Hope for European M&A

2009 was a bad year for European M&A. Transactions have decreased significantly since it was at its highest and the value of the transactions was even more declined.

However, as according to UBS and Boston Consulting Group, that next year will be different. A survey conducted by the organizations suggests that 20% of European companies expect to announce high value deals in 2010.

Deal Fails, GM to Shut Down Saab

After talks between GM and Dutch car maker Spyker failed General Motors has decided to shut down Saab. GM's new CEO had set an end of December deadline for Saab's sale, but it appears that that is now impossible. In shutting down the car maker, Saab has promised it will repay all its debts and continue honor warranties.

Saab had been a consistent money loser for GM these past 20 years, losing $340 million alone in 2008.

Exxon to Buy XTO Energy

Exxon Mobil has struck a deal to buy XTO Energy, America's second largest gas producer, in an all stock deal valued at $31 billion. Exxon will also be assuming XTO's $10 billion debt as part of the deal. This will be the biggest oil/gas deal in four years. By buying XTO, Exxon will be able to expand into the shale gas field, which is developing quickly.

Citigroup Reaches Deal to Repay Bailout Money

Citigroup has reached a deal so as to repay their bailout loan. Citigroup will repay the aid they received with money from private investors and the facilitation of the sale of the government's $25 billion in bank stock, allowing it to wean itself off other forms of federal assistance.

Europe in Support of "Social" Tax for Banks

The European Union has backed Anglo-French moves to introduce a 'social' tax for banks, insurers and markets. EU leaders have asked that the International Monetary Fund examine the "Tobin" tax, which would ultimately affect banks on a global scale. The only EU nation not giving the tax full support is Germany, because of issues with the country's constitution which prevents one-off taxes on bankers' bonuses. However, Germany's Chancellor, Angela Merkel, finds the idea very "seductive".

China's Going Green

When it comes to the environment China has a bad reputation, but it now appears that China may ultimately push to be a low carbon leader. Taking into consideration the massive amounts of pollution coming out of China, it has been realized that unless China works toward developing greener technologies China will be ruined by its own development. Understanding that its carbon footprint may in turn destroy the country's development China has been working to reassure political leaders that 'going green' is a high priority.

VW to Buy Stake in Suzuki

Volkswagen is on a roll. Having recently announced their decision to buy Porsche, VW has announced that it will also be purchasing a 20% stake in Suzuki. The stake, which will cost VW $2.5 billion, will allow VW to tap into Suzuki's dominance in the Indian market. In return Suzuki will gain access to newer technologies as the brand has lagged in gas-electric hybrids and other fuel efficient vechicles.

Swedish Bidder Looks to Volvo

Sweden's Jakob Consortium is ready to make a bid for Volvo and has already informed Ford that they are ready to submit a financed bid for the auto maker.

This would be the third bid submitted for Volvo. Zhejiang Geely Holding Group of China and Crown consortium of the United States have already made offers. Geely has offered $1.8 billion.

U.S. Unemployment Drops in November

November was expected to be yet another bad month in the United States. Financial markets were bracing for a 130,000 job loss, so imagine the surprise when only 11,000 jobs were lost in November. With this the unemployment rate dropped to 10% from 10.2% in October. According to Brian Fabbri of BNP Paribas this "suggests that the labor market is much closer to its trough and more synchronized with broader measures of economic growth".

The unexpectedly low job loss numbers sent the dollar higher, pushing down prices for the U.S. government's debt. The dollar also posted its largest gain in almost a year.

U.S. Bailout Plan Expected to Cost Less Than Previously Thought

Initially the $700 billion TARP (Troubled Asset Relief Program) was expected to cost American taxpayers $341 billion, however it has now been estimated that the program will in fact cost $200 billion less than this original calculation.

TARP was the program approved by Congress last year so that the government could provide banks with funds so as to keep them afloat, thus preventing a complete financial system meltdown.

Financial firms have been paying off their loans quicker than expected as they fear that the government-set restrictions will make them less competitive in the world markets when compared to banks that have already paid off their debts.

At this time Bank of America intends to repay $45 billion, thus having paid back a total of $116 billion in total. Citigroup is also requesting that they be allowed to pay back $20 billion of their debt. The treasure believes that approximately $175 billion will be repaid by the end of 2010.

AsiaInfo to Buy Linkage

AsiaInfo Holdings, a Chinese based provider of software for the telecom industry, will be purchasing its rival, Linkage Technologies International, for $60 million in cash and 26.8 million shares. The stock portion of the deal is estimated to be worth $672.7 million.

Apple to Purchase Lala

Apple Inc has agreed to buy Lala, a relatively new start-up digital music storage company based in Palo Alto. Lala allows for users to play music that they own from the web. If Apple introduces this technology it would mean allowing people to skip having to download music that they buy and synchronize their music collections between computer and mobile device.

More China-Taiwan Deals Coming

Its no secret that China and Taiwan don't see eye to eye, but recently business relations between the two have been getting a lot less chilly. Currently, the Industrial and Cemmercial Bank of China is in talks to purchase a $3 billion stake in Taiwan's Cathay Financial Holdings, while Taiwan's Fubon Financial Holding is in talks to buy a stake in China International Capital Corporation. There are several other possible cross-strait mergers in process, but they have stalled due to political issues.

While it is good to hear that the two countries are finally attempting, after long years of feuding, to make some peace the deals seem somewhat odd because they offer few benefits, leading to the belief that the deals are here more for the symbolic nature than for anyone's benefit.

VW May Purchase Porsche Next Week

In the gradual merger of VW and Porsche, VW will may buy a 49.9% stake in Porsche next week, this 49.9% stake will cost VW $5.9 billion. VW plans to acquire the other 50.1% of Porsche in 2011.

Kraft Makes its Bid

Kraft has officially put its offer on the table for Cadbury. Kraft's $16.1 billion bid has been met only with resentment. The UK's business secretary has already warned that Kraft will face a major backlash if it tries to buy Cadbury for such a small amount. Many expect that Kraft will eventually raise their offer in order to appease shareholders but that has yet to occur. No rival bidders have yet come forward.

Cadbury Considering Pac-Man Bid

Not willing to accept a possible hostile takeover by Kraft, Cadbury is coming develop a new defensive strategy. Using the Pac-Man defense, where the prey becomes the predator, Cadbury is considering turning the tables and making an offer for one of Kraft's confectionary businesses. This of course will only occur if Cadbury doesn't get a better offer as there is currently speculation that Hershey teamed with Ferrero as well as Nestle may have their eyes on Cadbury.

Asian Countries Questioning Economic Systems

The economies of many Asian nations are highly dependent on exports, which has allowed for increased living standards and reduced poverty, unfortunately this year global trade has contracted at the highest rates in nearly 80 years. This year export earnings decreased 40%, which has erased millions of jobs. Thailand's exportation shipments alone have decreased 17% this year. This has caused many Asian countries to rethink their economies and many are in talks to rebalance growth. No new plans are currently in effect however, they understand the need to change.

Unemployment Will Remain High in US, Europe Until 2011

The Organization for Economic Cooperation and Development (OECD) has announced that they expect unemployment rates to remain high in both the United States and Europe until 2011. They do believe that most of the countries will either be out or coming out of the economic crisis by that time, but that the unemployment recovery will be slow. According to the OECD, US unemployment rates are expected to dip below 10% in the third quarter of 2010 and most likely stay above 9% until the end of 2011. It is also expected that unemployment in Europe will rise to about 11% in 2010 and will stay at more or less that rate until 2011.

Blackstone to Buy Birds Eye

Pinnacle Foods Group, which is controlled by Blackstone Group, announced that it will be buying Birds Eye Foods for $1.3 billion. Pinnacle expects to finance the deal using a combination of new debt and new equity, contributed by Blackstone. The deal is expected to close during the first quarter of 2010.

American Express to Buy Revolution Money

American Express announced that it intends to buy Revolution Money, a provider of internet based payment services. Revolution Money is a relatively young company but American Express believes that it has a lot of potential. American Express will pay $300 million in order to acquire the company.

Delta Makes Offer for JAL

Delta Airlines has made an offer worth $1billion to aid Japan Airlines. Not to be outdone, American Airlines has promised to top that offer in the next few days. Although Japan Airlines is debt-ridden, Delta and American Airlines both stand to gain much from an acquisition of the JAL due in part to JAL's strong place in the Japanese market and Asia as a whole, which has proven to be a tricky market to infiltrate in the past.

