Business to Business News

After making an official offer to troubled UK Insurance Company, Friends Provident, last Thursday, JC Flowers have been rejected. JC Flowers, a U.S.-based private equity firm, was keen to take over Friends Provident and had made an offer for a 3.5 billion pound cash take over.

Friends Provident however did not seem too eager to take up this offer as they believe it did not value the company correctly. At 150 pence per share, Friends believed that were being seriously undervalued. What was worse was that this amount would have been further reduced if Friends Provident had paid their shareholders a dividend of 5.3 pence a share for the year 2007, as was planned. Friends’ shares closed on the Friday market at 120 pence a share.

Friends Provident would have preferred a bid closer to their actuarial value, in the range of 160 pence a share.

This is a second take over bid for Friends Provident that has run afoul. A merger with Friends’ rival- Resolution was on the cards last year, but that deal too fell through. After the Resolution bid, Friends has been in the process of overhauling their strategy. They have been dogged by several setbacks, including grave financial losses and the exit of their chief executive.

Although Flowers had announced their intent for a takeover way back in January, they made their official offer only on last Thursday.

JC Flowers, the U.S. Equity group is prepared to make a bid worth ₤3.5 billion towards Friends Provident, ailing life assuror, after Flowers has gathered a stake of almost 2 % in the life insurance company.

JC Flowers is believed to have offered nearly 175 p per share which is a lot higher than the closing Friends made at 152.5 p last week. JC Flowers may wait for Friends to show their annual tally on Tuesday before making any final decision.

JC Flower is run by former Goldman Sachs financier Christopher Flowers, and is aid to be standing by to receive the information about the review that Flowers is scheduled to make at the end of this month where Friends will deliberate about the sale or merger of Friends’ 53% stake in F&C Asset Management, which is a separately listed fund manager. Friends will also discuss, probably next week about its decision to sell Lombard, its European Wealth Management Business, worth almost ₤700 million. Lombard has already attracted potential customers in Zurich Financial Services and AXA.

Life Insurance companies have been hit hard by the subprime crisis and Flowers’ move to sell indicates that there are lots of companies out there that are out to make the most of the opportunity to buy out these companies at their current low values.

GCap Media has stated that it is considering the offer Global Radio has made in light of their new bid. GCap is Britain’s largest commercial radio group and had received an offer from the privately owned Global Radio. The initial offer made by Global Radio was 202 pence per share and they have recently upped it to 225 per pence. They have also requested GCap to drop their strict March 5th negotiations deadline.

GCap are expected to make an announcement soon about their decision

British American Tobacco (BAT) is eager to buy the cigarette businesses of Skandinavisk Tobakskompagni (ST) in a deal where they are willing to shell out 2 billion pounds.
BAT is the world’s second largest cigarette manufacturer, with well known brands Kent, Lucky Strike, Dunhill and Pall Mall cigarettes, part of their roster. They have made a remarkable increase in sales in 2007, up nearly 11% along with an increase in share prices by 108.53 pence.

BAT intends to buy over the entire business of ST, a company that accounts for nearly 60% of the tobacco sales in Scandinavia. This will result in an increase in sales for BAT by nearly 30 million cigarettes.

BAT just acquired Turkey’s state owned Tekel Cigarette maker in a deal worth $1.72 billion just last week.

A relatively new company called Tangerine Confectionery, which was formed in January 2006 has bought Cadbury’s Monkhill confectionery. This buyout makes Tangerine confectionery the new owners of Butterkist, the popular popcorn brand. The sale price is still under wraps but sources speculate that the sale will fetch the global confectionery giant Cadburys an excess of £250m.

Momkhill’s currently employs over 800 personel and they will be a significant addition to Tangerine’s global workforce strenght. Butterkist popcorn will be a interesting addition to Tangernine’s portfolio which is already teeming with brands such as Princess, Taverners and Mojo.

CVC Capital Partners and Blackstone, the two private equity firms, are said to be readying a bid for the known pubs group Mitchells & Butlers. The move would involve shareholders keeping about 50% stake. Their bid would try to head off a rival bid from Punch Taverns.
The two PE firms are believed to be aiming to snap up M&B, but wish to give shareholders an opportunity to continue owning nearly half the business. This kind of deal often takes place when a bidder looks only to have a controlling stake. Analysts doubt as to whether parties interested could raise the required funding, given the bad state of the credit markets. This arrangement would overcome the credit problem.
A long-time rival M&B, Punch, tried to pounce on the firm just at the beginning of February 2008 with an all-share merger proposal. This followed M&B revelation that it had incurred potential and realised losses of nearly £422m from hedging bets tied to a doomed property deal. The hit will take out over two years’ profits. Other PE firms, including TPG and Cinven, are also said to be interested in M&B. All eyes are on property tycoon Robert Tchenguiz who has about 23% of the popular pubs company.

Chennai –based entertainment group Pyramid Saimira bought Aurona, a London based video games and interactive entertainment software company. The purpose, according to Mr P.S.Saminathan, managing director, Pyramid group is” to develop gaming , animation and special effects using Aurona’s expertise.

