Mergers & Acquisitions: BofA, Foster’s, Allied World and More
Bank of America (NYSE:BAC) is in exploratory talks with the principal investment funds of Kuwait and Qatar about selling part of the firm’s $17 billion stake in China Construction Bank Corp. (HKG:0939). BofA owns 10% of CCB’s Hong Kong-listed shares, and will be contractually free to sell those shares after August 29, which it would do in order to raise the $50 billion it needs to reach new Tier 1 capital requirements. BofA has also been talking to other investors in addition to the Kuwait Investment Authority and the Qatar Investment Authority.
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General Motors (NYSE:GM) CEO Dan Akerson recently told a German newspaper that European brand Opel has the potential to be successful with its new cost structure, and that GM will not be selling. Akerman sought to quash rumors that GM would be divesting the Opel brand, which accounted for 13% of GM’s total sales last year. The German media has been speculating since June that the European unit might be sold, with Chinese automakers and Volkswagen AG (ETR:VOW) considered potential buyers.
SABMiller (LON:SAB) is set to renew its bid for Australian brewer Foster’s Group (ASX:FGL) later this month with a slightly higher offer. SAB is waiting for Foster’s full-year results on August 23. With beer profits expected to tumble, SAB hopes the fiscal year results will put pressure on Foster’s board to accept its current offer of A$11.2 billion, or a slightly larger cash offer. In the past few days, Foster’s share price has fallen below SABMiller’s bid level, making the offer more attractive.
As of 12:20 p.m. ET this afternoon, Allied World Assurance’s (NYSE:AWH) accepted offer for Transatlantic Holdings (NYSE:TRH) was only about $70,000 above the hostile offer from Validus Holdings (NYSE:VR). At one point, Validus’s bid was nearly $400 million better than the Allied offer. At the time they were made, the Allied offer was worth $3.2 billion and the Validus offer was worth $3.5 billion. But since then, Validus has lost more than a fifth of its value. Both bids undervalue Transatlantic’s share price and book value. A late bid from Warren Buffett’s Berkshire Hathaway (NYSE:BRKA), valuing the company at $52 a share, places a 3.24% premium on Transatlantic’s current share price, which could allow the Berkshire bid to pull ahead.