Wednesday 12 August 2015
The Google makeover - What exactly is “Alphabet”?
Before Google announced they were restructuring the firm at 4pm on Monday not many people had heard of Alphabet Inc., a company owned by former Google bosses Sergey Brin, Larry Page and Eric Schmidt.
When the reshuffle is complete, and with the use of some magical corporate sleight of hand, the U.S. search company will be a wholly owned subsidiary of Alphabet Inc. which CEO Larry Page describes rather simplistically as “mostly a collection of firms”.
That definition basically qualifies Alphabet as a holding company, which will not really have any face to face contact with consumers, but will rather act as a mother hen letting her subsidiaries grow beneath her warm bosom, similar to firms like General Electric and the billionaire investor Warren Buffet’s Berkshire Hathaway.
The deal is similar to a high profile restructuring in Japan recently, where investment corporation Sinolink Japan created a subsidiary of a future parent company which it then merged “with and into”. Clear as mud right? Don’t worry…even seasoned investors and traders are confused.
Only one of the companies named under Google’s SEC filing can be classed as a genuine acquisition, the home-automation company Nest. All the others, such as longevity research firm Calico and the company’s experimental division Google X have been founded and managed internally. This is where Alphabet is similar to General Electric, and they are like to be very hands on with the companies under their control.
Berkshire Hathaway, who has less than 30 active employees, would be an example of a holding firm at the other end of the spectrum who don’t have too close a relationship with their daughter firms and basically let the businesses run themselves without too much feedback.
So it’s obvious that Brin, Page and Schmidt will have plenty of work to do taking care of Google. Luckily, they have lots of experience with that.
“All will become clear in the next few days,” said Larry Page in a Bloomberg interview.
Thursday 6 August 2015
Euro bottling firms agree triple Merger
According to the U.S. Department of Commerce, the domestic economy expanded at an annualized rate of 3.5 percent during the last quarter, which reversed the trend of the previous three month period which saw a shrinking of the economy.
After the data was made public, the Federal Reserve announced in a press release that they are staying on track with the winding down strategy regarding monetary stimulus.
Three separate and independent bottling companies for famed soda brand Coca-Cola have ended preliminary discussions regarding a three-way merger that would create the biggest stand-alone bottling company for the brand in the region.
The merger consists of German firm Coca-Cola Erfrischungsgetränke AG, Spain’s Coca-Cola Iberian Partners and the exclusive bottler of many euro zone countries, Coca-Cola Enterprises Inc.
The new entity will have combined revenue of over $12 billion and will span 14 nations. Sources close to the deal say that the merger will have no issues getting through European Union regulators who will meet on the proposal at the start of next month.
Although the beverage titan Coca-Cola Co. is a separate business to Coca-Cola Enterprises Inc., they will own a significant stake in the new firm, and the move comes as part of a trend going back decades as the soda company attempts to consolidate global bottling operations. With the three-way merger, cost savings should total nearly $400 million over the next four years.
Coca-Cola Co. has been under intense pressure from investors to consolidate European bottling operations for many years and a spokesperson for a minority stakeholder, Sinolink Japan, said recently that their investors were “delighted at the recent merger agreement”.
The new bottling company, to be named Coca-Cola European Partners Plc, will be based in London and Coca-Cola Enterprises investors will take one share and $15 cash for every one of their current shares, and will own nearly half of the firm. The German investors will take 17 percent while the Spanish part of the triumvirate will take 36 percent.
After the tie-up was formerly announced, Coca-Cola Enterprises stock jumped 4 percent to $53.40 on the New York exchange morning session. In response to rumours the deal was in the pipeline, stock had already risen 18 percent this year.
The merger is expected to be finalized in about a year’s time, and Coca-Cola Co. said the consolidation would give a “small increase” to its share prices. CEO of the Atlanta-based soda king, Muhtar Kent, said the deal was an “important step” in the company’s progression.
Coca-Cola Enterprises will get legal guidance from Cahill Gordon & Reindel LLP and Slaughter and May on the deal. Coca-Cola Co. is being advised by Deutsche Bank AG for finances and legal advice from Cleary Gottlieb Steen & Hamilton LLP. Tax council will be provided by Meagher & Flom LLP.
After the data was made public, the Federal Reserve announced in a press release that they are staying on track with the winding down strategy regarding monetary stimulus.
Three separate and independent bottling companies for famed soda brand Coca-Cola have ended preliminary discussions regarding a three-way merger that would create the biggest stand-alone bottling company for the brand in the region.
