The Timesizing® Wire
©2003-04  Phil Hyde, Timesizing Assocs, Box 622, Cambridge MA 02140 USA 617-623-8080 - HOMEPAGE

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Takeovers, alias Mergers&Acquisitions (M&As)
First, recall the 1920s, check out *dot-coms, banking & Warsh & Porter, & consider, mergers are "opportunities for cooking the books" (Hedrick Smith's Wall Street Fix) & "just another word for more layoffs" (NYT 11/30/98). They dediversify the economy & downsize the workforce & their own consumer base, & lead to more mergers = a downward spiral.

6/26/2005  since the end of complete coverage (dec/2001), our takeover tracking has narrowed to biggies (>$1B), banks, blasts, blocks, overviews, downsides, untakeovers (spinoffs), statistics, put-downs, prop-ups, sporadic failures, speedups, & delays (note: more recent dates are handled entirely on current homepage or homepage-archive pages) -

• A merger? Anyone tell the board? - Directors are under pressure to accept the mergers, hold the questions, NYT, 3:1.

1. UPS agrees to acquire freight carrier Overnite Corp. for $1.3B, Dow Jones/AP via Boston Globe, E2.
2. Merger costs slash profit 62% at TD Banknorth after Toronto Dominion's acquisition of Banknorth, Dow Jones/AP via Boston Globe, E2.

• We've had choppy market conditions for five years now - The only way left for these companies to grow is to buy each other, Kenneth Worthington of CIBC World Markets re brokerages (but applies generally under downsizing capitalism), East Vancouver Republic, p.1.

• Oracle profit slips 15% after its $10.3B acquisition of PeopleSoft, NYT, C5.

• Oracle's lengthy war for PeopleSoft harms both sides of the hostile bid, by Jesse Eisinger, WSJ, C1.

• Abbott agreed to pay $1.2B for TheraSense, pointer (to B4), WSJ, front page.

• World watch - Europe...Briefly, WSJ, A8.
  The value of completed mergers and acquisitions [M&As] in Central and Eastern European countries awaiting European Union membership rose nearly 3% this year, defying a global decline.
  • A survey by KMPG Corporate Finance, which uses Dealogic data, showed the transaction value rose to $9.2B from $8.95B in 2002,
  • while the number of closed deals fell 19% to 753 so far this year.
  • The value of global completed transactions fell 15% this year, the survey said.
  [We don't track them all any more but they've kept going, preps for downsizing all. Even just today on one page of the NYT, even in the middle of the Xmas holidays, we've got five of these "appetizers for downsizing" -]
  
  1. May Department buying 125 stores from Gingiss Group, AP via NYT, C4.
  2. Software company [I-trax] acquires health services provider [Meridian Occupational Healthcare Assocs.], Bloomberg via NYT, C4.
  3. Reliant Resources plans $1B bond sale to buy power plants [in Texas], Bloomberg via NYT, C4.
  4. Principal Real Estate Investors [and Madison Marquette jointly acquired a shopping center in NJ from Sarofim Realty Advisers for $70m], NYT, C4.
  5. Vitesse [Semiconductor] to buy Cicada [Semiconductor] for $66m, Bloomberg via NYT, C4.
  [and compare biggy tomorrow -]
  FedEx to buy Kinko's for $2.2B, 12/31/2003 WSJ, A3.

• [media consolidation alert -]
  F.C.C. approves deal giving Murdoch [News Corp.] control of DirecTV - A $6.6B acquisition [from GM of Hughes Electronics and its DirecTV unit] comes with limitations, NYT, C1 & C14.
  [and let's just barely mention "Pfizer agrees to buy Esperion for $1.3B," 12/22 NYT, C1]

• Oracle may drop bid for PeopleSoft over refund offer [dba 'poison pill'], WSJ, B4.
  [Good, Oracle CEO Larry Ellison has really gone off his rocker on this. He's wasted far too much of his time trying to shortcut to marketshare instead of build to it.]

• Bayer sets plan to split off chemical units, by Gautam Naik, WSJ, A3.
  ...its industrial-chemicals division and part of its polymers division into a new company with 5.6B euros ($6.46B) in annual revenue. The businesses it will retain includ[e] healthcare, drugs, crop science and materials operations [and] bring in a total of 22B euros in revenue....
  [so that's an UNtakeover, but on the other hand, we have, same page -]
  R.R. Donnelley to buy Moore Wallace for $2.8B, WSJ, A3.

