In the article provided, the players manage to achieve their goal and higher payoff by cooperating against their rival.
http://www.reuters.com/article/reutersEdge/idUSL1742352720071017
Trade buyers team up to triumph in M&A
Wed Oct 17, 2007 1:31pm EDT
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By Mark Potter and Eleanor Wason - Analysis
LONDON (Reuters) - Team work is playing an increasing part in the traditionally cut-throat world of corporate mergers and acquisitions (M&A).
Danish brewer Carlsberg (CARLb.CO: Quote, Profile, Research) and Dutch rival Heineken (HEIO.AS: Quote, Profile, Research) on Wednesday became the latest companies to join forces in a bid to buy and break up a competitor -- Britain's Scottish and Newcastle (SCTN.L: Quote, Profile, Research).
This, on the day that a consortium of banks led by Royal Bank of Scotland (RBS.L: Quote, Profile, Research) completed their takeover of Dutch bank ABN AMRO (AAH.AS: Quote, Profile, Research), and while British chemicals group ICI (ICI.L: Quote, Profile, Research) is also in the midst of being carved up by two of its rivals.
With debt markets clogged by the fallout from losses on poor quality U.S. mortgage loans, and equity markets suffering bouts of volatility, the team-up trend could be here to stay, investors and bankers say.
"It's all to do with reducing your risk," said one M&A banker at a major investment bank in London.
"If everything is going fantastically well in debt and equity, you can buy all of it (the target business) and auction bits off." If not, it can be better to form a consortium and agree a break up before the deal is done, he continued.
Richard Cranfield, a partner at law firm Allen & Overy which advises on M&A deals, said consortium deals were often complicated to put together, but that apparent successes -- notably the RBS-led bid for ABN AMRO -- could encourage more.
"The execution risk is now better understood...It's about the experience of doing them successfully," he said.
Colin Morton, a fund manager at Rensburg Fund Managers, said the Carlsberg/Heineken move for Scottish & Newcastle was reigniting speculation about other potential corporate break-up targets, such as food and consumer goods giant Unilever (ULVR.L: Quote, Profile, Research) (UNc.AS: Quote, Profile, Research) and mobile phone group Vodafone (VOD.L: Quote, Profile, Research).
But much would depend on the macro-economic outlook, which is currently in the balance, he said.
"If things get any worse, you'd typically expect M&A to dry up," Morton said. "What you're seeing at the moment is that a lot of companies have been through a lot of restructuring over the past five years or so. They've cut debt and restored profitability and they're now wondering what next? Doing a deal can give them another few years of cost-savings. But valuations are high, so they're often getting together with someone else."
REASONS TO COOPERATE
Allen & Overy's Cranfield said there were many reasons why companies get together to do an M&A deal.
One is to give them more chance of success in a bid battle.
RBS's decision to team up with Spain's Santander (SAN.MC: Quote, Profile, Research) and Belgium's Fortis (FOR.BR: Quote, Profile, Research), for example, gave it a decisive advantage over Britain's Barclays (BARC.L: Quote, Profile, Research), which was trying to buy ABN AMRO on its own.
Another reason to find a partner is to avoid buying something you don't want.
Hence British insurer Standard Life's (SL.L: Quote, Profile, Research) is working with Swiss Re (RUKN.VX: Quote, Profile, Research) on a possible bid for Resolution (RSL.L: Quote, Profile, Research) because it is not interested in the target's closed life funds.
A third motive is to drive up the price of a bid to persuade a reluctant seller.
Dutch chemicals group Akzo Nobel (AKZO.AS: Quote, Profile, Research), for example, managed to increase its bid for ICI by over 10 percent -- and win over the British company's board -- after it struck a side deal to sell on some assets to Germany's Henkel (HNKG_p.DE: Quote, Profile, Research).
Looking to avoid trouble with competition regulators is a further reason to work with another company.
"That's why you've got Carlsberg and Heineken coming together," Rensburg's Morton said.
"Getting together might be complicated. But if you can get through that, it can often make a complicated deal easier."
