a proxy fight for control of Yahoo! (YHOO)

Reuters reports that Greenspan says the US may be in a mild recession.

Reuters writes that Merrill Lynch (MER) say tax rebates will not end recession.

Reuters says that Sony (SNE) posted a surprise loss but forecast growth.

Reuters reports that BHP Billiton (BHP) might add more cash to it bid for Rio Tinto (RTP)

The Wall Street Journal reports that a growing number of economists say the US is not in a recession.

The Wall Street Journal reports that the International Energy Agency cut its projection for oil demand.

The Wall Street Journal writes that GM (GM) may try to raise additional cash.

The Wall Street Journal writes that MBIA (MBI) and Ambac (ABK) could lose their Aaa ratings.

The Wall Street Journal writes that Wal-Mart (WMT) will start to hold its toy suppliers to higher standards.

The Wall Street Journal writes that EA (ERTS) posted a loss but revenue grew sharply.’

The New York times writes that oil refineries are seeing their profits drop despite high gas prices.

The New York Times writes that delivery of the Airbus A380 has been delayed again.

The FT writes that Moody’s (MCO) will stick to its current ratings scale.

The FT reports that IAC (IACI) and Liberty Media have reached an agreement on the break-up of Barry Diller’s company.

Douglas A. McIntyre

Posted on: May 14, 2008 – 2:53 am in Press Digest, , , , , , , , , , , ,

Media Digest 5/13/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, HP (HPQ) plans to buy EDS (EDS) to better compete with IBM (IBM).

Reuters writes that AIG (AIG) says it sees no reason to follow the request of its ex-CEO to the company’’s annual meeting.

Reuters writes that Staples (SPLS) has raised its hostile bid for Corporate Express.

Reuters reports that Nissan reported a large drop in earnings and said that the next year would be disappointing due to higher commodities prices and weak US market..

Reuters writes that Microsoft (MSFT) has launched WorldWide Telescope, free software for exploring outer space.

The Wall Street Journal writes that Dell (DELL) is trying to reinvenet its high end game computer business.

The Wall Street Journal writes that Exxon (XOM) management has asked investors to reject a move to have the company elect a separate chairman and CEO.

The Wall Street Journal writes that Beazer (BZH) will restate is results for nine years.

The Wall Street Journal reports that Merrill Lynch (MER) tried to convince investors that it has enough capital and will not have to raise money.

The Wall Street Journal reports that Clear Channel (CCU) is near a deal to complete its LBO.

The Wall Street Journal writes that Dish Network (DISH) is losing subscriber growth momentum.

The New York Times writes that Nissan will sell an electric car in the US by 2010.

The New York Times writes that Wachovia (WB) faces a inquiry over auction-rate securities.

The FT writes that UBS (UBS) sees further problems in the US housing business.

Bloomberg writes that Toyota (TM) will cut discounts on its Prius hybrid as the cost of gas rises

Douglas A McIntyre

Posted on: May 13, 2008 – 2:52 am in Press Digest, , , , , , , , , , , , , ,

Clear Channel (CCU) Pistol Whips It Banks? (C)(DB)(MS)(CS)(RBS)(WB)

Clear Channel (CCU) has a leveraged buy-out in place. Of course, like many of these deals cut last years, the banks tried to walk out a side door. often claiming that the businesses they were buying had fallen apart, In most cases that was a convenient truth.

The LBO firms doing the deal, Thomas H. Lee Partners and Bain Capital, decided not to let its banks walk and took them to court, The case looked like a winner.

According to The Wall Street Journal, the banks backed down and got a very small concession in the process. The paper writes "Under the proposed settlement terms, the banks would fund Clear Channel’s buyout at $36 per share, down from the original price of $39.20." CCU says No settlement has been reached by the parties and there can be no assurance that any settlement will be reached. Clear Channel will not comment on any potential settlement terms or the likelihood that a settlement agreement will be reached." Sounds a bit legal.

If the settlement works, for Citigroup (C), Deutsche Bank (DB), Morgan Stanley (MS), Credit Suisse (CS), Royal Bank of Scotland Group (RBS) and Wachovia (WB) it is a set-back, but no one gave them permission to stick it to CCU. Now, the get to reap the fruits of that.