• Stars were aligned for mergers... - Mergers looked good, then investors spoke, by Andrew Sorkin, NYT, C1.
  The latest merger boom may turn out to be just a boomlet. A week ago, speculation was rampant on Wall Street that a new wave of mergers and acquisitions would follow...Bank of America's $48B agreement to buy FleetBoston Financial and Anthem's $16B acquisition of WellPoint Health Networks....
  Now, since those deals were panned and investors pummeled the stocks involved, pronouncements about a sweeping merger revival have become less effusive....
  [Has a momentary glimmer of sense has penetrated through to the speculators' oops investors' brains? These mergers aren't about corporate productivity, efficiency, stockholder value or anything but CEO boredom and greed.]

1. Anthem Inc. is buying WellPoint Heath Networks for $16.4B, pointer blurb (to B1), WSJ, front page.
   ...to form the biggest managed-care firm...
   
2. [and] UnitedHealth Group is acquiring Mid Atlantic Medical Services [for $2.6B]....

3. R.J. Reynolds Tobacco Holdings plans to buy tobacco rival - Will pay $2.6B in an all-stock deal, NYT, C1.
   ...[for] US cigarette business of British American Tobacco....

4. [overview]
   After a dry spell, a merger flood - As the economy 'bounces back' [our quotes], companies are again looking for 'growth', rather than cuts, WSJ, C1.
   [Nice try, but a "merger" does not equal "growth" and the resulting overlap frequently triggers cuts.]

1. 9/29 Manulife agreed to buy John Hancock for $10.3B in stock, pointer blurb (to A3), WSJ, front page.
   ...a deal that will make the Canadian firm the second-largest life insurer in North America [after American International Group (AIG)]....

2. 9/27 Air France and KLM may form a broad ['sweeping'] alliance - French are seen taking lead role, NYT, B3.

3. [and the 'block' -]
   9/27 Britain blocks big chains from taking over Safeway, NYT, B3.

• Britain: Utility acquisition canceled, Bloomberg via NYT, W1.
  ...Scottish & Southern Energy abandoned its acquisition of Midlands Electricity from Aquila Inc. after bondholders turned the offer...unprepared to accept 86% of face value for their bonds....

• [good news for a change]
  Taubman Centers Inc. - Michigan Senate bill aims to help fight off takeover, WSJ, B4.
  ...a $1.74B takeover bid by Indianapolis-based Simon Properties Group and Westfield America Inc., the US unit of Westfield Holdings Ltd. of Australia..\.. The measure [which] already has passed the House..\..would override a federal judge's ruling that prevented the Taubman family from voting their shares against the deal....

• France: Argentine utility for sale, Bloomberg via NYT, W1.
  Electricite de France [EF]...based in Paris..\..Europe's largest power company, said it was seeking a buyer for Empresa Distribuidora de Electricidad de Mendoza [Edemsa], an Argentine unit that has never had a profit because of a rate freeze.
  [Apparently EF had stre-e-etched over to South America to acquire Edemsa and now it's flopped - another case of a failed takeover.]
  EF, [a] gov't-controlled utility, said the decision...will not affect the company's other interests in Argentia, like Edenor, an electricity distributor that serves Buenos Aires and...the city's outskirts....
  [And what the hell is a utility controlled by the French government doing screwing around with foreign acquisitions? If they have extra cash, they should be lowering electric rates.]

• Ripplewood deal blazes a trail in Japan, by Ken Belson, NYT, W1.
  TOKYO...- Ripplewood Holdings LLC said [yester]day that it would buy the fixed-line operations [3d-largest in Japan] of the Japan Telecom Holdings Co. from the Vodafone Group [world's largest mobile phone carrier, for] ¥262B ($2.2B)..\..in one of Japan's largest leveraged buyouts....

• [1 down]
  With ties lingering, Medco leaves Merck [in a spinoff to shareholders] - The No.1 drug benefits manager now controls its own stock and cash flow, by Milt Freudenheim, NYT, C2.

• [1 up]
  British bank 'expansion' [our quotes] - HBOS took over the Bank of Western Australia for $1.6B, by John Shaw, NYT, W1.
  [and it's in banking.]

• Grupo TMM Shareholders cancel sale of Mexican railroad - [Transportes Ferroviarios Mexicanos, to Kansas City Southern], by Elisabeth Malkin, NYT, C3.
  [So plans for 'Nafta Rail' go down - tooo baaad.]

