| To: Glenn Petersen who wrote (3696) | 6/20/2014 12:19:12 AM | | From: Sr K | | | | The former Tyco used an inversion in 1997 when buying ADT. That's how it got incorporated in Bermuda.
en.m.wikipedia.org
In July 1997, Tyco merged by reverse takeover with smaller publicly traded security services company named ADT Limited, controlled by Lord Ashcroft. Upon consummation of the merger, Tyco International Ltd. of Massachusetts became a wholly owned subsidiary of ADT Limited, and simultaneously ADT changed its name to Tyco International Ltd., retaining the former Tyco stock symbol, TYC. The merger moved Tyco’s incorporation to Bermuda, where it was headquartered in the colonial capital of Hamilton. A new subsidiary named ADT Security Services was also formed out of the merger.[ citation needed]
Some of the Tyco pieces are
COV
TE Connectivity, somewhere in Mexico (not traded on a U.S. exchange)
Tyco International (TYC)
CIT
MTSI
ADT (a recent spinoff)
MNK |
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| To: Sr K who wrote (3699) | 6/20/2014 7:57:59 AM | | From: Glenn Petersen | | | | Icahn Urges Family Dollar to Sell Itself
By WILLIAM ALDEN
DealBook
New York Times
June 19, 2014 5:01 pm
Updated, 6:38 p.m. |
The activist investor Carl C. Icahn has turned up the heat on Family Dollar Stores, the discount retailer in which he holds a 9.39 percent stake.
In a letter to Howard R. Levine, Family Dollar’s chief executive, Mr. Icahn urged the company to put itself up for sale “immediately,” and he demanded that three of his representatives be added to Family Dollar’s board. If the company does not cooperate, Mr. Icahn said, he plans to go directly to shareholders with an effort to throw out the entire board.
Shares of Family Dollar rose 2.7 percent in after-hours trading.
The letter was the first public indication of Mr. Icahn’s plans for his new investment in Family Dollar, which he disclosed earlier this month. The billionaire has a long record of aggressively lobbying corporate boards and management, most recently at Apple, eBay and Dell.
His strategy with Family Dollar appears to be pulled straight from that playbook.
“We believe there would be significant interest from strategic and financial buyers who could recognize massive synergies from an acquisition of the company,” Mr. Icahn said in the letter. “And it is clear that now is a perfect time to sell, given the advantageous stock market and interest rate environment.”
Family Dollar has fortified its defenses. The company adopted a one-year shareholder rights plan, also known as a poison pill, after Mr. Icahn disclosed his stake.
Family Dollar said in a statement that members of its board and management had “recently met with Mr. Icahn, and, as we expressed in the meeting, we are always open to constructively communicating with our shareholders with the shared goal of enhancing value.”
The company added that, during a review of its business, it would “continue to take immediate, strategic actions as appropriate to improve our performance. We are confident that these steps will position Family Dollar to deliver stronger returns for our shareholders.”
But Mr. Icahn indicated that Mr. Levine, the chief executive, resisted his ideas during a dinner on Wednesday.
“Although we appreciated the cordial nature of our discussion at last night’s dinner, it was apparent that we have a strong difference of opinion as to the future of our company,” the investor said.
Mr. Icahn pointedly noted the company’s disappointing financial results, saying its stock had lagged that of rivals. He said that “consolidation” in the company’s industry was “inevitable” and that “the company has been in limbo for far too long.”
To kick off a sale process, Mr. Icahn said he wanted his three board candidates to join a committee to search for interested buyers. He told Mr. Levine that his first choice would be to achieve this “in a friendly and collaborative manner with you.”
But he added: “If we cannot achieve this collaboratively, we intend to take this matter directly to shareholders by commencing a written consent solicitation within the next few weeks to remove all of the members of Family Dollar’s board of directors and replace them with individuals that will have a shareholder mandate to sell the company.”
This is not the first time a Wall Street investor has tried to persuade Family Dollar to pursue a deal. In 2011, Nelson Peltz, another prominent investor, made a bid for the company after amassing a 7.9 percent stake. But Family Dollar resisted, and Mr. Peltz eventually abandoned the effort when the company agreed to name his partner to its board.