The price of acquiring Aurona will be around $20 million according to estimates of other buyouts of similar sized companies. The director has refused to reveal the amount paid for the transaction.

Mr Saminathan said “ We have plans to two of our subsidiaries. Pyramid Samira Production Company, which is in to movie production, is likely to hit the markets in February this yea ,the tentative value of the company could be Rs 1,7OO crore.”

The company is currently in process of finalising bankers to the issue. “We also have a company in the advertising side, Dimple Cine Advertising, for which we intend to file the draft prospectus by May or June “ added Mr Saminathan..

With such diversified interests, their quest for superior and adequate software is perhaps met success by acquiring of London based, Aurona Technologies.

 The Federal Trade Commission finally approved Google’s $3.1 billion acquisition of Internet ad server DoubleClick after eight months of review for possible antitrust violations. But the deal has yet to be signed by the European commission. Google being the most popular search engine also has a lock on the Internet text ad market with its AdWords and AdSense programs. Doubleclick dominates in the third party banner ad server market. The advantages of the Google-DoubleClick deal:
1. With the doubleclick acquisition, Google will have a very powerful influence on the overall Internet advertising market to the loss of both content publishers and advertisers, big and small. Size is considered as the junk e-mails received everyday tells the story.
2. Google’s doubleclick deal will give access to enormous amount of confidential data of both publishers and advertisers giving it greater power.
3. The saturation of ad is causing click through rates for text ads to trend lower and because of this the pressure on Google to maximize revenues from its assets is increasing. Unlike Microsoft which has a more diversified revenue stream, Google on the other hand is a one-trick pony i.e. it generates revenue from text ads. If Google wants to rise up revenues then it would be to try a bundle or engage in tying of course only with the selfless motive of benefiting consumers, publishers and advertisers. When Window’s operating system was bundled with Microsoft’s internet explorer it was finito for the Netscape browser.

Scottish Newcastle who are Britain’s leading brew manufacturers owning brands like Foster’s beer, Newcastle Brown ale and Strongbow cider, and also having 37 and a half percent stake in United Breweries Limited, accepted the offer from Carlsbery and Heineken on Friday.

Under the agreement the share holders will receive 800 pence in cash for each S&N share. The deal will result in break-up of Scottish & Newcastle assets; Carlsberg , Danish brewing giant will control the French, Greek, Chineese and Viatnamese operations of the country while Heineken the Dutch brewing giants will get control of the UK and Ireland, Portuguese, Finish, Belgian, US and Indian operations of Scottish & Newcastle.

Carlsberg will also benefit by the transfer of the British firm’s share of Baltic Beverages Holding AB, a fast growing company in Russia. Carlsberg is paying 54.5 percent and the balance amount will be borne by Heineken.
On the deal, Mr. Jorgen Buhl Rasmussen said “This is a truly transformational transaction for Carlsberg creating the world’s fasted growing global brewer. We now have full control of our destiny in Russia and other BBH territories and I am truly excited about the new opportunities this will present us”

Chairman and CEO Mr. Jean-Francois van Boxmeer said “This is a significant strategic step for Heinken It gives us undisputed leadership in Europe and creates significant opportunities in profitable markets to grow the premium Heineken brand. Our ability to create value from mature markets coupled with the step-change in revenue growth will drive our future expansion.

However, unions are seeking job guarantees from Heinken, as it will get UK operations, for the 3,300 staff of S&N. But till now there is no comment on the said matter.

Dr. Vijay Mallaya, chairman of UB Group said, “ While The UB Group has had an excellent and productive relationship with Scottish and Newcastle Plc, we welcome the fact that Heinken will be a potential shareholder of United Breweries Limited on terms that are yet to be discussed.”

According to UB group’s president and chief financial officer, Mr. Ravi Nedungadi, he dosent think that this development will trigger an open offer, and that Heinken will probably get the share holding in UB.
 

The Cloud has taken over a German hotspot aggregator that is known for supplying Wi-Fi services to four-star and five-star hotels all across that country. This UK-based hotspot service provider has over 3,500 access points in Germany. With the acquisition of GlobalAirNet AG it further adds 5,300 access points located in over 300 hotels. Taken as a whole, The Cloud can now boast of more than 25,000 hotspots all across the UK, Sweden, Germany, Denmark, Norway and Netherlands. The Cloud already was a market leader in the UK and Sweden.

The Cloud believed that Ganag’s service quality in room and hotel Wi-Fi coverage is very high. This acquisition provides the brand and credentials from which it intends to expand its operation to the European hospitality sector. This is a crucial step in terms of Cloud’s consolidating their operations in the German market.  Hotels in Germany with Ganag hotspots include the Marriott, Crowne Plaza chains, Swiss Hotel. Mr Achim Moehrlein, Managing Director and Co-Founder of Ganag, will be the Managing Director of The Cloud’s combined German business. The Cloud has not yet divulged the details of the price it had to pay for this major business acquisition.