• Patterson Dental to purchase healthcare supplier [AbilityOne Products, for $575m], Reuters.... (//WSJ, B6)
• DRS Technologies plans to buy Integrated Defense [for $375m], Bloomberg....
• Precision Castparts to acquire SPS Technologies [for $575m], Bloomberg....
• Jarden agrees to buy Lehigh Consumer Products [for $155m], Bloomberg.... (//WSJ, B6)

8/14/2003  since the end of complete coverage (dec/2001), our takeover tracking has narrowed to biggies (>$1B), untakeovers (spinoffs), banks, blasts, blocks, downsides, overviews, statistics, connections, singularities, put-downs, prop-ups, speedups, & delays -

• Synthes-Stratec Inc. has bought Mathys Medizinaltechnik for $1.1B,
  Switzerland: Medical acquisition, NYT, W1.

1. [biggy]
   GE agrees to pay Aegon $5.4B for [its commercial-]finance units, by Kranhold & Fleming, WSJ, A3.

2. [untakeover]
   Merck sets date for spinoff of Medco Health Solutions, Bloomberg via NYT, C2.
   

1. [untakeover]
   Fidelity said it spun off Geode Investors, pointer blurb (D7), WSJ, front page.
   ...a unit for computer-driven investment strategies.

2. [block]
   Dana sues ArvinMeritor adviser in an effort to fight off takeover , by Robert Frank, WSJ, C12.
   Dana Corp., fending off a hostile takeover from ArvinMeritor Inc., sued ArvinMeritor's financial adviser for breach of contract and misappropriation of confidential information. ...Dana claims UBS was advising the company on a highly sensitive project at the same time the banking company was helping ArvinMeritor launch its unsolicited bid....

1. [the put-down]
   Peugeot's formula for success: Steering clear of megamergers - Undistracted by big alliances, car maker becomes one of world's most profitable, by Neal Boudette, WSJ, front page.

2. [the prop-up]
   Pace of acquisitions bodes well for investors, by Karen Talley, Dow Jones via WSJ, C8.
   [We wouldn't be so sure.]

• Attorneys general, pointer blurb (to A2), WSJ, front page.
  ...from about 30 states have agreed to cooperate in an antitrust probe of Oracle's hostile bid for PeopleSoft.
  [Go get 'im, boys! Ellison has LOST it! Note Comcast's takeover-triggered downsizing today, 8/01/2003 #1.]

• GAO warns on future problems from audit-industry mergers, by Low & Weil, WSJ, C11.
  A widely anticipated report from the General Accounting Office found that recent consolidation among the largest accounting firms could present a range of problems in the future, including reduced competition and fewer choices for audit clients....

1. Pfizer posts $3.59B Q2 loss due to acquisition [of Pharmacia in April], by Scott Hensley, WSJ, B4.
   [See 4/15/2003 #1 below.]

2. Having a cow over milk prices, pointer summary (to B1), WSJ, front page.
   Gluts often bring consumers' dairy prices down sharply. Not this time, and certain economists think supermarket mergers may be to blame.
   [The indicated article -]
   Secret in the dairy aisle: Milk is a cash cow, by Scott Kilman, WSJ, B1.
   ...The nation's top 5 grocery chains, including Kroger and Safeway, now control about 45% of supermarket sales, up from roughly 26% in 1995, according to Wall Street analysts. "With all the mergers, there is less competition," says Marty Mack, a deputy in the NY State Attorney General's office, which has sent letters to 40 grocers in the state seeking explanations for their high milk prices.
   [That's easy - momentum, alias, rolling inertia.]
   ..\..America's farmers are swimming in such a glut of milk that they are getting their lowest prices for the stuff in 25 years.... Supermarkets have seen their milk costs drop since 2001..\.. But consumers aren't reaping comparable savings, as many dairy processors and retailers hold onto the profits....
   The average price of a gallon of whole milk has declined just 9.4% during the past 20 months to $2.68 in June, according to the US Bureau of Labor Statistics..., in many places...not even that much....
   [So what the heck is the Bureau of Labor Statistics doing tracking milk prices??? We'd like to see a lot fuller statistics on labor prices (wages) in relation to labor (over)supply and in relation to unemployment, workers' comp, welfare, disability, homelessness and incarceration - or is that too much to ask a Bush-government agency? Surely it's the FTC's and the Commerce Dept's job to fret about monopoly-manipulated food et al. prices, not the BLS.]

1. [biggy]
   Roche Holding to acquire Igen International for $1.42B cash, stock, by Landers & Raghavan, WSJ, B2 (//NYT C1).

2. [banks]
   J.P. Morgan buying Bank One trust business for $720m, Reuters via NYT, C4.

1. [the biggy]
   Lehman Brothers goes from the prey to the hunter [of Neuberger Berman for $2.63B], by Craig & Lauricella, WSJ, C1 (//NYT C1).

2. [the banks]
   First National Bank Holding to buy Access Anytime [Bancorp for $22m], Reuters via NYT, C4.

