Mergers: August is the busiest month
August, normally the slowest month for deal making, is “on course to be the busiest this year,” said Zachary Mider and Jeffrey McCracken in Bloomberg.com. More than $175 billion in deals have been announced, with mining company BHP Billiton’s $39 billion hostile bid for fertilizer maker Potash leading the way, followed by Intel’s $7.7 billion acquisition of computer-security specialist McAfee. Computer maker Hewlett-Packard and its archrival, Dell, are locked in a bidding war for 3Par, a maker of computer storage systems, and rumors are rumbling that brewers SAB Miller of South Africa and Japan’s Asahi will soon be sparring to gain control of Australia’s Foster’s.
The flurry of deal making offers “a glimmer of economic confidence” at a time when the U.S. seems to be slouching toward a double-dip recession, said Anupreeta Das and Gina Chon in The Wall Street Journal. Some executives seem to have “grown restless waiting for the broader economy to turn” and have decided it’s time to spend some of the record $2.8 trillion in cash that corporations have on their balance sheets. What’s more, with corporate borrowing rates at “historic lows,” there’s plenty of financing available for companies with an urge to merge.
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Autos: General Motors prepares a public offering
General Motors has filed for an initial public offering, raising the possibility that the carmaker could soon repay a significant portion of the $43.3 billion it still owes the federal government, said Bernard Condon in The Washington Post. In a “remarkable turnaround” from its 2009 bankruptcy, the company has posted two consecutive quarterly profits, including $1.3 billion in the latest quarter. A public share offering could come as soon as October and raise $70 billion to $80 billion.
Banking: Feds seize community lender
ShoreBank, a Chicago lender once regarded as a model of socially responsible banking in low-income communities, was seized last week by regulators and taken over by a consortium of big banks and philanthropic groups, said Becky Yerak in the Chicago Tribune. Since ShoreBank’s founding in 1973, its “mission was to revitalize declining, mostly black Chicago neighborhoods.” But its loan losses swelled during the recession, crippling its ability to raise additional financing.
Pensions: New Jersey sued for disclosure dodge
Bringing its first-ever fraud case against a state government, the Securities and Exchange Commission has sued New Jersey for “failing to tell bond investors it was underfunding its pension funds,” said Lisa Fleisher in NJ.com. The state settled the charge without paying a penalty or admitting culpability, but did agree to improve disclosures to investors. The SEC accused New Jersey of failing to disclose an unfunded increase in pension benefits of 9 percent, granted in 2001, which could potentially compromise the state’s ability to repay its debts.
Hedge funds: A stressed-out legend retires
Legendary hedge-fund investor Stanley Druckenmiller, “who made a mint with George Soros betting against the pound in 1992,” has retired, said Nils Pratley in the London Guardian. From 1986 until 2007, after which his performance sank, Druckenmiller, 57, delivered returns averaging 30 percent a year, first as manager of Soros’ Quantum Capital fund and then as the head of his own firm, Duquesne Capital. Announcing his retirement, Druckenmiller said that the difficulties of managing billions of dollars were having “a clear impact on my ability to perform, as well as my state of being.”
