Mergers and acquisitions never reached the fizzy levels experts predicted, but 2013 is still shaping up to be the best year for U.S. deal activity in five years.
Although most mergers and acquisitions ultimately fail to create value for shareholders down the road, it’s hard to say that the economy or markets are truly healthy without them — and that’s not just because investment bankers and corporate law firms need to get paid.
Companies don’t do much wheeling and dealing when markets and the economy are in a funk. A pickup in mergers and acquisitions activity is a sign of confidence — and animal spirits and investor psychology are as critical as anything to ensuring better times ahead.
Despite notching one of the biggest mergers and acquisitions on record, 2013 was hardly a whirlwind of deal activity, but it did pick up smartly.
U.S. mergers and acquisitions volume totaled $865.1 billion in the first nine months of 2013, according to Dealogic. That’s a 39% increase over the same period a year ago — and the highest nine-month total since 2008.
Some deals made huge splashes, while other passed by more quietly, but all of them contributed to the recovery in M&A. For the top 10 mergers acquisitions of 2013, according to FactSet, read on:
#10: Applied Materials (AMAT) Buys Tokyo Electron (TOELY)
Transaction Value: $10 billion
Applied Materials (AMAT) and Tokyo Electron (TOELY) are two of the biggest and most important suppliers to the semiconductor industry in the world, making the machines and technology that turns silicon wafers into computer chips.
Merging the No.1 and No. 3 manufacturers in the industry will create a giant with a market cap of about $30 billion, but more than anything, it’s a defensive move. Technical and financial pressures are squeezing margins and profits in an already mature industry.
Now that the two biggest players have tied the knot, we can expect even more mergers and acquisitions in this sector in 2014.
#9: Spectra Energy Partners (SEP) Buys Spectra Energy Corp.’s (SE) U.S. Transmission, Storage & Liquids Assets
Transaction Value: $9.8 billion
Income investors who love master limited partnerships were licking their chops when this deal was announced. Spectra Energy Partners’ (SEP) acquisition of assets from Spectra Energy Corp. (SE) transforms it into one of the largest fee-based MLPs in the country.
The deal is supposed to offer about $8 billion in organic growth potential by the end of the decade, and it diversifies SEP’s portfolio of energy, storage and transmission revenues.
Best of all for income seekers, SEP expects its annual distribution growth to hit 9% from now until 2015.
#8: American Airlines (AAMRQ) Buys US Airways (LCC)
Transaction Value: $11 billion
US Airways (LCC) had long been looking for a merger partner, but probably didn’t imagine it would find a deal quite like this. AMR Corp. (AAMRQ) — parent of American Airlines — emerged from bankruptcy with a deal in place to merge with US Airways, creating the world’s largest airline in the process.
When American Airlines filed for bankruptcy protection at the end of 2011, it knew that coming out of the process as a standalone company was a losing proposition. Enter US Airways — always a bridesmaid in the consolidation-crazy airline industry.
The deal gives American and US Airways a chance to compete against United Continental Holdings (UAL) and Delta Air Lines (DAL) — and a chance for American to pay back its creditors.
#7: Thermo Fisher Scientific (TMO) Buys Life Technologies (LIFE)
Transaction Value: $13 billion
There were a lot of mergers and acquisitions in the healthcare industry this year — especially in the various specialty subsectors — and no deal was bigger than this.
Thermo Fisher Scientific (TMO), the world’s largest maker of scientific and lab equipment, struck an agreement to buy genetic sequencing company Life Technologies (LIFE). The tie-up vaults Thermo into a prime position in the promising new field of personalized medicine.
Life Technologies is a huge prize because of the dramatic strides it’s making it cutting the time and costs for sequencing human DNA, which allows for the development of highly personal gene-based diagnostic tests and therapies.
#6: Liberty Global (LBTYA) Buys Virgin Media
Transaction Value: $16 billion
This deal didn’t make much of a splash on this side of the pond, but billionaire John Malone’s international cable business sure made waves in the U.K.’s telecom and cable market.
Liberty Global’s (LBTYA) deal to buy U.K. cable-TV and broadband provider Virgin Media created a much stronger rival to No. 1 British Sky Broadcasting.
And it’s already paying off, at least in terms of share-price performance. LBTYA is up 36% for the year-to-date, and up 17% since the Virgin Media deal closed in June.
#5: Publicis Groupe (PUBGY) Buys Omnicom Group (OMC)
Transaction Value: $17 billion
It was a complete and total shock when bitter rivals Publicis (PUBGY) and Omnicom (OMC) agreed to a so-called merger of equals to create the largest advertising agency holding company in the world.