Douglas A, McIntyre

Posted on: May 12, 2008 – 1:02 pm in Mergers and Buy Outs, , , , , , ,

Media Digest 4/29/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, Cadbury is looking at buying Hershey.

Reuters writes that banks being sued by Clear Channel (CCU) have asked for a delay of a Texas trial.

Reuters reports that share of Visa (V) fell on quarterly results

Reuters reports that Lewis Ranieri who helped create the current mortgage market says that house prices are off more than most analysts think.

Reuters writes that the Fed is thinking about paying interest on bank reserves.

Reuters reports that big US media companies are expected to have good first quarters because of their cable properties.

The Wall Street Journal writes that the CEO of Calpers will step down.

The Wall Street Journal also writes that a former senior Fed official blasted the bail-out of Bear Stearns (BSC).

The Wall Street Journal writes that airlines are trying to push their fares up.

The Wall Street Journal writes that the Fed will propose new and tighter policies for issuing credit cards.

The Wall Street Journal reports that Take-Two’s (TTWO) Grand Theft Auto IV game is expected to post record sales.

The Wall Street Journal reports that GM (GM) will idle some of its truck and SUV plants.

The Wall Street Journal reports that the FDA turned down a major new Merck (MRK) drug.

The Wall Street Journal writes that Blockbuster (BBI) is seeking a stake in Viacom’s (VIA) new premium cable TV venture.

The Wall Street Journal reports that Citigroup (C) may cover some of the losses at two hedge funds.

The Wall Street Journal writes that circulation at most large newspapers dropped sharply.

The New York Times writes that rising oil prices are not stimulating new production.

The New York Times reports that United (UAUA) is in merger talks with US Airways (LCC).

The New York Times writes that the WB TV network will return as a website.

The FT reports that Deutsche Bank (DB) had its first loss in five years.

The FT writes that the Saudis will launch a $5.3 billion sovereign fund.

The FT writes that the Rockefeller family is pushing for Exxon (XOM) to have a more independent board.

Bloomberg reports that profits at BP (BP) rose sharply.

Douglas A. McIntyre

Posted on: April 29, 2008 – 2:40 am in Press Digest, , , , , , , , , , , , , ,

Media Digest 4/11/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, Bernanke says that the current financial system can be fixed.

Reuters writes that Google (GOOG) is using Frank Quattrone as its investment bank advisor.

Reuters reports that banks involved in the Clear Channel (CCU) buy-out argued that the case against them should be dismissed.

Reuters reports that Delta (DAL) and its pilot’s union have reached an agreement that will let a merger with Northwest (NWA) move forward.

The Wall Street Journal writes that most observers believe that a Microsoft (MSFT) deal to buy Yahoo! (YHOO) is the most likely outcome of the struggle between the two companies.

The Wall Street Journal writes that Fontier Airlines (FRNT) has filed for Chapter 11.

The Wall Street Journal reports that a poll of economists shows they believe the economy will ger worse.

The Wall Street Journal writes that Verizon (VZ) is in a legal dispute with Time Warner Cable (TWC) about connection speeds of the two company’s broadbands offerings

The Wall Street Journal reports that Lehman (LEH) repackaged some of its unsold buyout loans into a new security that it used as collateral to obtain cash loans from the Fed.

The Wall Street Journal writes that profits at Genentech (DNA) rose on solid revenue gains.

The New York Times writes that George Soros has given a dire forecast for the economy.

The New York Times reports that March retail sales for most big chains were weak.

The FT writes that AMR (AMR) has cancelled another 1,500 flights.

The FT reports that Wal-Mart (WMT) had strong March sales and lifted its outlook.

The FT writes that a number of airlines want compensation for delays in Boeing’s (BA) 787.

Bloomberg writes that GE’s (GE) push for revenue overseas may help the company weather the US downturn.

