Wall Street Folly

• Closely Watched Buffett Recalculating His Bets
• LSE welcomes high-frequency traders as source of liquidity
• Gold Rallies to 18-Month High on Dollar’s Weakness, Inflation
• Greenspan Says Capital Requirements Must Be Raised
• Allan Sloan: A Year After Lehman, Wall Street’s Acting Like Wall Street Again
• Eurotunnel Says Goldman Fund Becomes Biggest Investor
• Swiss Deal With I.R.S. May Hide Some Tax Cheats
• Martin Feldstein op ed: ObamaCare’s Crippling Deficits Read the rest of this entry »

Tags: Barclays, Casinos, Eurotunnel, Gold, Goldman Sachs, Healthcare, IRS, Lehman Brothers, LSE, M&A, Politics, Warren Buffett

• Goldman Sachs Raised to ‘Buy’ by Meredith Whitney
• Berkshire Tones Down Risky Business
• For Buffett Fans, the Price Is Right
• Boutique banks win bigger share of M&A fees Read the rest of this entry »

Tags: Berkshire Hathaway, Boutiques, Goldman Sachs, M&A, Meredith Whitney, Warren Buffett

I2 Technologies (ITWO) shareholders woke up to rather unpleasant news this
morning.  They're scheduled to vote on a $14.86/share cash merger with JDA
Software (JDAS) on 11/6 (tomorrow!), and now it seems that JDA wants the vote postponed
so that they can recut the deal "due to the adverse effect of the continuing credit crisis". The stock is down around 4 points on the news.

Possible losers: As of 6/30 SAC Capital owned 1.8 million shares, RenTech owned 1.7 million.  As of 9/30, BlackRock looks like they owned around 2 million shares in various entities.

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Tags: Charts, Credit Crunch, M&A

Even the thought of such a deal should make Goldman shareholders shudder (the good news is, it's not happening) :  It seems that after Goldman Sachs converted to a commercial bank last month that Lloyd Blankfein called up Citigroup CEO Vikram Pandit about possibly hooking up.  It may have been at the suggestion of the now regularly meddling regulatory authorities.  Pandit rejected the idea quickly (a wise decision in our view).  According to the report in the Financial Times, the deal would have been structured as Citi taking over Goldman.  Man, what a culture clash that would be. What an ill thought out concept.  We don't think that a deal would have ever worked.

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Tags: Citigroup, Credit Crunch, Fed, Goldman Sachs, Lloyd Blankfein, M&A

U.S. Is Said to Be Urging New Mergers in Banking – NY Times

Tags: Banks, Credit Crunch, Henry Paulson, M&A

Texas justice coming after huge Huntsman victory?:  Delaware Chancery Court Judge Stephen Lamb ruled that Apollo’s Hexion
Specialty Chemicals has to complete its merger with Huntsman Corp even though
Black & Co argued that the combined company would be insolvent and that a
decline in Huntsman’s business voided the deal.

Worse for Black, after the Delaware court ruling he could be personally on
the hook for $2 billion in damages in a separate Texas lawsuit where Huntsman is
suing him for fraud if this case isn’t somehow settled. According to the NY Post:

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Tags: Apollo, Leon Black, M&A, Private equity

Now they all want a Jamie Dimon’s type deal: Why buy the entire bank, including the toxic debt and other liabilities as well as having to pony up for the equity, when if you just wait a few days, the Feds may swoop in and let you just cherry pick the good assets, limiting your liabilities?  Those thoughts may chill exploratory merger talks between Wachovia and possible suitors Citigroup, Banco Santander, and Wells Fargo .  According to Bloomberg:

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Tags: Banks, Citigroup, Jamie Dimon, JPM Chase, M&A

Wachovia says they don’t have "liquidity issues" (at least as of today) but they’re nonetheless reportedly testing the merger waters. The toxic debt laden bank is reportedly in preliminary merger discussions with Banco Santander, Wells Fargo and Citigroup.   The stock got nailed today, closing at $10, down  $3.70.
achovia reportedly in talks with three suitors – MarketWatch

Tags: Banks, Citigroup, Credit Crunch, M&A

CNBC’s Charlie Gasparino is reporting that the Morgan Stanley / Wachovia talks are no longer preliminary — they’re official and advanced

Tags: CNBC, M&A, Morgan Stanley

Per Briefing.com:

16:35      MS Morgan Stanley considers merger with Wachovia – NY Times  (21.75 -6.95)

NY Times reports Morgan Stanley, one of the two last major American investment banks, is considering a merger with the Wachovia (WB) or another bank, according to people briefed on the discussions. Morgan Stanley’s chief executive, John J. Mack, received a telephone call on Wednesday from Wachovia expressing interest in the Wall Street bank. Morgan Stanley is considering other options as well. Other banks have also expressed interest in Morgan Stanley. The talks are preliminary and no deal may emerge.

