Denbury has operations in the Barnett Shale play in Texas, and tertiary recovery fields in Texas, Louisiana, and Mississippi. The company also owns a large carbon dioxide deposit in Mississippi. The CO2 is used in a technique called CO2 flooding to cover more barrels from existing fields. Denbury is also building a new CO2 pipeline, which the company hopes to use to pipe carbon dioxide from power plant emissions to fields for enhanced oil recovery.

Denbury shares are up nearly 8% this morning. The company’s 52-week range is $5.59-$40.32, and its market cap as of yesterday was $4.03 billion.

Paul Ausick
March 26, 2009

A few very large deals have been done recently. Most were first proposed several months ago. They were likely to work because they were what investment bankers call “strategic.” Usually that means that the two companies involved are in the same business. They see “synergies” which involve things like taking the R&D geniuses from the acquiring company and putting them in the same room with their counterparts from the firm being acquired. Working together may set off the creative sparks that drive new discoveries. Or, they may not. The real but hidden definition of the word “synergy” is firing lots of people. The recently closed marriage between Dow Chemical (DOW) and Rohm and Haas (ROH) was about firing people. Pfizer (PFE) bought drug company Wyeth (WYE) for the same reason. Being in the pharmaceuticals business is not what it used to be. Blockbuster drugs face competition. Keeping hundreds of research scientists around is expensive.

Roche recently bought Genentech (DNA), a company in which it was already the largest shareholder. That deal was not just about firing. Biotech operations like Genentech are the next generation of pharma companies. Roche wants in on that action. It had the tremendous advantage of only having to buy part of the shares in Genentech. Aside from getting customers and new products, Roche got control of the whole company and merely had to acquire 44% of the shares.

M&A may be coming back. Not the kind of M&A that is about firing but the kind where the excuse for the buyout is more positive than layoffs. And, the impetus for the move up in M&A activity is probably that the stock market has been going higher recently.

IBM (IBM) is in talks to buy server company Sun (JAVA). Sun has had a difficult time making it all alone. It sits in fourth or fifth place in terms of market share. Giants like Hewlett-Packard (HPQ) top that list. Sun has no chance of ever making it to one of the top three spots. The company has already fired thousands of people, so it is lean, maybe too lean to grow. IBM has been watching Hewlett-Packard become a more formidable competitor. And, Cisco (CSCO) recently said it would get into the high-end server business. The number of huge companies that want a piece of IBM’s business seems to be growing.  IBM gets new technology by buying Sun, but, more importantly, it gets Sun’s market share.

Sun’s stock is way down. Before the rumor about an IBM deal hit the news, Sun traded at $5, less than a third of its 52-week high. What was lost in the commotion about the buyout was that Sun’s shares had moved from $3.84 to $5 in just six trading days. Most of that increase was due to the rally in the overall market. And, if the market keeps going up, the price of potential acquisitions is going to get more expensive, even if the underlying businesses of the targets has not changed.

Companies that want to get bigger or round out their portfolios of businesses have probably been on the phone with their investment bankers in the last two weeks. It may be the first time that some bankers have gotten a client call in a year. There is a rush to look at targets now, because if the market moves up another 10% or 15%, a lot of companies that were cheap will get expensive.

Time Warner (TWX) may not be planning to buy CBS (CBS), although it would make some sense. If a deal like that was on Time Warner’s mind, CBS has gotten 29% more expensive in the last five days. If Exxon Mobil (XOM) wants to buy Chevron (CVX), the price is up 9% in five days.

Cheap is getting expensive. The environment for M&A may not be as safe as it was two years ago, but the targets have begun to cost more.

Douglas A. McIntyre

Reuters reports that some economists believe that the US economy will start to rebound in the second half of the year.

Reuters says that the Dow Chemical (DOW) merger with Rohm and Haas (ROH) will now go through.

Reuters reports that Eli Broad who invested in AIG (AIG) has given up hope that the company will recover.

Reuters reports that the US is weighing future aid for Citigroup, if needed.

Reuters reports that Moody’s (MDO) has listed those companies at greatest risk for default.

Reuters reports the Manpower says the global downturn in the job market is continuing.

Reuters reports that the US auto task force met with GM (GM), Chrysler, and the UAW.

The Wall Street Journal reports that Roche is near a deal to buy Genentech (DNA).