Mr. Icahn apparently thinks his luck will be better.
dealbook.nytimes.com |
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| From: The Ox | 6/23/2014 11:51:34 AM | | | | | | Harbinger Group ( HRG +1%), Phil Falcone's holding company, offers to buy retailer Central Garden & Pet ( CENT +8.9%) in a ~$1.1B deal that includes the assumption of debt, or - as an alternative to acquiring the entire company - purchase CENT's pet business for $750M.CENT operates two segments: Its lawn-and-garden business offers grass seed, weed killer and flower pots, while its pet-supply unit sells dog bones, horse vitamins and aquariums.HRG says it has tried unsuccessfully to engage CENT in closed-door talks, and that it decided to make its offer public in light of the lack of response.
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| From: The Ox | 6/23/2014 12:15:55 PM | | | | | | | PLX Technology, Inc. (Nasdaq: PLXT) 9.9% HIGHER; Avago Tech (Nasdaq: AVGO) and PLX Technology, Inc. (Nasdaq: PLXT) announced that they have entered into a definitive agreement under which Avago will acquire PLX, a leader in PCI Express silicon and software connectivity solutions, in an all-cash transaction valued at approximately $309 million, or $293 million net of cash and debt acquired. Under the terms of the agreement, which was approved by the Boards of Directors of both companies, a subsidiary of Avago will commence a tender offer for all of the outstanding shares of PLX common stock for $6.50 per share in cash. Avago expects to fund the transaction with cash available on its balance sheet. |
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| From: Glenn Petersen | 7/1/2014 3:23:23 PM | | | | | | Mergers Hit a 7-Year High, Propelled by a Series of Blockbuster Deals
By MICHAEL J. DE LA MERCED
DealBook
New York Times
June 30, 2014 8:13 pm
The New York Times
_______________
Deal makers have been thinking big this year.
Buoyed by some of the biggest deals in recent memory, 2014 has so far been the kind of year that bankers and lawyers have been awaiting for some time.
“People are willing to make bigger bets on transactions than they were two years ago,” said Stephen Arcano, a partner at the law firm Skadden, Arps, Slate, Meagher & Flom.
And it appears that the factors that have been driving the waves of consolidation will keep propelling mergers for the rest of the year.
At first glance, many of the statistics that define merger activity for the first half of the year are eye-popping: Deals worth nearly $1.77 trillion were announced in the first six months of 2014, according to Thomson Reuters, up nearly 73 percent from the period a year earlier and more than in the first six months of any year since 2007.
Much of that was spurred by a smattering of blockbuster transactions, like AT&T’s $48.5 billion bid for DirecTV; Comcast’s $45 billion offer for Time Warner Cable; and Facebook’s $19 billion deal for WhatsApp. Over all, 18,217 deals have been announced, down 0.4 percent from the period a year earlier and the lowest level of announced transactions since 2005.
In the high end of the market, however, business is booming. Forty-six deals worth more than $5 billion have been announced this year, 130 percent more than last year. The difference is even starker on a dollar basis: these announced megadeals were worth $740.7 billion, up nearly 231 percent.
The New York Times
_______________
Many of the factors underpinning the growth have been little changed since the end of the financial crisis. Companies are sitting on enormous amounts of cash. And borrowing has rarely been cheaper, with the Federal Reserve keeping interest rates low.
But much of the work done to bolster stock growth, such as cost cuts and stock buybacks and special dividends, has already been completed. Accomplishing more requires more drastic action.
That has prompted companies to buy growth through acquisitions. Management teams have been dusting off corporate playbooks for potential deals. And as companies have pursued industry-changing mergers, their peers have been forced to weigh the cost of inaction — and many have chosen to act.
“What’s different now is that you have catalysts in industries that are causing managements and boards to act because their industry structures are changing,” said Michael Carr, the head of Americas mergers and acquisitions at Goldman Sachs. “And in some ways, the stakes of not acting have gone up.”
The New York Times
________________
Investors have been largely rewarding companies for taking action, with stocks of acquirers climbing — they normally fall as shareholders worry about the potential for overpaying for deals. That sort of positive reaction inspires others weighing takeover bids to jump in, confident that shareholders will be on their side.