Douglas A. McIntyre

Posted on: April 11, 2008 – 2:52 am in Press Digest, , , , , , , , , , , ,

Top 10 Pre-Market Analyst Calls (ATHN, BBBY, CNQ, CCU, COCO, EL, ESI, CRM, PCU, URBN)

Below are the top analyst calls we are focusing on this Wednesday morning in pre-market trading:

  • AthenaHealth (NASDAQ: ATHN) started as Outperform at JMP Securities.
  • Bed Bath & Beyond (NASDAQ: BBBY) cut to Sell at Piper Jaffray.
  • Canadian Natural Resources (NYSE: CNQ) raised to overweight at Lehman Brothers.
  • Clear Channel (NYSE: CCU) cut to Hold at Stanford Research.
  • Corinthian Colleges (NASDAQ: COCO) cut to Neutral at Piper Jaffray
  • Estee Lauder (NYSE: EL) cut to Sell at Piper Jaffray.
  • ITT Educational (NYSE: ESI) cut to Neutral at Piper Jaffray.
  • Salesforce.com     (NYSE: CRM) cut to Market Perform at Bernstein.
  • Southern Copper (NYSE: PCU) started as Sell at Citigroup.
  • Urban Outfitters (NASDAQ: URBN) cut to Neutral at Piper Jaffray.

Jon C. Ogg
April 9, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Posted on: April 9, 2008 – 6:59 am in Analyst Calls, , , , , , , , , ,

Who Will Buy Sirius (SIRI): If It Has To Be Sold?

Once The Justice Department cleared the merger of Sirius (NASDAQ: SIRI) with XM Satellite (NASDAQ: XMSR) and there was some anticipation that the deal would get done the shares of both companies should have gone up. A year ago, the combination was viewed as a dream deal.

If anything, the shares dropped. Sirius is below $3 and XM is below $13. The market began to realize that the year which was wasted on getting government approval was a year the companies need to stay competitive. XM has over $1 billion in debt. Refinancing it in the current market would be nearly impossible. Selling shares would lead to extremely large dilution.  As we recently noted, Goldman Sachs even put Sirius on its "Conviction Sell List" with a price target of $2.25.

Growth at Sirius has slowed considerably. In the fourth quarter revenue rose only 29% to $250 million. But, for the full year, revenue was up 45%. Subscriber deactivations in the fourth quarter were almost 540,000 compared to 330,000 in the same quarter of 2006. The firm’s net loss was $166 million. Long-term debt was almost $1.3 billion.

The market is also concerned that combining the two companies may not lead to big cost savings, at least not initially. Sirius and XM run on separate satellite platforms. As The Wall Street Journal points out "The companies’ combined 17 million subscribers have radios that aren’t interoperable. Radios that can receive signals from both companies likely wouldn’t be available for at least a year after the merger – and a year or two after that for customers who get satellite radios via new car purchases."

Sirius and XM also face competition which did not exist when they were started. Near the top of that list are HD radio, the Apple (NASDAQ: AAPL) iPhone, and a host of cellphones that download and play music.

If the new company does run into debt service problems and needs to find a buyer, the cost of the common shares is likely to be over $4 billion, unless the situation gets extremely bad. The debt of the two operations taken together is well over $2.2 billion.

The most appropriate buyer for the satellite radio company would be Clear Channel (NYSE: CCU) which has over 700 radio stations.  The odds that regulators would allow a de facto monopoly in the radio business puts the chances of this at is close to zero.

Since the car companies are the major conduit for satellite radio sales one of them might buy the firm to keep it operating. With market caps of under $15 billion, GM (GM) and Ford (F) are not candidates. With a $161 billion market cap, Toyota (TM) could swing a deal. But,the US car companies might raise a stink about their largest competitor providing the service. It is just the kind of thing that Congress likes to hold hearings over.

There is a theory, a weak one, that one of the telecom companies, probably Verizon (NYSE: VZ) or AT&T (NYSE: T) would want to own a satellite radio company to offer another service to bundle with cellular, broadband, TV, and landlines. The larges cable companies, Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) would have a similar incentive. Sirius and XM should have over 20 million subscribers by the end of this year. But, the analysis of how many of those customers could be "cross sold" bundled services probably would not justify the cost of an acquisition.

