Category ArchiveMergers and Acquisitions



Mergers and Acquisitions 09 Oct 2007 12:58 pm

Miller, Coors Join Forces

Beer

Miller and Coors will merge their North American brewing operations:

Miller Brewing Co. and Coors Brewing Co., the nation’s second- and third-largest brewers, are combining their operations, creating a bigger challenger to Anheuser-Busch Cos. – but also raising the possibility of future job cuts at Miller’s Milwaukee headquarters.

For now, longtime Coors executive Leo Kiely will be running the newly merged operations of Miller Brewing and Coors Brewing.

But Miller President Tom Long is Kiely’s heir apparent, and Miller owner SABMiller Plc will be picking the MillerCoors chief when Kiely retires – perhaps within a few years.

Those facts emerged from this morning’s Webcast presentation to analysts about the agreement to combine Miller and Coors.

A decision hasn’t been made yet on where the MillerCoors headquarters will be located once the merger is completed in 2008. None of Miller’s six breweries, or the two breweries operated by Coors, will be closed as the result of the merger, said Pete Marino, Miller spokesman.

But administrative jobs in Milwaukee, and at the Coors offices in Golden, Colo., will be analyzed as the merged company looks to reduce costs, he said.

“It’s safe to assume there will be some reductions,” Marino said. But it’s too early to estimate the extent of those job cuts, and where they will occur, he said. MillerCoors will maintain a presence in both Milwaukee and Golden, Marino said.

Miller has 1,700 employees in Milwaukee, with 800 employees in the corporate offices and 900 brewery workers.

Miller itself is the result of the merger of South African Breweries and Miller Brewing while Coors is the mashup of Molson and Coors.

A changing alcohol market means new business arrangements are needed. The Milwaukee Journal Sentinel story notes that this new company hopes to be in a better position to compete with wine and spirits makers as well as Anheuser-Busch, the world’s largest beer maker.

We now have a truly pressing question: the names of the baseball stadiums in Denver and Milwaukee. I propose the Colorado Rockies play in CoorsMiller Field while the Brewers get MillerCoors Field.

Miller, Coors to Combine U.S. Operations”

Ecommerce & Mergers and Acquisitions 12 Jan 2007 01:10 am

eBay Buys StubHub.com

StubHub.com logo

Ebay bought online ticket reseller StubHub.com for $310 million. This purchase of this tech company should accomplish more for eBay than buying Skype for $2.6 billion in 2005. An S&P analyst says eBay bought StubHub.com for a good price, three times its 2006 revenues. (Michael Arrington pushes a rumor that the price was 30-times EBITDA and describes the “dirty but lucrative” business of ticket reselling.) And unlike Skype to use the service a customer has to shell out some cash.

Jim Goodman, the founder of Ticketmaster.com wonders,

The other thing that really comes into question for me is how long these businesses are going to last (the electronic secondary market that is)? I am obviously very familiar with a Ticketmaster contract, having negotiated a few in my day :-) . Basically what it says is that Ticketmaster is the exclusive computerized ticketing source. Not to mention the rules printed on the back of a season ticket (which are often sold in the secondary market), which often states that it can’t be resold.

One of these days, contracts/rules, etc. are going to be enforced and there are going to be a lot of invalidated tickets out there. There are going to be a lot of very angry customers. And legitimate businesses that were doing hundreds of millions of dollars in revenue will be left with very little. The secondary market is a very, very fine line!!!

We’ll soon see a day where tickets have RFID tags to prove they’re legit and to prevent reselling. When that happens fans will have a cow and politicians will hold hearings.

Read

Airlines & Mergers and Acquisitions 11 Jan 2007 07:22 am

AirTran Increases Bid for Midwest Airlines

Airplane

AirTran (AAI) sweetened its bid for Midwest Airlines (MEH). The low-cost airline raised its offering price to $345 million up from $290 million last fall.