© Reuters2007All rights reserved
Wednesday, October 17, 2007
Sequential move game
The article talks about the never ending game between labor and civil liberties organization and the US government. In this case the NGOs protect the rights of 8 million illegal immigrants working for USA companies. This is a sequential move game and I believe that US Government will react to the necessitated pause in their project.
http://www.ajc.com/business/content/shared-gen/ap/Finance_General/Immigrant_Employers_Lawsuit.html?cxntnid=biz101107e
Plan to Enforce Labor Rule Stalled
By JULIANA BARBASSA Associated Press Writer
SAN FRANCISCO — A federal judge on Wednesday granted a request by labor and civil liberties organizations to temporarily block the U.S. government from proceeding with a program to crack down on businesses that may be employing illegal immigrants.
U.S. District Judge Charles Breyer said the Social Security Administration and the Department of Homeland Security could not go ahead with their plan to send joint letters warning businesses they'll face penalties if they keep workers whose Social Security numbers don't match their names.
Breyer said the new work-site rule would likely impose hardships on businesses and their workers. Employers would incur new costs to comply with the regulation that the government hasn't evaluated, and innocent workers unable to correct mistakes in their records in the given time would lose their jobs, the judge wrote.
"The plaintiffs have demonstrated they will be irreparably harmed if DHS is permitted to enforce the new rule," Breyer wrote.
The so-called "no match" letters, including a Department of Homeland Security warning, were supposed to start going out in September but were held after labor groups and immigrant activists filed a federal lawsuit.
The government had about 140,000 letters ready to go, each containing the names of 10 or more employees with mismatches in their records. About 8 million employees would be affected, according to court documents.
The decision Wednesday was disappointing, said Homeland Security Secretary Michael Chertoff, but wasn't more than a "bump in the road" in the agency's drive to vigorously enforce laws aimed at keeping illegal immigrants out of the work force.
The government will evaluate the "modest legal obstacles" presented by the judge, addressing them in litigation or outside court, as it examines its options and determines whether to appeal the decision, Chertoff said.
"I don't think there's anything in the judge's ruling that is insurmountable," Chertoff told The Associated Press by telephone. "The key is to move forward. We're committed to using every tool available to enforce our immigration laws."
But plaintiffs, which include the AFL-CIO, the American Civil Liberties Union and the U.S. Chamber of Commerce, saw the decision as a significant victory against a program they believe would foster discrimination on the work site, lead to job losses by lawful employees and expose businesses to additional expenses and the fear of prosecution.
"Judge Breyer's decision today reassures authorized workers and U.S. citizens that their rights will be protected," said Marielena Hincapie, with the National Immigration Law Center, an attorney on the case. "We're very pleased to find the court held there is a serious question whether the Department of Homeland Security has exceeded its authority."
The injunction blocks the implementation of the government's plan until the lawsuit is resolved or an appeals court overturns this judge's decision.
The government had argued that the rule doesn't impose an expense and simply provides guidelines to businesses that want to avoid liability for hiring undocumented workers.
"If an employer gets an indication of problems with an employee's Social Security number or their name, they've got to ask about it," Chertoff said. "That seems commonsense to me."
In August, Chertoff announced the agency would start notifying businesses that if workers were unable to clear up problems with their Social Security numbers within 90 days, the employees would have to be terminated. If not, their bosses could face criminal fines and other sanctions.
The ruling Wednesday came as Latinos in northern Virginia filed a lawsuit against Prince William County in an attempt to halt the implementation of a resolution that aims to deny a wide range of public services to illegal immigrants.
___
October 10, 2007 - 6:28 p.m. EDT
Copyright 2007, The Associated Press. The information contained in the AP Online news report may not be published, broadcast or redistributed without the prior written authority of The Associated Press.
http://www.ajc.com/business/content/shared-gen/ap/Finance_General/Immigrant_Employers_Lawsuit.html?cxntnid=biz101107e
Plan to Enforce Labor Rule Stalled
By JULIANA BARBASSA Associated Press Writer
SAN FRANCISCO — A federal judge on Wednesday granted a request by labor and civil liberties organizations to temporarily block the U.S. government from proceeding with a program to crack down on businesses that may be employing illegal immigrants.