At this time it appears that American Airlines holds an edge over Delta as both American and JAL are members of the OneWorld alliance. Accepting an offer from Delta would mean that JAL would become part of SkyTeam.

Hershey & Ferrero Considering Cadbury

Chocolate makers, Hershey & Ferrero are reportedly in discussion to determine whether or not the two would want to make a joint bid for Cadbury, in a potential deal to rival Kraft's $16.7 billion hostile offer. The two companies have been in talks for the past few weeks and it is uncertain whether or not the two will make a bid.

Devon Energy to Sell Assets

Devon Energy announced its plans to divest all of its offshore and international energy properties so that it would be able to focus on its domestic onshore business. The majority of Devon's business centers on natural gas, which has not bounced back recently, unlike oil. The company believes that the sale of these businesses could generate proceeds anywhere from $4.5 to $7.5 billion after taxes. Devon says that it intends to direct the proceeds to its United States and Canadian portfolios and to pay back debt. There is speculation that the Chinese National Offshore Oil Corporation (Cnooc) would be interested in this purchase, especially after buying a stake in Statoil's Gulf assets.

Obama Plans to Engage Asia

Under Bush and other presidencies Asia as a whole was largely ignored by the United States. President Obama however seems reasonably determined to change all that. Obama, who has noted that he once lived in Indonesia while addressing politicians and business leaders alike in Toyko, is determined to improve relations between Asia and the United States. He is planning to meet with all 10 members of the Association of South East Asian Nations, a first for a U.S. president, which includes Myanmar, a nation currently under U.S. economic sanctions. Obama hopes to be able to promote cooperation rather than competition, in the belief that strengthening ties will allow for a balance of Asian imports and exports to and from the United States, thus helping the U.S. and smaller Asian economys get back on their feet.

Canon to Buy Océ

In the attempt to stand up to the competition of Fuji and Ricoh who have bought printer makers in the past few years, Canon has made an offer to buy Océ, the largest printer maker in Europe. Canon will be paying $1.1 billion for the Dutch company or 8.6 Euros per Océ share. The deal would give Océ better access to international markets and Canon would gain the technology that it needs in order to remain competitive.

Hong Kong Energy Companies to Increase Stakes in Britain

Cheung Kong Infrastructure and Hong Kong Electric announced that they will collectively spend $127 million in order to increase their stakes in Northern Gas Networks of Great Britain. They will be purchasing the stakes from the United Utilities Group.

Motorola Fathoms Splitting 3-ways

In the past Motorola has acknowledged a desire to split into two separate companies, is currently exploring the possibility of dividing into three. By dividing into three different companies Motorola hopes to be able to raise cash and pay down debt. Motorola is said to have hired JPMorgan Chase, Centerview Partners and Goldman Sachs to seek possible buyers for its cable television and radio companies. The businesses up for sale could be worth upwards of $5 billion.

HP to Acquire 3Com

Hewlett-Packard has announced that it will be acquiring networking equipment company 3Com for approximately $2.7 billion or $7.90 in cash per each share of 3Com. The deal is expected to improve HP's business in China as well as its network gear business.

EC Objects to Sun-Oracle Deal

The European Commission has officially shown its objection to Oracle Corp's proposed acquisition of Sun Microsystems. The EC believes that a merger of the two companies would hurt competition in the database market. The Commission has to either approve or reject the deal by January 19th and despite the opposition there is no telling as to whether or not the deal is done just yet.

Opel Not Too Far Gone

G.M's decision not to sell Opel apparently has a lot to do with the fact that Opel's finances are not as far down the hole as previously believed. It was previously forecasted that Opel needed $3.3 billion in order for the company to function until 2011, however, it is now believed that it will only cost $2 billion for Opel to survive until that time. This will obviously still require a lot of government lending from both the United States and Europe, but we'll have to see how willing Germany is to giving aid to Opel, as they are particularly upset with the scrapping of the Opel - Magna deal.

CF Rejects Agrium, Again

CF Industries has announced that it has rejected Agrium's latest and supposedly "final" takeover bid. Agrium's latest offer for CF totaled $4.5 billion. The bid was increased to $92.99 per share in both cash and stock. CF still believes that Agrium is undervaluing their company and therefore unwilling to accept these offers.

Statoil Sells Interest to Chinese Company

Statoil has sold partial interest in some of its American based energy development leases to the China National Offshore Oil Corporation (Cnooc). Statoil is a major player in the Gulf of Mexico where it has won a number of leases from the U.S. government to develop the region. Cnooc apparently outbid several large companies so as to gain the deal and is now the first ever Chinese company to gain energy rights in the United States. Cnooc still needs to create an American subsidiary and the deal must be approved by the Minerals Management Service before the interest transfer goes through.

Its About Time for Stanley and Black & Decker

For 28 years Stanley Works and Black & Decker have discussed a possible merger. On Monday that nearly 3-decade long courtship came to a close as Stanley agreed to buy Black & Decker for $3.5 billion. The two tool makers will now be worth about $8.4 billion combined. The deal is expected to close in the first half of next year.

Germany Not So Happy with G.M.

After 6 months of negotiations and a decision to sell its majority stock to Magna, G.M. has decided that it doesn't want to give Opel up just yet. G.M.'s new board has decided that they want to keep Opel because it is a major part of G.M.'s global development strategy and have stated that they expect to spend $4.4 billion in order to downsize operations. Obviously, the German government is not taking this all too well. Last spring the government had provided $6.6 billion to help finance and bridge loans when G.M. had filed for bankruptcy in the U.S., a move that preserved nearly 25,000 jobs in the company. The Germans are now intent on getting that money bank, after having been so jilted by G.M. as they had worked to get the deal moving.

Germany to Stop Foreign Aid to China

In his first controversial move as German development minister Dirk Niebel has decided that Germany will not longer be giving foreign aid to China and India. Niebel has stated that the purpose of foreign aid was to help battle poverty and he has noted that neither of the economic juggernauts need the aid that they have been receiving. In 2007 Germany gave China 67.5 million Euros and in 2008 gave India 84 million Euros. Although this move will free up monetary aid for other developing nations this move could prove disastrous as it is very possible that China and/or India will take offense to these actions and retaliate against Germany. We will have to wait and see how China and India will react to Niebel's new policy.

Britian Poised to Sell Nationalized Banks

Northern Rock, the Royal Bank of Scotland and Lloyds Bank are set to be sold into the private sector by the British government. These three banks were are bailed out and nationalized by Britain during the financial meltdown. Britain has announced that no currently existing British financial institutions will be allowed to buy these banks.

International Law Firms May Merge

Washington based Hogan & Hartson and London based Lovells law firms have been in talks for the past two years in the hopes of merging. The two firms would combine to have 2,500 lawyers and a joint revenue of $2 billion. The discussions are continuing and could possibly still collapse.

IT Service Companies In Demand

U.S. information technology services companies are likely to gain more focus and demand from the M&A world. In part due to an increase in IT spending it is believed that these companies will soon be in the center of M&A's focal point. Technology companies are seemingly fighting one another for dominance and it is understood that they will be willing to pay high prices in order to gain newer and better technologies and services, like those provide by IT services companies.

Better M&A Opportunities is Europe, Not Asia

According to Bank of New York Mellon Corp there are currently a lot more M&A opportunities in Europe than there are in Asia. China is still viewed as being the better long-term investment but Mellon Corp sees that hard-hit Europe is really looking to refocus their businesses making them more susceptible to wanting to sell or merge with other companies than Asia.

Renault's Woes

Renault's alliances are suffering these days as sales of its cars in Russia and India are declining and tension with its partners are climbing. Renault continually seems to be trying to increase their business prospects by adding cash, such as by gaining new partners when they in fact may need to just be focusing on increasing the technology of their vehicles. By focusing on creating vehicles with higher mileage and less carbon emissions their vehicles could possibly seem more appealing to consumers. Currently however, they have too many (three) partners which may lead to conflicted interest and just plain being pulled into bankruptcy with them. Although it is very possible that situation in the car market could change, especially in Russia, maybe this would be a good time to let go of some of their partnerships and reassess their situation.

