Letter from Lex: listening devices Premium

Wonder what the NSA might know about Vodafone’s intentions for its 45 per cent stake in Verizon. After weeks of intense speculation about a possible $100bn-plus deal, the UK telecoms company confirmed it was instead in talks with Germany’s largest cable operator, Kabel Deutschland, about a much smaller €10bn deal. Meanwhile Japan’s SoftBank sweetened its offer for Sprint just as France Telecom found itself at a critical juncture with its chief executive embroiled in a politically-charged fraud case. Another Japanese company, Nintendo, wants nothing to do with smartphones or, more specifically, smartphone gaming. Rival Sony appears to be more savvy than its compatriot after it dropped the price of its PlayStation just as Microsoft unveiled its new Xbox, a monster of a product but an unambiguous financial failure.

Elsewhere there was a spate of M&A activity. US grocer Safeway sold its 200-plus stores in Canada to Sobey’s for $5.7bn while Brazilian meatpacker JBS acquired the pork and poultry operations of Marfrig for R$5.85bn. India’s Apollo Tyre made a bold strategic move with a $2.5bn offer for the larger Cooper Tire of the US, but the market reacted badly to the 40 per cent premium it was prepared to pay. In the pharma sector, after several bitter exchanges, Royalty Pharma’s hostile takeover of Dublin-based Elan looks to be in trouble. As for the fashionistas of the business world, trading houses, Marubeni decided to ditch the energy unit of grain trader Gavilon, which it agreed to buy for $2.6bn last year.

Other investors had their eyes on initial public offerings. US beauty products group Coty raised $1bn but its IPO revealed that demand for new issues has limits. Finally, Germany’s largest private residential property group, Deutsche Annington, joined the trend of private equity flotations, but investors may be wary of getting into hot markets when existing players are exiting. Or if the NSA is listening in.

John Casey, Lex Publisher

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