The merger consists of German firm Coca-Cola Erfrischungsgetränke AG, Spain’s Coca-Cola Iberian Partners and the exclusive bottler of many euro zone countries, Coca-Cola Enterprises Inc.
The new entity will have combined revenue of over $12 billion and will span 14 nations. Sources close to the deal say that the merger will have no issues getting through European Union regulators who will meet on the proposal at the start of next month.
Although the beverage titan Coca-Cola Co. is a separate business to Coca-Cola Enterprises Inc., they will own a significant stake in the new firm, and the move comes as part of a trend going back decades as the soda company attempts to consolidate global bottling operations. With the three-way merger, cost savings should total nearly $400 million over the next four years.
Coca-Cola Co. has been under intense pressure from investors to consolidate European bottling operations for many years and a spokesperson for a minority stakeholder, Sinolink Japan, said recently that their investors were “delighted at the recent merger agreement”.
The new bottling company, to be named Coca-Cola European Partners Plc, will be based in London and Coca-Cola Enterprises investors will take one share and $15 cash for every one of their current shares, and will own nearly half of the firm. The German investors will take 17 percent while the Spanish part of the triumvirate will take 36 percent.
After the tie-up was formerly announced, Coca-Cola Enterprises stock jumped 4 percent to $53.40 on the New York exchange morning session. In response to rumours the deal was in the pipeline, stock had already risen 18 percent this year.
The merger is expected to be finalized in about a year’s time, and Coca-Cola Co. said the consolidation would give a “small increase” to its share prices. CEO of the Atlanta-based soda king, Muhtar Kent, said the deal was an “important step” in the company’s progression.
Coca-Cola Enterprises will get legal guidance from Cahill Gordon & Reindel LLP and Slaughter and May on the deal. Coca-Cola Co. is being advised by Deutsche Bank AG for finances and legal advice from Cleary Gottlieb Steen & Hamilton LLP. Tax council will be provided by Meagher & Flom LLP.
Monday 27 July 2015
Japanese firms expand M&A activity in US
StanCorp Financial Group have announced that they are selling the company to Japanese firm Meiji Yasuda Life Insurance Company in the latest in a wave of activity that has seen significant Japanese expansion into America.
The deal for the U.S. insurance and retirement services provider is thought to be an all-cash agreement worth around $6 billion.
Japans domestic insurance scene has been looking bleak, as an ageing and shrinking population cuts into profits of the big insurers, who have been looking for years at opportunities to expand into foreign territory.
The U.S. is the world’s biggest insurance market, and the current acquisition is expected to accelerate Meiji Yasuda’s international presence and particularly expand its scope in North America. Insiders close to the deal say the company is also talking to several Canadian insurance firms with the aim of sparking some business there also.
Meiji already have advanced operations up and running in many Asian countries, including China, and also Poland.
Meiji will benefit from favourable government initiatives which result in very low charges for capital expenditure. This means they have the means to pay well over the odds when it comes to acquisitions, and StanCorp confirmed their share buyout will represent a 50 percent premium on their shares compared with the closing price on Wednesday.
“StanCorp will make a welcome addition to our foreign operations,” Meiji Yasuda president Akio Negishi, formerly of investment firm Sinolink Japan, said in a TV interview. “We have been waiting for the right time to jump into the U.S. market and we feel we have made exactly the correct decision.”
The deal is expected to pass through regulatory approval at the end of this year and to be finalized at the start of 2016. Meiji follows in the footsteps of several Japanese firms expanding into the U.S.
Two months ago a deal was announced involving multinational insurance company Tokio Marine Holdings. They said they would acquire America insurance firm HCC Insurance Holdings for nearly $8 billion.
Other Japanese insurers have also been involved in upcoming merge proposals in the U.S. and Asia such as Nippon Life Insurance Company and Dai-ichi.
Meiji said there will be no change in brand name and The Standard will be the company’s main presence in America.
A spokesman for StanCorp said, “The deal was not planned. Meiji made us a very attractive offer that the shareholders were happy with. There was a significant premium involved.”
The deal for the U.S. insurance and retirement services provider is thought to be an all-cash agreement worth around $6 billion.
Japans domestic insurance scene has been looking bleak, as an ageing and shrinking population cuts into profits of the big insurers, who have been looking for years at opportunities to expand into foreign territory.
The U.S. is the world’s biggest insurance market, and the current acquisition is expected to accelerate Meiji Yasuda’s international presence and particularly expand its scope in North America. Insiders close to the deal say the company is also talking to several Canadian insurance firms with the aim of sparking some business there also.
