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.