M&A Activity Review

Michaels Stores Files for I.P.O.
Michael Stores looks to raise about $500 million with the company’s initial public offering. Michael Stores is an arts and crafts chain and the company will trade under the ticker MIK. The company looks to pay down debt through the IPO and expand in the future. The Blackstone Group and Bain capital owned Michaels for about 6 years in a previous $6 billion deal.  

K.K.R. buys Shale Assets from WPX for $306 Million
Kohlberg Kravis Roberts purchased natural gas shale assets from WPX Energy for $306 million. K.K.R. is a private equity firm now owns 27,000 acres in the Barnett Shale region and 66,000 acres in the Arkoma Basin. This transaction is another move by K.K.R. in the energy business.

DBS to Buy Bank Danamon 
The DBS Bank, the largest bank in Singapore, and the DBS group holdings bought Bank Danamon on Indonesia for $7.2 billion. DBS looks to grow and expand in Indonesia-- one of Asia’s rapidly expanding economies. RIM, Research in Motion, continues to struggle. RIM announced a $125 million loss and continues to post declining sales. With continuing losses, RIM may look to partner up or consider other ventures. RIM’s current market value is $7.3 billion which is significantly down from the $29.4 billion that it was worth one year ago. RIM may look to be acquired if it continues to struggle.
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Editorial Staff

Payout on Greek Credit Swaps

One of the instruments in the European debt crisis was decided on Monday. The payout for the credit default swaps was structured was held at an auction on Monday in London. The investors who bought protection with the credit default swaps will receive a payout equal to 78.5 percent of the original value of the Greek bonds. The estimated total payout amounts to about $2.5 billion. The Greek debt situation and bonds have been crucial in undermining the Greek and Europe economies.
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Editorial Staff

Culture Shock at Goldman Sachs

On Early Wednesday morning, Greg Smith, a 33-year-old midlevel executive at Goldman Sachs resigned, citing concerns that the company’s culture has gone haywire. About 15 minutes after his resignation, an op-ed article that he had written explicating his criticism was published in the New York Times. The article - containing statements such as, “it makes me ill how callously people still talk about ripping off clients", reignited the debate about corporate greed on Wall Street that had largely begun to to subside after the industry’s behavior in the financial crisis in 2008. CEO LLoyd Blankfein expressed his frustration with the article, saying that there were many outlets within the firm - such as its detailed and intensive employee feedback methods, and independent, public surveys - through which Smith could have made his concerns known. The release of the op-ed article attracted negative attention from the media worldwide, and Goldman shares fell by 3.4 percent. Evidently, the public nature of Smith’s discontent has produced a ripple effect for the firm.
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Editorial Staff

Arcapita Files for Bankruptcy

Arcapita, a Bahraini Investment Firm once worth $7.4 billion, filed for bankruptcy protection on Monday. Arcapita failed to extend $1.1 billion in credit that would have expired on Wednesday. Arcapita owns the Viridian Group, Pods, and J. Jill. After filing chapter 11, Arcapita seeks to restructure its debt and improve the future of the company.
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Editorial Staff

M&A Activity Review

Carl Icahn bids $2.6 Billion for CVR 
Icahn bids $2.6 billion for CVR, an oil refinery corporation, only two days after publically stating that the company should sell itself. The current offer would pay $30 a share wich is an 8.7 percent of the prior day’s closing. Icahn’s attempt to takeover the company may turn hostile. Icahn wants to avoid another failed acquisition as he was unsuccessful after making many attempts to buy Clorox last year.

Kellogg to Buy Procter & Gamble’s Pringles Group 
Kellogg announced on Wednesday that it will buy Procter & Gamble’s Pringles. The recent deal is valued at $2.695 billion after a recent transaction with Diamond Foods failed to take place. Kellogg looks to gain an edge with the snack brand that had $1.5 billion in annual sales. Kellogg will also be adding $2 billion in debt through the deal which already has $5 billion in long-term debt.
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Editorial Staff

Market Recap (Feb. 24)

In a holiday-shortened trading week, the Dow Jones Industrial Average (DJIA) ended up 0.26% for the week at 12982.95. The index constantly flirted with the symbolically significant 13000 mark, even going over it a few times in day trading, but did not close once above it. The NASDAQ Composite and the S&P 500 both continued to rise as well, finishing up 0.41% and 0.33% respectively for the week.

On February 21st, Eurogroup officials delivered a long term refinancing option for Greece that included a large haircut of 53.5% for private bondholders and the option for creditors to swap into new bonds with a maturity of 30 years. Investors responded positively towards this new LTRO which, pending bondholder cooperation, should reduce Greece's debt by 107 billion euros and avoid a massive default when 14.4 billion euros worth of Greek bonds come due on March 20th.

Crude oil futures finished the week at $109.87 per barrel, indicating that gas prices will soon eclipse the dangerous $4 per gallon benchmark. Several commodities analysts reported on the possibility of crude reaching $130 per barrel by this August, near the record highs of Summer 2008.

Investors were heartened by the Labor Departments latest report that initial jobless benefit claims for the week were unchanged at 351,000 (the lowest since March 2008) and the four week average fell to 359,000, the lowest in four years.

In terms of fourth quarter earnings reports, Hewlett-Packards woes continued as they announced a 44% year over year drop in profits to $1.5 billion. Retail stocks performed relatively well this week with Target leading the pack on the back of better than expected 4Q earnings. AIG reported earnings of 82 cents per share that far outpaced analyst estimates of 62 cents per share, sending its stock price up. The company enjoyed a $17.7 billion gain due to the release of the allowance of deferred tax asset valuation.
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Editorial Staff

M&A Activity Review

TNT Express Rejects Bid by U.P.S. 
TNT announced on Friday that the company turned down a bid from UPS that valued the company at $6.4 billion. However, U.P.S., United Parcel Service, is continuing talks with TNT. The U.P.S. offer valued TNT at 9 euros a share which is about a 46 percent premium to the closing price. This potential deal would represent the largest merger in U.P.S. history. As a result of the talks about a deal, shares of TNT rose 2.6 percent on Friday.

Advent and Goldman Agree to Buy TransUnion for $3 Billion 
Transunion accepted an offer to sell the company to Advent International and GS Capital Partners, two private equity firms. GS Capital Partners, a branch of Goldman Sachs, and Advent bought the company from Madison Dearborn Partners and the Pritzker family. The buyout is the largest private equity deal of the year.

Mitsubishi Buys 40% Stake in Encana Shale Gas Assets 
Mitsubishi invested $2.9 billion in Encana’s holdings in British Columbia. Encana, a Canadian natural gas producer, owns about 409,000 acres in British Columbia. The $2.9 billion investment was made in exchange for 40% of the company. This deal represents another investment made for shale gas assets. Shale formations and fracking, a method of extracting natural gas and oil from sedimentary rock, have prompted new and increased investments.
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Editorial Staff