Tags: M&A, Morgan Stanley

• Lehman Said to Prepare Bankruptcy as Buyers Withdraw
• Lehman CEO Fuld’s hubris contributed to meltdown
• Fed to take broader range of collateral on loans
• Paulson applauds actions to aid market stability
• Ten banks commit to $70 billion borrowing facility
• AIG Scrambles to Raise Cash, Talks to Fed
• Electronic Arts Ends Acquisition Talks With Take-Two
• Oil Falls to Six-Month Low as Refineries Escape Major Damage

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Tags: AIG, Credit Crunch, Lehman Brothers, M&A, Oil

The Wall Street Journal is reporting that there is officially a deal  for bank of America to buy Merrill Lynch for around $44 billion in Bank of America stock or roughly $29/share.  That’s a significant premium to Merrill’s Friday close of $17.17.  We suspect tomorrow that the stock will be trade at substantially less, because BAC will probably sink like a rock. 

If we were holders of Bank of America — thankfully we’re not — we wouldn’t be so thrilled with their buying Merrill Lynch. Which leads to the next question: will they get to vote on a deal?  We’re guessing ‘no’.

Bank of America Reaches Deal for Merrill – Wall Street Journal

Tags: Bank of America, Credit Crunch, M&A, Merrill Lynch

Fees generated by the big Wall Street banks and boutiques have dried up in a
big way and the Wall Street Journal’s Heard on the Street column suggests that there
may be more pain on the way.  And that could lead to consolidation.

Senior bankers warn that after a tough first half, the outlook has deteriorated further. Does the grim forecast mean that the long-rumored consolidation in investment banking will finally occur?

The damage caused by mortgage-backed securities remains the focus for investors. The investment banks might have taken most of the balance-sheet hits from their subprime problems, but other areas, in particular commercial real estate and higher-grade residential mortgages, have begun to show cracks. Continued credit-market weakness is likely to force further write-downs in the third quarter.

Bankers Face a Grim Fall
- Wall Street Journal

Tags: Fees, investment banking, M&A

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Tags: M&A

This morning we suggested that angry shareholders might wanna rip Yahoo directors and management a new one because of their rejection of the $40/share Microsoft bid in early 2007 that was disclosed yesterday in unsealed court documents.  Turns out that Carl Icahn is one of those, and may seek to relieve CEO Jerry Yang of his CEO job….

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Tags: Carl Icahn, M&A, Microsoft

If shareholders were pissed that the useless tools at the helm at Yahoo
cavalierly rejected $33 a share from Microsoft earlier this year, they’re gonna
wanna rip ‘em a new one when they find out that Microsoft offered $40 to the
Yahooligans in January ‘07 that was also summarily rejected. 

Not only that, but weeks before Microsoft actually made their January 2008 bid, Jerry Yang ordered up a draft press release rejecting a deal.   That news
came out of unsealed court papers….

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Tags: M&A, Microsoft

Curiouser and curiouser– at least they’re signaling that they’re still interested:  Microsoft is willing to talk to Yahoo again, but it sounds like it’s testing the waters with talk of an alternative transaction, not a full merger, at least for now.  But the merger door could still be open too as well.

Here’s the text of the Microsoft statement from the company’s press release:

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Tags: M&A, Michael Steinhardt

With private equity deals few and far between, Blackstone is delving deeper into the event driven fund business. And they’re looking to further expand their interests in Asia with their most recently announced move.  Schwarzman & Co is starting up a unit that will invest in Asian event drivn opportunities indluding those related to mergers and bankruptcies.  SAC Capital alum Aaron Nieman will run it:

Blackstone Altius Advisors will be led by
Senior Managing Director and Chief Investment Officer Aaron Nieman, New York-
based Blackstone said in a statement issued through BusinessWire today. The fund
will be based in Hong Kong with employees in Tokyo, Mumbai and New York.

“As Blackstone continues to aggressively
seek opportunities within Asia, Aaron and his team will provide additional
investment capability that will bolster our presence in the region,” Antony
Leung, Blackstone’s Greater China chairman, said in the statement.