Once the deal closes, the new company will be worth about $35 billion and have roughly $23 billion in annual revenue — and it will leave a vastly changed industry landscape.
Indeed, now that Omnicom and Publicis are hooking up, the Big Four players will become the Big Three, leaving just Omnicom-Publicis, WPP (WPPGY) and Interpublic Group (IPG).
#4: Comcast (CMCSA) Buys NBCUniversal Media from General Electric (GE)
Transaction Value: $17 billion
The sitcom 30 Rock sure had a lot of fun with this drawn-out deal — and it sure took long enough — but General Electric (GE) finally sold its media company to Kabletown, er, Comcast (CMCSA).
The storied NBC network and other entertainment properties are probably a better fit for a cable company than a conglomerate that makes everything from toaster ovens to turbine engines. But it remains to be seen whether NBCU has finally found a good home.
One thing that’s not in doubt is what the deal has done for CMCSA stock price. Comcast stock is up a market-beating 36% for the year-to-date.
#3: Michael Dell and Private Equity Firm Silverlake Buy Dell
Transaction Value: $25 billion
If you needed any evidence that mobile tech is upending the world, look no farther than Dell going private. Once the largest manufacturer of PCs on the planet, Dell just didn’t make much sense as a publicly traded company anymore. On an unadjusted basis, Dell stock used to top $170 a share — but that was a long time ago. When founder Michael Dell and his private equity partners finally bought the company out — something Dell had been pursuing since February — they paid total consideration of just $13.88 a share.
When all was said and done (and after adjusting for splits and dividends), Dell sold at a 75% discount to its all-time high.
#2: Berkshire Hathaway (BRK.B) and 3G Partners Buy H.J. Heinz
Transaction Value: $23 billion
Berkshire Hathaway’s (BRK.B) Warren Buffett has had a hard time finding the big elephants he usually likes to hunt, so he must have been very pleased to buy ketchup-maker H.J. Heinz with the help of a private equity partner.
When the news hit, it also fueled a lot of (ultimately false) hope that 2013 would be a banner year for mergers and acquisitions. But that didn’t pan out. Sure, the M&A numbers are the best they’ve been in five years, but they’re still well below all-time highs.
Regardless, it’s always good for market psychology when the Oracle of Omaha goes shopping, and the Heinz deal was a nice vote of confidence early in 2013.
#1: Verizon (VZ) Buys Out Verizon Wireless Stake from Vodafone (VOD)
Transaction Value: $130 billion
The biggest deal of the year — and one of the biggest of all time — was Verizon’s (VZ) agreement to buy out Vodafone’s (VOD) 45% stake in Verizon Wireless.
More than a decade in the making, the deal’s final price tag makes it the third-largest corporate transaction of all time, behind only AOL’s (AOL) merger with Time Warner (TWX), and Vodafone AirTouch’s takeover of Germany’s Mannesmann.
When it comes to mergers and acquisitions, this one looks like a sure winner for VZ shareholders. Even if growth is hard to come by in the saturated mobile market, Verizon Wireless is an absolute cash cow.
Pensions News – September 2014: budget reforms; legislation; public service pension schemes; and more
/3 Comments/in Pensions /by News DeskWelcome to the latest edition of Pensions News, which aims to help employers and trustees keep up to date with all the latest developments in pensions legislation, guidance and case law. This edition of Pensions News summarises the key developments from September 2014.
In This Issue:
– Budget reforms: the announcement that the 55 per cent death benefits tax charge on pension funds held in a drawdown product at death or uncrystallised after age 75 will be abolished in April 2015.
– The Pensions Regulator: information on new questions in the DB scheme return; and the publication of the staff determinations procedure that applies to cases where a decision is made by the executive arm of the regulator.
– DWP: an announcement about the removal of the NEST restrictions, which also gives some indication on the possible timescale for the introduction of the system for automatic transfers.
– Legislation: the coming into force of certain provisions of the Pensions Act 2014; the progress of the Pension Schemes Bill through Parliament and the publication of notices of amendments; and amendments to the draft updated IORP Directive.
– HMRC: the coming into force of a statutory requirement for scheme administrators to be fit and proper for the role and the publication of HMRC guidance about this requirement; and the latest Pension Schemes Services newsletter.
– Public service pension schemes: a policy note about the NHS pension scheme and Fair Deal; and an update to the directions on valuations and the employer cost cap.
– Other news: the annual review of the Pensions Advisory Service; and the Pension Protection Fund’s latest Technical News publication.
