An unprecedented increase in mergers and acquisitions in the first quarter of 2018
The first quarter witnessed an unprecedented record of $1.2 Trillion.It was perhaps triggered by US Tax reforms and buoyant activity in the European market.
Consolidation is the latest buzz word in Indias Energy Industry
Recently Tata Power Co Ltd had aquired the 1.1 gigawatt renewable energy portfolio of Welspun Energy Ltd for $ 1.4 billion. Also, Greeko Energy Pvt Ltd has aquired SunEdison Inc's Indian assets for $ 392 million.
Competition Commission of India approves Tata Steels proposed acquisition of Bhushan Steel
CCI said it "finds no Appreciable Adverse Effect on Competition (AAEC)" in respect of Tata Steel's proposed acquisition of Bhushan Steel".Last month, Tata Steel said it had won the bid to acquire Bhushan Steel under the insolvency process. Tata Steel is to acquire, either directly or through a wholly owned subsidiary, 75 percent or more of the total issued and paid up share capital of Bhushan Steel, as per the notice submitted to the CCI
Opposition against T Mobile Sprint merger(3/8/18)
The founder of Boost Mobile USA says that the merger should happen only if Boost and Metro PCS are spun off. Boost is owned by Sprint and MetroPCS by T Mobile.
Sprint Corporation is an American telecommunications company that provides wireless services and is an internet service provider. It is the fourth-largest mobile network operator in the United States and serves 54 million customers as of October 2017.The company also offers wireless voice, messaging, and broadband services through its various subsidiaries In July 2013, a majority of the company was purchased by Japanese telecommunications company SoftBank Group Corp.although the remaining shares of the company continue to trade on the New York Stock Exchange. Sprint uses CDMA, EvDO and 4G LTE networks.
T-Mobile is the brand name used by the mobile communications subsidiaries of the German telecommunications company Deutsche Telekom AG. The brand is active in Austria (under the subsidiary T-Mobile Austria), the Czech Republic (T-Mobile Czech Republic), the Netherlands (T-Mobile Nederland), Poland (T-Mobile Polska), and the United States (T-Mobile US). The name was previously used by subsidiaries in other countries, including Albania (now Telekom Albania), Croatia (now Hrvatski Telekom), Germany (now Deutsche Telekom), Hungary (now Magyar Telekom), Macedonia (now Makedonski Telekom), Montenegro (now Crnogorski Telekom), the United Kingdom (now EE Limited), Romania (now Telekom Romania), and Slovakia (now Slovak Telekom)
Tata Steel aquires Bhushan Steel .
Tata Steel has bought Bhushan Steel Ltd .Tata Steel Ltd had won the bid to acquire debt-laden Bhushan Steel Ltd (BSL) in an insolvency auction. The bankrupt firm was among the 12 stressed assets the RBI had referred for NCLT proceedings last year. Bhushan Steel had debt in excess of Rs 40,000 crores.A cosortium had claimed around Rs 55000 crores .The consortium included SBI and the infamous PNB.
This is being considered as the first big bankruptcy success.
Liberty Global merges with ZIGGO then merges its Dutch operations with Vodafone.
Ziggo, the large Dutch cable operator has been aquired by Liberty Global. They were the two main cable TV operators in Netherland. Since the two accounted for separate and a large volume audience, the aquisition had been questioned for leading to monopolistic environment. However, the European Commission has approved the deal with certain conditions.In related developments Vodafone has agreed a deal with US cable giant Liberty Global to merge their Dutch operations, continuing the rapid pace of merger-making in European telecoms markets.Now Vodafone shall provide converged services in the Dutch market.
GEIS acquired by ABB
ABB has acquired General Electric Industrial Solutions for $2.6 billion. GEIS will be integrated into ABB’s Electrification Products (EP) division.The combination reinforces ABB’s position as a worldwide leader in electrification and accelerates its growth and competitiveness in key markets, particularly North America. As one of Thomas Edison’s original businesses, GEIS is considered the cradle of electrification .