Nieman joined Blackstone from SAC Capital
Management, where he was a managing director in the Canvas Capital Management
unit overseeing merger arbitrage and event-driven investments in Asia- Pacific,
the Blackstone statement said.

Blackstone to Start Asian Event-Driven Fund Business – Blackstone

Tags: Bankruptcy, Blackstone, Distressed, Hedge funds, M&A

It kinda serves him right for blowing Microsoft off: Legg Mason’s Bill Miller — Yahoo’s second largest shareholder with 83.8 million shares — was one of those fund managers who most vocally opposed Microsoft’s bid for Yahoo because he felt that it grossly undervalued the shares. But after all of his bluster, he got a rather nasty and unexpected surprise when Mr. Softy pulled its bid.  And he also got some big losses as well.  Now he wants Jerry Yang to use some of Yahoo’s cash to buy stock.

Monday’s selloff in Yahoo (YHOO) is creating more pain for value manager Bill Miller. Miller is chief investment officer at Legg Mason Capital Management, which at Dec. 31 was Yahoo’s second-biggest shareholder, with a 6.9% stake, according to Lionshares.com. Yahoo had been one of the standout performers in Miller’s Legg Mason Value Trust, which lost 20% of its value in the first quarter as big bets on beaten-down financial stocks such as Bear Stearns (BSC) went sour. But Monday’s 14% decline in Yahoo takes the stock about half the way back to where it was trading before Microsoft (MSFT) unveiled its $31-a-share bid on Feb. 1. Should they stick, Monday’s declines will reduce the fund’s gains in Yahoo accordingly.

Bill Miller wants Yahoo buyback – Fortuns

Tags: M&A, Microsoft

At 7 am, Yahoo’s premarket trading price is at $22.72 (it broke $22 for a few minutes) on 805K shares.  Microsoft is now trading as well, at $30.90, up $1.66 on 350K shares….

Tags: M&A, Microsoft

After Microsoft pulled it’s bid:  In very very early market trading (6am), Yahoo is down over 6 points, at $22.56.  196K shares have traded so far. And it’s destined to go lower.  Sub-20 anyone?

Tags: M&A, Microsoft

Yahoo’s Jerry Yang sent a cheerleading type letter to his employees after Microsoft pulled its generous bid for the company.  Blah, blah, blah.

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Tags: M&A, Microsoft

Don’t forget to flush:  We sure hope that Jerry Yang and his buds at Yahoo have purchased hazmat suits, since there are destined to be multiple poisonous lawsuits filed against him and Yahoo’s other directors after Microsoft pulled the rug out of their bid for the grossly overvalued company. Microsoft had even upped their price to $33 a share yet they were still absurdly holding out for more.  Sheer stupididity and hubris. It will be great fun tomorrow to watch ths stock barf its lungs out.  As a Microsoft holder, as we’ve said before, we’re glad they walked.

Credit Suisse’s Heath Terry just came out with a report valuing Yahoo at roughly $22/share.  He says ""As we have said from the beginning, we believe that Yahoo management’s sole interest is in keeping the company independent. While they have been willing to appease shareholders by putting on at negotiations, we continue to believe that Yahoo is no more willing to sell at $37, or $40, or $100, than they were at $31, forcing Microsoft to walk away in hope that a later move, likely via an alternative board slate, would be more appealing to shareholders"…..

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Tags: M&A, Microsoft

JP Morgan’s firesale purchase of Bear Stearns could be completed "within hours" of the May 29 vote according to Reuters sources….

Tags: Bear Stearns, JPM Chase, M&A

Jamie Dimon just might be on the prowl for fresh meat, on the heels of JP Morgan’s swallowing Bear Stearns: 

On the acquisition front, JPMorgan has
  long been interested in adding to its US retail and commercial banking
  business and had been linked to WaMu before the Seattle-based bank raised $7bn
  from private equity investors. Bankers say JPMorgan could be interested in
  taking over regional banks, such as Atlanta-based SunTrust.
 
  Mr Dimon declined to name targets but when asked whether the integration of
  Bear would prevent JPMorgan from exploring other acquisitions, he said:
  “No.” He added that dislocation created by the credit crunch increased
  opportunities for banks with strong balance sheets such as JPMorgan.

JPMorgan seeks fresh acquisitions – Financial Times

Tags: Bear Stearns, Jamie Dimon, JPM Chase, M&A