“We went back and looked to the share price reaction of acquirers. It’s higher in 2014 than we’ve seen in at least the last 20 years,” said Patrick Ramsey, a co-head of Bank of America Merrill Lynch’s Americas mergers business. “That’s a huge source of confidence and validation not just for the people doing the deals, but for their peers and others.”
Another sign of emboldened deal makers: a rise in hostile and unsolicited takeover bids. Unsolicited transactions worth about $145.1 billion have been announced this year, reaching levels unseen in seven years. The surge in activity has been led by the likes of Valeant Pharmaceuticals’ $53 billion bid for the Botox maker Allergan and the drug maker AbbVie’s $46 billion offer for its Irish counterpart Shire.
Once seen as distasteful, such unsolicited bids are now just a standard part of the M.&A. tool kit, advisers say.
“What was once maybe viewed as a vice has become much more acceptable,” Mr. Arcano said.
AbbVie’s pursuit of Shire also highlights how taxes are becoming an increasingly important driver for deals, particularly within sectors like the health care industry. The deal would be structured as a so-called inversion, in which the American buyer would essentially be allowed to reincorporate in country like Ireland or the Netherlands with a significantly lower tax rate.
Pfizer’s thwarted $119 billion bid for AstraZeneca of Britain and Medtronic’s $43 billion deal for the Irish lab equipment maker Covidien were also done as inversions, meant in part to cut the buyers’ taxes. Buyers protest that the tax rationale is not the only reason to pursue such a deal — the transactions must make sense strategically in the first place — but analysts calculated that Pfizer could have saved some $200 million for each percentage point of taxes that it cut in the deal.
“Everyone is talking about it, from M.&A. professionals to people on Capitol Hill,” Mr. Arcano said.
The emergence of hostile deals and the prospect that some of America’s biggest corporate names are weighing a change of address to cut their taxes has prompted an outcry among some in Congress. Some lawmakers have proposed a moratorium on inversions. Fearing that the move may eventually be outlawed, companies are plowing ahead in search of foreign targets that fit the inversion mold.
Strikingly, however, one of the most deal-focused sets of buyers has been largely sitting out this year’s boom. Private equity firms’ announced transactions — worth $117.1 billion — accounted for just 7 percent of all mergers, down nearly half from the same time a year ago.
While such companies focus on buying up targets, these firms find themselves increasingly unable to compete with corporate rivals that can take advantage of bigger cost savings to justify higher prices.
“The proportion of M.&A. with respect to financial sponsors has dropped simply because the size and scope of M.&A. among corporate buyers is so high,” Mr. Carr of Goldman said.
Despite the torrid pace of the first half of the year, deal makers say that the second half is likely to keep them busy. Sprint, for example, is widely expected to announce a merger with T-Mobile US. And more health care and tech deals are in the works, advisers say.
“At times,” Mr. Arcano said, “it feels like we’re drinking out of a fire hose.”
dealbook.nytimes.com |
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| From: Glenn Petersen | 7/11/2014 4:44:04 PM | | | | | | How Disruptive Technology Is Spurring Tobacco Merger Talks
By STEVEN DAVIDOFF SOLOMON
DealBook
New York Times
July 11, 2014 4:10 pmJuly 11, 2014 4:10 pm
Disruptive technology can spur takeovers as companies race to bulk up and acquire innovators in the fear that their business could go out of date.
But who would have imagined that this phenomenon would happen in the 400-year old cigarette industry?
The second and third largest cigarette companies in the United States, Reynolds American and Lorillard have confirmed that they are in talks to combine. The merger would result in the cigarette industry in the United States being dominated by two players – the new combined company and Altria, the maker of Marlboro cigarettes. The three companies currently have roughly 90 percent of the $90 billion to $100 billion United States tobacco market, with the Altria Group taking roughly half the market.
A final move of consolidation in this industry was perhaps inevitable because of declining sales in the still highly profitable American cigarette market. Both Reynolds and Altria have already spun off their international operations and so expansion abroad for more opportunities does not seem feasible. Left with few expansion opportunities, it is no surprise that the companies would seek to combine to reap further profits through cost savings.
