Suddenly it’s a bit like the old days – 2007 BC. Before Crunch, that is.
A small flurry of deals – real, rumoured, and (some quite possibly) imaginary – hit the screens on Tuesday afternoon.
After the summer drought, Nokia kicked things off in the multi-billion category on Monday with its $8.1bn deal for Navteq – a punchy little number at about eight times estimated sales and 40 times earnings.
Now there’s another eight billion-er on Tuesday. Canada’s Toronto Dominion Bank has agreed to buy New Jersey-based Commerce Bancorp for $8.5bn, doubling its size in the US.
Citigroup, fresh from Monday’s drama, is taking full control of Nikko Cordial, exchanging $4.6bn of its own shares to boost the 68 per cent shareholding it took back in June. Royal Bank of Canada is buying Trinidadian bank RBTT Financial for about $2.2bn and Nasdaq too is in on the act, snapping up the Boston Stock Exchange for about $61m.
Real, live deals in the UK also, with Groupe Norbert Dentressangle, France’s answer to Eddie Stobart, making an offer to buy Christian Salversen, long the subject of takeover speculation, for £245m. There was also the $1bn approach from Cookson Group for Foseco, both of which supply products for the steel industry.
Well, it’s not quite the $70bn-odd days we once had. And there’s a notable absence of private equity names in this pile – who were driving the upper end of the market and for whom financing is likely to stay tight, at least for bigger deals, until the banks have worked the necessary losses on leveraged loans through their systems.
But the activity does reinforce the position of those who have recently argued that the latest M&A wave have further to run, notably taken by the analysts at UBS and Scott Moeller at Intelligent Mergers. Marginal deals might be postponed (or eventually pulled) but strategic deals that made sense two months ago, will still largely make sense today. A little breather in the gungho pace of deal making may actually be good for the shareholders of the acquirers, argues Moeller.
And after old-style deal chatter started up again last week in the US – we’re now seeing the return of the deal speculators to Europe. Reuters reports on Tuesday that Vodafone is in talks to buy the Italian assets of Tele2, the Swedish operator, citing sources familiar with the situation, in a deal that could be worth €560m. The Times brings word that, credit squeeze be damned, private equity group Cinven is interested in Emap’s B2B and consumer titles as the media group considers its break-up options.
Even Northern Rock shares bounced (again) on speculation (again) that there could be a deal in the pipeline, with new talk of a 175p rescue bid, and on reports that the beleaguered bank was shortly to meet with two hedge funds, JC Flowers and Cerberus, about possible break-up bids for the lender.
On that one, we won’t hold our breath.