Why do rugby players make such good business people?
/2 Comments/in Sports /by News DeskFormer New Zealand All-Black Sean Fitzpatrick and ex-England rugby coach Sir Clive Woodward explain why rugby and business go so well together.
George Gregan, Australia’s talismanic former scrum half, is one of the country’s most successful rugby union players. His international career spanned 13 years and saw him win 139 caps. Only two people have represented their countries more in the history of rugby – New Zealand’s Richie McCaw and Ireland’s Brian O’Driscoll.
Yet just five years into his international career and at the peak of his powers – the same year, in fact, that Australia won the Rugby World Cup – Gregan started his own business: GG’s Espresso shop, based in Sydney’s bustling business district.
To a football fan this might sound like an odd move, a bit like David Beckham drawing up a business plan for a greasy spoon cafe. But there lies, in a nutshell, one of the major differences between a game in which you throw the ball and one in which you kick it.
Rugby union went professional in 1995, and although the amount of money pumped into the sport has steadily increased, players’ wages are still small compared to that of football.
All Black Dan Carter will become rugby’s highest-paid player after the World Cup, yet even on his new wages it would take him more than 20 years to amass the annual salary of Cristiano Ronaldo. Ronaldo also enjoys bonuses and endorsements that take his earnings beyond £50 million a year – exactly 100 times more than the fourth highest-paid rugby player, Sam Burgess.
Rugby’s historical frugality is a major reason for its close and practical ties to business, says Sean Fitzpatrick, who recently spoke at Grant Thornton’s Inspiring Business event, part of a series dedicated to stimulating ideas among business audiences.
Sean Fitzpatrick
– New Zealand All Black: 1986-1997
– Captain 51 times
– World Cup winner: 1987
– Front Row Group director: 2010
Sean is a World Cup-winning All Black with 92 caps to his name, having captained the side a one-time record of 51 times, a figure only recently bettered by Richie McCaw.
“Unlike footballers, most rugby players will have worked. We know that when we finish, we won’t have enough money to lie on the beach,” he explains during an interview with Strategies for growth ahead of his presentation. “A rugby player has to work with people and adapt to different situations; footballers don’t learn those skills because they don’t have to.”
It’s a fact drawn out in the experience of Sir Clive Woodward, the former England coach who steered the team to the 2003 Rugby World Cup title. During the early 1980s he combined his time working as an executive for the technology company Xerox with playing rugby 21 times for England.
Sir Clive Woodward
– England coach: 1997-2004
– Rugby World Cup winner: 2003
– Southampton FC: 2005
– British Olympic Association director: 2006-2012
“From a coaching point of view the business experience has been fantastic; as a player it effectively got in the way because it encroached on training time,” says Sir Clive, who delivered a presentation on world-class performance at Grant Thornton’s Inspiring Business event.
“When I became a coach all the lessons I learned in business became priceless. When I coached England it certainly helped that the players knew I had been in their shoes and had played for my country, but the biggest thing that helped me was 18 years in business,” he adds, referring not only to his days as a salesman and team leader with Xerox but also his stewardship of a small business that at one time employed nine people.
Coaching a team and heading up a business require the same leadership traits, according to Sir Clive. The key is not the team, but the dynamics between the individuals within it.
“Sometimes you can go over the top on ‘the team’. We lost the World Cup in 1999, and we had many of the same players and the same coach as we did in 2003. We were a lot better but fundamentally we were the same people.
“Anyone who plays rugby is likely to be pretty motivated. The secret to a great team is allowing those talented individuals to really flourish in a collaborative environment. You cater to every different personality because everyone is different.”
For Sean, culture is the most important ingredient in a winning formula. It’s no coincidence, he says, that the All Blacks have experienced sustained international success over the course of 100 years, despite the country having a population of just 4.6 million.
“They say that being captain of the All Blacks is more important than being the prime minister. It’s a huge responsibility and it takes three or four years to get used to it. It is the fear of failure but as you get older you learn to live with the fear. I loved being an All Black but the pressure was immense,” says Sean.
“The culture is the most important thing in a business, too – and it comes from the top. How you act towards people defines how they act towards each other. Make people want to work with you. Respect needs to happen up and down the organisation.”
The relationship between business and rugby is born of necessity, but the two are not uncomfortable bedfellows. Former players regularly make a smooth transition to employment or enterprise and thrive in a competitive environment that is different but the same.
George Gregan is just one example of this. His coffee shop now has 16 outlets. At the last count it had a turnover of £5 million and employs nearly 280 people.