Lin & Fung Acquires Wear Me Apparel

Hong Kong listed consumer goods sourcing group Li & Fung is acquiring Wear Me Apparel in the U.S. for approximately USD 400 million. Wear Me designs and sells clothes for primarily children and young men under its Kids Headquarters label as well as under the Calvin Klein, Timberland and Rocaware brands, with annual revenues of about USD 700 million. Li & Fung says that it will continue to look for other potential acquisitions.

Gazprom Looking to the U.S.A.

Russia's Gazprom is dominant in the European natural gas markets and has quickly been expanding to Asia. These days however, Gazprom has decided to take another look at their 20 year plan to bring liquefied natural gas to the States, something that they had previously pushed to the side in order to take advantage of Asia's growing market and higher European prices. A representative of Gazprom has noted that they are "looking for companies who have big US gas positions and who are looking to get bigger in Europe..." Gazprom is aiming to increase sale of gas in Europe by gaining access to gas reserves in the United States. They would ultimately like to reach a production target of 3 billion cubic feet per day within the next five years.

Britain Isn't Looking Too Good

It was hoped that Britain would be getting out of this recession by the middle of the year, but it has ultimately become clear that this is not going to be the case. The British economy still appears to be falling. Everything from the UK's manufacturing sector to its services sector seems to be in peril. This is in despite of all of the incentives that Britain has attempted to put in place to stimulate its economy. Seemingly these incentives were of little use. It appears that Britain's economy is in such bad shape that even Italy has overtaken it. Britain has lived beyond its means for quite some time and may now suffer for it.

SPACs Reemerge

Recently we've been hearing a lot more about Special Purpose Acquisition Companies (SPACs). SPACs are designed by companies for the sole purpose for acquiring companies. Back in 2007 they helped raise over $12 billion in 66 transactions. This was of course before the recession went into full swing. Nowadays these SPACs aren't doing so well, at all. Back in 2003 there were 161 SPAC IPOs, since that time 72 of them have acquired targets and another 51 have been liquiated. Nowadays there are only 35 surviving SPACs and 15 of those are still looking for target companies. Its not unlikely that many of these surviving SPACs will liquidate. I have to wonder if this accurately reflects the M&A market of today. Is it just a dying business type or is it an example of what is to come for M&A?

China Increases Import of Lumber

China continues to grow and in doing so has increased the amount of lumber that they import. The importation of softwood logs has increased 51% from the first to the second quarters of this year. Russia and New Zealand are seeing the greatest benefit from the increased trade. New Zealand has increased its share of the market from 21% over the past year.

Demand for Oil Decreasing in Developed Nations

The demand for oil in first-world nations peaked prior to the recession and will quite possibly never reach those levels again. This is in part due to the increased rates of people within these countries who are using more fuel-efficient vehicles. Of course this does not mean that the global thirst for oil will decrease any time soon, in fact expect that the global demand for oil will increase almost 14% between 2010 and 2020. The demand is expected to increase due to the rise of developing nations, so while the U.S. and parts of Europe will have stabilized, the needs of developing nations may cause oil prices to rise, although it is not expected that this will have a significant impact on the American economy.

More M&A to Come in China?

With the shift of power moving from the United States to China it is highly likely that many more cross-border acquisitions will have to take place to make sure that the United States and Europe will be able to remain competitive in the world's market place. This means that more countries will attempt to buy into Asia over the next few years.

China Looks to Britain

China seems to be passing up on deals in the United States these days for Britain. The Chinese now seem to believe that the regulations to purchase assets in Britain are much more welcoming than American regulations.

ING Selling Asian Bank

ING is said to be selling off its private Asian bank branch to a Singaporean based bank. The bank is set to sell at $1.46 billion in cash. This is just another example of a failing European bank selling off its assets to Asian banks who are continually snapping up properties so as to expand their reach.

RHJ International to Buy Commerzbank AG

After failing to acquire Opel from GM, RHJ International has found more deal success in Commerzbank AG. The private U.K. based bank is set to be sold to RHJ for approximately $362 million, all in cash. RHJ is said to be attempting to build a global financial brand.

Cisco Keeps On Buying

Cisco has announced that it will be paying $2.9 billion or the equivalent of $35 a share to acquire Starent Networks on Tuesday. Starent Networks makes products that helps telecommunications companies ship data to phones and other computing devices. Cisco's purchase represents a belief that smartphones and wireless data plans will continue to increase in popularity.

Yanzhou Reattempts its Bid for Mining Firm

Yanzhou Coal Mining of China has resubmitted its application for the purchase of Feliz Resources. The deal could be worth $3.2 billion. Yanzhou has been previously been blocked from acquiring the company but had been asked to resubmit.

Onyx Pharma to Buy Proteolix

Onyx Pharmaceuticals has agreed to buy Proteolix Inc, a cancer drug developer. The deal is potentially worth $851 million. Onyx will pay $276 million upfront now for Proteolix. It will pay another $40 million if one of their drugs, Carflizomib, develops properly and then another $535 million if the drug is approved in the U.S. and Europe. The deal is expected to close sometime during the fourth quarter.

China and Russia Make Preliminary Gas Deal

Russia's Gazprom and China's China National Pertroleum Corp have signed a preliminary framework agreement pertaining to natural gas. The deal between the two would allow for 2.4 trillion cubic feet worth of gas to be shipped from Russia to China each year. The deal is expected to be one of gas for loans. China is hungry for more natural resources to support its immense population and Russia needs more funding for its energy companies. In an environmentally friendly move China is looking to diversify its energy resources and limiting its dependency on coal, one of the world's greatest pollutants. The original framework of the agreement was signed in the presence of both Prime Minister Putin and President Hu Jintao.

China is Back On Track

America and China's economies may be interconnected but China's economy is doing a lot better than America's. In China last year factories were shutting down and millions of people were being laid off. This year however factories are reopening and are hiring, some factories are even worried that they won't be able to hire enough people to fill the needs for the coming Christmas season. This is in direct contrast to the American situation where unemployment rates are approaching the double digits. Although China's economy is doing well it will reach a point where its growth rate will decrease because of China's dependency on its exports, but for now they seem to be on top.

American Trade Gap Reduced in August

Although it was expected that the American trade gap was supposed to increase from $32 billion to $33 billion in August, the trade gap actually fell 3.6% dropping to $30.7 billion. The decrease in the trade gap was due in turn to a decrease in imported oil and exports reached its highest levels this year.

Google Has A Positive Outlook

Google, while not a good frame of reference for the rest of the American economy, is standing high above the rest of the field. Not only is the company hiring instead of cutting jobs but they are also actively searching for deals. The company believes that the worst is now behind them and are doing what they can to improve and grow. I am hopeful that the rest of the economy will soon catch up.

Citibank Wants to Sell Off Commodities

In what may be an attempt to hide the controversy of Andrew Hall's contracted $100million bonus Citibank will try and sell one of its units. The unit in question, Phibro, is one of Citibank's most profitable businesses. Phibro is one of Citibank's in-house hedge funds and has raised over $2billion for Citibank in the past 5 years.

HSBC Wants a Piece of RBS

Apparently HSBC and the Royal Bank of Scotland are in advanced discussions for HSBC to acquire some of RBS' retail and commercial banking assets in China, India and Malaysia. HSBC is attempting to gain a stronger foothold in Asia, as the financial prospects there seem much more stable for the moment. The two companies are still negotiating on prices.

Emerging Nations Popular for Cross Border M&A

The BRIC nations as well as Central and Eastern Europe appear to be favorites in consideration of cross border M&A. The majority of the United States' possible international high growth acquisitions were made in Brazil, India and China. These nations are also those who made the most cross border acquisitions during the first half of the year. Even though cross border M&A is down in general, the economies of these emerging nations are still growing and now is a good time to invest in them.

American Consumerism and Price Cutting

As America was sucked deeper and deeper into the recession, consumerism has dropped astronomically, a major problem consider consumer activity accounts for 70% of the United States economy. As activity dropped prices on consumer goods have also been cut tremendously so as to lure customers in. Its a practice that barely keeps businesses out of the red and yet a necessary one if they are even going to stand a chance of keeping afloat during these hard times. All of this combined is making for a shoppers paradise for those Americans who can still afford to spend. Between all the deals there are currently floating around many are taking advantage of decreased prices on everything from food to clothing to technology and housing. If you can afford this is a great time to spend, if you can't well at least the basics are getting cheaper.

