Despite Hurricane Ike, which swept through Houston a few weeks ago, and the financial crisis, which has more than a few bankers and lawyers distracted, the University of Texas School of Law went ahead and held its Mergers and Acquisitions Institute Oct. 2 and 3 in the Bayou City, and 120 bankers, lawyers and corporate dealmakers were there trying to figure out the landscape given tightening credit and falling stock prices.
The clear message at the conference was that strategics have returned, and all three panelists on the conference's corporate dealmakers panel Oct. 2 confirmed it, with some caveats.
Kate MacDougall, a development director at Houston oil and gas pipeline giant Enterprise Products Partners LP in Houston, said the company's acquisition of Gulfterra Energy Partners LP doubled it size, so it has plenty of organic growth it can pursue without acquisitions. But she didn't rule out acquisitions. "We have the liquidity to do deals," she said. "When the crazy money was there, we did less acquisitions."
John Zhang, director of development at glass and ceramics maker Corning Inc. of Corning, N.Y., said his company has typically bought companies to help commercialize its technologies and then develop them. It then sells businesses it views as non-core. "We have $3.5 billion in cash on our balance sheet and little debt. If we see opportunities in the marketplace, we'll move quickly and execute," he said. "If we see something that requires financing, the credit markets may be difficult."
Corning has already been doing some buying and selling. In July it sold its Steuben Glass business to an affiliate of retail and real estate investment firm Schottenstein Stores Corp. for an undisclosed sum. And in August it bought components maker Optimum Manufacturing Corp., also for an undisclosed sum.
Barbara Papas, vice president and manager of corporate development at semiconductor maker Texas Instruments Inc. in Dallas, said her company was also in good shape but big deals would be difficult to accomplish. "We have a good amount of cash and NO debt," she said. "But if something big comes along, it would be harder to do in this environment."
When asked how they source deals, Papas said most are found internally from management and its sales force, but there's been a new phenomenon since the debt crisis began to unfold. "We've always had external inquiries from bankers," she said. "With the tight debt markets, we're definitely seeing more of those inquiries coming in."
- Claire Poole
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