Reliance communications to complete Asset sale soon.
The asset sale to Reliance Jio Infocomm and Canada's Brookfeild was expected to be completed soon after the bankruptcy appeal court halted insolvency proceedings of insolvency.Subsequently,the Supreme Court had also given its clearence. However the deal is presently on hold because of intervention of the Department of Telecommunication.The Department of Telecommunications (DoT) has held up the sale on the ground that Reliance Jio has refused to accept the responsibility for paying any spectrum arrears that may fall due to the government as RCom's dues.
Latest on TMobile Sprint merger
The proposed merger to reduce / eliminate competition. The Justice department of the US is evaluating the effect of the merger on smaller wireless companies. There are fears that with less competition monopolistic pricing could be detremental to the ultimate consumer. April 2018 — Both companies agreed to merge under the T-Mobile banner, meaning Sprint would be absorbed by T-Mobile rather than creating a new company name.T Mobile P/E ratio was arount 26 in the year 2017 whereas Sprint had a P/E Ratio of around over 3
Sequesnce of events relating to proposed merger,
May 2018 — Marcelo Claure — Sprint’s CEO — steps down from his position. Takes another job with SoftBank, Sprint’s parent company.
June 2018 — Investigations on the proposed merger start by the U.S. Justice Department.
June 2018 — John Legere — T-Mobile’s CEO — defends the proposed merger.
August 2018 — The DoJ approves the three fold formula of carriers stating that was exactly what was needeed to provide robust 5G competition.
September 2018 — The FCC stalled its decision process on the merger, saying it needed more time.
October 2018 — The T-Mobile Sprint merger received shareholder approval.
South East Asia to be preferred location for buyouts .
According to Coller Capital’s latest Private Equity Barometer.South East Asia is the preferred location of PE/VC investors.Developed markets in the Asia Pacific region may stand to lose out.
Southeast Asia’s infrastructure – mobile, logistics, etc. are extremely fast growing . This may nail down investments in India, Japan , Australasia etc.
Working Capital Loans will no longer be 100% cash credit in India
RBI has introduced some changes in the requirements of working capital loans.
The draft stipulates a minimum level of 'loan component' in fund based working capital finance and a mandatory Credit Conversion Factor (CCF) for the undrawn portion of cash credit/ overdraft limits availed by large borrowers, it said.
Companies which have a working capital loan of Rs 150 Crores or more shall have to consider at least 40% of the amount as loan component. This shall gradually be increased to 60% over the coming year(2019). It is expected that the above mentioned change shall help companies manage liquidity in a better way than what is done now.
Credit Conversion Factor
Following type of two products are frequently encountered in the banking system,
1. Loan : here bank has parted away or given from its pocket to borrowers who will be paying the same in future. In such products bank is exposed to credit risk.
2. Off balance/ contingent products: in these products the bank has not parted with any money at the start but has promised or obligated to provide the money when the need arises from customer's side.
Basel framework stipulates that banks have to calculate their credit risk capital . Hence the credit risk capital need to be calculated for above products types.We know that the off balance product does not have direct credit risk compared to loan products. Hence its is required to use some factor which will convert off balance product amount equivalent to loan product amount. This factor is called credit conversion factor or CCF.
CCF may be seen as probability of off balance sheet exposure converting into loan exposure (on balance sheet).
Global companies working hard to mine on Asteroids
Companies like Deep Space Industries and Asteroid Mining Corporation are busy building machines which could help them mine several 1000s of crores worth of minerals to be finally brought on earth. It shall then become difficult to manage the world economy .
