Roche set to walk away from $6.8 billion bid for genetic specialist Illumina

NEW YORK, Wed Apr 18, 2012 – Swiss drugmaker Roche said on Wednesday it would not extend a $6.8 billion hostile offer for genetic specialist Illumina as the U.S. group’s shareholders blocked its move to appoint new directors.

Roche, which is now set to walk away from its takeover target, said an offer above $51.00 per share would not be in the interests of its own shareholders.

The tender offer for Illumina expires on Friday and Roche said it would not extend the bid as the U.S. firm’s management had refused to engage in constructive dialogue.

The decision is a victory for Illumina in its battle to stay independent, although some investors think Roche may wait in the wings for a fresh opportunity to pounce if the U.S. company’s shares underperform.

The gene sequencing specialist, which branded itself “the Apple of the genomics business,” rejected Roche’s sweetened takeover offer and had repeatedly urged shareholders to vote against appointing Roche’s nominees to its board.

“It won’t hurt Roche to send a signal that they can walk away from these deals,” said Navid Malik, an analyst at Cenkos Securities.

Roche, the world’s largest maker of cancer drugs, has been developing targeted therapies and Illumina’s technology would help it to progress further in this field as gene sequencing can better identify which patients benefit from a given drug.

Avon rejects $10 billion takeover bid from beauty company Coty

NEW YORK, Mon Apr 2, 2012 – Beauty company Coty Inc. said on Monday it offered to buy Avon Products Inc. for $10 billion, but the bid was rejected by the cosmetics direct seller, which is grappling with sliding sales in key markets and a bribery probe.

Coty, whose products include fragrances for celebrities including Beyonce and Lady Gaga, said it had no plans to make a hostile bid but had been “unsuccessful” in getting Avon to talk about a deal.

Coty, a fast growing privately held company majority-owned by John A. Benckiser, is offering $23.25 per share, a 20 percent premium over Avon’s Friday closing price of $19.36 on the New York Stock Exchange.

Shares of Avon rose 19.3 percent to $23.10 in premarket trading.

Avon, in a statement on Monday, rejected the offer, saying it “substantially undervalues” the company.

Avon is searching for a new CEO to replace Andrea Jung, who has held the reins since 1999. Avon has said the new CEO will undertake a top-to-bottom review of the struggling company, which is also dealing with a probe into whether it broke U.S. anti-bribery laws in China.

Avon said that having a new CEO will create a “greater opportunity” to increase the company’s value beyond what Coty is offering.

The company is facing a long decline in sales and the number of sales representatives in the United States. During the holiday period, sales in key emerging markets like Brazil and Russia fell.

Coty said it originally offered $22.25 per share in early March but failed to entice Avon into talks. It said it went public with its latest offer after sending three letters to Jung but failing to draw Avon into discussions.

“We do not understand how your Board’s unwillingness to discuss our proposal can serve the best interests of Avon’s shareholders,” Coty Chairman Bart Becht said in letter to be delivered to Jung on Monday.

TNT Express not expecting bid from FedEx-source

NEW YORK – Dutch delivery firm TNT Express is not expecting U.S. rival FedEx to trump a 4.9 billion euros ($6.5 billion) takeover bid from United Parcel Services, a source close to TNT said on Thursday.

TNT last week rejected a 9 euros per share cash offer from UPS, the world’s largest package delivery company, but is still in talks with its U.S. suitor.

TNT’s shares jumped to an all-time high of 10.24 euros this week partly on hopes that FedEx, which has flirted with the idea of buying TNT for years, might trigger a bidding war.

“The last discussion we had with them (FedEx) didn’t give us the impression that they were ready to make a move”, the source said, adding he had sounded out FedEx’s intentions very recently.

While FedEx sees strategic value in combining with TNT, it feels the price has become too expensive to do a deal at this point, another source close to the situation said.

The sources asked not to be identified because they were not authorized to speak with the media.

FedEx and TNT declined to comment.

Some analysts said FedEx could be better off scooping up assets that competition regulators might require UPS to sell if it succeeds in winning over its Dutch target.

Sources close to the talks between UPS and TNT said a combined firm would need to make significant asset sales in Europe – the Netherlands, Britain and Germany in particular – to win regulatory approval.

“You could see some assets that are displaced or some market share opportunities that come from the deal as well that could benefit FedEx,” said Benjamin Hartford, senior research associate at Robert W. Baird.

Talbots opens books to Sycamore after spurning buyout bid

HINGHAM, Mass. – Talbots Inc., looking to sell itself, opened its books to Sycamore Partners in a move that could lead to the private equity firm raising its original buyout offer, which was snubbed by the women’s apparel chain last month.

Earlier this month, people familiar with the matter told Reuters that Talbots – which is also looking for a new leader – had started actively soliciting offers and private-equity firm Golden Gate Capital was considering a bid for the company.

Wedbush Securities analyst Betty Chen said Talbots’ confidentiality agreement with Sycamore will greatly reduce the possibility of a bidding war.

