| From: Glenn Petersen | 10/29/2013 11:29:24 AM | | | | | | Frenzy of Deals, Once Expected, Seems to Fizzle
By ANDREW ROSS SORKIN
DealBook
New York Times
October 28, 2013, 8:38 pm
It was mere months ago when headlines were blaring news of the return of merger mania.
Deals were back! Confidence had returned! Warren Buffett was buying Heinz! Dell was going private! American Airlines was merging with US Airways!
Well, take a look around. Prognostications of a return to deal-making have turned out to be wrong, very wrong.
So wrong, in fact, that merger activity, measured by dollar value, looks as if it is on track to be down 3.4 percent globally from last year, according to Thomson Reuters. By number of deals, it’s the lowest year-to-date period since 2005.
And deal-making may not be coming back anytime soon.
“It’s pretty grim, even with Verizon- Vodafone padding the numbers,” said Scott A. Barshay, the head of the corporate department at the law firm Cravath, Swaine & Moore, referring to Verizon’s recent $130 billion deal to buy out Vodafone’s share of the joint venture in Verizon Wireless. If you exclude that deal from the count measured by total dollars, we’ve returned to 2009.
“There has not been confidence in the strength of the recovery since the financial crisis, which makes C.E.O.’s and boards reticent to pursue major transactions,” he said.
Some blame the debt ceiling fights in Washington, the government shutdown or the introduction of Obamacare for creating uncertainty in the economy and thus the slowdown in deal-making.
“It reflects the broad-based loss of confidence in the business community and their inability to make significant capital investment, be it M.&A. or capital spending, in large measure because of the uncertainty of tax and regulatory policy from Washington, D.C.,” said Doug Kass, founder of Seabreeze Partners Management. “Until Washington, D.C., grows more proactive, less inert in policy, this is likely to continue.”
But that may only be part of it.
What if the slowdown in merger activity isn’t cyclical, but secular? What if corporations have learned the lessons of so many companies before them that the odds of a successful merger are no better than 50-50 and probably less? Is it possible that the biggest deals have already been done?
Big deals are drawing significant antitrust and regulatory scrutiny. The United States government blocked AT&T’s acquisition of T-Mobile and is in the middle of trying to block American Airline’s merger with US Airways. Can you even imagine the outcry if a big bank merger were announced in this postcrisis world?
The stars were supposed to have been aligned for mergers and acquisitions — a barometer of confidence in the boardroom from the people who can actually see the health of their own business up close.
Corporations are sitting on record cash, some $1 trillion. The debt market is back open for business. Activism by large shareholders is pushing companies to rethink their structures. Economic and corporate growth are slowing.
And of the deals that have been announced, shareholders have rewarded acquirers by bidding their shares up. All of those ingredients had led many experts to suggest that companies would seek to buy rivals at a record pace.
“It feels like we have seen the beginning of the return of the strategic deal. We just need to see more of that across more sectors to call it a recovery,” said Gregg R. Lemkau, a co-head of global mergers and acquisitions at Goldman Sachs.
Predicting, of course, is a dangerous game. Now that I’ve speculated that deal flow will continue to be slow, fate may have it that a spate of big mergers will be announced in the coming weeks. But there would have to be an awful lot of deals before Christmas to make up for the slowness.
By deal value, it should be noted that deal volume in the United States is up 29 percent. But for Wall Street, the lower number of total deals is a meaningful problem. Most banks had been staffed in expectation of the return of merger advisory work, which is some of the most lucrative business a bank conducts. And while most bankers will say they are busy, and they are, many are working on answering shareholder activists, who typically prod companies to find ways to unlock corporate value.
There’s not nearly the same kind of payday in helping a company defend itself against an activist as there is in working on a deal. More often than not, helping a client defend itself against an activist is a relationship-building exercise, undertaken in hopes of getting hired for a transaction down the road. Goldman Sachs reported its third-quarter net revenue for advisory work was down 17 percent compared with the same period a year earlier.
Come bonus and management review season, some Wall Street banks may have to rethink their staffing needs.
However “grim” Mr. Barshay sees the current deal activity, however, he disagrees with the assertion that deal-making is on the wane for good.
“I do not believe the slowdown is secular. For the last 50 years, M.&A. activity has been cyclical, waxing and waning with confidence in the economy,” he said. “It isn’t that C.E.O.’s won’t do a deal, but they have to believe it will be a triple or a home run before they’ll pull the trigger. That’s why you’ve had this strange phenomenon in 2013 of fewer M.&A. deals.”
And while mergers may be a good barometer of boardroom confidence, Mr. Kass says it is a poor indicator of the economy and the market.
“Never lose sight that business leaders are much like retail investors,” he said in an email. “They buy (invest and take over) high and sell low! As such, and based on history, they are very lagging indicators.”