Interface acquires Nora Systems (7/8/18)
Atlanta-based Interface, a global commercial flooring manufacturer, has acquired Nora Systems, a leading manufacturer of rubber flooring. Interface has acquired Nora in a stock purchase valued at roughly $420 million.Founded in 1938 in Weinheim, Germany, Nora Systems is a private limited company owned by investment firm Intermediate Capital Group. It has more than 1,000 employees across the globe, Nora's annual revenue is approximately $280 million. This acquisition deal will expand interface's portfolio and increase its presence in other industries, including healthcare and education.
ADM diversifies into probiotics with $243 million aquisition of UK manufacturer(23/7/18)
Agricultural commodities giant Archer Daniels Midland Co. has diversified into the microbiome space with the acquisition of UK-based manufacturer Probiotics International Ltd. in a cash deal worth $243.5 million (£185 million) Our body contains more than 100 trillion bacteria and other microbes collectively known as microbiome, the research of which investigates how these bacteria and microbes affect our health.Probiotics International Limited produces research based live bacteria products for veterinary, human, agriculture, and equine healthcare markets. The Archer Daniels Midland Company (ADM) is an American global food processing and commodities trading corporation, headquartered in Chicago, Illinois.[2][3][4] The company operates more than 270 plants and 420 crop procurement facilities worldwide, where cereal grains and oilseeds are processed into products used in food, beverage, nutraceutical, industrial, and animal feed markets worldwide.Prior to the aquisition the operational cash flow to debt ratio stood at over 21 % for the previous year. Cash investments were always on the card.
SEBI issues guidelines to split the CMD post - listed firms (23/7/18)
From 2020 onwards the practise of having one person appointed as Chairman and Managing Director shall cease. According to guidelines issued by SEBI , the Chairman will have to be a non executive director and the post of Managing Director shall be independent.
Idea Vodafone merger
The merger creates Vodafone Idea Limited, the largest carrier in India by subscribers and revenue market share.The two companies were facing difficult times because of the price war launched by Jio with deep pockets.Vodafone Group plc is a British multinational telecommunications conglomerate, with headquarters in London and Newbury, Berkshire.It predominantly operates services in the regions of Asia, Africa, Europe, and Oceania.Vodafone India was the Indian subsidiary of UK-based Vodafone Group plc and was a provider of telecommunications services in India with its operational head office in Mumbai. As of March 2018, Vodafone India had a market share of 21% with approximately 223 million subscribers and was the second largest mobile telecommunications network nationally after Airtel.
The merger has resulted in the creation of the largest mobile services operator in India.The merged entity shall deal with approximately 43 crore subscribers with valuations totalling Rs 1.5 Lakh crores.Vodafone will own 45.1% in Vodafone Idea Ltd, Aditya Birla Group 26% and Idea shareholders 28.9%. The Aditya Birla Group holds a right to acquire up to a 9.5% additional stake from Vodafone so as to equalise shareholdings over time.In case Vodafone and the Aditya Birla Group’s shareholdings in the combined company are not equal after four years, Vodafone will have to sell down shares in the combined company to equalise its shareholding to that of the Aditya Birla Group over the following five-year period. Until equalization , the voting rights of the additional shares held by Vodafone will be restricted .
Together, Vodafone India and Idea Cellular have debt of around 1.15 trillion equaling over Rs 1 Lakh 15 thousand Crore.
Mega IPOs on offer in India(2/7/2018)
The equity market has seen a lot of volatility this year ; however, there are a large number of companies planning to raise long term capital through the issue of equity shares in the primary market. Companies planning an IPO include Acme Solar Holdings (Rs 2,200 crore), Barbeque Nation Hospitality (Rs 700 crore), CMS Info Systems (Rs 1,300 crore), Devi Sea Foods (Rs900 crore), Garden Reach Shipbuilders (Rs 1,000 crore), Indian Renewable Energy Development Agency (Rs 900 crore), Nakshatra World (Rs 650 crore), Nazara Technologies (Rs 1,000 crore) and Rail Vikas Nigam (Rs 3,000 crore). In case all these issues materialise 2018 may be a golden year as far as issues of IPOs are concerned
The buying of Times Warner by AT&T and its proposed demerger
· AT&T has bought Times Warner.