3. [the overview]
   Private equity deals are again the talk of Europe - Big private buyouts, reviving in Europe, aren't just for Americans anymore, by John Tagliabue, NYT, C1 & C9.
   [We swear this destructive, wheel-spinning, makework-for-CEOs is driven by boredom.]

1. Beijing names firms for M&A restructuring, Dow Jones via WSJ, A8.
   ...104 state-owned firms [in which] foreign and private companies will even be allowed to take a controlling stake....
   [Woweee. Looks like China has completed lesson one in Cannibalizing Your Own Consumers.]

2. Canadian banks still plan mergers - in the U.S., by Elena Cherney, WSJ, C5.
   TORONTO -...Royal Bank of Canada, Bank of Nova Scotia, and Bank of Montreal are trolling for acquisitions in the U.S. retail-banking market....
   [See, us Canucks can be just as suicidal as you Americans!]

3. [and right below -]
   Stocks driven higher by merger-bid expectations may be risky, inside continuation of C1 article by Robin Sidel, WSJ, C5.

• BAT [British American Tobacco] to acquire Tabacchi Italiano for winning bid of $2.58B, by Raghavan & Galloni, WSJ, C5.

1. [biggy]
   Citigroup said, pointer blurb (to A3), WSJ, front page (//NYT C1).
   ...it plans to buy Sears Roebuck's massive credit-card and financial-products business for about $3B in cash.

2. [downside]
   Johnson & Johnson said, pointer blurb (to B4), WSJ, front page.
   ...profit fell 27% on acquisition-related charges [related to $2.4B purchase of Scios Inc.] despite a 14% sales gain.
   [You have to wonder, with this kind of downside, why are CEOs' ego trips still outvoting their competency?]

1. Yahoo in [$1.63B] deal for Overture Services, an Internet listing service, by Bob Tedeschi, NYT, C1.

2. A boomlet hailed, by Jesse Eisinger, WSJ, C1.
   The financial media are busily reporting a surge in M&A activity. And why not? Their sources are chattering about it. Fortunately, most people aren't looking at the data, which would confuse them. To date, there have been 3,706 deals announced, Thomson Financial said. That's a whopping 10 deals more than last year by this time. The value of [this year's] deals falls short: $187B vs. $201B last year....

1. 7/12 Boise Cascade is to buy OfficeMax for $1.1B, by Robin Sidel, WSJ, B2.

2. 7/14 New economy - When chief executives attack: the Oracle-PeopleSoft takeover fight turns personal, by Laurie Flynn, NYT, C4.
   [It's all about Ellison's sagging ego. He can't compete, so he goes around trying to buy, & shutdown, rivals.]

1. [good -]
   Magna International to spin off property, tracks, by Mark Heinzl, WSJ, B2.
   ...Aurora, Ont...MI Developments Inc. [which] will also own Magna's 59% stake...in Magna Entertainment Corp. which owns 14 racetracks in North America....

2. [bad - ]
   Merger activity is picking up, pointer blurb (to C1), WSJ, front page.
   ...after a 2-year slump, spurred by increased investor confidence [aka superwealthy's desperation about where to $tore it all now] and still-cheap stock prices [ha!]
   [They're ba-a-ack.]
   

• EMC to buy Legato Systems for $1.3B - Stock transaction extends data concern's arsenal of software products - EMC is expected to brighten its revenue and earnings outlook for the second quarter, by Charles Forelle, WSJ, B4.

1. [good -]
   Regulators [SEC] may be clamping down on merger accounting, by Floyd Norris, NYT, C1.

2. [bad -]
   Liberty Media buys [Comcast's majority stake in] QVC [for $7.9B], hedging bets on Vivendi auction, by Sorkin & Fabrikant, NYT, C1.

3. [another bad -]
   U.S. owners [CMS Energy and Xcel Energy] sell big Australian power producer [Loy Yang Power to consortium including Australian Gas Light and Tokyo Electric Power] for $2.4B, Reuters via NYT, C5.

1. Fiat will sell [FiatAvio, its] aerospace components division for $1.7B [to Finmeccanica & Carlyle Group via Avio Holding], by Eric Sylvers, NYT, W1.

2. Provident Bancorp to buy New York bank [E.N.B. Holding] for $73.5m, Bloomberg via NYT, C4.

1. [the reversal (good) -]
   China introduces regulations banning cartels, Dow Jones via WSJ, A8.

2. [the biggy (bad) -]
   Airlines [Delta, Northwest, American] sell reservations company [Worldspan] in $1B deal [to Travel Transaction Processing Corp.], Reuters via NYT, C6.

• M&A activity falls, despite last-minute deals, by Robin Sidel, WSJ, C14.