In his letter to Midwest AirTran CEO Joseph Leonard said,

The decision to take this step and initiate a process that is governed by SEC regulations and a fixed timetable was one that was taken after very careful thought. I should add that the decision to unilaterally increase, by $2 per share, or nearly 18 percent, the consideration we are now willing to pay over the already fair and full offer we first proposed to you on October 20, 2006, (which in itself was a 37 percent premium to the value then being accorded Midwest by the investment community and an 89 percent premium over the six months average price of your company’s stock) was also not an easy decision for us to make. However, we are willing to take this step because we fully believe that a combined AirTran and Midwest, whose shareholder base will consist of holders of both of our companies, will generate the value needed to justify our increased offer.

Leonard thinks “a combined AirTran and Midwest will materially expand service to Milwaukee and the other communities that you presently serve and the new company will provide an overall net increase in jobs and bring added job security and growth opportunities to your employees.”

This morning making his tv rounds Leonard noted Milwaukee fliers are paying 40% more for air travel than in Chicago. I did a quick search for prices on flights to Washington, D.C. in late February. In that case Leonard is correct. Chicago to Washington costs $98 (pre-taxes). On Midwest it’s $188. The trade off is dealing with O’Hare Airport and Midwest’s two-across seating. I’m probably willing to pay for it, but how many other travelers will? Midwest’s model has been a better level of service for a competitive price. That may not work in the new airline economy. Midwest’s strategy of increasing capacity with more regional flights to places like Duluth, MN (!) doesn’t seem as inspiring.

AirTran’s offer is on the table until 02.08.07.

“AirTran ups offer for Midwest

Media & Mergers and Acquisitions & Private Equity 26 Dec 2006 05:50 pm

Star Tribune Sold To Private Equity Firm

Avista Capital Group logo

The McClatchy Company which earlier this year bought Knight Ridder for $4.5 billion sold the Minneapolis Star Tribune to, you guessed it, a private equity firm for $530 million. Avista Capital Partners is the firm of the moment. In a press release McClatchy said Avista tried snagging the two Philadelphia newspapers earlier this year. McClatchy will use the cash to pay off debt from the Knight Ridder deal.

paidContent.org notes the “sale price is much less than the $1.2 billion McClatchy paid to buy the Star Tribune from Cowles Media Co. in 1998.” At $530 million the paper is a better growth prospect than at $1.2 billion. We’ll all wait and see how they’ll get growth out of rapidly-changing business.

Read

Mergers and Acquisitions & Private Equity 19 Dec 2006 11:04 pm

Texas Pacific Gets into Casino Business

Texas Pacific Group logo

Texas Pacific still had a few billion burning a hole in its pocket. The private equity firm strikes again joining Apollo Management to buy Harrah’s for a deal, including debt, worth $27.8 billion. You can do big deals like buying part of Sabre, Qantas, and now Harrah’s if you raised $15 billion in the world’s second-largest buyout fund.

Even with forking over a lot of money they bought the casino group for cheap:

At $90 a share, Texas Pacific and Apollo would be paying less for Harrah’s earnings than what Las Vegas Sands’ or MGM’s profits are worth on the stock market. Harrah’s is being valued at 21.4 times projected 2007 earnings, based on the average estimate of 18 analysts surveyed by Bloomberg. That compares with a 23.1 ratio for MGM Mirage and 51.5 for Las Vegas Sands Corp., according to Bloomberg data.

That’s what I call smart money.

Read

Media & Mergers and Acquisitions 18 Dec 2006 07:31 pm

Chandlers Want Their Newspaper Back

Tribune Company logo

The family that used to own the LA Times is reported (by the Times no less) to be interested in buying the company that bought their newspaper. Really it’s not as confusing as that sentence sounded:

The Chandlers, who currently own a 20% stake in the company, have been in discussions with billionaire Ron Burkle’s investment firm, Yucaipa Cos., about making a joint offer for some or all of Tribune’s assets, the Los Angeles Times reported on its Web site, citing two unnamed people said to be familiar with their plans. The L.A. Times is owned by Tribune, along with 10 other newspapers including the Chicago Tribune, 26 television stations, and the Chicago Cubs baseball team.

Tribune executives led by Chief Executive Dennis J. FitzSimons are expected to enter a bid of their own in alliance with a consortium of three private investment firms, one of the group’s advisors reportedly said.