· AT&T shall get immense boost in the content area.It will be able to market all entertainment of Times Warner to various cable operators.
· President Trump of the US has been a long opponent of this deal .He fears too much power should not go in a few hands. CNN belongs to Times Warner .
· DOJ is again looking into the matter.
· If the merger is officially blocked, AT&T would be required to pay Time Warner $500 million in a so-called "reverse break-up fee" — but Time Warner stands to lose more. The company would lose out on an $85 billion acquisition, which would have gone directly to its shareholders and executives.
· A fall in stock prices happened immediately after the deal was done.
RBI hikes Repo and reverse REPO rates (3/8/18)
The REPO rates have been increased by 25 basis points . They stand at 6.5% now. Reverse REPO has been hiked to 6.25%. Repo rates prevail when RBI lends to other banks while reverse repo is the rate at which the RBI borrows from other banks.
Ethiopia private push to be supported by World Bank.
According to Ethipian PM Abiy Ahmed , the World Bank may soon provide budget support to the tune of 1 billion dollars to aid liberalisation which has been affecting almost all sectors in the Ethiopian economy except for the banking sector which continues to be shielded.
Hydro One and Avista Corp cancel proposed merger
Hydro One and Avista Corp have agreed to cancel their merger after regulators in Washington state and Idaho refused the deal. Hydro One Limited is an electricity transmission company serving the Canadian province of Ontario. It is an over 100 year old company responsible for the Hydro Electric Power Commission of Ontario. Avista Corporation is an American energy company. Avista generates and transmits electricity and distributes natural gas to residential, commercial, and industrial customers.Under the terms of the merger agreement, Hydro One must now pay Avista US$103 million in termination fees. The Washington Utilities and Transportation Commission has denied the planned takeover of the American company. The Idaho Public Utilities Commission also denied the proposed takeover. The merger required approvals from state regulatory commissions in Washington, Idaho, Oregon, Montana and Alaska . Only Montana and Alaska have agreed to the proposal." Rickford, Ontario Energy Minister, has comforted customers that the penalty shall not be loaded on them.
Over 11% drop in mergers and acquisitions for sub-Saharan Africa
Refinitiv, formerly Thomson Reuters’ Financial and Risk business, is one of the world's largest providers of financial markets data and infrastructure, serving more than 40 000 institutions in more than 190 countries. The company reported a 12  percent decline in mergers and acquisitions (M&A) in the value of announced M&A transactions with any sub-Saharan African involvement in the year 2018. The sub-Saharan Africa is, geographically, the area of the continent of Africa that lies south of the Sahara. According to the United Nations. it consists of all African countries that are fully or partially located south of the Sahara The UN Development Program lists 46 of Africa’s 54 countries as “sub-Saharan,” excluding Algeria, Djibouti, Egypt, Libya, Morocco, Somalia, Sudan and Tunisia.The report was published in the Middle East and Africa Investment Banking Review for 2018.
Employees of Rogers Media attempt to buy magazines
A number of Rogers Media staff members have put together a proposal to purchase the company’s magazine branded five titles ; Maclean’s, Today’s Parent, Hello! Canada and Chatelaine’s English and French editions, along with digital titles Canadian Business and Flare and a custom content division. Rogers had tried to sell the magazines in 2018The deal nearly came through with Roustan Media, but later collapsed.Rogers sold the MoneySense website to Ratehub in late 2018. Rogers is a leading diversified Canadian communications and media company. They are Canada’s largest provider of wireless communications services and one of Canada’s leading providers of cable television, high-speed Internet, information technology, and telephony services to consumers and businesses. Through Rogers Media, they are engaged in radio and television broadcasting, sports, televised and online shopping, magazines, and digital media. The shares are publicly traded on the Toronto Stock Exchange and on the New York Stock Exchange . Rogers Media was created in 1994 after the acquisition of Maclean-Hunter properties to manage all television station and specialty channels, radio stations and publishing assets. Rogers Media, Inc. is a subsidiary of Rogers Communications, which owns Canada's largest publishing company, Rogers Publishing Limited, which has more than 70 consumer and business publications. Rogers Media Inc. also owns 52 radio stations, and several television properties including terrestrial television stations and cable television channels.
