M&A Roundup

Xstrata and Flaconbridge; Ashtead and NationsRent Cos.; BMG, EMI, Kohlberg Kravis Roberts, Universal, Warner Music, Viacom and GTCR Golder Rauner; ...
Helen ShawJuly 21, 2006

•Swiss mining group Xstrata has sweetened its hostile bid again for Canada’s Falconbridge from $16.35 billion to $16.9 billion. If successful, the takeover bid could prevent a combined attempt by three companies to thwart Xstrata. Contingent upon Inco’s friendly merger with Falconbridge, U.S.-based Phelps Dodge would acquire both companies for $35.4 billion.

•England-based Ashtead Group will acquire Fort Lauderdale, Florida-based NationsRent for $1 billion, forming the second-largest equipment rental company worldwide. Ashtead expects to combine NationsRent to Sunbelt Rentals, its U.S. business.

•German media conglomerate Bertelsmann has fielded over a dozen bidders for BMG, its music-publishing arm, which it is selling to meet the expense of buying out minority shareholder Groupe Bruxelles Lambert. Music company EMI and U.S. private equity group Kohlberg Kravis Roberts have joined to bid for BMG. Other companies still in the running are Vivendi’s Universal, Warner Music, Viacom, and buyout firm GTCR Golder Rauner.

•After last week’s European court ruling that annulled Bertelsmann’s 2004 deal to merge BMG with Sony Music, Bertelsmann and Sony Music must now update the merger notification to EU regulators, who will decide whether to clear the deal or begin a four-month investigation.

•The New York Observer, which had been trying to sell 80 percent of the newspaper, has ended its discussions with Tribeca Enterprises. The paper, which is losing approximately $2 million each year, has received interest from dozens of potential buyers over the past several months.

•Hong Kong legislators have proposed to examine Richard Li’s $1.18 billion sale of a controlling stake in his company PCCW, Hong Kong’s fixed-line phone operator, to investment banker Francis Leung. There is speculation that Mr. Li’s father, Li Ka-shing, one of Asia’s richest men, has partially financed Leung’s acquisition. The acquisition would result in cross-ownership among rival fixed-line telecom companies. Additionally, the Securities Investors Association of Singapore has asked Richard Li to abstain from voting on the deal.

•HCA, a U.S.-based hospital operator, had been attempting to sell its business to private equity groups, but the deal has fallen through. The company with a $17.6 billion market capitalization fielded bids from Bain Capital, Kohlberg Kravis Roberts, Merrill Lynch Private Equity and the family of Senate Majority Leader Bill Frist, whose father and brother founded HCA. The company’s $11 billion debt load proved to be a significant barrier to what would have been one of the largest buyouts in history.

•General Motors, Renault, and Nissan Motor Co. will review a potential alliance for about three months. In early July, billionaire investor Kirk Kerkorian, a major investor in GM, had encouraged the companies to consider a partnership.

•Sadia, Brazil’s largest food company, has offered to acquire food processor Perdigao for as much as $1.7 billion. Perdiago’s chief executive Nildemar Secches states that a majority of its investors, which are pension funds, have rejected the offer, however, Sadia claims the offer cannot be rejected unless it is extended to all shareholders. The deal would form the fourth-largest meat processor worldwide.