But the companies could have tried to combine years ago. So why now?
It may very well be that disruptive technology known as e-cigarettes.
The e-cigarette market is growing at phenomenal rates and could surpass $2 billion this year according to some reports.
And as was the case during the dot-com boom, when many made wild forecasts of potential Internet users and revenue, people are already predicting that sales from e-cigarettes will surpass regular old, unhealthy cigarettes. Well, at least by 2047, according to one analysis by Bloomberg Industries.
By 2047, many of us could also be underwater because of global warming, assuming we are alive. Or not.
In other words e-cigarettes have momentum but we do not know if they will actually succeed. They may very well be a fad.
Still, fear of this technology is rumbling through the industry. But unlike, say, the taxi industry and Uber, Big Tobacco is well-coordinated and has deep pockets.
Lorillard has already acquired Blu Ecigs, the largest American seller of e-cigarettes with a 40 percent market share. Reynolds has also released its own e-cigarette, but is viewed by the industry to be behind in this market.
An acquisition of Lorillard thus catapults Reynolds ahead of Altria in the e-cigarette category. It would also add the controversial menthol cigarettes of Lorillard to Reynolds stable of offerings.
Reynolds and Lorillard would have to sell some brands in connection with the deal in order to satisfy antitrust regulators. This is where Imperial Tobacco comes in. Imperial Tobacco will take advantage of Reynolds and Lorillard’s hunger to merge to obtain a significant presence in the United States at a likely good price.
One way to view this deal is that it is all about dealing with a declining industry. But this transaction is also about fear. Fear that new technology will end your old business.
This is where the e-cigarette comes in. Reynolds and Lorillard would now be the front-runner in this new technology. They will also benefit from the unrestricted advertising that can be done for e-cigarettes. Advertising that may subliminally also provide a boost for cigarettes themselves.
A giant tobacco merger in that respect is not that much different than acquisitions like Facebook’s $16 billion deal for WhatsApp or Google’s $3.2 billion deal for Nest Labs. Large premiums are being paid in fear of the next big technology and the destruction it might bring. That technological destruction may not come to pass, but then again it might.
The merger of Lorillard and Reynolds shows no industry is safe from technology’s transformative effects — and the uncertainty that generates.
Welcome to the 21st century, cigarettes.
Steven Davidoff Solomon, a professor of law at the University of California, Berkeley, is the author of “ Gods at War: Shotgun Takeovers, Government by Deal and the Private Equity Implosion.” E-mail: dealprof@nytimes.com | Twitter: @StevenDavidoff
dealbook.nytimes.com |
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| From: Glenn Petersen | 7/15/2014 12:29:32 PM | | | | | | Congress needs to address this issue...yesterday:
Reluctantly, Patriot Flees Homeland for Greener Tax Pastures
By ANDREW ROSS SORKIN
DealBook
New York Times
July 14, 2014 9:20 pm
Heather Bresch grew up around politics. Her father is Joe Manchin, the Democratic senator from West Virginia and a former governor. She has heard him say repeatedly, “We live in the greatest country on Earth,” as he did in countless political advertisements. And it appeared to rub off on her: Ms. Bresch was named a “Patriot of the Year” in 2011 by Esquire magazine for helping to push through the F.D.A. Safety Innovation Act.
Ms. Bresch is the chief executive of Mylan, the giant maker of generic drugs.
Until now, Ms. Bresch ran an unabashedly proud American company based in a Pittsburgh-area suburb, one of a handful of success stories that kept the once-thriving steel city relevant.
But on Monday, Ms. Bresch announced plans to renounce her company’s United States citizenship and instead become a company incorporated in the Netherlands, where the tax rates are lower. She did so by agreeing to acquire Abbott Laboratories’ European generic drug business.
The deal is just the latest example of a so-called inversion — in this case, it’s actually called a “spinversion” — and may be the most surprising of such deals given Ms. Bresch’s family background.
Ms. Bresch says she entered the deal reluctantly, and she genuinely seems to mean it.