Manroland Goss acquires GWS, Dovak
Printing solutions provider manroland Goss web systems Group acquired GWS Printing Systems of the Netherlands, a specialist in used web offset equipment, the companies announced on Dec. 20,2018.Manroland web systems and Goss International (“Goss”), are both long-time web offset printing manufacturers and service providers. The new company will operate under the brand name “manroland Goss web systems” Alexander Wassermann, CEO of Manroland web systems, will be theCEO of the new company with global headquarters in Augsburg, Germany. The company’s North American headquarters will be in Durham, NH. Mohit Uberoi.The then CEO of Goss International, will be a board member and assist the management team with business integration.The existing shareholders of manroland web systems and Goss International, the Lübeck-based Possehl Group and NY-based American Industrial Partners (AIP) will remain shareholders of the new company .Manroland Is a German company having a history of beyond 150 years.Its turnover exceeds EUR 900 million. Goss on the other hand is an American company founded by brothers Fred and Sam Goss The original Goss Printing Press Company was founded in Chicago in 1885.
Knesset Finance Committee approves grant to Intel
Israel's Knesset Finance Committee has approved a NIS 700 million grant for Intel Corp in return for a planned $5 billion expansion of its production operations at the Kiryat Gat fab. Intel submitted its plans for the Kiryat Gat expansion in May.The Knesset (Israel's unicameral parliament) is the country's legislative body.
Intel is Israel's largest private employer and biggest exporter. In 2017, Intel Israel exported $3.6 billion worth of goods, 8% of all Israel's high-tech exports. In exchange for the NIS 700 million grant, the Israeli government expects Intel to hire 250 new employees and make NIS 2.1 billion in Israeli procurement.
Toyota Suzuki tie up
Toyota was founded by Kiichiro Toyoda in 1937, as a spinoff from his father's company Toyota Industries to create automobiles. Toyota was the world's first automobile manufacturer to produce more than 10 million vehicles per year which it has done since 2012, when it also reported the production of its 200-millionth vehicle. As of July 2014, Toyota was the largest listed company in Japan by market capitalization and by revenue. On the other hand Suzuki had started with manufacture of Looms, and subsequently shifted to car manufacturing. By 1954, Suzuki was producing 6,000 motorcycles per month and had officially changed its name to Suzuki Motor Co., Ltd. Following the success of its first motorcycles, Suzuki created an even more successful automobile: the 1955 Suzuki Suzulight. The Suzulight sold with front-wheel drive, four-wheel independent suspension and rack-and-pinion steering, which were not common on cars until three decades later.Volkswagen held a 19.9% non-controlling shareholding in Suzuki between 2009 and 2015. An international arbitration court ordered Volkswagen to sell the stake back to Suzuki. Suzuki paid $3.8bn to complete the stock buy-back in September 2015.
Toyota Motor Corp. and Suzuki Motor Corp. have agreed to sell each other’s cars in India.While Suzuki will supply its best-selling models such as compact car Baleno and small sports utility vehicle Vitara Brezza to Toyota, small car specialist Suzuki will source Toyota’s popular sedan Corolla and sell it through the dealership network of Maruti Suzuki India Ltd—its local unit.
Cronos group shares tumble (14/5/19)
The Cronos Group Inc. is a medical marijuana producer and the the first cannabis company to be listed on the Nasdaq stock market under the trading ticker symbol "CRON."The Altria group has invested Canadian $2.4 millions. However the group has not been able to propel performance and use this investment as a leverage.