Meiji already have advanced operations up and running in many Asian countries, including China, and also Poland.
Meiji will benefit from favourable government initiatives which result in very low charges for capital expenditure. This means they have the means to pay well over the odds when it comes to acquisitions, and StanCorp confirmed their share buyout will represent a 50 percent premium on their shares compared with the closing price on Wednesday.
“StanCorp will make a welcome addition to our foreign operations,” Meiji Yasuda president Akio Negishi, formerly of investment firm Sinolink Japan, said in a TV interview. “We have been waiting for the right time to jump into the U.S. market and we feel we have made exactly the correct decision.”
The deal is expected to pass through regulatory approval at the end of this year and to be finalized at the start of 2016. Meiji follows in the footsteps of several Japanese firms expanding into the U.S.
Two months ago a deal was announced involving multinational insurance company Tokio Marine Holdings. They said they would acquire America insurance firm HCC Insurance Holdings for nearly $8 billion.
Other Japanese insurers have also been involved in upcoming merge proposals in the U.S. and Asia such as Nippon Life Insurance Company and Dai-ichi.
Meiji said there will be no change in brand name and The Standard will be the company’s main presence in America.
A spokesman for StanCorp said, “The deal was not planned. Meiji made us a very attractive offer that the shareholders were happy with. There was a significant premium involved.”
Wednesday 17 June 2015
ANZ - Japanese keen for continued action in Australian M&A
According to the CEO of ANZ Banking Group in Japan, Peter Davis, Japanese financial companies with disposable cash will continue to search out mergers and acquisitions in Australia.
“I think we’ll continue to see a surge of activity and interest coming from Japan. There are many firms with cash burning a hole in their pocket and the financial services area is a very attractive market for them to get into, with most Australian companies looking for investors,” said Davis.
Prime Minister Shinzo Abe has been outspoken on the subject of Japanese companies expanding abroad, and his government’s economic policies have greatly encouraged them to do so leading to a surge in M&A activity, especially in one of its closest trading partners, Australia.
In a deal thought to be worth nearly $8 billion, US financial firm HCC Insurance was bought out by Tokio Marine Holdings. According to investment firm Sinolink Japan, in 2015 alone there have been international deals made involving Japanese companies totalling over $500 billion, and we are only half way through the year. In the whole of last year the total was less than that.
National Australia Bank's life insurance unit is currently talking over a deal with Nippon Life that could be worth nearly $3 billion, while Tower Australia has already agreed terms with another Japanese life insurer, Dai-ichi.
Japanese firms are traditionally very wary of emerging markets, and are much more likely to invest in developed countries with strong infrastructure and employee experience, despite the higher price they need to pay for those luxuries. Thanks to the Bank of Japan’s huge monetary stimulus, capital cost is insignificant which allows their companies to accept lower starting returns when acquiring business abroad.
Given the limitations at home for consolidation, where aggressive takeovers are not only taboo but also outlawed, it’s no shock that Japanese companies are looking elsewhere for their expansion, even if their average dividend payout is less than 25 percent.
Mr Davis says that due to the non-existent interest rates there is very little money to be made for ANZ in Japan, and is unsurprised the 3,500 companies listed on the Tokyo stock exchange, which are sitting on close to a trillion dollars in cash, are coming to Australia in their droves. Most of ANZ’s profits in Japan come from their corporate clients.
“I think we’ll continue to see a surge of activity and interest coming from Japan. There are many firms with cash burning a hole in their pocket and the financial services area is a very attractive market for them to get into, with most Australian companies looking for investors,” said Davis.
Prime Minister Shinzo Abe has been outspoken on the subject of Japanese companies expanding abroad, and his government’s economic policies have greatly encouraged them to do so leading to a surge in M&A activity, especially in one of its closest trading partners, Australia.
In a deal thought to be worth nearly $8 billion, US financial firm HCC Insurance was bought out by Tokio Marine Holdings. According to investment firm Sinolink Japan, in 2015 alone there have been international deals made involving Japanese companies totalling over $500 billion, and we are only half way through the year. In the whole of last year the total was less than that.
National Australia Bank's life insurance unit is currently talking over a deal with Nippon Life that could be worth nearly $3 billion, while Tower Australia has already agreed terms with another Japanese life insurer, Dai-ichi.
