M&A

M&A Roundup

Alcatel and Lucent; Phelps Dodge and Inco and CVRD;Vivendi and BMG Music Publishing; Merrill Lynch and National City; Geophysique and Veritas; Nipp...
Helen ShawSeptember 7, 2006

•On Thursday, Alcatel shareholders will vote on the telecom equipment company’s $10.9 billion acquisition of Lucent Technologies, its U.S. rival. Some investors have criticized the merger’s price tag because the stock prices of both companies have declined over 25 percent since the deal was announced in April. Also on Thursday, Lucent shareholders will consider the deal during a special meeting.

•Phelps Dodge has abandoned its $18.2 billion friendly, proposed takeover of Canadian nickel mining company Inco. This leaves the all-cash $17 billion bid from Brazil’s Cia. Vale do Rio Doce, the largest iron-ore producer worldwide, as the only bid for Inco. Previously, Phelps Dodge had tried to create a three-way merger with Inco and Falconbridge. For more on this deal and three-way mergers, see the CFO.comspecial report,”Three’s a Crowd”.

•Vivendi has agreed to acquire BMG, the music-publishing unit of Bertelsmann, for $2.1 billion. The deal, subject to regulatory approval, creates the largest music publisher worldwide with one-quarter of the market. Regulatory approval is not certain; in July, a European Union court annulled the 2004 merger between music subsidiaries owned by Sony and Bertelsmann.

•Merrill Lynch has agreed to purchase National City Corporation’s Home Loan Services, First Franklin, and its affiliate NationPoint in a $1.3 billion deal. Merrill will also buy $5.6 billion of National City’s mortgage portfolio. The deal is expected to close during the fourth quarter of 2006.

•French oilfield services group Compagnie Generale de Geophysique has agreed to acquire Texas-based Veritas DGC Inc. for $3.1 billion. The acquisition of the geophysical information and services company merges the companies’ seismic businesses and creates the world’s largest surveyor of oil and gas fields.

•Nippon Steel Corp. has stated that it is considering an alliance with Posco, South Korea’s largest steelmaker. The two companies have renewed a five-year strategic tie-up agreement, initially signed in 2000, to improve competitiveness. Asian steel companies are taking steps to ward off any possible takeover attempts by Mittal Steel, which has succeeded in its hostile attempt to acquire Luxembourg-based steel giant Arcelor.

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