The Wall Street Journal reports that the UAW has agreed to concessions to Ford (F).

The Wall Street Journal writes that central bankers in Europe are beginning to see signs of hope that the economy will recover.

The Wall Street Journal reported that oil is rising putting $50 in sight.

The Wall Street Journal reports that airlines are hitting trouble as customers flee.

The Wall Street Journal reports that Sun (JAVA) is seeking new customers for flash-based storage.

The Wall Street Journal reports that the head of IBM (IBM) says that the company will “go on the offensive”.

The Wall Street Journal reports that China consumer prices fell causing concern about deflation.

The Wall Street Journal reports that Bank of America (BAC) keeps saying it is not Citigroup.

The Wall Street Journal reports that US firms in China are bringing down their expectations.

The Wall Street Journal reports that TI (TXN) narrowed its forecast for this quarter.

The Wall Street Journal reports that Palm (PALM) moved to raise cash.

The New York Times reports that investors in biotech companies are losing patience.

The New York Times reports that ‘quants” tried to out smart Wall St.

The New York Times reports that EADS made a profit for the year.

The New York Times reports that short sellers are showing a knack for deals.

The FT reports that Europe rejects a US call for additional stimulus.

The FT reports that Citigroup did well in the first two months of the year.

The FT reports that more concerns have hit the credit markets.

The FT reports that Barclays (BCS) has been warned about toxic asset dumping.

Bloomberg reports that hedge funds may cut 20,000 jobs this year.

Bloomberg reportd that a survey of economists says joblessness will reach 9.4% this year.

Douglas A. McIntyre

Get the closing date: NO LATER THAN APRIL 1. Interestingly enough, the WSJ has run a report noting that no settlement has yet been reached.

This is pretty amazing when you consider what has happened in the economy.  It looks like shares were halted at $74.91, but that was after a 17% run.  We did expect a settlement of some sort.  But we expected a mere payment of damages or a much lower price to the merger than the $78.00 price tag.  On Friday morning, Rohm & Haas common stock was trading under $55.00.

JON C. OGG

Reuters reports that AIG (AIG) got billions of dollars from the government that it paid out to other firms.

Reuters reports that Exxon (XOM) will try to take a big role in Iraq’s oil sector.

Reuters says that Lloyd will meet with investors on its plan to have the UK government take a majority stake in the company

Reuters reports that General Growth has asked bondholders for an extension.

Reuters writes that Pepsi’s (PEP) Quaker Oats will refocus on the health benefits of its products.

Reuters reports that China will lower export taxes to zero.

Reuters reports that Dow Chemical (DOW) says M&A talks between Rohm and Haas (ROH) are going well.

The Wall Street Journal reports there is a new fear that credit markets are tightening.

The Wall Street Journal reports that one of Madoff’s executives got fake trading tickets.

The Wall Street Journal writes that the US will push world leaders to spend more on economic stimulus.

The Wall Street Journal writes that jobless scars will outlast the recession.

The Wall Street Journal reports that the Obama car team is finishing up in Detroit.

The Wall Street Journal reports there are cases that the DJIA could fall to 5,000.

The Wall Street Journal reports that Japan posted its first deficit in a decade.

The Wall Street Journal reports that P&G (PG) may make luxury cosmetics.

The Wall Street Journal reports that Chrysler is using more foreign designers.

The Wall Street Journal reports that Lazard named a new M&A head.

The Wall Street Journal reports that more OPEC cuts are unlikely.

The Wall Street Journal reports that large investors are buying gold.

The Wall Street Journal reports that the new Firefox browser may cut Google (GOOG) inquiries.

The Wall Street Journal reports that the oil industry is trying to limit layoffs.

The Wall Street Journal reports that Sinopec says it performance is improving.

The Wall Street Journal reports that CBS (CBS) has made a $6 billion wager on the NCAA.

The New York Times reports that the strength of the US dollar is making it harder for poorer countries to raise money.

The New York Times reports that the World Bank says the global economy will shrink this year for the first time since WWII.

The New York Times reports that NBC (GE) is being strengthened by strong news shows.

The New York Times reports that customized newspapers might bring readers back.

The New York Times reports that GM (GM) Canada is offering labor a deal that could restrict job cuts.

The FT reports that AIG’s (AIG) former head Greenberg says the US bungled the rescue of the company.