Struggling Jaguar Land Rover may be sold , rumors.
Jaguar Land Rover owned by the Indian Tatas could be sold to a French manufacturing firm after the holding company lost £3.4billion in just three months. It may be snapped up by PSA, which owns Peugeot, Citroen, and Vauxhall. Groupe PSA (known legally as Peugeot S.A.; known as the PSA Group in English; formerly known as PSA Peugeot Citroën from 1991 to 2016) is a French multinational manufacturer of automobiles and motorcycles sold under the Peugeot, Citroën, DS, Opel and Vauxhall brands.
Japan tests the world's fastest-ever bullet train
The bullet train is known as Alpha-X.The train is capable of reaching speeds of 400 kms per hour
Chevron bows out of Anadarko fight
Anadarko Petroleum Corporation is a company engaged in hydrocarbon exploration. It is organized in Delaware and headquartered in two skyscrapers in The Woodlands, Texas: the Allison Tower and the Hackett Tower, both named after former CEOs of the company.The company has been the subject of multiple environmental cases, including the largest environmental contamination settlement in American history - the 2014 settlement related to the former Tronox subsidiary of Kerr McGee, a company purchased by Anadarko in 2006. The company is ranked 257th on the Fortune 500. Chevron Corporation is an American multinational energy corporation. One of the successor companies of Standard Oil, it is headquartered in San Ramon, California, and active in more than 180 countries. Chevron is engaged in every aspect of the oil, natural gas, and geothermal energy industries, including hydrocarbon exploration and production; refining, marketing and transport; chemicals manufacturing and sales; and power generation. Chevron is one of the world's largest oil companies; as of 2017, it ranked nineteenth in the Fortune 500 list of the top US closely held and public corporations and sixteenth on the Fortune Global 500 list of the top 500 corporations worldwide.
Chevron Chief Executive Michael Wirth’s decision to opt out of a bidding war for Anadarko Petroleum Corp has dampened expectations that oil majors will drive a new wave of consolidation in U.S. shale.Wirth last week ruled out increasing his $33 billion offer for Anadarko after being outbid by Occidental Petroleum Corp, walking away from a company he had described as a perfect match. Chevron received a $1 billion breakup fee that it will use toward share buybacks.
Ghana is Africa’s top gold producer
Ghana has become the largest gold producer in Africa, toppling South Africa in a recent data released by the World Bank.Ghana has thus dethroned South Africa, which produced 139.3 tonnes and returned to the high volumes of the 1
Rumors of takeover of Lendlease by a Japanese company send its stocks soaring.((13/5/19)
Lendlease is a $7.2 billion business which brings together construction, development and investment management on a global platform . Mistui of Japan is rumored to be a prospective predator. Speculations have led to the stock of Lendlease soaring. Lendlease ;headed by Steve McCann, has unveiled damaging revelations last November that it would take a $350 million provision after a raft of delays and design blunders hit its engineering and services division.There was a sharp decline in the value of its stock after this announcement. Lendlease Group is a multinational construction, property and infrastructure company headquartered in Barangaroo, Sydney, Australia. The company was established by Dick Dusseldorp [3] in 1958 to provide finance for building contracts being undertaken by Civil and Civic. In 1961 the company acquired Civil and Civic from Bredero's Bouwbedrijf.
Qatar Airways plans to retire their A330s
Qatar Airways plans to retire all of their Airbus A330s within the next three years, by replacing them entirely with A350s and 787s.
The airline recently phased out A340-600s, so the plan is now to do the same for A330s. At the moment Qatar Airways has a fleet of 25 A330s, including 12 A330-200s and 13 A330-300s.
Cronos group shares tumble (14/5/19)
The Cronos Group Inc. is a medical marijuana producer and the the first cannabis company to be listed on the Nasdaq stock market under the trading ticker symbol "CRON."The Altria group has invested Canadian $2.4 millions. However the group has not been able to propel performance and use this investment as a leverage.