China Wants A Media Empire

China believes that in gaining economic standing it must create a media empire to go along with it; an empire to compete with the likes of Time Warner, Bloomberg and Viacom. Although no plans have yet to be laid out formally, China appears to want to give their existing media corporations like CCTV the freedom to finance and produce a wider range of entertainment and cultural content for distribution inside and possibly outside the country. The Chinese government currently appears frustrated with its lack of ability to provide sufficient programming to its population, which gets a lot of their programs from other countries like Taiwan and the United States. In attempting this they are also trying to find a way to soften their image internationally.

HSBC Selling Off Properties

HSBC is not convinced that the recession is coming to a close or that they are in the clear. The company continues to sell off its international offices. It was announced that they are now selling their New York City headquarters to Israeli businessman Nochi Dankner for $330 million. It is noted that South Korea's National Pension Service is interested in buying HSBC's headquarters in Canary Wharf (London).

Asian Stocks Fall as U.S. Unemployment Rises

After reports from the U.S. government were released showing that the unemployment rate rose to 9.8% this month Asian stock markets fell. The increased unemployment rates depict that the United States' economy is still fragile and recovery is unassured. Although the loses in Asian markets were only moderate (Europe barely faced any change) this could be telling of Asia's dependency on exports to the United States and their need to develop a more internalized, consumer driven economy if they are going to prevail.

China to Overtake Japan in 2010

It is relatively safe to say that at some point next year China's economy will eclipse that of Japan's and become the 2nd largest economy in the world. Japan meanwhile will start to drift off into the shadows as China claims many of Japan's markets, including car manufacturing. Japan has two choices at this point. Either they can accept their fate and become the Asian Switzerland, a country of wealth and luxury but no political status or they can take advantage of their close proximity to China and make China's rising power work for them as China is their biggest trading partner. We have to wait and see now what action Japan is planning to take as China's economy continues to grow.

Danone and Wahaha Part Ways

After years of legal issues, starting in 2007 regarding conspiracy theories, Group Danone of France and Chinese based Wahaha have decided to end their joint business venture. Danone will be selling its 51% stake in the beverage maker. In return the two companies have agreed to drop all legal proceedings.

Stock Is the New Cash in M&A

This year 36% of M&A deals have had some involvement of stock options, the highest proportion of stock usage since 2001 when 46% of deals had some reliance on stock. The reason why stock is coming into play in M&A transactions now is because stock is seen as an insurance policy in an increasingly volatile market.

U.S. and G-20 Propositions

It was agreed during the G-20 conference that the United States needs to put a halt on how much they are relying on capital from other countries. With trillions of dollars in loans, lenders are starting to put in their share on how the United States goes about spending its money. Now, with the rise of the G-20 it has become pretty well understood that the United States is no longer going to have a dictatoral-type rule, not when we're spending everyone elses money.

As for the recovery of the United States' economy Former Federal Reserve chairman Paul Volcker believes that it will be slow due to high unemployment rates and dependency on other countries, especially as consumers continue to default on credit cards and other loans.

U.S. and Western Allies Engaging in Talks with Iran

The United States and its Western Allies are in talks with Iran over its nuclear power program. The U.S. and Europe are determined to come to terms with Iran on this issue, attempting to gain information on whether or not Iran is developing a nuclear arms program. At the very least they would like to place sanctions on the program.

Iran tells that they have done nothing wrong especially as they came forward about the
program rather than keep it hidden from the rest of the world.

Although they are not at the talks, Russia and China have a distinct interest in this case. Both nations have developed economic ties with Iran and fear that sanctions may hinder their ability to do trade with the Middle Eastern nation.

On a positive note these talks show promise as it tells us that both sides are open to discussing the issues at hand as opposed to creating more problems.

China Sets Tough Regulations on Foreign M&A

Already this year China has shut down several possible M&A deals, including that of Coca-Cola's proposed takeover of China Huiyan, due in part to the protectionist ideals of Mofcom, China's ministry of commerce. However, not only is China shutting down deals but they are also imposing restrictions on many other deals, including deals that do not directly involve Chinese companies. For example when Mofcom permitted Belgium-based InBev’s $52 billion acquisition of Anheuser-Busch they imposed restrictions to stop InBev acquiring further interests in four Chinese companies.

In August of 2008 China passed a very strict law on monopolies. The law gave Mofcom power to influence any M&A activity that they believed could eventually effect China. Clearly China feels it necessary to involve itself in M&A because of either antitrust issues or industrial policy.

Some of the G-20's New Rules

The G-7 is out. Its irrelevant. The G-20 is in. Rapidly developing nations have had economic but little political power under the G-7 contingency.
This group of 20 are quickly moving to work to make the economy work. Over the course of the G-20 summit in Pittsburgh the group came to a series of agreements including:

1. The countries will require higher levels of capital at banks and financial institutions, so as to give these institutions a buffer against unexpected losses that occur after making risky moves.
2. The Group of 20 will outline a long set of principles for tougher rules. The governments have pledged to develop this set of regulations by the end of 2010.
3. It was decided that bonus caps would be set in place for financial executives. The caps would defer the payout of bonuses for several years. It is hoped that the deferred payout would reduce the incentive for financial institutions to take short-term gambles. Countries are free to impose tougher restrictions as they see fit.
4. It was agreed that the nations would revive talks to reach a new global trade agreement by the end of 2010. For one, the talks could lead to a reduction in barriers to agricultural exports.

G-20 Gives Nations Homework

As we walk away from the G-20 it appears that various nations have been given homework so as to improve the global economic crisis:

The United States are being asked to increase its savings rate, reduce trade deficit and work towards improving its huge budget deficit.
China, Japan and Europe (Germany in particular) are expected to reduce their dependence on exports. They are being asked to promote more internal consumer spending and investment as opposed to relying on the rest of the world for financial support.

Of course all changes will take time but I think that if it can be done these would be relatively efficient ways to improve financial standings.

Confidence in M&A Growing

Despite a slow start to the year, M&A is currently picking up in part due to deals such as those of Kraft, Disney and Skype. Both consumer and investor confidence seems to be picking up as American stocks opened much higher this week than last. The increased consumer confidence is due in part to the realization that M&A is not dead and that companies are still trying to build and produce a greater profit unlike what it had earlier seemed when many companies were just trying to stay afloat. The seeming return of M&A is being looked at as a correction to the problems of the recession.

Taiwan to Allow Chip and LCD Makers to Invest in China

Taiwan and China have had a pretty icy relationship ever since China gave up Taiwan to Japan. However there are some actions being taken to improve fair trade between the two countries. Taiwan is finally allowing the country's Chip and LCD manufacturers to invest in Chinese companies. There is no specific time table as to when these new regulations will come into effect, but its one step in the right direction towards improving economic ties between the nations.

Sina.com Ends Deal for Focus Media

Sina.com has decided to scrap a deal with Focus Media. The deal would have been worth $1.7 billion. The deal which had been settled on back in December had not yet gained approval from the Chinese government. It is speculated that the delay for approval caused the two companies to rescind.

Xerox to Buy Affiliated Computer Services

Xerox has announced that it will be paying $6.4 billion for the acquisition of outsourcing company Affiliated Computer Services. Xerox will be paying $63.11 in cash per stock of A.C.S. It is expected that Xerox revenues will triple to about $1o billion next year, up from $3.5 billion in 2008

Unilever Buys Sara Lee Home Care Brand

Unilever has agreed to buy Sara Lee's personal care brands for 1.275 billion Euros. Unilever believes that brands Sanox and Radox will act as a good complement to their existing brands such as Axe and Dove. The deal is subject to approval by the European Commission

Update on Volvo Bidding

Since Volvo was put up for sale in December of 2008 a series of interested parties has come forth to put in their bid, however there are only 2 remaining buyers that Ford seems to be serious about. One of these companies is Shanghai Automotive Industry Corp, the other is Geely Automaker, both are Chinese. Geely is the currently frontrunner with a bid of $2.5 billion. The bid is much higher than expected considering Volvo has sold 25% less this year than last.

The main draw of Volvo has been not only the company's name but the safety technology the company has developed over the past few years.

Areva Selling Unit

Areva SA, the largest builder of nuclear reactors in the world, is selling one of their units so as to raise money to develop uranium mines and buy Siemen AG's share of a nuclear-reactor joint venture. The company has already begun to accept bids and of the three they have received, all have been under $4 billion which is less than the $4.25 billion the unit is estimated to be worth. As of right now the bidders include General Electric Co which has teamed up with CVC Capital Partners on the deal, Toshiba Corp. and Alstom SA in partnership with Schneider Electric. Since one of the major shareholders is the French state it is likely that the winning bidder will be from France.