If Ms. Bresch’s deal is not a call to Washington to address what is clearly a growing trend that it has remained nearly silent on, the nation will most likely continue to lose large employers and taxpayers in droves to countries with lower tax rates. Almost 20 large United States companies have announced plans to give up their United States citizenship over the last two years. Just on Monday, the Irish drug maker Shire cleared the way for a merger with AbbVie, the drug maker based in Chicago, and Walgreen is considering an inversion through a deal with Alliance Boots, a European drugstore chain.
“It’s not like I’ve not been vocal and up there talking to anybody who’d listen to me,” Ms. Bresch told me in an interview about the crusade she had been on in Washington for years, talking to lawmakers about overhauling the corporate tax code to make United States companies more competitive. “But you know what they all say? ‘Yeah, uh huh, O.K. Uh huh.’ ”
She added: “We were one of the last ones in our sector to do this. So it’s not like I was blazing the trail. If you put on your business hat, you can’t maintain competitiveness by staying at a competitive disadvantage. I mean you just can’t. The odds are just not in your favor.”
She’s right about her competitors. Teva Pharmaceutical Products, which is based in Israel, and Actavis, which is now based in Ireland after a tax-driven acquisition of Warner Chilcott in 2013, pay much less in taxes.
Still, there’s something morally disconcerting about a company like Mylan, which is a beneficiary of United States taxpayers who pay for Mylan’s drugs through Medicaid and Medicare, leaving the country, in part, to pay less in taxes. (Ms. Bresch insists that the merger is being driven mostly by its strategic merits, and that the lower tax rate is just an added benefit.)
How much less will Mylan pay?
Ms. Bresch, who said the company’s current effective tax rate is about 25 percent, said the rate would come down to 21 percent in the first year of the deal and then move into the high teens after three to five years. Mylan will continue to pay taxes in the United States on its domestic profits, but not on its business operations abroad.
All of which raises an important question: Even if the United States were to revamp its corporate tax code, how low would the rate have to drop to be competitive and still raise enough revenue to pay for the services that citizens expect?
President Obama has proposed a top corporate rate of 28 percent, and a rate of 25 percent for manufacturers. However, that number would appear to be too high to hold on to the likes of Ms. Bresch. Even 20 percent — some Republicans have floated that number — might still be too high.
This tax-rate arbitrage among global companies creates a race to the bottom as countries try to outcompete one another until the rate becomes zero, a number that many shareholders might be thrilled about, but would be unlikely to produce enough money for the Treasury’s coffers. There have been proposals to curb inversions, but those are only short-term solutions.
When I raised the prospect that Mylan would still leave even if United States tax rates were lowered somewhat, Ms. Bresch stopped me.
“Well, I don’t think you can say that,” she said. “I would step back and say our starting point today is 35, right?” She added: “I can’t say as a starting rate what’s enough or not enough until you honestly are able to sit down and look at a holistic proposal because everything from manufacturing, physical assets, depending on how they would reform this in entirety, would be how it applies, regardless of what that starting point is.”
Ms. Bresch doesn’t appear hopeful about tax reform.
“Obama had the wherewithal to muscle through an entire health care reorganization, right?” she pointed out. “Like it, don’t like it, whatever. This tax reform is even, in my opinion, on a larger scale than that because it’s a global economy.” She added, “Our government, right or wrong, has taken the viewpoint of, ‘We’re not negotiating.’ It is what it is. I think that standoffish mentality around tax has now continued to compound and complicate this issue.”
But Ms. Bresch is even more nervous about the larger implications: “You know what makes me want to cry? I think whoever the next Facebook is, why would you ever start that company here in the United States?”
That’s tough love from the daughter of a United States senator, who learned of the deal on Monday for the first time.
So what does he think of the deal?
“I am always disappointed when American companies feel the need to move overseas because of the U.S. tax code,” Senator Manchin told me in a statement. “However, this decision is systemic of a larger problem with our corporate tax code that puts American companies at a disadvantage with their global competitors. Since the day I arrived in the Senate, I have been advocating for a complete overhaul of our tax system, and I will continue to work with my colleagues on ways to reform our tax code so we are competitive in a global market, and companies that manufacture and sell their products in America stay in America.”
So far, that’s much easier said than done.
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