The FT reports that “Falls in the value of financial assets worldwide might have reached more than $50,000bn, equivalent to a year’s global economic output, the Asian Development Bank will warn”

Bloomberg reports that GE’s (GE) CEO says that Armageddon will leave him and GE intact.

Bloomberg reports that HSBC (HBC) fell to a 12-year low.

Bloomberg reports that AIG warned that its failure would cripple world banks.

Bloomberg reports that oil futures are near $50 on fears that OPEC plans another production cut.

Douglas A. McIntyre

IPIC is wholly owned by the Government of the Emirate of Abu Dhabi.  It might not be fair to compare this to the failed Dow Chemicals (NYSE: DOW) deal with the Kuwaitis.  But that is hard to forget what implications that had on the buyout of Rohm & Haas (NYSE: ROH) by Dow.

Nova was in the gutter already as its shares were at $1.34 Friday.  Even at $6.00, this is down over 80% from last year’s high of $32.46.  This deal is going to be great for those speculators who piled in on the hope of something happening.  And it is going to lock in some major losses for long-term investors who held on.

This might be a small deal.  At least it shows that sovereign wealth funds are not completely out of the picture.

Jon C. Ogg
February 23, 2009

The early read on the merger agreement was that Dow could not get out and was probably facing billions of dollars in damages.

Now, it looks like the people who screwed up Dow’s chances of making an easy financial deal without having to go into the credit markets to buy ROH have come to Dow’s rescue.

According tothe FT, “The Kuwait Investment Authority would consider increasing its support for Dow Chemical’s disputed takeover of Rohm and Haas if the terms of the deal were changed to account for the downturn.” Kuwaiti Petroleum Corporation was going to set up a joint venture with Dow and that would have given the big chemical company $7.5 billion in cash. The KPC walked away, leaving Dow without the capital it needed to close the Rohm deal.

But, Rohm and Haas’s fight is probably not over. The part of the Kuwait potential financing which suggests that the deal be changed to account for the recession is not going to work. ROH has too much leverage. It will continue to force Dow by pushing it legal recourse and lambasting Dow in the press.

If Kuwait is earnest in helping Dow, it will put up a portion of the capital to complete the ROH transaction and force Dow into the credit markets to get the rest.

Douglas A. McIntyre

Reuters reports that a poll of analysts cut Q2 earnings forecasts.

Reuters reports that Amazon (AMZN) launched a new Kindle

Reuters reports that UBS (UBS) will cut jobs after a Q4 loss.

Reuters writes that GM’s (GM) Lutz will retire.

Reuters writes that Russia says it will have no debt restructuring.

Reuters reports that US life insurers are being dragged down by bad investments.

The Wall Street Journal reports that Obama warned of a lost economic decade.

The Wall Street Journal reports that the best rated firms like Cisco (CSCO) are able to raise money.

The Wall Street Journal reports that emerging markets are seeing an economic slowdown.

The Wall Street Journal reports that the board of Genentech (DNA) tried to get a higher offer from Roche.

The Wall Street Journal reports that the UK said European regulators should give more power to local countries to oversee banks.

The Wall Street Journal reports that junk funds are looking at the high end of distressed debt.

The  Wall Street Journal writes that JC Penney (JCP) is focusing on trendy lines.

The Wall Street Journal reports that Sandisk (SNDK) sees a rise in storage chips.

The Wall Street Journal reports that OPEC is delaying drilling projects.

The Wall Street Journal reports that Fedex (FDX) will cut 900 jobs.

The Wall Street Journal reports that Boeing (BA) won its satellite arbitration case.

The Wall Street Journal reports that Disney (DIS) is closing a deal with Dreamworks.

The Wall Street Journal writes that company inventories probably shrank last month.

The Wall Street Journal reports that the Treasury is turning to the Fed for improving lending.

The Wall Street Journal reports that Nomura fell 14%.

The Wall Street Journal writes that NYSE (NYX) posted a loss.

The Wall Street Journal reports that crude dropped under $40.

The Wall Street Journal reports that a plan by China to put money into Rio Tinto (RTP) forced its chairman out.

The Wall Street Journal reports that Pfizer (PFE) will report payments to doctors.

The Wall Street Journal reports that McDonald’s (MCD) sales moved up sharply in January.

The Wall Street Journal reports that Cablevision (CVC) went into the debt markets again.