In a regulatory filing on Monday, Sycamore said it had signed a confidentiality agreement with Talbots, effective Jan. 27, giving it access to certain private information regarding the company’s business, strategy and prospects.

“It is possible that Talbots has already gone through (its review process) and the remaining party that’s still interested in continuing the dialogue is Sycamore,” Chen said.

In December, Talbots rejected a $212 million buyout proposal from Sycamore, and said it would instead explore strategic alternatives.

When Sycamore made its offer, the private-equity firm had said it might consider increasing its $3 per share bid if it had access to Talbots’ private financial records.

Westlake makes unsolicited $1 billion Georgia Gulf bid

HOUSTON ― Westlake Chemical made an unsolicited, $1.03 billion bid for rival chemical company Georgia Gulf Corp, as it looks to increase its offerings of chemicals used to make plastics and building products.

Westlake offered to buy Georgia Gulf for $30 per share in cash, a 23 percent premium to the stock’s Thursday close on the New York Stock Exchange. Georgia Gulf’s shares surged 35 percent on Thursday morning to $33.09 — above Westlake’s bid.

In a letter to the target’s board, Westlake Chief Executive Albert Chao said Georgia Gulf has rejected the offer, first made in September.

“We have made numerous attempts to engage in meaningful dialogue with Georgia Gulf and have expressed our willingness to explore … whether opportunities exist that would justify increasing our proposal price,” Chao said in statement, noting that Georgia Gulf has declined to enter into talks on the bid.

A deal would make Westlake one of the largest North American producers of ethylene, a key building block for thousands of common chemicals.

Ethylene can be made using natural gas, which has become cheap and abundant in recent years due to natural gas deposits locked in shale formations around North America.

Westlake also has a large ethylene pipeline network in the U.S. Gulf Coast that will allow it to transport additional capacity from Georgia Gulf facilities. Several Georgia Gulf and Westlake plants operate near each other in western and middle Louisiana.

Westlake will also get increased capacity in vinyl resins, commonly used to make PVC pipe for construction.

Westlake, which has already bought up a 4.8 percent stake in Georgia Gulf, said its bid is not subject to a financing condition. Deutsche Bank and Morgan Stanley are advising Westlake.

Carl Icahn drops $1.73 billion bid for Commercial Metals Co.

IRVING, Texas ― Billionaire investor Carl Icahn on Wednesday dropped his $1.73 billion hostile bid for Commercial Metals Co. after failing to pick up support among the metal company’s other shareholders.

Shares of the company fell about 7 percent in before-the-bell trading. They closed at $14.76 Tuesday on the New York Stock Exchange. Icahn had offered $15 a share.

Icahn, who controls about 10 percent of the company, had hoped to secure support from investors holding another 40.1 percent of the company’s shares. Only 23 percent of the shares were tendered in response to his offer, Icahn said.

The activist investor also withdrew his slate of nominees to the company’s board.

“The company has made a number of promises to shareholders, which shareholders appear to believe will be beneficial to the stock,” Icahn said in a statement. “We respect the views of the shareholders and hopefully their decision not to tender will prove to be the right one.”

Icahn has lost out on a number of recent high-profile proxy contests and takeover attempts. Last year, he gave up on his years-long public campaign against Lions Gate Entertainment LGF.TO, as well as attempts to get board seats at Clorox Co. and drugmaker Forest Laboratories.

Commercial Metals had dismissed Icahn’s $15-a-share tender offer — which represented a 31 percent premium when Icahn made his original approach in November — as “substantially undervalued” and “opportunistic.” The stock briefly topped the $15 mark last week.

Top Talbots investor pans Sycamore Partners’ $3 a share bid

HINGHAM, Mass. ― Private equity firm Sycamore Partners’ $3 a share bid for Talbots Inc is “opportunistic and a very low offer,” a top investor in the ailing retailer said.

Sycamore, which owns 9.9 percent of Talbots, offered to buy it for about $212 million on Tuesday, when the company was worth about $110.3 million.

“The company’s numbers right now are distorted by merchandising issues,” Mitch Williams, a fund manager at OppenheimerFunds told Reuters.

Oppenheimer is the biggest institutional stakeholder in Talbot with a 11.9 percent stake, followed by Sycamore, according to Thomson Reuters data.

Williams refused to say what he would consider a fair valuation, but said any offer had to take into account Talbot’s historical performance and not just the recent past.

When asked about Oppenheimer’s stand, a spokesman for Sycamore Partners said the firm had no comment beyond what it said in its recent filing.

Founded in post-war Massachusetts, Talbots built its reputation on its traditional pearls-and-classics fashions, but is widely seen as dull today.

Shares have dropped from the $30-levels they used to trade at a decade ago to around $1.56 just prior to Sycamore’s bid. They shot up to $2.80 on the New York Stock Exchange Thursday.

The retailer has lagged peers Ann Inc and Chico’s FAS, as it tried and failed to attract younger shoppers, while alienating its core older customers in the process.