U.S. District Judge Charles Breyer said the Social Security Administration and the Department of Homeland Security could not go ahead with their plan to send joint letters warning businesses they'll face penalties if they keep workers whose Social Security numbers don't match their names.
Breyer said the new work-site rule would likely impose hardships on businesses and their workers. Employers would incur new costs to comply with the regulation that the government hasn't evaluated, and innocent workers unable to correct mistakes in their records in the given time would lose their jobs, the judge wrote.
"The plaintiffs have demonstrated they will be irreparably harmed if DHS is permitted to enforce the new rule," Breyer wrote.
The so-called "no match" letters, including a Department of Homeland Security warning, were supposed to start going out in September but were held after labor groups and immigrant activists filed a federal lawsuit.
The government had about 140,000 letters ready to go, each containing the names of 10 or more employees with mismatches in their records. About 8 million employees would be affected, according to court documents.
The decision Wednesday was disappointing, said Homeland Security Secretary Michael Chertoff, but wasn't more than a "bump in the road" in the agency's drive to vigorously enforce laws aimed at keeping illegal immigrants out of the work force.
The government will evaluate the "modest legal obstacles" presented by the judge, addressing them in litigation or outside court, as it examines its options and determines whether to appeal the decision, Chertoff said.
"I don't think there's anything in the judge's ruling that is insurmountable," Chertoff told The Associated Press by telephone. "The key is to move forward. We're committed to using every tool available to enforce our immigration laws."
But plaintiffs, which include the AFL-CIO, the American Civil Liberties Union and the U.S. Chamber of Commerce, saw the decision as a significant victory against a program they believe would foster discrimination on the work site, lead to job losses by lawful employees and expose businesses to additional expenses and the fear of prosecution.
"Judge Breyer's decision today reassures authorized workers and U.S. citizens that their rights will be protected," said Marielena Hincapie, with the National Immigration Law Center, an attorney on the case. "We're very pleased to find the court held there is a serious question whether the Department of Homeland Security has exceeded its authority."
The injunction blocks the implementation of the government's plan until the lawsuit is resolved or an appeals court overturns this judge's decision.
The government had argued that the rule doesn't impose an expense and simply provides guidelines to businesses that want to avoid liability for hiring undocumented workers.
"If an employer gets an indication of problems with an employee's Social Security number or their name, they've got to ask about it," Chertoff said. "That seems commonsense to me."
In August, Chertoff announced the agency would start notifying businesses that if workers were unable to clear up problems with their Social Security numbers within 90 days, the employees would have to be terminated. If not, their bosses could face criminal fines and other sanctions.
The ruling Wednesday came as Latinos in northern Virginia filed a lawsuit against Prince William County in an attempt to halt the implementation of a resolution that aims to deny a wide range of public services to illegal immigrants.
___
October 10, 2007 - 6:28 p.m. EDT
Copyright 2007, The Associated Press. The information contained in the AP Online news report may not be published, broadcast or redistributed without the prior written authority of The Associated Press.
Repeated Bidding?
The article is not only about biding and giving the right price. It about the game that BEA as a company willing to be acquired by bigger market players, want to initiate with the potential buyers. In order to achieve the needed price BEA tries to involve other bidders and refused Oracle’s first offer. I believe that the game between Oracle and BEA will be a repeated one and probably other players will offer other payoffs.
http://online.wsj.com/article/SB119218622871657224.html?=djemalert&mod=djm_HAWSJSB_Welcome
Oracle Discloses Pitch for BEA
Offer of $6.7 Billion Too Low, Target Says;Icahn Presses for Sale
By VAUHINI VARAOctober 13, 2007; Page A3
Larry Ellison, founder and chief executive of Oracle Corp., may be entering the end game in his four-year play to consolidate the business-software industry around his company.