The New York Times reports that the new stimulus bill could help tech and energy companies.

The New York Times reports that retail credit cards are facing worse defaults that the rest of the credit card market.

The FT writes that China inflation hit a 30-month low.

The FT reports that Kuwait may back the Rohm and Haas (ROH) with Dow (DOW).

The FT reports that IBM (IBM) will push further into cloud computing.

The FT reports that GM (GM) is fighting to avoid Chapter 11.

Bloomberg reports that an analyst believes Fannie Mae (FNM) and Freddie Mac (FRE) need $200 billion in aid.

Bloomberg reports that analysts think that the House stimulus bill will create more jobs that the Senate version.

Douglas A. McIntyre

Dow Chemical (DOW) continues to dodge the issue of why it will not close the transaction to buy Rohm and Haas. (ROH). Most analysts think that when a joint venture with Kuwait fell though Dow lost about $7 billion in payments that would have been part of the Middle East transaction. Dow would have used that money for the ROH deal.

Dow has made the claim that because the chemicals industry has fallen apart, finishing the acquisition of Rohm faces huge financial hurdles. Dow also claims that it does not have access to the credit necessary to close.

Rohm and Haas has begun the process of settling the dispute with Dow in the court system, and it would seem to have an unusually solid case.

In a letter from the Rohm and Haas board sent to Dow yesterday after a series of meetings between the two companies, it said “At none of those meetings, despite our repeated requests, did Dow’s representatives provide ours with meaningful details of what Dow is doing to secure financing for the merger.”

Dow has not come public with a specific description of exactly why it cannot obtain the money. It won’t make that disclosure because it has access to the capital. It does not want to admit that the price of that cash is more than it wants to pay, not more than it is able to pay.

Douglas A. McIntyre

Reuters reports that Moody’s cut Toyota’s (TM) rating for the first time in 10 years.

Reuters writes that estimates are that the US lost 525,000 jobs in January.

Reuters reports that investments in AIG (AIG) and Citigroup (C) bought the government the least value for its money among financial firms it has given money.

Reuters reports that Toyota (TM) will loss almost $5 billion in the current fiscal year.

Reuters reports that Nomura plans to raise $3.3 billion.

Reuters reports that the government is thinking of converting its investments in US banks instruments which could give them common shares.

Reuters reports that British Airways posed a loss due to the economy.

Reuters reports that News Crop (NWS) posted its largest quarterly loss ever.

The Wall Street Journal reports that the new bank bailout program will have tougher terms and would get the US bigger pieces of banks

The Wall Street Journal reports that states are running low on capital for jobless claims.

The Wall Street Journal writes that nations are creating barriers to trade to protect some industries.

The Wall Street Journal reports that Bank of America’s (BAC) CEO bought more shares.

The Wall Street Journal reports that the lack of a "car czar" has slowed Detroit’s restructuring plans.

The Wall Street Journal reports that Sirius (SIRI) and EchoStar (DISH) are in talks over SIRI debt.

The Wall Street Journal reports that the Senate passes a bill to limit pay at banks getting TARP funds.

The Wall Street Journal reports that Lenovo will renew its focus on Chinese markets.

The Wall Street Journal reports that the unemployment rate could hit 7.5%

The Wall Street Journal reports that productivity is up as companies cut jobs.

The Wall Street Journal reports that pay limits for financial executives have loopholes.

The Wall Street Journal reports that Moody’s is looking at its rating for commercial real estate bonds.

The Wall Street Journal reports that a government watch dog says the US paid too much for bank shares.

The Wall Street Journal reports that government investment in some securities may give them higher values which are to some extent false.

The Wall Street Journal reports that many retailers have stopped making forecasts.

The Wall Street Journal reports that a major Rohm and Haas (ROH) investor is pressing Dow (DOW) to close it acquisition deal.

The Wall Street Journal reports that newspaper chain McClatchy (MNI) posted an operating loss.

The Wall Street Journal reports that Warner Music (WMG) results were better than expected.

The New York Times reports that China’s unemployment is swelling.

The FT reports that the US is hiring experts to look at auto company restructuring and some have backgrounds in bankruptcy.

The FT reports that the CEO of GE (GE) warned of a depression threat.

Bloomberg reports that US car parts companies may seek over $25 billion in government aid.

Douglas A. McIntyre