In the end, that leaves the satellite TV firms, Dish Network (NASDAQ: DISH) and DirecTV (NYSE: DTV). DirecTV has the larger market cap at $29 billion. That makes it a more likely buyer. The company has 17 million customers and 1,800 digital audio and video channels. DirectTV had $617 million in operating income in the fourth quarter of last year. John Malone’s Liberty Media Corp owns 470 million share of DTV. That would make Malone the key to any decision. DirecTV knows that programming and technical aspects of satellite-delivered content as well as any company.

There may be no logical home for Sirius, and that may be why the shares trade so low.

Douglas A. McIntyre

Some of these names have been discussed on our open email distribution list as well as been under review for our "Stocks Under $10" weekly newsletter.

Posted on: April 2, 2008 – 9:41 am in Satellite, , , , , , , , , , , , ,

Media Digest 4/1/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, US car sales for March are likely to be off sharply.

Reuters writes that Microsoft (MSFT) will not raise its bid for Yahoo!  (YHOO)

Reuters reports that UBS (UBS) will take a write-down of $19 billion on U.S. real estate and related assets and have a large loss in Q1.

Reuters writes that Wal-Mart will offer its own private lable brand of coffee.

Reuters reprots that Lehman Brothers (LEH) will raise $3 million.

The Wall Street Jounal writes that the chairman of UBS will leave and the bank will raise  to $12 billion.

The Wall Street Journal writes that Deutsche Bank (DB) will write-off almost $4 billion

The Wall Street Journal writes that US farmer will plant less corn

The Wall Street Journal writes that Schering-Plough (SGP) and Merck (MRK) are defending the effectiveness of a cholesterol drug which the FDA panel says does not work well.

The Wall Street Journal says IBM (IBM) was suspended from new federal work.

The Wall Street Journal writes that the market in credit-default swap has gotten huge but is largely unregulated.

The Wall Street Journal writes that Dell (DELL) will close on of its large plants.

The New York Times writes that banks are trying to get courts to dismiss claims that they must fund a buy-out of Clear Channel (CCU).

The FT writes that hedge funds had one of their worst quarters ever.

Bloomberg writes that the NYC real-estate market is slowing due to trouble on Wall St.

Douglas A. McIntyre

Posted on: April 1, 2008 – 2:52 am in Press Digest, , , , , , , , , ,

Media Digest 3/27/2008 Reuters, WSJ, NYT, FT, Bloomberg

According to Reuters, Oppenheimer cut is earnings forecasts for Merrill Lynch (MER) and UBS (UBS) a day after cutting Citigroup (C) and Bank of America (BAC).

Reuters reports that the Meriwether hedge fund is down 28% so far this year.

Reuters reports that Tata Motors say it purchase of Jag and Rover from Ford (F) will improve its balance sheet.

Reuters writes that the buyers of Clear Channel (CCU) have sued banks to close the $19 billion deal.

Reuters writes that earnings at Oracle (ORCL) missed some estimates and the stock fell.

Reuters also reports that Motorola (MOT) will split itself into two companies.

The Wall Street Journal writes that Comcast (CMCSA) and file sharing company BitTorrent will work together.

The Wall Street Journal reports that AMD (AMD) has launched its new family of chips.

The Wall Street Journal reports that Paulson want the Fed to have more power over securities firms.

The Wall Street Journal writes that Citigroup has settled a large lawsuit over the Enron collapse.

The Wall Street Journa reports that Nokia (NOK) is making a number of moves to take handset share in the US.

The New York Times writes that home equity loans may be the next round in the credit crisis.

The New York Times reports that Congress is demanding details about the Bear Stearns (BSC) deal.

The New York Times writes that Take-Two (TTWO) has rejected an offer from Electronic Arts (ERTS).

The New York Times reports that oil moved up sharply to $106 a barrel.

The FT writes that Rambus (RMBS) won a major patent suit

Bloomberg writes that taxpayers may be liable for billions of dollars from Fed and Treasury efforts to help financial firms.