The software giant disclosed a $6.7 billion unsolicited offer to buy BEA Systems Inc., a Silicon Valley company that helped build the market for Web-services software. The bid, a 25% premium to BEA's closing price Thursday, comes as activist investor Carl Icahn, BEA's biggest shareholder, has put pressure on the smaller software company to sell itself.
BEA responded that the offer significantly undervalues the company, but didn't reject it outright.
An acquisition of BEA would be the second-biggest purchase ever by Mr. Ellison. In June 2003, he launched a hostile bid for rival PeopleSoft Inc. that included a drawn-out battle to overcome the smaller company's antitakeover defenses.
An extended acquisition spree followed. If it lands BEA, which Mr. Ellison has long coveted, Oracle would be close to meeting its goal to be a leader in most big-business software categories.
The bid highlights two opposing views of the industry's future. When Mr. Ellison began predicting consolidation in the software industry, BEA CEO Alfred Chuang argued that smaller software companies like his remain independent by innovating quickly.
Recent events seem to be supporting Mr. Ellison's view, and are giving big shareholders the opening to press managements to sell. "The smaller software companies are going to have more and more trouble competing, so there's a great need for a catalyst like me," Mr. Icahn said in an interview.
Mr. Icahn has been increasing his stake in BEA in the past several weeks and now owns 13.22% of the company's shares. He said he is "certainly happy" about Oracle's bid, adding that BEA "definitely should be taken over." He said the company "would be a great fit with Oracle" but added that he "would like to see it command a better price" and named SAP AG, International Business Machines Corp. and Hewlett-Packard Co. as other possible acquirers.
BEA, of San Jose, Calif., has been battling IBM, Oracle and others in the market for "middleware," an umbrella term for several kinds of programs that act as a foundation for building custom business programs. BEA, with a product called WebLogic, pioneered one category of middleware called application servers that are used to build Web services.
IBM and Oracle have been able to use their massive sales forces, and steep discounting, in competing against BEA. Last year, IBM had 32% share of the middleware market, compared with 10% for BEA and 9% for Oracle, according to research firm Gartner Inc. Buying BEA would make Oracle the No. 2 middleware vendor after IBM.
A person familiar with IBM's thinking said IBM is unlikely to enter the bidding fray, because IBM typically buys small software companies, and the Oracle offer for BEA is already about twice as much as IBM has ever paid for an acquisition. Plus, this person said, there is enough overlap between IBM's WebSphere software and BEA products that it would probably raise antitrust scrutiny. An IBM spokesman declined to comment.
A person familiar with SAP's thinking said the company would be unlikely to be interested in buying BEA because it wants to focus on a competing product, called NetWeaver. An SAP spokesman declined to comment.
An H-P representative said H-P isn't interested in entering BEA's market, but declined to comment specifically on whether it had any interest in buying the company.
The Oracle bid comes at an awkward time for BEA, because the smaller company is in the midst of restating its quarterly earnings over a 10-year period because of issues associated with the way it accounted for stock options.
According to documents made public yesterday, Oracle co-president Charles Phillips on Tuesday sent a letter to BEA offering to buy the business-software maker, in a bid that values BEA at $17 a share. "We believe our all-cash offer provides the best value for BEA's shareholders and the best home for BEA's employees and customers," Mr. Phillips said in the letter, adding, "We look forward to completing a friendly transaction as soon as possible."
Thursday, BEA wrote back to Mr. Phillips saying "BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter." The company added that "the absence of current financial information in the public markets limits investor visibility into our performance."
Following word of the bid, BEA's stocked surged 38% to $18.82, up $5.20, on Nasdaq.
---- William Bulkeley, Don Clark, and Ben Charny contributed to this article.
Write to Vauhini Vara at vauhini.vara@wsj.com
http://online.wsj.com/article/SB119218622871657224.html?=djemalert&mod=djm_HAWSJSB_Welcome
Oracle Discloses Pitch for BEA
Offer of $6.7 Billion Too Low, Target Says;Icahn Presses for Sale
By VAUHINI VARAOctober 13, 2007; Page A3
Larry Ellison, founder and chief executive of Oracle Corp., may be entering the end game in his four-year play to consolidate the business-software industry around his company.