BlackRock - Barclays Deal Approved

The deal for the acquisition of Barclays by BlackRock has officially been approved by the European Commission. A representative of the European Commission noted that the sale would not be a hinderance to any other European competition. The sale will give Barclays a 19.9 percent stake in the joint business.

China's Interest in Australia and the U.S.

Lately China has been making a lot of international investments, particularly in Australia and the United States. China's interest in Australia is of no surprise considering China's increased need for natural resources and minerals so as to support their massive population. China's Outbound Foreign Direct Investment program is supported by 8,500 investors and is currently valued at 55.91 billion U.S. dollars an 111% increase from 2007. Investment in Australia increased 26.7% between 2007 and 2008. The U.S.'s activity with China is moving a little more slowly than Australia because of a series of regulations but it is nonetheless increasing as the OFDI increases.

Dell to Buy Perot Systems

Dell Inc has announced that it will be purchasing Perot Systems for $3.9 billion in cash. Dell which focuses mainly on the PC business has been losing a lot of its revenue recently and this deal comes as an attempt to open up its market so that it compete with companies such as HP. Such a deal would also give Dell a much needed boost in international business while gaining some of Perot's reputable clients, including the U.S. government.

Looking to Europe for New M&A

Yes, M&A has been slow. It has been impressively slow. Yet, despite how cool the market for M&A has been of late, with deals like that of Kraft and Cadbury and a resurgence in talks concerning Deutsche Telekom possibly buying Sprint Nextel Corp. to merge with T-Mobile things are looking up. The belief that there is a possible rise to M&A, especially in Europe, stems from the fact that high-end good manufacturers and sellers are having a hard time these days and that they may have to take action in order to save themselves. Also, with such major deals like that of Kraft taking place, there is going to be a resounding fear of being left behind while the rest of the industry continues to shift and expand. The fields that we see as having the most potential for expansion in M&A are those of the pharmaceutical industry (considering many companies are losing patents to their drugs in 2012), beverages (especially beer) and other high-end luxury goods. Hopefully once these take off the majority of other industries will soon follow. European companies are currently being seen as at the fore-front in possibilities for M&A, so it is very likely that things will really start off there.

U.S. Credit Card Defaults on the Rise

Credit card defaults tend to rise after a period of high unemployment rates, but according to Moody's default rates have reached an all-time high. The Moody's credit card charge-off index rose from 10.52% to 11.49% from July to August. The credit card charge-off index measures the amount of credit card loans that banks do not expect will be repaid. Moody's expects that unemployment rates will continue to rise next year so it should be expected that credit card defaulting will continue to rise.

Europe is Only Losing When it Comes to China

Europe may be China's single largest trading partner but China doesn't particularly seem to care. A series of events that started with the 2005 retracted promise of lifting the trade embargo placed on China after the Tiananmen Square incident of 1989 and extends through the EU's pressure on China to alter their human rights code have led to a Chinese distrust and dislike of Europeans. China is seemingly unwilling to deal with the EU unless they have to which could ultimately impede European chances of smoothly transitioning out of this recession. It also hinders a large amount of trade between the two bodies as the Chinese government is likely to step in to prevent any trading with Europe that they do not deem as being necessary. China is picking and choosing various European nations to deal with but is wary of the whole. The Chinese are currently in talks with the UK; Germany and France are also working to get on China's good side. Overall though, relations look bleak.

Bernanke Thinks the Recession is Over

Federal Reserve Chairman Ben Bernanke thinks that the recession in America is "very likely" over. Bernanke stated that America is out of the recession, unfortunately unemployment probably will not get much better for a while longer. According to Bernanke we have to continue with the stimulus plans to make sure that we keep moving out of the recession.

Europe Sees America as Fading

Thanks in part due to what many see as the failure of the Bush administration America's relations with the outside world is on edge and there is a continually growing belief that America can not free itself from financial burden and recession without the aid of other nation's like those of the G20. Although Europe appreciates the differences between the Obama and Bush administrations, clearly preferring Obama, it is noted that there exists a general inclination to no longer do as the United States tell because of the protectionist walls they had to put up during the Bush administration. So unless America and Europe can come to terms once more it almost seems that Europe will not be a willing participant in coming to America's aid, thus helping promote a continued American downfall.

Avaya May Gain Nortel Unit

Avaya recently made a top bid for a unit of Nortel that makes networking and communications equipment for corporations and governments. The bid is worth $900 million, however the deal has to overcome some hurdles before it can go through. Verizon is apparently arguing against the deal in a bankruptcy court, stating that this deal could be of relevance to national security. It is expected that the bid will go through despite Verizons concerns.

U.S. Infuriates China Over Tire Tariffs

The United States is currently testing China for the sake of tires and buying American. The Obama administration has imposed trade regulations on the importation of Chinese tires. It is a move that may not be all too smart considering that the U.S. needs China's cooperation and alliance when it comes to issues of the environment, power and nuclear standoffs. China is furious with the decision and has called it a protectionist move that is in violation of global trade regulations. The question now is whether or not the Chinese will further retaliate.

Bloomberg L.P. Shows Interest in BusinessWeek

BusinessWeek, which was put on sale in July, by the McGraw-Hill Companies, has still yet to have found a suitable buyer. However, Bloomberg L.P. appears to have some interest in acquiring the magazine despite already having their own (Bloomberg Markets). Of course this does not yet constitute a bid on Bloomberg's part, but it is a possibility.

US and China to Become Solar Energy Powerhouses

Although Germany is still the world's solar energy producer it is believed that Germany will be overtaken by the United States in 2013 and China not long after. The two countries have already been laying out plans on how to expand their solar-power based operations. It is expected that they will install 5 gigawatts worth of solar installations between 2009 and 2011. Both countries' solar power industries are expected to continue to expand at least until they begin to outproduce Germany.

Tri-Tech Holdings Announces IPO

Tri-Tech Holdings, a Chinese based company that designs customized sewage treatment and odor control systems for China's cities and municipalities has announced its IPO of 1,700,000 million shares worth $6.75 each. Tri-Tech expects to make approximately $10.18 million from their IPO. They will be listed as TRIT on the Nasdaq.

Please refer to the Press Release for more information.

Finally, G.M. Decides Opel's Fate

After several dramatic months of ups and downs G.M. has finally decided to sell Opel to Magna. The bid will give Magna a 55 percent stake in Germany-based Opel, as well as Vauxhall, based in Britain. G.M. will keep a 35 percent stake, while Opel’s employees will keep 10 percent. Although we do not know the details of the decision the deal is ultimately coming with some strings attached.

Closing in on an Opel Deal?

The German Minister is tired of waiting around for the decision concerning Opel's future and has asked for a decision on the company by the end of next week. Conflict has arisen about who to sell to or if to even sell Opel at all. Magna has been largely considered the forerunner for the sale but many in Opel's managment team currently prefer Belgian RHJ or just not selling at all and allowing G.M. to continue running Opel. The entire situation seems like a mess. Hopefully we'll find out what is going on this week.

PerkinElmer Acquires Sym-Bio Lifescience in Shanghai

PerkinElmer (NYSE:PKI) has acquired Sym-Bio Lifescience, a supplier of diagnostic products to hospitals in China based in Shanghai for RMB 435 million. Sym-Bio is active in the infectious diseases area and has manufacturing in the Shanghai area. PerkinElmer said that it is seeking to expand its prenatal and newborn screening business in China.

Maybe M&A Isn't So Terrible After All

I guess we were too fast to say that M&A had struck a real low note. Obviously the industry is not as healthy as it once was but it is definitely not as bad as we had thought. As recently as the last week of August it was believed that monthly lows in M&A had reached its lowest point since 1994, however after a stellar week, capped by deals involving Disney and Skype among others, August was only the worst we've seen since last November. Not that horrible. Of course its too early to say that things are in full recovery but its definitely not as bad as it once seemed.

Europe and China Having Business Troubles

It seems like China and Europe just can not get along when it comes to business. The European Union is currently claiming that the Chinese are attempting to keep them out of China. Supposedly, Chinese business discriminates against foreign companies, enforces arbitrary laws and regulations, and abuses the nation's World Trade Organization obligations. Although China too has complained about European and American protectionist policies, America does not appear to have as much issue doing business in China as Europe. The EU has come up with a list with about 500 ways China could make business easier for them. We'll have to wait and see what China's response is, but I don't think they're going to change. China has always been very protective and they realize that the European economy needs them despite the EU's claims otherwise.

