Friday, December 18, 2009

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.

Tuesday, December 15, 2009

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.

Monday, December 14, 2009

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.

Thursday, December 10, 2009

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.

Tuesday, December 8, 2009

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.

Monday, December 7, 2009

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.

Friday, December 4, 2009

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.