Dealscape's greatest hits and wackiest rumors: Week ending Feb. 29, 2008

E-Mail

Discussion

Print Story

Published February 29, 2008 at 4:57 PM

« Previous Story Home Next Story »

Deal news started the week a day early when Electronic Arts Inc. announced Sunday a bid for smaller rival Take-Two Interactive Software Inc. The $2 billion bid provided the press and the blogosphere with plenty of fodder to feed on all week. First it was the $2 billion bid that the media focussed on Monday. By Tuesday, talk about possible Take-Two defenses and white knights were the rage. By Wednesday, both sides were queuing up their next steps as EA threatened to go hostile and Take-Two hunkered down as the media flagged potential governance issues surrounding changes to CEO Strauss Zelnick's pay package. By the end of the week, Take-Two told the world other possible bidders had expressed interest, while players from the game sector and the greater media industry said "it's not me." The deal offered some relief from the usual Delta Air Lines Inc.-Northwest Airlines Corp. rumors and Microsoft Corp.-Yahoo! Inc. chatter that the business media fixated on all February.

After the jump, we unabashedly revel in the best of the week's other rumors, speculation and manias.

Continue reading below

Also on Dealscape

A paper tackles 'The Dark Role of Investment Banks'

This just in, courtesy of the Harvard Law School Corporate Governance Blog: a paper from three European finance professors arguing that investment banks collude with their investment arms by encouraging bidders to buy targets they've already taken stakes in. The paper, evocatively titled "The Dark Role of Investment Banks in the Market for Corporate Control," presents a broad statistical indictment of M&A between 1984 and 2003. The authors argue that advisers are privy to information that they "directly exploit" by investing in target firms. Investment banks advising bidders not only take more positions in target companies before deals are announced than nonadvisers, but profit more from them, they conclude. And they argue that premiums in targets are higher when advisers to bidders have a position in the target.

Warren Buffett
Buffett Billionaire Warren Buffett is willing to spend as much as $60 billion on deals that would fuel more growth at his conglomerate Berkshire Hathaway Inc., according to Bloomberg TV. Buffett is seeking acquisitions of companies in the $5 billion to $10 billion price range, the report notes. It's no secret that Buffett invests in areas he knows best like insurance, utilties and industrial. It's certainly an oppurtune time for Buffett to go shopping with declining valuations for some companies because of lower earnings prospects from a slowing economy. Dealscape offers some suggestions from The Deal's Auction Block.

XM-Sirius
Cramer_Doll The proposed XM Satellite Radio Holdings Inc.-Sirius Satellite Radio Inc. merger was announced over a year ago, and it still has been hung up at the Federal Communications Commission and the Justice Department. "Mad Money" maestro Jim Cramer thinks he knows why, and he's mad as hell about it.

Chrysler LLC
PT Cruiser assembly line Long-distance relationships can be difficult, especially international ones. Cerberus Capital Management LP and minority partner Daimler AG are learning that lesson the hard way as they squabble over profits and losses at jointly owned turnaround story Chrysler LLC.

Sprint Nextel
A day after Sprint Nextel Corp. issued a disappointing earnings report and projected that customer defections will continue, Pali Capital Inc. analyst Walter Piecyk in a Friday note called for investors to vote out four of the telecom's board members. New CEO Dan Hesse and investor Ralph Whitworth of Relational Investors LLC, named to Sprint's board earlier in February, need help, the analyst wrote.

Circuit City
Investor Mark Wattles' Wattles Capital Management LLC has amassed a 6.5% stake in struggling Circuit City Stores Inc., and is now agitating for change with the nomination of five directors to the electronics retailer's board. The investment is the second big position Wattles has taken in an electronics retailer; he's the largest shareholder of Ultimate Electronics Inc. Interestingly, he amassed his holdings in Ultimate shortly before its 2005 Chapter 11 bankruptcy filing and bought half its stores at a bankruptcy auction.

Delta-Northwest
My how a month of waiting can change perception. A deal between Delta Air Lines Inc. and Northwest Airlines Corp., widely seen as a forgone conclusion just weeks ago, is being viewed as considerably less likely in the current news cycle. The Wall Street Journal Wednesday proclaimed in a headline that deal talks have hit a "snag," in the story describing the deal as "foundering" and at an "impasse," while The New York Times similarly reported that ongoing pilot negotiations are playing "havoc" with airline mergers.

Ford-Tata
Sure, we've heard it before, but the logic behind the latest rumors from trade publisher Automotive News that Ford Motor Co. and India's Tata Motors will announce a deal for Jaguar and Land Rover by March 6 makes sense.

Citigroup
Citigroup Inc. has been pulling out all the stops to end its bleeding. It sold some real estate, received multibillion-dollar capital infusions from foreign investors, slashed its dividend, proposed a massive corporate restructuring including the hiring of a new CEO, but still there seems to be no light at the end of its tunnel. Oppenheimer & Co. analyst Meredith Whitney said Monday that if things don't turn around it might be forced to sell the crown jewel of its holdings -- Smith Barney Inc. -- to have enough capital to endure its massive credit problem.

Cablevision
After failing to acquire Cablevision Systems Corp. last year, the controlling Dolan family has again hired Bear, Stearns & Co. But instead of making another run for the company, the bank has been tasked to explore a possible sale of assets or even acquisitions, according to a New York Post story on Monday. By Friday, it became clearer why Bear, Stearns was hired as reports surfaced that Cabelvision and IAC/InterActiveCorp's Ticketmaster are trying to acquire 49% of concert promoter AEG Live, according to The New York Times.

Iridium
Thought Iridium Satellite LLC was dead after its 1999 bankruptcy? Guess again. The one-time Motorola Inc. attempt to launch a massive global, satellite-based phone service remains in business, following a $25 million purchase in 2000. Now Iridium is reportedly planning an IPO in 2009, according to Barron's Tech Trader Daily blog.

Reed Business Information
It looks like UBS may have its work cut out for itself when it comes to the auction of the Reed Business Information unit, the publisher of Variety and New Scientist. Although Reed Elsevier plc only put the unit on the block Feb. 21, when it announced the purchase of ChoicePoint, the business may already have a bidder in the form of London's Apax Partners, according to The Times of London. Meanwhile, rival Nielsen Co. named former Reed executive Gerry Byrne as the head of Nielsen Business Media unit's entertainment publications, which is best known for Billboard and The Hollywood Reporter. The business media made much of the coincidence that Byrne is a veteran of Reed Business Information.

- The editors