B&E this fortnight

Microsoft makes a Quantitative move!
In one of its biggest acquisition ever, Microsoft has acquired a Quantive, the online marketing biggie at a whopping price of $6 billion. With this deal, Microsoft has complied to its previously outlined vision of providing the advertisement industry with a world-class advertisement platform. “The deal represents the next step in the evolution of our ad network from our initial investment in MSN, to the broader Microsoft network including Xbox Live, Windows Live and Office Live, and now to the full capacity of the Internet,” said Steve Ballmer, CEO of Microsoft . The deal has a lot of potential for Microsoft as it would enable the company to strengthen relationship with advertisers, agencies and publishers. Microsoft , which is a dominant player in online content with MSN, it now aims at becoming a Web powerhouse with this acquisition. It will also allow Microsoft to have access to a Quantive’s brands like Atlas (advertiser’s tool for better return generation on ad campaigns) and DRIVE pm (a service that matches ads with Web-page inventory). Noticeably, Microsoft has been on a spree of acquisitions, a move to become an unparallel name in online market. In 2002, it bought Navision, the Danish small-business soft ware-maker at a price of $1.45 billion. In more recent times, Microsoft acquired Massive, online video-game advertising firm, and Screen Tonic and Motion- Bridge, mobile-phone advertising companies. However, its latest move to acquire a Quantive seems to be a counter move against Google’s latest buyout of Ad firm Double Click.

Springtel’s age bother!
Sprint Nextel has decided to cough up $57 million as a settlement towards an age discrimination case. The case had been filed against the wireless company by its laid off workers. It stated Sprint Nextel had first shift ed all the employees above 40 years to certain positions, which were later scrapped in lieu of downsizing. As per the settlement, the company would pay the eleven lead plaintiff s an average of $155,000 each. The attorneys of the plaintiff s would get $19.4 million as fees and also $1.65 million as coverage expenses for settlement confirmation. The remaining $34.3 million would be divided between the remaining 1,686 plaintiff s.

Another victory for the PE firms!
The dominance of private equity firms in the global market got a further fillip as Corporate Computer Seller (CDW) agreed to be acquired by Madison Dearborn Partners for $7.3 billion. Apparently, CDW’s strong financials (with zero debt and $500 million of cash) lured Madison Dearborn Partners to buy the company. Shares of CDW soared to a new 52- week high on the news of the deal with Dearborn, rising by 10% to $7.55.

Non-Stop mobile security by Alcatel
Alcatel-Lucent – the telecom equipment manufacturer is all set to launch a product that allows companies distantly fasten down on security violations on the laptops of their on-the-go employees. It comes as a part of Alcatel’s effort to expand into new markets and off set tinting competition in its core business of fixed and wireless-communications equipment. The product, known as Nonstop Laptop Guardian, has already been launched by the company. This effort is an attempt by Alcatel-Lucent to improve its position in the fast-growing market that caters to security in mobile devices such as laptop and mobile phones. With increased demand of mobile security, Siemens NonStop looks to be a big hit in the global market.

Will Siemens be back in calm waters?
Siemens created a history of sorts when it announced that an outsider, Peter Loscher, would be replacing outgoing CEO Klaus Kleinfeld. For more than a century, Siemens never had an outsider as a chief executive. An Austrian, Peter Loscher, has been a top executive in Merck and at one point had also worked for General Electric. The new 49- year-old MBA has spent most of his career in international assignments, and thus brings with him the expertise required for tapping emerging markets out of Europe. However, this is his fi rst assignment as a CEO and he is all set to inherit the legacy of legendary Kleinfeld, which might turn out to be a difficult task for Loscher.

Qualcomm’s loss is Broadcom’s gain!!!
It seems to be a never-ending problem for Qualcomm. With a history of lost patent battles, the company has yet again ended up on the losing side in a patent battle with rival Broadcom. Th is time, Qualcomm has been accused of violating three patents of Broadcom and all of these patents helped the cell phones to process video, work on two types of networks and enable walkie-talkie conversations. Consequently, Qualcomm will end up paying $19.6 million for this violation. We just hope that Qualcomm’s legal woes would end soon.

AT&T revs up before the iPhone launch...
There-branding campaign for AT&T Inc. will be paced up at the Cingular wireless stores in a quest to raise AT&T’s profile prior to the launch of Apple Inc.’s iPhone. The company is expected to bring AT&T brand name instead of ‘Cingular’ and it expects to complete the process of re-branding the stores before the launch of iPhone in late June. Acquisition of BellSouth Corp. by AT&T last year has helped in the process of consolidation of ownership of the wireless joint venture between the two companies. Michael Coe, spokesperson from the company, however, revealed that the iPhone is one of the strongest product in the wireless industry and for the same, the company would make it sure t h a t every drop of equity from the iPhone gets accumulated to the AT&T brand.