EU Investigates Sun-Oracle Deal

The European Commission has been widening its investigation of the proposed $7.4 billion deal between Oracle and Sun. The commission has found that the deal would inhibit the abilities and competiveness of other companies in the field. The commission however has yet to decide whether or not to allow the takeover of Sun to go through and has until January 19th to deliberate.

China Makes Foreign M&A Difficult

China has many policies concerning M&A and they have no qualms about it. The government routinely involves itself in M&A activity dealing with foreign investors and has shut down several possible acquisitions including a multi-million dollar deal concerning Coca-Cola. The Chinese government states that they are trying to prevent certain companies from maximizing their benefits within the nation and in turn protect their citizens. I think this is perfectly legitimate reasoning but it is a shame that the government is limiting M&A potential.

Decrease Exports to Rebuild

Just about every nation struck by the economic recession believes that the prime way to start the process of regrowth is to export. Of course this is a highly valid way of stimulating the economy, however the problem is that when everyone wants to focus on exporting, no one imports and no one wins. A former World Bank economist claims that the only way to exit the recession is for the nations at the center of the problem to be among the first to emerge. In this sense Asia might have to cut back on its exports while the United States increases their's if we are going to get out of this. Europe and Asia seem to slowly be getting back on track, now that France, Germany and Japan have joined the bandwagon, now we just have to wait for the U.S. to get climb on.

Too Big to Fail, So They Keep Growing

Wells Fargo, J.P. Morgan Chase and Bank of America keep on growing. Bank of America alone has had a 138% combined asset growth over the past year, after its acquisition of Countrywide and Merrill Lynch. Unfortunately this growth is leading to much fear concerning these major banks. As these banks grow, especially now that they know they have government protection, they are able to continue corrupt practices, in that they can't be punished because of their size and because the government believes that their fall would alone for even more American financial ruin. They can seemingly continue their growth process unchecked. On top of this it could lead to more problems for mid-sized banks because of larger banks' growing reach.

Closing in on a Deal for Hummer

It is said that a deal to sell Hummer to Sichuan Tengzhong Heavy Industrial Machinery could be finalized as early as next week. Despite a series of setbacks that the two companies have had since Tengzhong announced its intent back in June, the deal appears to be moving forwards. Of course the deal could still be overturned by the Chinese government, however executives seem hopeful. Tengzhong is expected to pay $170 million for Hummer, much less than the $500 million price tag GM had placed on it last year.

AIG Taiwan May Sell For Less than Hoped

AIG had been hoping to sell its Taiwanese insurance division for approximately $2 billion. The three possible offers that AIG has on the table are all currently below $1.5 billion. AIG was hoping to be able to sell their Taiwanese division so as to repay part of its $182.5 billion debt.

China's Neusoft Acquires Finnish Mobile Phone Software Business

Chinese information technology solutions company Neusoft is acquiring the mobile phone software development and testing business operations of Sesca Group in Finland. The purchase includes business units in both Finland and Romania which will be integrated with Neusoft's global mobile solutions business. Sesca has been active in the development of software for Symbian, Java, Microsoft and Linux mobile phone platforms.

Hummer Acquisition Still Not Approved By Chinese Government

The acquisition of Hummer by Sichuan Tengzhong Heavy Industrial Machinery Co. from General Motors has still not been approved by China's Ministry of Commerce according to Xinhua. In its application Tengzhong has reportedly only said that it plans to buy the Hummer brand and it is unclear if any technology or other assets will be purchased.

US National Debt to Double

The United States national debt is expected to double within the next 10 years. America's debt currently stands at around $11 trillion and is therefore likely to reach $20 trillion. The forecasts could significantly damage or affect the healthcare and economic reforms that President Obama is trying to establish. Despite this, the White House and the CBO both believe that the country's debt will begin to decline within the next three years.

Should Nokia and Alcatel-Lucent Merge?

As Ericsson is currently busy acquiring Nortel's assets, its smaller competitors are struggling to stay afloat. It is suggested that Nokia and Alcatel-Lucent should merge. The two companies being ranked as number 2 and 4 in their sectors are both struggling and would have a lot to gain by pairing up according to Reuters, however as they have seen many failed mergers in their industry such a merger may be unlikely. Yet a merging of the two companies would allow them to grow and compare to Ericsson while preventing Huawei from gaining too much busy in the industry thus causing the two to fail even more. Is it a good idea for the two to collaborate?

Intel Acquires RapidMind

Intel has now acquired software company, RapidMind. Intel plans to use RapidMind's programs so as to further develop and exploit their own technologies. Intel has recently been actively pursuing software companies, having purchased Wind River back in June for $884 million.

Proctor & Gamble to go to Warner Chilcott

The Procter & Gamble and Warner Chilcott have announced an agreement for the sale of P&G's global pharmaceuticals business to Warner Chilcott. Warner Chilcott is said to be paying $3.1 billion upfront for the pharmaceutical company.

Growth in Chinese Loans for M&A but Boost is Unlikely

Chinese banks have lent out over $13 billion yuan in the past year in order to finance domestic M&A as well as another $400 million to finance international M&A. There are applications for loans currently processing for another $19 billion in domestic and $440 million in international M&A. However, we shouldn't expect this to mean a boom in M&A coming from China, the government and many banks consider M&A to be a dangerous and risky field.

Yanzhou Coal Plans to Acquire Felix Resources in Australia

Yanzhou Coal Mining Co., the fourth largest coal producer in China, plans to acquire Felix Resources Ltd. in Australia for approximately A$3.4 billion ($2.9 billion) to increase its coal reserves. Felix Resources owns the Yarrabee, Minerva and Ashton mines and a stake in the Newcastle coal port in Australia.

Oracle Receives Justice Approval

Oracle Corp stated that it has received approval from the justice department to go forward with its acquisition of Sun Microsystems. The deal is worth $7.4 billion and is still waiting for approval from the European Commission.

Scripps Network Looking to Purchase the Travel Channel

Scripps Network, which already owns HGTV, has announced its interest in the purchase of the Travel Channel from Cox Communications Inc.

BBVA expected to gain Guaranty

Banco Bilbao Vizcaya Argentaria is expected to win a bidding war for Texas lending company Guaranty Financial Group Inc. Guaranty's sale is to come to a close on Tuesday. A win for BBVA would help the Spanish bank gain a greater footing in the States, after a their 2007 acquisition of, Alabama based bank, Compass.

Germany Wants Magna to Win Opel

Germany's federal government announced that it would be willing to contribute 4.5 billion euros in aid of Opel if they were to sell to Magna. An interesting move considering that the ministry has refused to state whether or not they would contribute any funds if Opel were to choose Magna's principle rival, Belgian financial group RHJ, in the sale of Opel. Will Opel take the bait?

Southwest Continues to Seek Acquistions

Despite having lost a the bankruptcy auction for Frontier Airlines last week, Southwest Airlines' CEO has stated that the airline would still be interested in acquiring other airlines. This is in direct contrast to the company's prior record of retreating from acquistions, prefering a slower growth strategy. However, as the company may end up in the red for 2009 it is possible that they have decided to take a riskier approach so as to reach a profit.

Sinopec Completes Acquistion of Addax

In China's largest ever foreign takeover, Sinopec has acquired Addax Petroleum. Sinopec spent $7.5 billion so as to acquire petroleum reserves in Africa and the Middle East.

Chinese M&A Activity Forecast to Rise

M&A activity in China, in particular outbound mergers and acquisitions, is expected to increase according to a briefing by FinanceAsia.com. However, Chinese buyers are sensitive to political factors and to being perceived as overpaying. Therefore small and medium sized transactions are expected to dominate the market and companies may prefer making low profile deals or asset purchases with no public market valuation. The briefing also mentions that interest remains high in the natural resources, commodity and energy sectors from Chinese investors but with growing interest in the agribusiness sector.

Air China to Gain Higher Stake In Cathay

Air China is said to be increasing their stake in Cathay Airlines (from 17.5% to 29.9%) so as to be able to expand into Hong Kong. Air China will reportedly spend $813 million to complete this transaction.

