Mergers and Acquisitions Recap: Deals and Rumors of the Week

HSBC (NYSE:HBC) will sell 185 of its branches to First Niagara Bank (NASDAQ:FNFG) for $1 billion as part of its agreement with the U.K. to pare down U.S. operations. First Niagara may sell off some of the branches that don’t fall in line with its business strategy and to avoid antitrust issues. Today HSBC reported that it would cut 30,000 jobs as it retreats from countries where it is struggling to compete.

Lansdowne Partners, a major European hedge fund, has sold its entire $850 million stake in Goldman Sachs (NYSE:GS), citing concerns for the future success of the firm as new banking regulations are put in place. Lansdowne exited the banking industry in 2008, just ahead of the financial crisis.

Peabody Energy (NYSE:BCU) and ArcelorMittal (NYSE:MT) have taken their bid for Macarthur Coal (ASX:MCC) hostile, after failing to reach an agreement over a proposed $5.2 billion deal. Peabody and Arcelor have not upped their offer, prompting the Macarthur board to tell its shareholders not to take action on the proposal.

Validus Holdings (NYSE:VR) is still pursuing a hostile takeover of Transatlantic Holdings (NYSE:TRH) after Transatlantic filed a lawsuit against the company in the Delaware Court of Chancery in an attempt to block the $3.2 billion hostile bid. Despite Transatlantic’s complaint that Validus misrepresented its offer, Validus maintains that it was superior to a competing offer from Allied World Assurance (NYSE:AWH).

The for-profit educational business, Apollo Group (NASDAQ:APOL), has agreed to buy computer-based math instruction firm Carnegie Learning in a $75 million deal.

Wal-Mart’s (NYSE:WMT) acquisition of a 51% stake in South African retailer Massmart has been appealed by the country’s government. Both Wal-Mart and Massmart are undergoing legal proceedings in an attempt to gain approval of the $2.4 billion deal.

ValueClick (NASDAQ:VCLK) will buy privately-held Dotomi in an attempt to increase the company’s ability to deliver display advertising for major retailers. ValueClick will pay an up-front consideration of $295 million for Dotomi.

Ingersoll Rand (NYSE:IR) is discussing a sale of its Hussmann refrigeration business to private equity firm Clayton Dubilier & Rice for $750 million or less. Hussmann provides supermarkets and food retailers with display cases, refrigeration systems, and beverage coolers. Ingersoll Rand bought Hussmann in 2000 for $1.5 billion.

First-round bids for EMI music group ranged between $3 billion and $4 billion. Citigroup (NYSE:C) is auctioning off the company, which includes both a recording and publishing business, after seizing it in February. Rivals Sony (NYSE:SNE), Universal, Warner Music, and BMG are among the early bidders. EMI will now begin the process of due diligence and will likely return for a second round of bidding in September. Final sales figures will depend on whether the business is sold as a whole or in pieces. The publishing business owns copyrights to 1.3 million songs.

Kraft Foods (NYSE:KFT) plans to split into two businesses. It will spin-off its North American grocery business which includes brands like Velveeta, Kraft macaroni and cheese, and Oscar Mayer meats, while keeping its global snacks business, which includes brands like Oreo, Cadbury, and Trident. The company’s snacks business is growing rapidly, while its grocery business, more established, generates a lot of cash and has strong profit margins, but has slower growth. By splitting the two, Kraft is allowing shareholders to choose between two very different stocks. Kraft’s snack business generates $32 billion in annual sales while the grocery business generates $16 billion in sales.

Morgan Stanley (NYSE:MS) plans to sell its mortgage-servicing arm Saxon Mortgage Services. The investment bank has been quietly shopping around for prospective buyers, including Ocwen Financial Corp. (NYSE:OCN), which bought Litton Loan Servicing from Goldman Sachs (NYSE:GS) just two months ago for $600 million. Morgan Stanley is hoping to fetch a similar price for Saxon, which the bank bought for $700 million in 2006.

Telecommunications equipment supplier AlcatelLucent (NYSE:ALU) is looking for potential buyers, as the company’s valuation has been plummeting ever since it bought Lucent in 2006, falling from a peak worth of $100 billion to its current value of $7.8 billion. The company’s patents alone could be worth twice as much as Nortel’s, which sold for $4.5 billion in a bankruptcy auction in June. Alcatel’s various units hold 18,800 U.S. patents, which could make Alcatel worth up to $20 billion in a sale.

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