24/7 Wall St. » TXU

Media Digest 12/3/2007 Reuters, WSJ, NYTimes, FT, Barron’s

247wallst — Mon, 03 Dec 2007 04:16:32 +0000

According to Reuters, a study by America’s Research Group says most shoppers will wait to buy until late in the month, looking for sales.

Reutes writes that Nasdaq (NDAQ) has opened its office in China, looking for listings there.

Reuters reports that OPEC is unlikely to change crude oil output when its ministers meet in the United Arab Emirates this week, Qatar’s Oil Minister Abdullah al-Attiyah

Reuters writes that Vivendi will take a controlling position in video game company Activision (ATVI).

According to The Wall Street Journal, a number of subprime loans went to people with good credit, which may change bank and government views of the problem.

The Wall Street Journal reports that Lennar (LEN) has sold 11,000 home sites to Morgan Stanley (MS) ins a sign big investors are looking for borrowers.

The Wall Street Journal writes that JP Morgan (JPM) will put $200 million into entertainment ventures in the hopes of a strong return.

The Wall Street Journal writes that the Citadel deal to buy E*Trade’s bank may set a value on mortgage-related securities which could effect write-offs by Citi (C) and other financial companies.

The New York TImes says that NBC has started buying programming from outside producers in blocks, a new move in the industry.

According to the FT, Merrill’s (MER) new chief is eyeing a major overhaul of the company.

The FT writes that the head of Fedex (FDX) sees the economy moving into recession which may spread across the global economy.

The FT writes that Dell (DELL) has signed a $4.5 billion three year deal with WPP to handle its advertising

CNN Money writes that Warren Buffett bought $2 billion in TXU (TXU) bonds.

Bloomberg writes that Moody’s is ready to cut ratings on $105 billion worth of SIVs.

Douglas A McIntyre

Merger Arb Spreads Remain (TXU, TRB,SLM, CEN)

247wallst — Mon, 20 Aug 2007 13:16:00 +0000

There are over 150 pending mergers out there that have not yet closed. After last week’s Fed actions, there are still some deals out there that are perceived to be at risk as far as the deals closing or if the deals can close at the announced buyout price. Some of these spreads have tightened in merger-arb scenarios, but there are quite wide spreads on many pending deals. We’ll be sending out a few selected deals we expect to go through without issue before Labor Day to our Special Situation Investing Newsletter subscribers. Earlier we covered ACS, URI, FDC & CCU merger-arb spreads.

The buyout of student loan giant SLM Corp, or Sallie Mae (NYSE:SLM), is alsostill at risk. Sallie Mae holders have already approved the $25 Billiondeal for $60.00/share last week, but the buyout by J.C. Flowers still faces regulatory and credit market risks.With shares trading down again and under $48.00 today, this wouldrepresent a 25% gain for merger-arbs now if the deal is able to close.Shares traded close to $60.00 on their own back in early 2006.

The $5.3 Billion buyout of Ceridian (NYSE:CEN) by Thomas H. LeePartners has a wide enough merger-arb spread to make you scratch yourhead. The $36.00/share buyout for Ceridian is now seeing shares tradeunder $33.00, giving roughly an 8% merger-arb spread.

Sam Zell’s $8.2 Billion buyout of Tribune Co. (NYSE:TRB) is still ahighly leveraged deal that in fact is only a quasi-buyout and one thatmany are not giving the highest marks. Shareholders are set to votetomorrow. With shares at $26.50, they are at least higher and closerto that $34.00 buyout price. The prevailing thought here seems to be that this buyout price may be lowered.

There also remains speculation that the near-$45 Billion (afterdebt) acquisition led by KKR& TPG of TXU (NYSE: TXU) may still not becompletely done. TXU is an interesting one, because the company hastelegraphed that it will split into three units if this merger fails.Shareholders vote September 7 for the $69.25 buyout price, and some keyshareholders have already signaled they are against the merger. Withshares at $64.00, that is a 7.5% discount. The good news here is thatbefore the Fed intervened with a discount rate cut, shares got as lowas about $61.00 last Thursday. Here was a large list of competitors that were thought at the time it was announced that could also be under review.

Maybe Warren Buffett will finally get off his wallet and do that whale of a deal he said he’d love to do.

Jon C. Ogg
August 20, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he is editor of the 24/7 Wall St. Special Situation Investing Newsletter and he does not own securities in the companies he covers.

Banks Eat Private Equity Debt (JPM)(GS)

247wallst — Tue, 17 Jul 2007 09:12:00 +0000

Bloomberg is reporting that JP Morgan (JPM), Goldman Sachs (GS) and several other large investment banks have had to keep $11 billion in private equity debt.

"The banks have had to dig into their own pockets to finance parts of at least five leveraged buyouts over the past month because of the worst bear market in high-yield debt in more than two years", data compiled by Bloomberg show.

Some of the deals that have yet to be funded include TXU (TXU) and First Data (FDC)

If the problem become more severe, it is certainly not out of the question that several money center banks and investment firms would have to take large hits to their P&Ls. Beyond that that big question is what occurs if one of the big private equity deals simply fall apart. Beyond lawsuits that is.

Douglas A. McIntyre