June 7, 2007
The M&A Rumor Mill
We live in times of a private equity fueled M&A boom, and with it deals are increasingly rumored. Today's reports are that Brian Tierney head of Philadelphia Media Group, which last year acquired the Philadelphia Inquirer and the Philadelphia Daily News last year for $515 million, is interested in a possible offer for Dow Jones. This would be a counter to Rupert Murdoch's News Corp.'s $5 billion offer. This comes a few days after it was announced that billionaire Ron Burkle has joined forces with Dow Jones' union to explore an alternative transactions. Burkle has previously made an unsuccessful attempt to buy The Los Angeles Times. His bid would presumably employ an ESOP structure (and tax-dodge) similar to that being used by Sam Zell in the take-private of the Tribune Cos.
These reports are a bit unusual in that they are confirmed. But am I the only one who has noticed that the rumor mill is flying these days? Take this Marketwatch article on prospective white knights for Alcoa's $33 billion unsolicited offer for Alcan. According to Marketwatch, Norsk Hydro, BHP Billiton, and Rio Tinto are all said to be rumored bidders. The article continues that other potential suitors for Alcan also include "Brazil's Co. Vale do Rio Doce, the U.K.'s Anglo American, Xstrata Plc of Switzerland and Russia's Rusal." To be complete, the Article concludes by stating that Chinese companies and private-equity groups could emerge as potential bidders. Well, there. So far, no other bidders have emerged for Alcan.
And other rumors in the past twenty-four hours alone include that Time Warner may buy Scripps, Monster Worldwide is in play due to its CFO's resignation, Nissan-Renault is looking for a new partner, and TD Ameritrade Holding Corp. is being pushed by hedge fund shareholders to acquire a rival. While some of these reports are undoubtedly true, others smack of "throw it up on the wall and see if it sticks" journalism. Moreover, some of this reporting (as in the case of the Dow Jones reports above) appear to be merely preliminary reports of what would ordinarily be merely indications of interest.
As with all booms/bubbles it may be time for all of us to take a step back.
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