Andrew Ross Sorkin is the editor at large of DealBook. Twitter: @andrewrsorkin
dealbook.nytimes.com
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| To: The Ox who wrote (3519) | 11/6/2013 12:36:23 AM | | From: richardred | | | | | Hi OX: I wasn't familiar with MSPD/Mindspeed until your posting. Nice quick premium. I'm not sure if the acquirer is the remnants of the MA/Com I used to own in my early investing days. Like my SYMM, it looks like the board just gave up at trying to turn things around. Both stocks sold for much higher than the quick takeout price in the not to distant past. Interesting note- The PR state the acquisition will add 15-20 cents to 2014 earnings. |
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| To: richardred who wrote (3512) | 11/8/2013 7:03:12 AM | | From: richardred | | | | Twitter’s ready to go on the acquisition warpath, with almost $2B to spend
Eric Blattberg / VentureBeat
The floor of the New York Stock Exchange.
November 7, 2013 5:02 PM
Thanks a successful IPO opening day, Twitter now has a warchest of $1.8 billion. And according to some analysts, a lot of opportunity to spend it.
“Twitter has a long M&A shopping list with dozens of target private companies the microblogging service is targeting for purchase,” PrivCo’s Same Hamadeh said in a research note. “Twitter will use its rich stock to buy companies straightaway, adding to its revenues and further justifying its high valuation.”
Eric Blattberg / VentureBeat
Actor Patrick Stewart examines the Twitter logo as he stands next to child activist Vivienne Harr, who helped him ring the opening bell.
That high valuation does demand some justification. And it’s unlikely to be justified anytime soon with massive revenue or, perish the thought, actual profit. Twitter has pulled in $422 million so far in 2013, but it has a net loss of $134 million, up 89 percent since last year. With anemic growth figures, Twitter will likely need to keep spending on growth, so that loss number will take some time to turn into a profit.
“In our opinion Twitter will justify its steep valuation through both organic growth and through an imminent acquisition spree,” Hamadeh said.
Twitter has already acquired a long list of companies, including social search engine Summize, mobile messaging company Cloudhopper, ad firm Ad Grok, analytics startup BackType, social news startup Summify, blogging platform Posterous, email marketing firm RestEngine, social TV analytics firm Bluefin Labs, ad solutions startup Trendrr, and ad exchange MoPub, among at least 18 others.
What’s left?
Clearly, Twitter wants ad tech companies. It’s also shown a tendency to purchase analytics solutions, especially those that tie ad metrics in traditional media industries, such as television and music, to digital ads on Twitter. With the massive rise of messaging platforms that are bringing in massive revenues, an acquisition there could add to Twitter’s communication chops and add revenue, although that’s counter to Twitter’s traditional openness.
And while Twitter has openly indicated its interest in the music business, its #Music app has not seen widespread adoption. An acquisition in the music space that did not conflict or compete with the music industry stars and companies that Twitter is seeking to cozy up to could be a good use of IPO cash.
Exactly what companies are on the social network’s target list, however, isn’t known.
One thing that is? Based on Twitter’s stock price today, Twitter’s founding trio of Evan Williams, Jack Dorsey, and Dick Costolo are now worth a combined $5 billion.
venturebeat.com |
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| To: richardred who wrote (3512) | 11/8/2013 7:14:35 AM | | From: richardred | | | | Millennial Media completes acquisition of Jumptap
 Sara CastellanosTechnology Reporter- Boston Business Journal Email | Twitter | Google+
Maryland-based mobile advertising company Millennial Media (NYSE:MM) announced Thursday it has completed its acquisition of Boston-based mobile ad network Jumptap.
As part of the acquisition, Millennial Media will integrate Jumptap into the company's existing technology, including Jumptap's cross-screen targeting and advanced real-timie bidding technology, according to a release.
Millennial Media will also acquire 62 issued patents and more than 50 patent applications owned by Jumptap as part of the acquisition.
Jumptap specializes in offering mobile ad targeting, delivering ads to the mobile consumer most likely to care about them. The company said in August its system now reaches more than over 218 million mobile users in the U.S. and more than 439 million mobile users worldwide.
Millennial Media said in August the acquisition deal would transfer 24.6 million of its shares to Jumptap shareholders.
The deal was reached based upon Millennial Media's closing share price on Aug. 12, which was $9.13 per share. At that price, the stake included as part of the acquisition was valued at $224.6 million.
The acquisition "further strengthens Millennial Media as it aims to redefine advertising using mobile as the foundation," according to the release.
“Jumptap’s assets are incredibly complementary to what we have built at Millennial Media," said Paul Palmieri, chairman and CEO of Millennial Media in a statement, "and our combined team will have the technology, products, and expertise to help define what the future of digital advertising can be – which undeniably has its foundation in mobile."
bizjournals.com |
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| From: richardred | 11/8/2013 7:53:27 AM | | | | | | Rockwell Automation pursues 'active' acquisition pipeline.
>Rockwell Automation Inc. has about $1.6 billion in cash at its disposal to pursue an “active pipeline” of acquisitions, mainly targeting companies outside the United States, company leaders told The Business Journal.
bizjournals.com |
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