Northwest is out of danger!
After 19 months of suff erring bankruptcy, Northwest Airlines is all set to regain good health. It had successfully done a $2.5 billion annual cost savings. This is the first time in a half a decade when a leading US airline would not be bankrupt. Northwest had fi led for Chapter 11 on September 14, 2005. A federal judge has ruled that it can exit the bankruptcy and the 11 day ‘administrative period’ has started, in which the airlines must notify the change in its status to its new shareholders and other parties. The US airlines now has an equity value of $7.8 billion and is issuing new shares as compensation to its creditors.

Unicredit empowers Capitalia!
UniCredit has entered into agreement terms for buying Capitalia for $29 billion. This would help create the second biggest bank in Europe. The boards of both the banks have approved the takeover components. This completion of this merger would strengthen UniCredit’s position as Italy’s largest bank in terms of market value and also puts a stop to years of speculation as to who would take away Rome based Capitalia in a rapidly consolidating industry.

Cadbury is not short of suitors!
From the time it has announced its intentions of splitting its sweets and drinks business, it is believed that Cadbury has received around 12 proposals for the drink business. Sources claim that two private equity consortium have already been formed for bidding purposes. The bid is being valued at $16 million. Dr. Pepper and Snapple are two of its brands in the beverages business. A consortium comprising of Blackstone Group, Kohlberg Kravis Roberts and Lion Capital is supposed to be one of the parties in fray for cadbury’s business. Noticeably, Cadbury’s continental European beverages business was bought by Lion and Blackstone in February last year for $2.50 billion.

Kindler does a shuffling act!
Jeffrey Kindler, Pfizer’s Chief Executive Officer has announced a turnaround in its leadership positions to re-arrange the drug company, struggling with augmented competition and the loss of exclusivity rights. Two key functions, Research and Finance, are the targetted two blocks. 57-year-old John LaMattina, the research and development chief of the company for a long time, and 45-year-old Alan Levin, the short-time chief financial officer will be retiring soon as a new replacement (rather successor) is found out. All these steps are a consequence of Kindler’s strategies to ‘transform’ Pfizer into a

leaner, more productive company.
Even China couldn’t resist this! The state investment agency of China has announced plans to invest $3 billion in US private equity firm Blackstone in a landmark deal for the industry and the government. The agency, which was only established in March, will acquire the stake at 95.5% of the price to be set in Blackstone’s flotation, which is planned for later this year. The purchase of a stake, which will be just under 10%, values the whole of Blackstone at $30 billion. The Chinese government typically invests most of the reserves in more secure though lower-yielding US Treasury bonds.

Altel falls prey to TPG!
TPG Capital and the buyout arm of Goldman Sachs entered into agreement terms to buy Wireless company Alltel Corporation for $25 billion. The completion of the deal would make it the latest US corporate giant to fall prey to private equity hands. The transaction has been formalized revealing that TPG Capital and GS Capital Partners will get Alltel for $71.50 per share in cash. At $25 billion, this would be one of the largest private equity deal.

The Bajaj on ‘3’ wheels...
The Board of Bajaj Auto Ltd. (BAL) has nodded a demerger scheme, ripping apart the nations number two- two wheeler manufacturer into three separate units. Consequently this exercise will create two new companies from the existing resources. The newly carved businesses will essentially be fully owned subsidiaries namely, Bajaj Holdings and Investment Ltd. (BHIL) and Bajaj Finserv Ltd. (BFL). Rahul Bajaj revealed that the manufacturing business would remain in BHIL while other strategic businesses would be included in BFL. It has been further stated that there would be no change in the management structure in spite of all these split ups. As a matter of decision Rahul Bajaj’s elder son, Rajiv will continue to be the MD and CEO while younger Sanjiv will remain as the ED (additionally handling financial and international operations and BFL). The senior Bajaj revealed that the two new entities will have some common composition and will be consisting of a four member board, with Rahul himself, Madhur, Sanjiv and Rajiv at the helm. Post demerger, BAL shareholders have also been comforted as they would continue to hold one share of the company with face value of Rs.10, and would also be allotted additional BHIL and BFL shares, valued at Rs.10 and Rs.5 respectively. Apart from these changes, there is one major diversification worth to be noted! BAL will now be consequently renamed as Bajaj Holdings Ltd., eventually leading to a whopping Rs15 billion cash transferred to Bajaj Holdings. The new mega entity is also expected to get Rs37 billion cash or cash equivalents as part of the demerger. For starters, holdings of group companies, worth Rs27 billion are also on the cards. The share capital has been estimated to be close to Rs1.5 billion.

Million...billion …now its trillion!
Creating a record – Reliance Industries’ Chairman Mukesh Ambani has incredibly won an exceptional distinction of being the only trillionaire in the country with over Rs1,000 billion worth of wealth amassed through his shareholdings. Not far behind, younger brother Anil is also struggling to catch up in the race (with close to Rs900 billion worth of wealth in the stock market through his holdings in various group companies). The collective market value (capitalisation) of RIL, Reliance Petroleum (RPL), IPCL and Reliance Industrial Infrastructure Ltd. (RIIL) has crossed the Rs2,500 billion mark. In addition, the combined investors’ wealth in Reliance Communications (RCOM), Reliance Capital (RCL), Reliance Energy (REL) and Reliance Natural Resources Ltd. (RNRL) has touched the Rs1,424 billion mark.