The software giant disclosed a $6.7 billion unsolicited offer to buy BEA Systems Inc., a Silicon Valley company that helped build the market for Web-services software. The bid, a 25% premium to BEA's closing price Thursday, comes as activist investor Carl Icahn, BEA's biggest shareholder, has put pressure on the smaller software company to sell itself.
BEA responded that the offer significantly undervalues the company, but didn't reject it outright.
An acquisition of BEA would be the second-biggest purchase ever by Mr. Ellison. In June 2003, he launched a hostile bid for rival PeopleSoft Inc. that included a drawn-out battle to overcome the smaller company's antitakeover defenses.
An extended acquisition spree followed. If it lands BEA, which Mr. Ellison has long coveted, Oracle would be close to meeting its goal to be a leader in most big-business software categories.
The bid highlights two opposing views of the industry's future. When Mr. Ellison began predicting consolidation in the software industry, BEA CEO Alfred Chuang argued that smaller software companies like his remain independent by innovating quickly.
Recent events seem to be supporting Mr. Ellison's view, and are giving big shareholders the opening to press managements to sell. "The smaller software companies are going to have more and more trouble competing, so there's a great need for a catalyst like me," Mr. Icahn said in an interview.
Mr. Icahn has been increasing his stake in BEA in the past several weeks and now owns 13.22% of the company's shares. He said he is "certainly happy" about Oracle's bid, adding that BEA "definitely should be taken over." He said the company "would be a great fit with Oracle" but added that he "would like to see it command a better price" and named SAP AG, International Business Machines Corp. and Hewlett-Packard Co. as other possible acquirers.
BEA, of San Jose, Calif., has been battling IBM, Oracle and others in the market for "middleware," an umbrella term for several kinds of programs that act as a foundation for building custom business programs. BEA, with a product called WebLogic, pioneered one category of middleware called application servers that are used to build Web services.
IBM and Oracle have been able to use their massive sales forces, and steep discounting, in competing against BEA. Last year, IBM had 32% share of the middleware market, compared with 10% for BEA and 9% for Oracle, according to research firm Gartner Inc. Buying BEA would make Oracle the No. 2 middleware vendor after IBM.
A person familiar with IBM's thinking said IBM is unlikely to enter the bidding fray, because IBM typically buys small software companies, and the Oracle offer for BEA is already about twice as much as IBM has ever paid for an acquisition. Plus, this person said, there is enough overlap between IBM's WebSphere software and BEA products that it would probably raise antitrust scrutiny. An IBM spokesman declined to comment.
A person familiar with SAP's thinking said the company would be unlikely to be interested in buying BEA because it wants to focus on a competing product, called NetWeaver. An SAP spokesman declined to comment.
An H-P representative said H-P isn't interested in entering BEA's market, but declined to comment specifically on whether it had any interest in buying the company.
The Oracle bid comes at an awkward time for BEA, because the smaller company is in the midst of restating its quarterly earnings over a 10-year period because of issues associated with the way it accounted for stock options.
According to documents made public yesterday, Oracle co-president Charles Phillips on Tuesday sent a letter to BEA offering to buy the business-software maker, in a bid that values BEA at $17 a share. "We believe our all-cash offer provides the best value for BEA's shareholders and the best home for BEA's employees and customers," Mr. Phillips said in the letter, adding, "We look forward to completing a friendly transaction as soon as possible."
Thursday, BEA wrote back to Mr. Phillips saying "BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter." The company added that "the absence of current financial information in the public markets limits investor visibility into our performance."
Following word of the bid, BEA's stocked surged 38% to $18.82, up $5.20, on Nasdaq.
---- William Bulkeley, Don Clark, and Ben Charny contributed to this article.
Write to Vauhini Vara at vauhini.vara@wsj.com
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