On Monday, Talbots said it was looking for a new chief executive to replace Trudy Sullivan, four years after she took charge.

Sales have fallen steadily over the past three years, and some investors and analysts have long been expecting a sale.

“Talbots’ business trends have been among the weakest in a struggling women’s retail sector,” Nomura Securities International analyst Paul Lejuez wrote in a note titled “Talbots – Take The Money and Run.”

The analyst also said he did not expect the offer to be raised meaningfully, given the 92 percent premium.

Eric Kuby, chief investment officer at North Star Investment Management Corp, who exited the stock before Sycamore’s offer said: “On the basis of where the company is going and what the stock is doing, it is a reasonable offer.”

“But on the basis of what the stock could be worth if they got things turned around, it’s a very low offer.”

Microsoft considers bidding for Yahoo after thwarted attempt in 2008

NEW YORK ― Microsoft Corp. is considering a bid for Yahoo Inc., resurfacing as a potential buyer after a bitter and unsuccessful fight to take over the Internet company in 2008, sources close to the situation said on Wednesday.

Microsoft joins a host of other companies looking at Yahoo, which has a market value of about $20 billion and is readying financial pitch books for potential buyers, they said.

Those companies include buyout shops Providence Equity Partners, Hellman & Friedman and Silver Lake Partners, as well as Chinese e-commerce giant Alibaba and Russian technology investment firm DST Global, the sources said.

Yahoo shares jumped 10.1 percent on the news to close at $15.92 on Nasdaq, but fell back to $15.34 in after-hours trading. Microsoft shares ended 2.2 percent higher at $25.89.

Microsoft may seek a partner to go after Yahoo, one of the sources said, without identifying any parties.

No decision has been made and a bid may not materialize as there are internal divisions at the software company on whether it should pursue Yahoo again, a high-ranking Microsoft executive said.

One camp inside Microsoft is hot for the deal, believing that it would obliterate AOL Inc as a competitor and create a strong Web portal that can offer better products to audiences, advertisers and end users, the executive said.

However, another camp is against the deal, feeling that if Microsoft is going to invest billions of dollars in an acquisition it should be one that has more growth potential. Microsoft last tried buying Yahoo in 2008, offering to pay as much as $47.5 billion, or $33 per share.

“Yahoo’s value hasn’t grown in years, and some executives feel we should buy something that is more forward-looking,” said the executive, who spoke on condition of anonymity.

Yahoo, Microsoft and the other potential buyers declined to comment.

Any auction process for Yahoo is still in the early stages, and the company’s financial advisers — Goldman Sachs and Allen & Co — are preparing to send financial information to potential bidders, sources have said previously.

Shortly after ousting Carol Bartz as CEO in early September, Yahoo said it was exploring strategic alternatives after receiving “inbound interest” from a number of parties.

The once-dominant Internet pioneer is pursuing parallel tracks, sounding out deal options as well as engaging in a search for a new CEO.

Yahoo would be a big bite for any single private equity firm, especially at a time when financing markets for leveraged buyouts have dried up.

Industry sources said private equity firms could take over the U.S. operations and sell Yahoo’s Asian assets to a buyer such as Alibaba.

“There are many reasons why this thing probably makes sense,” said Sid Parakh, analyst at fund firm McAdams Wright Ragen. “If you strip out the variety of assets Yahoo owns, you are pretty much paying nothing for the core business.”

One Wall Street analyst recently valued Yahoo at just over $20 billion, with its core search and display advertising business worth $7.7 billion, its Asian assets worth $9.2 billion, plus $3.2 billion in cash.

Yahoo owns about 40 percent of Alibaba as well as about 35 percent of Yahoo Japan.

If Microsoft fully combined its Bing Internet search business with Yahoo’s, it would give it more than 30 percent of the U.S. search market and make it a credible competitor to Google, said Parakh.

Under a 10-year deal struck in 2009, Microsoft’s Bing already powers Yahoo search, but it cedes 88 percent of resulting advertising revenue back to Yahoo.

Microsoft, with a cash pile of $53 billion, could certainly afford a deal, but some doubted the world’s largest software company would actually pursue it, given its previously failed bid and the existing Yahoo agreement.

“I think it’s unlikely because they (Microsoft) have been down this path before,” said Ben Schachter, an analyst with Macquarie Research.

“In a lot of ways they’ve gotten what they want out of it already, with the (Yahoo) search deal. I could make a case for a lot of synergies. But it’s certainly not a strategic priority in any way.”

Silicon Valley sources said Jack Ma, the founder and CEO of Chinese e-commerce giant Alibaba — who last month expressed interest in buying Yahoo — could team up with private equity to make a deal.

Or it may make more sense for Ma to team up with Microsoft, said Susquehanna Financial Group analyst Herman Leung.

“If Microsoft gets involved, then you don’t need private equity,” said Leung. “The problem for Jack Ma is capital. Microsoft has $53 billion in cash. Why have to deal with bondholders and all this stuff when Microsoft can make that all happen for you?”