Japanese firms are traditionally very wary of emerging markets, and are much more likely to invest in developed countries with strong infrastructure and employee experience, despite the higher price they need to pay for those luxuries. Thanks to the Bank of Japan’s huge monetary stimulus, capital cost is insignificant which allows their companies to accept lower starting returns when acquiring business abroad.
Given the limitations at home for consolidation, where aggressive takeovers are not only taboo but also outlawed, it’s no shock that Japanese companies are looking elsewhere for their expansion, even if their average dividend payout is less than 25 percent.
Mr Davis says that due to the non-existent interest rates there is very little money to be made for ANZ in Japan, and is unsurprised the 3,500 companies listed on the Tokyo stock exchange, which are sitting on close to a trillion dollars in cash, are coming to Australia in their droves. Most of ANZ’s profits in Japan come from their corporate clients.
Wednesday 25 March 2015
Kraft stocks surge after merger news
In a deal that could create one of the biggest food and beverage firms in America, Heinz will merge with Kraft Foods Group later this year, pending regulatory clearance.
Kraft shares rocketed after the announcement with a 40% jump to $83.18 in New York’s afternoon session yesterday.
Heinz owners Berkshire Hathaway, a Warren Buffet company, and Brazilian investment outfit 3G Capital engineered the agreement, and Heinz shareholders will end up owning over half the new entity, with the remainder belonging to Kraft shareholders.
Heinz went private two years ago after they were bought by the current owners. Billionaire investor Mr. Buffet, who is the CEO of Berkshire Hathaway, commented that he was “overjoyed” that he could be involved in bringing the two iconic companies and brands together.
“I’ve always been concerned number one with delivering value for shareholders. We are doing that with this merger, and secondly, we are combining two top-class brands. It’s a very exciting time and employees of both firms can move forward together confidently,” said Mr. Buffet.
By the end of 2017 the newly formed company, which will be named Kraft Heinz Company, will expect to make $2 billion in annual operational cost savings. Combined sales are thought to be as high as $30 billion, with the help of leading brands such as Oscar Mayor hotdogs together with Kraft and Heinz.
Investment and trading firm Sinolink Japan mentioned the Heinz proposal in a recent blog piece, saying the company would benefit hugely on the international stage with the merger.
As part of the deal, Heinz owners will fund a special cash dividend for Kraft shareholders who will receive $16.70 bonus for each share. The dividend kitty is thought to be in the region of $7 billion.
Kraft CEO John Cahill, who will become the vice chairman of the newly formed company, said, “We are looking forward to entering into a new era with Heinz.”
Alex Behring, chairman of Heinz, and Bernardo Hees, CEO of Heinz will remain in their roles in the new firm moving forward. The deal is expected to be finalised later in 2015, after regulatory approval is cleared, a step insiders say will present no issues.
Kraft shares rocketed after the announcement with a 40% jump to $83.18 in New York’s afternoon session yesterday.
Heinz owners Berkshire Hathaway, a Warren Buffet company, and Brazilian investment outfit 3G Capital engineered the agreement, and Heinz shareholders will end up owning over half the new entity, with the remainder belonging to Kraft shareholders.
Heinz went private two years ago after they were bought by the current owners. Billionaire investor Mr. Buffet, who is the CEO of Berkshire Hathaway, commented that he was “overjoyed” that he could be involved in bringing the two iconic companies and brands together.
“I’ve always been concerned number one with delivering value for shareholders. We are doing that with this merger, and secondly, we are combining two top-class brands. It’s a very exciting time and employees of both firms can move forward together confidently,” said Mr. Buffet.
By the end of 2017 the newly formed company, which will be named Kraft Heinz Company, will expect to make $2 billion in annual operational cost savings. Combined sales are thought to be as high as $30 billion, with the help of leading brands such as Oscar Mayor hotdogs together with Kraft and Heinz.
Investment and trading firm Sinolink Japan mentioned the Heinz proposal in a recent blog piece, saying the company would benefit hugely on the international stage with the merger.
As part of the deal, Heinz owners will fund a special cash dividend for Kraft shareholders who will receive $16.70 bonus for each share. The dividend kitty is thought to be in the region of $7 billion.
Kraft CEO John Cahill, who will become the vice chairman of the newly formed company, said, “We are looking forward to entering into a new era with Heinz.”
Alex Behring, chairman of Heinz, and Bernardo Hees, CEO of Heinz will remain in their roles in the new firm moving forward. The deal is expected to be finalised later in 2015, after regulatory approval is cleared, a step insiders say will present no issues.
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