Where Wall Street Meets University Street!
How industry movements affect university giving and collaborations.
Martin Scorcese’s film title applies very well to recent mergers and acquisitions. So which are the international liaisons all set to go past the altar?
YES and I DO!
Let’s start with the stock exchanges-- Euronext Bourse has bid for the LSE’s (London Stock Exchange) French clearing business.
German giant seed maker Bayer is all set to bury Monsanto’s seeds for $66 B. CEO Hugh Grant, of Monsanto, appears strongly optimistic that the acquisition will pass scrutiny.
Japan Inc. may become a more important force in international markets in 2017, as Japanese companies are hoarding a record $3.2 trillion in cash. They may outbid Chinese companies as Beijing has been cracking down on capital outflows, preventing Chinese companies from making foreign acquisitions. China's State Administration of Foreign Exchange is vetting transfers abroad worth >$5 MM, increasing scrutiny to curb capital outflows, which would hurt the value of the yuan – which is still not being “floated”.
After decades of economic stagnation, and a shrinking population, Japanese companies spent $93 B overseas in 2016, little changed from $96 B in 2015. Chinese companies have spent $217 billion in the US, in 2016. Although the recent weakening of the yen against the dollar makes American acquisitions more expensive in “yen” terms; it also means that Japanese companies will earn more from overseas assets.
Japan’s Asahi Group Holdings is buying Anheuser-Busch-InBev's eastern European beer brands for $7.6 B. An “East-West” blend of beer! SoftBank Group’s brilliant scion Masayoshi Son, met Trump and pledged to invest $50 B in U.S. startup companies, following his acquisition of Sprint. Takeda agreed to buy Ariad for $24/share in cash, for $5.2 B. The deal is expected to close by the end of February. Both Takeda and Ariad's boards have approved the deal.
For all you Harry Potter fans - The Shanghai-listed group, Cultural Investment Holdings Co (CIH), is buying 75% of the Oscar-winning British visual effects company, Framestore, which has worked on films including Doctor Strange and the Harry Potter franchise.
Valeant Pharma, which has been bereft of suitors in the past 18 months, is shedding non-core assets to repay debt. L’Oreal will buy three skincare brands for $1.3 B.China's Sanpower Group will buy its its Dendreon cancer business for $819.9 MM. Chocolate is not for dogs because of its theobromine content. But one very interesting union is that of MARS and VCA (Veterinary Centers of America). MARS is going to the dogs! MARS Petcare - 800 animal hospitals, a lab business and dog day care franchises will operate under the name Camp Bow Wow! VCA will be part of Mars Petcare but will operate as a “distinct and separate business unit,”. Mars has 39 brands in its Petcare portfolio, its second largest division. MARS paid $90.60/share for VCA, including debt; the deal is valued at $9.1 B.
And then, there are some unions powered by GE – its 2014 purchase of Alstom, the largest nuclear power provider in France and the manufacturer of subways trains for $13.5 B, is yet to be finalized; as also it purchased of Baker Hughes for $29 B. The latter will be part of GE energy segment.
And finally, all the tools needed for a “honey do” list will now come from Stanley Black & Decker. Sears CEO, Eddie Lampert is selling the trusty Craftsman tools to raise cash. And this is interesting commercial déjà vu, since Lampert faced the same prospect of raising money - to free himself when he was kidnapped in 2003!
NO, NO, NO!
ATTEMPTED LIAISONS: Time Warner turned down a marriage offer from 21st Century Fox, getting a higher “dowry” of $85.4B from AT&T. NCR, meanwhile, held out against pressure from activist investors to accept $820MM from the Blackstone Group. NCR’s share price is up more than 60 percent this year.
The pharma arena saw its share of breakups: Pfizer and Allergan was busted before it got to the altar. In 2015, Allergan was sold to Actavis for $220 a share, after Allergan resisted a bid from Valeant Pharmaceuticals International for $185 a share. And Valeant’s C-suite has been teetering close to the Corrections systems - for creative formulations of its books and not drugs!
BONFIRE OF THE VANITIES Sumner Redstone’s ego was bigger than his penchant for women and with his limitless resources and legal sidekicks, he and daughter Shari, kicked out the ineffective CEO, Philippe Dauman, while keeping his seat on the board. It proved that blood is thicker than water; a succession strategy based on “I’m not going to die”!
PAPER MACHE TIGERS Gannett’s hostile bid, seeking to acquire Tronc, the company of The Chicago Tribune and The Los Angeles Times, failed like paper mache! Tronc CEO Michael Ferro proposition was accepted by Patrick Soon-Shiong, who invested $70 MM to become the second-largest shareholder of the company, after Mr. Ferro. Gannett tried, but to no avail.
THE MAC: This is litigation alleging a Material Adverse Change, or a MAC, allowing a company to walk away from a deal. Abbott Laboratories wants to renege on its $5.8 B acquisition of Boston-based diagnostics giant Alere - with a lawsuit in Delaware Chancery Court. Alere is fighting Abbott’s claims. And Verizon is rethinking its acquisition of Yahoo, after hackers affected more than 1.5B Yahoo accounts in 2015 and 2016, making Yahoo CEO Marissa Meyer look like a yahoo. Yahoo’s Board just bid her “Goodbye”.
CHINA’s companies have been on a buying spree of American businesses – as though they were on ALIBABA! Transparency is their biggest hurdle (like the Chinese Government!) The FTC stoppedclipped the wings of Chinese buyers (using their hard-to-move cash abroad). National security concerns stopped Philips’s $2.9 B from selling a controlling stake in its LED light business, to GO Scale Capital; and Fujian Grand Chip Investment Fund from acquiring the chip equipment manufacturer Aixtron. The Anbang Insurance Group’s $14 billion offer for Starwood Hotels and Resorts did not go well with American shareholders (they preferred Marriott International).
ICARUS came alive! Like the mythical bird, monster solar company, SunEdison, burned its wings and plummeted to the ground, in the middle of its acquisition of Vivint! With the sharp decline in oil in the last two years, the deal blistered, sending the company into bankruptcy.