M&A Roundup

Sony BMG; Bell Globemedia and Chum; Aviva and AmerUs Group; Comcast, Time Warner and Adelphia Communications; PCCW and Francis Leung; Xstrata and F...
Helen ShawJuly 14, 2006

•The European Court of First Instance, Europe’s second-highest tribunal, has annulled the European Union’s approval of the 2004 merger between Sony Music and BMG. Independent record companies had claimed that the top four music companies, Vivendi, Sony BMG, EMI, and Warner, held too much market dominance. Additionally, the decision casts doubt on whether a merger could occur between EMI and Warner, which are locked in attempts to buy each other for about $4.6 billion.

•Bell Globemedia has bid $1.5 billion to acquire rival media company Chum. The deal is likely to be subject to strong regulatory scrutiny, as a number of Chum’s television stations compete with those owned or affiliated with Bell Globemedia’s CTV network. Bell Globemedia expects to sell some Chum television operations and continue to keep separate newsrooms.

•Aviva, the largest British insurer, will acquire the U.S. life insurer AmerUs Group for approximately $2.9 billion. The deal expands Aviva’s existing U.S. operations, which total about $6.5 billion in assets. AmerUs has a significant presence in the life insurance and equity-indexed annuities markets.

•The U.S. Federal Communications Commission is expected to approve, with conditions, the $17.6 billion sale of bankrupt Adelphia Communications to cable providers Comcast and Time Warner. Consumer advocates have opposed the sale, claiming that it would give the two largest U.S. cable operators more power and result in higher consumer prices.

•Richard Li, chairman of PCCW, Hong Kong’s fixed-line phone operator, will sell his controlling stake in the company to a group of local investors led by Hong Kong investment banker Francis Leung for $1.17 billion. Foreign investors, Macquarie Bank and TPG-Newbridge, had bid for PCCW’s main telecom and media operations.

•Swiss mining conglomerate Xstrata has raised its cash offer for Canadian nickel-mining company Falconbridge to $16.35 billion and received unconditional clearance from the European Commission to proceed with the proposed acquisition. The developments pressure Inco, Canada’s top nickel producer, which has agreed in principle to buy Falconbridge. Inco has offered three friendly bids for Falconbridge since last October; one bid was in conjunction with U.S.-based Phelps Dodge.

•Shanghai Automotive will purchase $2.5 billion of its parent company’s stakes in ventures with General Motors Corp. and Volkswagen. SAIC Motor Company will sell its car-financing lenders, car assemblies, and component factories to Shanghai Automotive and receive cash and stock. SAIC owns 30 percent of Shanghai General Motors Co. and 50 percent of Shanghai Volkswagen Co.