Douglas A. McIntyre

Posted on: March 27, 2008 – 2:55 am in Press Digest, , , , , , , , , , , , ,

Media Digest 3/26/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, Comcast (CMCSA) and Time Warner Cable (TWC) are in talks to fund a wireless venture to be operated by Clearwire (CLWR) and Sprint (S).

Reuters writes that new home sales probably dropped again in February.

The Wall Street Journal writes that the stock market is trading where it was nine years ago moving in the direction of downturns in the 1930s and 1970s.

The Wall Street Journal writes that JP Morgan (JPM) has already started to put the primary brokerage part of Bear Streans (BSC) into its own operation beginning what will be a larger integration.

The Wall Street Journal writes that the Clear Channel (CCU) buy-out is near a collapse.

The Wall Street Journal writes that Ford (F) will announce its plan to sell Jaquar and Rover to Tata.

The New York Times writes that China shipped $12 billion in engine auto parts last year, pressuring the industry in North America.

The FT writes that banks are hoarding money and not passing on rates from centrail banks to customers.

The FT reports that banks in the The Federal Home Loan Banking system want to start a "mononline" insurance business to help local government bonds.

Bloomberg writes that Goldman Sachs believe write-offs at US banks and brokerages may hit $460 billion, four times that amounts already disclosed.

Douglas A. McIntyre

Posted on: March 26, 2008 – 2:49 am in Press Digest, , , , , , , ,

Clear Channel (CCU): Another Buy-Out Heads To Trash Bin

Thomas H. Lee and Bain Capital agreed to buy broadcast company Clear Channel (CCU) for $39.20 a share. As usual, several banks are putting up most of the money, an obligation of $18 billion in this case.

With LBO debt being written down right and left, it would be understandable if the banks had lost some of their lust for the transaction. According to The Wall Street Journal, the banks say the deal is in trouble because the two private equity firms have cold feet. The firms blame the banks.

Broadcast advertising revenue is falling apart, so it could be that all of the financial players involved would like out of the deal.

Then, it can end up in court.

Douglas A. McIntyre

Posted on: March 20, 2008 – 5:33 am in Uncategorized,

Media Digest 3/20/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, the war between Northrop Grumman (NOC) and Boeing (BA) is now going on in Congress and the public.

Reuters says Dell (DELL) will buy $23 billion of components in China in 2008.

Reuters writes that Borders (BGP) suspended its dividend and will look for a buyer

Reuters writes that Toyota (TM) is unlikely to make 2008 sales targets.

The Wall Street Journal writes that the Clear Channel (CCU) buy-out is in trouble.

The Wall Street Journal reports that airlines will have to restructure due to problems with oil prices and the economy.

The Wall Street Journal reports that Credit Suisse will report a loss this quarter.

The Wall Street Journal writes that the supply of oil may keep prices high.

The Wall Street Journal writes that car-makers are cutting costs due to an anticipated deep slump

The Wall Street Journal writes that an appeal court ruled against Qualcomm (QCOM) in a key patent case.

The Wall Street Journal repots that Verizon Wireless detailed its open network policy.

The New York Times writes that BNP Paribas says it will not buy rival Societe Generale

The FT writes that shares in Merrill Lynch (MER) fell over concerns about CDO write-offs

The FT writes that Boeing (BA) will probably delay its Dreamliner again.

Douglas A. McIntyre

Posted on: March 20, 2008 – 3:19 am in Press Digest, , , , , , , ,

Big Lawsuits Finally Hit The Private Equity World

It is surprising that it took so long. A private equity firm is finally suing a bank that walked on a big transaction. It is only the beginning.

Wachovia (WB) skipped out on its obligation to fund the Providence Equity buy-out of Clear Channel’s (CCU) TV stations. The banks reasoning was perverse. The deal terms had changed so it had the right to exit. But, the change in terms made the transaction better for the bank.

Legal eagles at the money center banks have decided that it is wiser to pay a break-up fee than to take more LBO debt onto their balance sheets. They cannot syndicate this debt to other institutions because of fear that too much leverage on the companies’ balance sheets could cause defaults in a recession.

The argument has the benefit of being true, but it does no take the banks away from their obligations.

On the scales of their reasoning the banks clearly think that the litigation costs outweigh the costs of more write-offs and having to raise more capital. It is the kind of theory that is true until it is not.