Saab Deal Inked

Its official. GM is selling Saab. GM and Swedish sports car maker Koenigsegg have inked a deal. It is expected that the transaction will be finalized this year.

Foreign Demand for US Assets Rebounds

Despite Russia and China having trimmed their US assets, there has been an increased demand to gain American long-term securities holdings. The US Treasury Department reported that foreigners purchased $90.7 billion more in long-term U.S. securities than the Treasury Department sold in June. This is a significant change from May when the department sold $19.4 billion more than was purchased by foreign countries and investors. This shows that there may be increased confidence in the US economy from abroad than there previously has been.

Volkswagen to Raise $5.7billion for Porsche Acquistion

Volkswagen said that it would work to raise approximately $5.7 billion to acquire a stake in Porsche. Volkswagen is currently planning to acquire a 42% stake in Porsche's sports car division. Porsche said on Friday that Qatar Holding LLC will acquire 10% of the Porsche holding company's shares. This move would thus free up more than €1 billion for Porsche. Porsche has already noted that it has decided to write down the value of its options structure so as to prepare for the sale.

Republic Wins Frontier

Republic Airways Holdings won a bid to gain Frontier Airlines. Republic paid $108.75 million for the airlines. Frontier had had another bid from Southwest Airlines worth $170 million but ultimately turned down the offer because of union conflicts. Frontier had filled for Chapter 11 back in April of 2008 and had to be auctioned off.

Tougher Anti-trust Regulations for M&A Deals

Since the Obama administration took office it has been noted that scrutiny of major M&A deals has become a lot tougher and more restrictive. This happens as M&A is looking to make some headway, thus possibly causing some slow down. These changes come after a series of deals were let through by the Bush administration that came under fire, like the merging of Sirius and XM Radio as well as Whirlpool Corp and Maytag.

M&A Activity Should Increase in the Private Sector

It is being predicted that American M&A activity will begin to skyrocket sometime between now and the next year. Dennis Roberts of the McLean Group attributes this rise to four factors. He tells that the burnout in the ranks of baby-boomer business owners, rapid technology advances, long-term growth in the appetite of foreigners for United States companies and a buildup of cash at the U.S.’s private equity groups will converge to help the M&A market. We're hopeful that he's right, such a boom could be of great help to the economy.

Hope for the EU

France and Germany are showing signs of growth, prompting hopes that the EU will recover quicker than expected. Both countries saw growth of 0.3 percent from the previous three-month period, something that surprised most experts who believed that the economies would continue to fail. France's finance minister has credited their "cash for clunkers" program as one of the major reasons that the economy is starting to improve.

China’s Interior Development and Competition to Low-Cost Asia

From our friends at CH-ina.com

The Inland Coast –
China’s Interior Development and Competition to Low-Cost Asia

The recent crisis has made it even more important for China to depend less on the rest of the world for growth and to develop quickly the interior markets. While exports contribute to only 20% of China’s GDP, export growth accounted for half of 2008’s economic growth.

Yet, due to difficult or expensive logistics, over 90% of China’s exports are produced within 250 km of the seashore. These exports, the foreign investments and the know-how that foreign enterprises brought have been the growth engines of the coastal regions of China. Meanwhile, the interior has mostly developed through infrastructure financed by the government and consumption growth, partially fueled by the income that migrants working on the coast send back home.
As a result, disparities between regions are quite extraordinary. Shanghai’s average salaries are twice those of neighboring Anhui province. Minimum salaries in Hefei, Anhui’s capital city, are 35% lower than those of Suzhou (the international manufacturing center of choice, next to Shanghai).

One could imagine a development model where the coastal areas’ continued growth generates enough wealth to drive the development of the interior. However, in this case the wealth gap between regions will not be reduced, or will even increase. Besides, China’s middle class is only about 2 to 300 Mio. strong. To count on their consumption to raise the living standard of the Inland’s 800 Mio. low income citizens will take too long.

On the other hand, the direct Inland’s development is also an opportunity to maintain exports levels: while the coast has become expensive, minimum wages in Anhui and Hebei (the Chinese provinces along the Yangtze River West of Shanghai) are competitive with those of Indonesia.
Besides, Vietnam’s minimum wages are catching up with this region’s too. This is mainly due to very high inflation in Vietnam in 2008 (23%), and an expected 10.5% price increase in 2009 while China’s CPI will stay around zero this year. As a result, Vietnam’s labor cots are not low enough to give it an important production competitive advantage, particularly when one takes into consideration China’s superior supply chain. (The range of components and materials available domestically is close to what is available in Europe. Additionally, their quality/price ratio is most competitive.)

To make good on the opportunity, large container ports are being built along the Yangtze River that will make shipping of goods almost as convenient as they are from the coastal cities. Wuhan (capital of Hebei) already has one while Chongqing (1’500km inland!) is building its own.

In addition, to ensure access to all the soft skills (management, knowledge of international markets and cultures, financial and insurance services), Shanghai, at the mouth of the Yangtze River, is building one of the largest people transportation hubs in the world. It will bundle conventional and magnetic levitation very high speed trains (up to 400 Km/h), 5 metro lines, and the newly expanded Hongqiao airport. The hub will start operating for the World Expo in May 2010 and, by 2020, it is planned to handle the extraordinary amount of 400 Mio. passengers per year!

In addition to linking Beijing to Shanghai by rail in under 5 hours, Chengdu (in the far west of China, at the end of the Yangtze valley) will be reached in just 7 hours. Hefei and Wuhan, now too far to be considered as part of the Shanghai area, will be within 3.5 and 1.5 hours reach of Hongqiao. The new trains will allow day trips and actually make these large cities of almost 5 and 7 Mio. inhabitants part of the Yangtze Delta. Alone, these two Yangtze River capital cities and their provinces will add populations of 130 Mio. inhabitants to the Greater Shanghai area.

As it develops, the Yangtze valley will add an inland coast of more than 1’500km, with Shanghai as its bridge head to the world.

In the coming decade, the Shanghai Greater area will become a formidable region gathering populations the size of the USA or Western Europe and be able to compete internationally both in the low-cost and high-tech exports.

Watch out for China’s interior development and the new opportunities that the Inland Coast emergence will bring in the coming years!

Nicolas Musy

US Deficit Getting Bigger and Bigger

The United States deficit grew $180 billion in July. This brings the fiscal year-to-date deficit to $1.267 trillion, which is triple what it was this time last year.

American Labor More Efficient than Chinese?

According to Bill Waddell, Apple should be having a hard time justifying why they would rather manufacture IPod's in China than in the States. Although the cost of labor is obviously skewed in China's favor, technology and time efficiency would make it so that it is actually more efficient both time and money wise for Apple to simply manufacture IPods in the United States. So what other companies are out there, using cheap Chinese labor when they could be making more of a profit by just manufacturing in America? Is this an adequate way of explaining why labor should be brought back to the States?

DSME to Buy Composite Tech's Turbine Business

In a deal worth $46 million, South Korean company, Daewoo Shipbuilding & Marine Engineering Co., Ltd has bought nearly all of the operating assets and operating liabilities of DeWind Inc

China Attempts to Gain Canadian Royalties Inc.

Recently China has been making just about every effort possible to gain an ever growing amount of natural resources. We learned today that state-controlled Jilin Jien Nickel Industry Co. Ltd. launched a $148.5-million unsolicited takeover bid to gain control of mineral exploration company, Canadian Royalties Inc, so as to increase their resource supply.

China Continues It's Recovery

Amid financial stimulus plans, China's trade and factory output is rising. Statistics show that retail sales, exports, Chinese steel output and investment in factories and other fixed assets also rose also rose in July. Economic growth increased in July by 7.9%, showing that China's stimulus package is working despite fears that it would just create more economic bubbles.

Economic Forecasting: Oil

It is a relatively common belief that the global economy will turn around by the end of 2009 with oil helping the rebound along. However in some opinions the oil business doesn't look to be at its finest right now. Merill Lynch expects that the demand for petroleum will fall 5.2mm b/d below capacity this year. It is also expected that refining will continue to be a low margin buisness, as the world has a much larger oil refining capacity than needed and we currently have 85 million barrels worth of oil products sitting in floating storage. There is a spare capacity of 20% this year as opposed to the 5-6% of years previous. So maybe it is not looking so rosy for the oil industry.

LS Power Associates to Buy Greater Share in Dynergy

LS Power Associates is expected to announce today (8/10) that they will be purchasing 9 power plants from Dynergy. LS Power will give Dynergy $1 billion and $500 million worth of shares that LS Power already had in Dynergy. They will also now own 15% of the energy company.