“In sport you need drive and determination, and you have to work hard,” says Sir Clive. “When players enter the business world they tend to take those traits with them and they tend to be successful.
“It’s a way of getting over the disappointment of not playing any more. Gregan is a good example of someone who has channelled that and got the job done.”
Mergers and Acquisitions – The 10 Biggest Deals of 2013
/1 Comment/in Merger /by News DeskMergers and acquisitions never reached the fizzy levels experts predicted, but 2013 is still shaping up to be the best year for U.S. deal activity in five years.
Although most mergers and acquisitions ultimately fail to create value for shareholders down the road, it’s hard to say that the economy or markets are truly healthy without them — and that’s not just because investment bankers and corporate law firms need to get paid.
Companies don’t do much wheeling and dealing when markets and the economy are in a funk. A pickup in mergers and acquisitions activity is a sign of confidence — and animal spirits and investor psychology are as critical as anything to ensuring better times ahead.
Despite notching one of the biggest mergers and acquisitions on record, 2013 was hardly a whirlwind of deal activity, but it did pick up smartly.
U.S. mergers and acquisitions volume totaled $865.1 billion in the first nine months of 2013, according to Dealogic. That’s a 39% increase over the same period a year ago — and the highest nine-month total since 2008.
Some deals made huge splashes, while other passed by more quietly, but all of them contributed to the recovery in M&A. For the top 10 mergers acquisitions of 2013, according to FactSet, read on:
#10: Applied Materials (AMAT) Buys Tokyo Electron (TOELY)
Transaction Value: $10 billion
Applied Materials (AMAT) and Tokyo Electron (TOELY) are two of the biggest and most important suppliers to the semiconductor industry in the world, making the machines and technology that turns silicon wafers into computer chips.
Merging the No.1 and No. 3 manufacturers in the industry will create a giant with a market cap of about $30 billion, but more than anything, it’s a defensive move. Technical and financial pressures are squeezing margins and profits in an already mature industry.
Now that the two biggest players have tied the knot, we can expect even more mergers and acquisitions in this sector in 2014.
#9: Spectra Energy Partners (SEP) Buys Spectra Energy Corp.’s (SE) U.S. Transmission, Storage & Liquids Assets
Transaction Value: $9.8 billion
Income investors who love master limited partnerships were licking their chops when this deal was announced. Spectra Energy Partners’ (SEP) acquisition of assets from Spectra Energy Corp. (SE) transforms it into one of the largest fee-based MLPs in the country.
The deal is supposed to offer about $8 billion in organic growth potential by the end of the decade, and it diversifies SEP’s portfolio of energy, storage and transmission revenues.
Best of all for income seekers, SEP expects its annual distribution growth to hit 9% from now until 2015.
#8: American Airlines (AAMRQ) Buys US Airways (LCC)
Transaction Value: $11 billion
US Airways (LCC) had long been looking for a merger partner, but probably didn’t imagine it would find a deal quite like this. AMR Corp. (AAMRQ) — parent of American Airlines — emerged from bankruptcy with a deal in place to merge with US Airways, creating the world’s largest airline in the process.
When American Airlines filed for bankruptcy protection at the end of 2011, it knew that coming out of the process as a standalone company was a losing proposition. Enter US Airways — always a bridesmaid in the consolidation-crazy airline industry.
The deal gives American and US Airways a chance to compete against United Continental Holdings (UAL) and Delta Air Lines (DAL) — and a chance for American to pay back its creditors.
#7: Thermo Fisher Scientific (TMO) Buys Life Technologies (LIFE)
Transaction Value: $13 billion
There were a lot of mergers and acquisitions in the healthcare industry this year — especially in the various specialty subsectors — and no deal was bigger than this.
Thermo Fisher Scientific (TMO), the world’s largest maker of scientific and lab equipment, struck an agreement to buy genetic sequencing company Life Technologies (LIFE). The tie-up vaults Thermo into a prime position in the promising new field of personalized medicine.
Life Technologies is a huge prize because of the dramatic strides it’s making it cutting the time and costs for sequencing human DNA, which allows for the development of highly personal gene-based diagnostic tests and therapies.
#6: Liberty Global (LBTYA) Buys Virgin Media
Transaction Value: $16 billion
This deal didn’t make much of a splash on this side of the pond, but billionaire John Malone’s international cable business sure made waves in the U.K.’s telecom and cable market.
Liberty Global’s (LBTYA) deal to buy U.K. cable-TV and broadband provider Virgin Media created a much stronger rival to No. 1 British Sky Broadcasting.