Banks now may face an onslaught of suits over broken deals. They will lose some of them and find that the price of breaking their word may be more than they imagined.

Douglas A. McIntyre

Posted on: February 29, 2008 – 6:38 am in Mergers and Buy Outs, ,

Media Digest 2/29/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, Paulson believes that the current proposal to help homeowners is too broad and may help speculators.

Reuters writes that Microsoft (NASDAQ:MSFT) has cut the price of Vista to encourage upgrades.

Reuters writes that AIG (AIG) posted a $5.3 billion loss.

Reuters reports that ad company WPP believes that 2008 will be a better year than 2007.

Reuters writes that the Sony (SNE) PS3 should have a strong year due to lower retail prices and new games for the console.

The Wall Street Journal writes that the net at Dell (DELL) slipped as the company tries to deal with costs.

The Wall Street Journal says that Microsoft knew that lowering the requirements on PCs that run Vista was a mistake.

The Wall Street Journal reports that Bain will resubmit its offer to buy 3COM (COMS).

The Wall Street Journal writes that Ebay (EBAY) has settled a major patent dispute.

The Wall Street Journal reports that "the Financial Accounting Standards Board will re-examine rules that allow banks to keep assets in special financing vehicles, off the books."

The Wall Street Journal writes that Providence Equity has sued Wachovia (WB) over closing a deal to by TV stations from Clear Channel (CCU)

The Wall Street Journal writes that the surge in oil makes it more likely that OPEC will hold production steady.

The New York Times writes that Viacom (VIA) profits rose on the strength of it studio results.

The FT reports that private equity firms are raising tens of billion of dollars despite a tough economy.

Bloomberg reports that auction-rate bond failures have lead to the worst month for munis since 2003.

Douglas A.McIntyre

Read More »

Posted on: February 29, 2008 – 4:15 am in Press Digest, , , , , , , , ,

Clear Channel (CCU) And Wachovia (WB): Another Bank Walks Away

Clear Channel (NYSE: CCU) has settled its differences with Providence Equity for the LBO firm to buy its TV properties. The dispute had made it to court. The original price was $1.2 billion, but that probably came down some.

Now that the fist fight is over, Wachovia (NYSE: WB) which was to supply $500 million for the deal, has walked out. It claims that, since the deal has changed, it has the right to withdraw. According to The Wall Street Journal "Wachovia has argued that even though the sale price is lower and the new agreement contains a larger equity component, it is a separate transaction from the one it originally agreed to fund."

It is a novel new theory. Since the equity component of the deal went up, Wachovia should be taking on less risk. There is a break-up fee of $45 million in the transaction, but the bank will probably argue that it will not pay that since the deal terms were altered.

The story is near-perfect example of the banks, encouraged by their legal advisers, turning their backs on customers to save their own skins. Even with the risk of a termination fee and potential suits from Providence and Clear Channel, Wachovia does not want to take on more LBO debt which it might have to write-down if it cannot be syndicated. New losses from the loans might force the bank to have to raise more money in the open market or from sovereign funds.

Even though it may have squeezed Wachovia to stay in the deal, its reputation as a class operation has taken a huge hit.

Douglas A. McIntyre

Posted on: February 25, 2008 – 6:24 am in Mergers and Buy Outs, ,

Media Digest 2/25/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

Accordig to Reuters, Alan Greenspan says that the US economic growth is zero and that the oil boom will go on "forever."

Reuters writes that the National Association for Business Economics survey predicts that the economy will slow by avoid recession.

Reuters writes that the Cerberus problems at Chrysler, GMAC, and other firms it owns are deepening.

The Wall Street Journal writes that Electronic Arts (ERTS) has made a $2 billion offer for Take-Two (TTWO).

The Wall Street Journal reports that Clear Channel (CCU) has settled it buy-out disagreement with Providence Equity but Wachovia (WB) may walk away from the financing.

The Wall Street Journal writes that Goldman Sachs (GS) may post its lowest profit in three years due to write-downs in debt from corporate buy-outs.

