On Dow Jones Investment Banker Today: SSL, Private Equity And More

21st Jul 2010 16:47

LONDON (Dow Jones Investment Banker)--The following columns have been published exclusively on Dow Jones Investment Banker in recent days. Many Dow Jones Investment Banker columns contain spreadsheets, video, PDFs and other supporting material. To arrange access to the best of Dow Jones news and opinion on companies, sectors and deals for investment bankers, please contact [email protected]. To see more, visit: http://www.dowjones.com/banker THE REMEDY: SSL Premium May Shake Up Diversified Pharmas LONDON--It's no secret that consumer health care is hot, but Reckitt Benckiser Group PLC's (RB.LN, RBGPY) proposed GBP2.5 billion offer for SSL International PLC (SSL.LN) has just slapped a massive 18.6x Ebitda multiple on the sector. If this is what consumer health is worth, it could prompt a rethink at companies such as Merck & Co. Inc. (MRK) and Novartis AG (NOVN.VX), which might decide that now is a good time to cash in and focus more on pharma. Contact the columnist: [email protected] THE SIGNAL: Education IT Firm Promethean Eyes More Acquisitions ?CEO LONDON--The $13 million planned acquisition announced Wednesday of loss-making Seattle education software firm SynapticMash Inc. by British education-technology company Promethean World PLC (PRW.LN) is proof positive of the latter's ambitions to fuel revenue growth from fresh business lines. Speaking to Dow Jones Investment Banker shortly before the deal was announced, Jean-Yves Charlier, the Brussels-based chief executive of Promethean World, said he was on the look-out for small-scale acquisitions, four months after it underwent an IPO. (By James Fidler) Contact the editor: [email protected] TIER ONE: Secondary Private Equity Gathering Momentum NEW YORK--Private equity has turned out to be surprisingly resilient, if the secondary market for limited partner interests is any gauge. Some LP interests are now trading at premium to net asset value, signaling investor confidence in the asset class and the underlying value of funds' investments. That, in turn, is a positive omen for future fundraising -- and, eventually, for a new round of buyouts. Contact the columnist: [email protected] THE REMEDY: Medicaid Managed Care Deals On The Way NEW YORK--U.S. health-care reform will shower federal dollars on the uninsured population and will depend on private companies to control the flow. U.S. managed-care companies are not going to miss a chance to get between a government ready to give and citizens happy to receive, and a large chunk of the new money will go to Medicaid. The big health insurers are going to do deals to increase their exposure to Medicaid. What remains to be seen is who buys whom. (Includes downloadable Excel spreadsheet of Aetna-Centene.) Contact the columnist: [email protected] THE APPRAISER: Paulson Could Hit The Jackpot On Harrah's NEW YORK--John Paulson's wager on Harrah's Entertainment Inc. could pay off handsomely if the casino giant gets valued at comparable levels to its peers in an IPO. In a debt restructuring announced in early June, Paulson swapped $710 million of par value debt for a 9.9% equity stake. As part of the deal, Harrah's granted Paulson registration and listing rights. Based on other casino stocks, Paulson's stake could be worth twice what he paid for it if Harrah's were to go public today. (Includes downloadable Excel spreadsheet: Paulson's investment in Harrah's.) Contact the columnist: [email protected] TIER ONE: Friday's Stress Test Shakespeare LONDON--Many observers believe that they will see this Friday the penultimate act of a farce, "A Comedy of Errors," performed by The Committee of European Banking Supervisors. They should check their tickets first. Instead, they may witness the opening night of a show with fewer giggles yet more substance. The revelations of the much-maligned test could yet be the catalyst for further issuance, narrowing spreads and greater liquidity in the European funding markets. By good fortune, it may also provide a much-needed fillip to investment banking revenues in the second half of the year. Contact the columnist: [email protected] THE SIGNAL: Nokia Needs Smarts LONDON--The good news for Nokia Corp. (NOK) is that after its profit warning last month, expectations for second-quarter results due Thursday are so low that it's unlikely to miss consensus. But whoever sits at the CEO's desk -- and the Wall Street Journal reports that the company is searching for a new incumbent -- will have probably the No. 1 strategy problem in all of tech-land to deal with. Contact the columnist: [email protected] THE SIGNAL: WiMax Redux With TD-LTE LONDON--Now that the WiMax initiative seems to be taking a step backwards, it's likely that operators using this technology will look to implement a variant of fourth generation mobile technology known as TD-LTE. Contact the columnist: [email protected] TIER ONE: For Biggest U.S. Banks, Next Six Months Won't Be Easy NEW YORK--The second-quarter results of JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC) and Citigroup Inc. (C), announced late last week, showed signs of an improving credit environment but operating and regulatory headwinds will challenge performance in rest of the year. The banks continue to be an accumulator of capital rather than deployer of it. Each has increased its Tier 1 common capital ratio for five consecutive quarters and is now well in excess of current "well capitalized" standards, have been preparing for the potential impact of new capital requirements. The three banks now operate at ratios between 8% and 10%, anticipating the possibility that regulators are actually going to be somewhat punitive to the banking industry when implementing Basel III capital standards, scheduled to go in effect by the end of 2012. Contact the columnist: [email protected] TIER ONE: FIG Bankers Combat Boredom NEW YORK--Buyers and sellers are still far apart on valuations, so acquisitive American bank CEOs may have to resign themselves to "boredom" for a while, Keefe, Bruyette & Woods Inc. president Andrew Senchak and managing director John Hompe told Dow Jones Investment Banker in an interview. But there are opportunities for banks to raise contingent capital, say the executives at the investment bank that ranks first in number of bank merger assignments. Contact the columnists: [email protected]; [email protected] TIER ONE: The Long Road To Shanghai's Exchange NEW YORK--A year ago one was hopeful that Shanghai might welcome foreign listings as early as March this year. But the usual delays associated with rule-making in China pushed back the timetable. Now, even next year may be optimistic. The good news is that foreign companies considering a listing have more time to influence the regulatory process -- and they will be well advised to do so. Chinese regulators are seeking inputs from potential issuers, according to people close to the situation. Contact the columnist: [email protected] THE REMEDY: Chances Of More Weight Loss Deals Look Slim, For Now LONDON--Lately, the stress of working on deals for companies developing obesity treatments could make you lose more weight than the drugs your client is developing. The FDA advisory committee's rejection of Vivus Inc.'s (VVUS) weight-loss drug Qnexa last week came as a shock--and not just to Vivus. The U.S. biotech firm was the first of a trio of late-stage obesity drug developers to face regulatory scrutiny, and it's now clear for all three that their chances of securing U.S. approval have lengthened considerably. (Includes downloadable Excel spreadsheet: Obesity drugs in Phase II.) Contact the columnist: [email protected] (END) Dow Jones Newswires July 21, 2010 11:47 ET (15:47 GMT)