Barnes & Noble to Buy

Barnes & Nobles announced a deal stating that an agreement has been made to buy Barnes & Noble College Booksellers from the company's Chairman. The deal is worth $596 million and Barnes & Nobles expects that the deal will increase earnings for this year by 30-35%.

Chinese Academy of Sciences to Sell Stake in Legend Holding

The Chinese Academy of Sciences announced that it is looking for a buyer for 29% of the shares of Legend Holding which is the parent company of Lenovo. They are looking to complete a deal by early September and are hoping to earn $404 million from the sale. They believe they will sell to another Chinese company.

M&A Activity Reaches All-Time Highs in Mining

Proposed takeovers in mining for the quarter a currently valued at over $122 billion. This is the highest total value for the mining industry in M&A for a quarter in years and more than twice the second-highest total value of $57 billion from the first quarter of 2008.

China's New Bullet Train

China is currently working on what could be the most technologically advanced transportation system ever. The country is spending over $50 billion to create a new bullet train system and will lay down over 16,000 miles of track. A project like this will not only boost travel but the Chinese economy as they are currently employing over 110,000 people on the project and it will greatly decrease the amount of time it takes to travel between China's major cities.

Fall of The British Empire

Britain has seemingly lost its standing in the world and is becoming increasingly insignificant in world affairs and in the world economy. Newsweek suggests that for some time now England has been the pawn and sidekick to the United States and now the U.S. is in decline England no longer has a hold, especially as emerging nations are giving little thought to the British. Is there any hope left for Great Britain or will they merely become insignificant?

Big Banks Still Failing

The United States may be hitting the bottom of the recession and may be on the turn around to get above water soon but the U.S.'s big banks have yet to come that far along. The FDIC has listed 305 banks as being problematic and Bankrate.com has given two dozen banks with $5billion+ in assets a one-star rating for soundness and safety, three banks have stated that they are close to collapsing. 69 banks have already failed this year. It will seemingly take a lot longer for banks to follow the trend and begin their recovery.

Russia's Lending

Russia's central bank annouced that they would be reducing their refinancing rates by a quarter of a point from 11% to 10.75%. They would also reduce their repurchase rate on bank loans to 9.75% from 10%. The government is currently attempting to encourage lending and consumer spending without increasing inflation after the annual inflation rate rose to 12% in July.

BRIC Nations Gain and American Debt

The emerging BRIC Nations are continuing to build up steam as they further prove their future economic dominance. Their reserves now make up 43% of the world's total. It is estimated that these countries will expand 1.3% this year and 4.5% next year. Meanwhile the States continue to pile on debt. The country's debt currently makes up 79% of their GDP. California is currently dealing with upwards of $60 billion worth of debt, that they are slowly selling off in the form of IOUs.

Italian Economy Continues to Contract

While many of the world's economies are showing signs of improvement the Italian economy is continuing its downward spiral. Although the economy is not contracting as much as it has been recently this is the 5th straight quarter in which there has been no improvement for the Italians and unemployment is at a 4 year high. During this recession there has been little want for Italian goods and exports and the country's stimulus plans appear to be failing.

Chinese Government to Closely Monitor Lending

In the hope of preventing an increase in credit risk and the development of new asset bubbles China is studying stock-market variabilities and carefully monitoring the lending industry. The country has a number of ways to control the flow of money and is therefore able to manipulate various stock trends.

National Express Puts Up Deadline

England's National Express railroad franchise has set up a date by which an offer has to be on the table to sell. The company has decided that all offers must be in place by September 11. Currently there are two bidders looking to buy.

20% Decrease in M&A Activity This Year

Since this time last year M&A activity has decreased by approximately 20% and these deals are worth a lot less that they were. The total value of trades is down 38% from 1.3 trillion last year.

North Pacific Group Selling

The North Pacific Group has just signed a letter of intent to sell it's stocks to a private equity firm that has to this point remained unnamed.

Financial Crisis Takes Toll on India's Religious

Most of us don't stop to think twice about Christianity in India, but with the current financial crisis and the toll it has taken on Western religion, India's Christian population has suffered. The struggling religion has seen a major decrease in mass outsourcing as well as a decrease in funding and revenues. Considering the Christian faith in India is relatively small this could have a severe impact on the ability for the church to continue there.

Arkema to Buy Dow Subsidiary

Arkema announced that it was to purchase an acrylic acid and esters plant from Dow Chemicals for $50 million.

China's Job Crisis

When we think about the instability in the job market many of us recognize the problems facing the United States and Europe, seldom do we think of China as having a similar issue. China and several other Asian countries are supposed to be the solution, picking us up out of the financial crisis. However, China is dealing with its own unemployment crisis. With the decreased demand of Chinese exports many companies are downsizing. Although the Chinese unemployment rate of 4.3% is well below that of the United States and the EU, the rate is still severe for the nation.

Shanghai Works for a Two Child Policy

In their dream to become a financial capital Shanghai is pushing to create a two-child policy. Shanghai has realized that as the Chinese population is getting older, putting pressure on China's youth and social security system, that it is time to change if they want to become dominant.

Sharp Decline in European M&A

During this weak economy Europe has probably suffered the most. The number of cross border M&A transactions has plummeted recently, dropping over 80% from this time last year. Domestic and European targeted M&A has also decreased considerably in the past year.

Life for Christian Lacroix?

An Italian family owned group recently put an offer on the table to acquire Christian Lacroix. This is the first serious bid the company has received since announcing bankruptcy. The struggling fashion house filed suit this year for protection against creditors.

Canadian Hydro Rejects TransAlta

Canadian Hydro has asked its shareholders to reject a bid it received from TransAlta. Canadian Hydro found the bid much to low as it does not reflect the company's intrinsic value.

Aetna Trying to Sell Its PBM Business

Aetna is reportedly shopping around its pharmacy-benefit management business. Although Aetna has been contacted by several companies it will be awhile before it reaches a deal or even announces negotiations. Aetna expects to earn approximately $2billion from the sale.

CIT Group Inc Considers Selling Assets

CIT Groups is reportedly considering selling off more of its assets. It is believed that they will be selling its aviation and rail-financed operations. The Group has already been approached by buyers, but has rejected all bids.

BYD Acquires Bus Manufacturer

The Chinese battery and electric car manufacturer BYD in which Warren Buffett's Bershire Hathaway has invested will acquire bus manufacturer Hunan Midea Coach for RMB 60 million. It also plans to build a new plant with a capacity of 400,000 units annually.

US Dollar Will Maintain Dominance

Despite China's efforts to create a new international trade currency so as to no longer rely on the weakening US dollar, Zhang XiaoMing of the Bank of Communications Co. has stated that the Chinese Yuan will not be able to overtake the US Dollar in the marketplace for at least another decade. Zhang notes that the Chinese will have to increase the ability to use the Yuan outside of China if the Yuan is to become dominant, which will take quite some time.

BRIC Nation's Growing Power

The BRIC nations' (Brazil, Russia, India, China) have shown tremendous IPO growth over the past year. The four countries currently have the best performing stock market values and trends show that the nations will continue to grow.

SinoChem May Overtake Nufarm

Australia's Nufarm announced on July 24th that it was recently approached by SinoChem. SinoChem hopes to take over Nufarm so as to increase the company's market share as they attempt to expand into North and South America.

Why Beijing Failed to Acquire GM

Beijing Auto's Opel bid was recently rejected and sources now believe that this is due in part to fear that by selling to Beijing, GM would instead strengthen a rival and further harm themselves.

Global Stock Improvement

Stocks improved globally on the 22nd, reaching new highs for 2009. The Dow increased to over 9000 for the first time since January. This is due in part to the stabilization of the United States housing market and greater than expected corporate earnings. This gives signs of hope that consumers are developing more faith in the market.

Decline in Venture Capital Investing

During the second quarter we saw that International Venture Capital Investments took a sharp decline in comparison with last quarter and last year. This quarter fewer deals have been made, with a lower average investment. Europe seems to be getting the worst of it, with the lowest investment rates it has had in decades. There were some improvements from last quarter though as invested capital increased but it is still far from where it was in 2008.

Acquisition Limitations

According to a new European Union rule, some European banks that have been hit hard by the recession will have to limit the number of acquisitions they make each year.