The New York Times writes that oil moved back towards $100 on movements of Turkish troops into Iraq.

The New York Times writes that movie studios are facing a sharp drop in DVD sales.

The New York Times writes that Adobe (ADBE) has created a platform which will allow thousands of applications to run on PCs and the internet.

Bloomberg writes that the failure of the auction rate market is forcing up interest rates for municipalities.

Douglas A. McIntyre

Posted on: February 25, 2008 – 4:01 am in Press Digest, , , , , ,

Failed Private Equity Deal Blow-Ups, Major Share Erosions Remain (COMS, ADS, BX, SLM, URI, CCU)

There is a menagerie of companies with stocks that look like the boulevard of broken dreams because of the woes in the stock market and economy in January.  But no group looks as bad as the group of the recently failed private equity buyouts.  Some of the losses here may seem excessive compared to what would have been the buyout price, but that is the new private equity M&A world for you. 

You can see how wide these spreads would be if they magically reappeared.  And NO, these prices won’t come back any time soon.

The freshly failed acquisition of 3Com Corp. (NASDAQ: COMS) by Bain Capital Partners LLC & Huawei was originally $5.30 cash, although the last ditch effort to please CIFIUS via a unit sale would have resulted in a lower price. If that magically came back, you’d be looking at an 82% gain.

The deal for Alliance Data Systems Corp. (NYSE: ADS) from The Blackstone Group, LP (NYSE: BX) may or may not happen, but the original price of the buyout offer was $81.75.  It is nearly impossible to think that price would ever be a buyout price in today’s environment, but that would represent a 54% premium to current prices.

SLM Corp. (NYSE: SLM), or Sallie Mae, was being J.C. Flowers & Co. before that merger was called off.  The company was originally being offered $60 per share and then it was briefly revised lower to $50 per share before being ditched altogether.  If that $50 number magically came back, that would represent a whopping 127% premium.  If that $60 pipe dream ever came back, the gains compared to today would be a whopping 172% gain.

United Rentals (NYSE: URI) buyout from Cerberus was $34.50, but it at least looks like it got its $100 million deal termination fee.  If that premium magically came back, that would be more than an 80% premium compared to today.

Clear Channel Communications Inc. (CCU), Thomas H. Lee Partners LP/Bain Capital Group is not yet a busted deal, although this $39.20 cash price is roughly 25% above today’s share prices.  This one has taken long enough that it seems Methuselah is in charge of this approval and decision process.

For whatever this is worth, investors looking at any of these companies better be looking at each company individually.  It isn’t like there weren’t some problems that either kept these mergers from happening, even if the buyout firms have had to gear down their efforts to more of true private equity firms instead of LBO firms.

Jon C. Ogg
February 21, 2008

On our open email distribution list you can see more detailed merger-arb spreads and other key issues in private equity, M&A, IPO’s, spin-offs and more.

Posted on: February 21, 2008 – 12:53 pm in Mergers and Buy Outs, Private Equity, , , , , ,

Media Digest 2/18/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, China e-commerce company Alibaba will try to participate in the decision of the potential sale of Yahoo! (YHOO) to Microsoft (MSFT) Yahoo! owns 39% of Alibaba and there are some restrictions on the transfer of that stake.

Reuters writes that Qatar has bought a stake in Credit Suiss and plans to spend $15 billion in the next year to invest in banks in Europe and the US.

Reuters writes that Toshiba will probably give up on its HD DVD initiative in the next few weeks.

The Wall Street Journal writes that the USDA has recalled 143 million pounds of frozen beeft.

The Wall Street Journal writes that Ambac (ABK) is in discussios about breaking itself into two pieces to protect its muni-bond insurance operation.

The Wall Street Journal reports that Providence Equity is disappointed in a suit by Clear Channel (CCU) to force the completion of an LBO.

The New York Times writes that a large number of Apple (AAPL) iPhones are being smuggled into China.

The New York Times writes that the British government has taken over troubled mortage lender Northern Rock.

The FT writes that wheat prices have soared to a new high.

Douglas A. McIntyre

Posted on: February 18, 2008 – 4:41 am in Press Digest, , , , ,