And it’s already paying off, at least in terms of share-price performance. LBTYA is up 36% for the year-to-date, and up 17% since the Virgin Media deal closed in June.
#5: Publicis Groupe (PUBGY) Buys Omnicom Group (OMC)
Transaction Value: $17 billion
It was a complete and total shock when bitter rivals Publicis (PUBGY) and Omnicom (OMC) agreed to a so-called merger of equals to create the largest advertising agency holding company in the world.
Once the deal closes, the new company will be worth about $35 billion and have roughly $23 billion in annual revenue — and it will leave a vastly changed industry landscape.
Indeed, now that Omnicom and Publicis are hooking up, the Big Four players will become the Big Three, leaving just Omnicom-Publicis, WPP (WPPGY) and Interpublic Group (IPG).
#4: Comcast (CMCSA) Buys NBCUniversal Media from General Electric (GE)
Transaction Value: $17 billion
The sitcom 30 Rock sure had a lot of fun with this drawn-out deal — and it sure took long enough — but General Electric (GE) finally sold its media company to Kabletown, er, Comcast (CMCSA).
The storied NBC network and other entertainment properties are probably a better fit for a cable company than a conglomerate that makes everything from toaster ovens to turbine engines. But it remains to be seen whether NBCU has finally found a good home.
One thing that’s not in doubt is what the deal has done for CMCSA stock price. Comcast stock is up a market-beating 36% for the year-to-date.
#3: Michael Dell and Private Equity Firm Silverlake Buy Dell
Transaction Value: $25 billion
If you needed any evidence that mobile tech is upending the world, look no farther than Dell going private. Once the largest manufacturer of PCs on the planet, Dell just didn’t make much sense as a publicly traded company anymore. On an unadjusted basis, Dell stock used to top $170 a share — but that was a long time ago. When founder Michael Dell and his private equity partners finally bought the company out — something Dell had been pursuing since February — they paid total consideration of just $13.88 a share.
When all was said and done (and after adjusting for splits and dividends), Dell sold at a 75% discount to its all-time high.
#2: Berkshire Hathaway (BRK.B) and 3G Partners Buy H.J. Heinz
Transaction Value: $23 billion
Berkshire Hathaway’s (BRK.B) Warren Buffett has had a hard time finding the big elephants he usually likes to hunt, so he must have been very pleased to buy ketchup-maker H.J. Heinz with the help of a private equity partner.
When the news hit, it also fueled a lot of (ultimately false) hope that 2013 would be a banner year for mergers and acquisitions. But that didn’t pan out. Sure, the M&A numbers are the best they’ve been in five years, but they’re still well below all-time highs.
Regardless, it’s always good for market psychology when the Oracle of Omaha goes shopping, and the Heinz deal was a nice vote of confidence early in 2013.
#1: Verizon (VZ) Buys Out Verizon Wireless Stake from Vodafone (VOD)
Transaction Value: $130 billion
The biggest deal of the year — and one of the biggest of all time — was Verizon’s (VZ) agreement to buy out Vodafone’s (VOD) 45% stake in Verizon Wireless.
More than a decade in the making, the deal’s final price tag makes it the third-largest corporate transaction of all time, behind only AOL’s (AOL) merger with Time Warner (TWX), and Vodafone AirTouch’s takeover of Germany’s Mannesmann.
When it comes to mergers and acquisitions, this one looks like a sure winner for VZ shareholders. Even if growth is hard to come by in the saturated mobile market, Verizon Wireless is an absolute cash cow.
Regional Energy News – September 2013
/0 Comments/in Energy, Law Firm /by News Deskhttps://s3-eu-central-1.amazonaws.com/centaur-wp/thelawyer/prod/content/uploads/2013/10/Regional-energy-news_414906.pdf
Karanovic & Nikolic has released the September 2013 issue of its Regional Energy News publication, which covers the following regions: Serbia, Macedonia, Montenegro, Croatia and Bosnia & Herzegovina.
Intellectual Property and Technology News – United States: Issue 19, Q3 2013
/9 Comments/in Intellectual Property, Technology /by News DeskDLA Piper has released the Q3 2013 edition of its Intellectual Property and Technology News – United States.
https://s3-eu-central-1.amazonaws.com/centaur-wp/thelawyer/prod/content/uploads/2013/09/DLA-Piper-IPT-News-Q3-2013-No19-414865.pdf
Contents:
– The right of publicity in college sports
– Trade Dress Watch
– Supreme Court corner
– The future of DNA patents
– The impact of inter partes review on patent litigation