The management consortium is said to include Providence Equity Partners of Rhode Island, Apollo Management of New York and Chicago investment firm Madison Dearborn Partners, according to the L.A. Times.

In July, the Chandlers demanded that Tribune take dramatic steps to lift its stock price, which had lost more than half its value since early 2004. The family said that Tribune should sell its broadcasting division, pursue tax-free spin-offs of its newspaper assets or try to sell the company as a whole.

About the only private equity firm not interested in Tribune is Texas Pacific Group, but they blew their wad last week on Sabre and Qantas.

Also interested in buying Tribune are Tribune executives. But “executives are unlikely to lead any buyout effort but could very well have a future management role in the company.” At least they’d keep their jobs.

Read

Airlines & Mergers and Acquisitions 13 Dec 2006 11:23 am

Fly, Fly Away

Airplane

The market talk today is airline consolidation. United (UAUA) talking to Continental (CAL) (with Northwest (NWACQ) in the background). AirTran (AAI) talking to Midwest (MEH). This is on top of U.S. Airways going after Delta. I won’t be surprised if defunct Pan-Am rises from the grave and goes after someone. And what about private equity? They’ve been buying anything like their money is burning a whole in their pockets. Let’s get to some details:

From MarketWatch on a possible United-Continental merger:

Analysts have long favored a combination of United’s Asian routes and heavy coverage of the western United States with Continental’s Latin American and European routes and its large and highly profitable hub in Newark, N.J.

On an AirTran-Midwest hookup we have the take from the Milwaukee Journal Sentinel:

A merger of AirTran and Midwest might change the nature of air travel from Milwaukee.

“Milwaukee has been extremely well served by having a hometown-headquartered airline here, and I would hate to lose that,” said Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce.

“The critical thing here is the quality of the air service,” Sheehy said. “And they have given us better air service than most markets our size.”

Midwest was launched in 1984 as a spinoff from Kimberly Clark’s corporate aviation division. Midwest was founded by Timothy Hoeksema, who remains as chairman, chief executive officer and president.

Midwest competed with much larger airlines by filling a niche. It offered award-winning service, including wide, two-across seating, gourmet meals served on china, and complimentary wine and champagne. That appealed to business travelers, who were more willing to pay the higher fares demanded by Midwest.

The formula worked until the recession hit in 2000, followed by an even greater slowdown in travel after the 2001 terrorist attacks.

Midwest came close to filing for Chapter 11 bankruptcy protection in 2003. The company managed to avoid it through a large refinancing package.

The company renegotiated agreements with aircraft lessors and lenders, and arranged for about $40 million in financing. Also, unions representing pilots and flight attendants agreed to wage concessions.

AirTran, once upon a time, was ValuJet. The low-cost airline recently put Elton John’s image on their planes. I’m not sure how well that would work with Midwest’s famous chocolate chip cookies.

Mergers and Acquisitions 11 Dec 2006 01:03 pm

AIG to Buy Six Ports from Dubai Ports World

AIG logo

Financial giant AIG will buy six U.S. port operations from Dubai Ports World. Earlier this year there was political furor over security concerns of an Arab company owning what many politicians felt were important infrastructure. From the The Guardian:

Senior politicians from both parties berated the president for allowing a Middle Eastern nation to take on management of American ports in the middle of the “war on terror”.

DP World is owned by the government of the United Arab Emirates, prompting some politicians to point out that two of the September 11 hijackers came from the UAE.

Polls showed that the American public opposed the deal by three to one. Democratic senator Hillary Clinton argued: “We cannot cede sovereignty over critical infrastructure like our ports. This is a job that America has to do.”

Faced with Congressional legislation in effect blocking the takeover, DP World agreed to sell.

The purchaser, AIG, is about as American as a company can get – it is among the top ten components of the Dow Jones index, has its headquarters in New York and manages $635bn of assets, largely on behalf of US insurance clients.

It is buying six cargo terminals along America’s east coast, 16 stevedoring operations and a passenger terminal for cruise ships in New York.

Read

Read