Google’s search yields Hyderabad
Google, the search engine behemoth has zeroed down on techno city Hyderabad, for its new facility. It has signed a MoU with the Andhra Pradesh government for the same. The state government is allotting 20 acres of land at Kokapet in Rajendranagar mandal to Google for setting up the facility. The upcoming facility will house various functions like engineering, online sales and service, information systems and other support functions. Though calculations suggest that around 4,000 persons would be working in the new facility, there are chances of the number increasing as per the upcoming business needs. Google follows Microsoft and Infosys in opening a facility in the city.

Tata Motor’s trucks revamped
In order to compete with global majors, Tata is planning to bring in a new range of trucks after its home-grown worldclass cars. With the golden quadrilateral highway project in the completion stages, trucks, with more powerful engines, are the need of the hour in order to link the four metros in the country. “We are revamping the whole range of products in commercial vehicles,” Tata Motors’ Managing Director Ravi Kant said. The new trucks would have a complete makeover in terms of styling and would be launched in new markets like Korea. In all probability, there would be a stake acquisition in automotive parts supplier, Visteon Corporation. No long term details were however available for the same.

Videocon in China Town!
Contributing to the surging bilateral trade between India and China would be the domestic consumer durable major, Videocon, which has inked a deal with China Council for Promotion of International Trade (CCPIT) for setting up a LCD manufacturing unit at Shenzen, China, The amount of investment required for the same is $1.5 billion. While 50% of the production would be for domestic consumption, the rest would be for exports. The technology for production of LCD would come from the company’s R&D centre in Japan in order to lessen production costs and bring it down to more competitive levels.

Coke magnifies Tata Tea’s 30%!
A new alliance between Coca-Cola and Glaceau will involve $4.1 billion as the former (world’s largest aerated drinks producer) has agreed to acquire the latter (US energy drink maker). This deal is a boon to Ta t a Group led Tata Tea – as it will bestow a windfall gain of about $1.2 billion for the 30% stake it holds in Glaceau. Tata Tea had acquired 30% stake in Glaceau for $677 million in August 2006. The deal in all probability will close in by the summer of 2007. Coke’s move has been primarily connected with portfolio expansion plans in order to compete more effectively with rival PepsiCo Inc.

Rupee scales a record high...
The rupee surged up sharply against the US dollar and managed to touch a new nine-year high of 40.55/56 on fresh dollar selling, provoked by China’s decision to revise the Yuan as well as strong equity markets. The rupee started weak at 40.74/76 to a dollar at the inter bank foreign exchange (forex) market, but managed to surge up to a fresh nine-year high of 40.55/56 to a dollar in late morning deals, however, it ended the day at 40.70/71 per dollar. Forex dealers opine that the rupee rallied sharply as anticipated in response to China’s decision to widen the trading band on the Yuan and to eventually raise domestic interest rate

Airtel to CII, big deal!
Sunil Mittal, the head at India’s largest private telecom provider (Bharti Group) has been elected president of Confederation of Indian Industry (CII) for 2007-08. He has formally succeeded R. Seshasayee, Chief Executive, Ashok Leyland. More to add to the announcement spree - K.V. Kamath, Managing Director, ICICI Bank, would take in responsibilities as the new Vice President. Being proud of Mittal’s success, a CII statement revealed, “His business acumen and leadership have been recognised through the numerous instances. He has been hailed as the businessman and entrepreneur of the year by leading global institutions and publications.” Views about Kamath were vivid too – the strategic initiatives instituted by him have helped ICICI increase its business potential.

Sun in Taro with $454 million
Sun Pharmaceutical Industries Ltd. has entered into final agreements with its subsidiaries for acquiring Taro Pharmaceutical Industries Ltd. The deal (worth $454 million) will be funded with interior accumulation and proceeds from its FCCB. This multinational has its footprints in U.S., Israel and Canada, of which North America begets more than 90% of Taro’s sales. Dilip Shanghvi, Sun CMD, stated that the company looks forward to working with Taro and its employees further ahead. It’s the apt opportunity for the duo to create increasing value and add a complimentary multinational organization to Sun’s business. More so to the deal, there are bright chances to build on Taro’s expertise in dermatology and paediatrics, along with its speciality and generic pharmaceuticals and over-the-counter products.

RCom to spell the black magic
Th is spells good news for all Blackberry fans but non- Hutch and Airtel users. The high-end device is now being made available by Reliance Communications on the CDMA platform. Until now, it was only available on GSM platform. The wireless e-mail experience up till now was restricted only to subscribers of Bharti Airtel and Hutch- Essar. Reliance, however has refused to divulge any further details about the same. The company recently had also unveiled Reliance Classic, the new range of colour mobile phones, priced in the range of Rs1,222- 1,299. RCom have claimed that Rs777 monochrome Classic handset recorded sales of one million in the first week of its launch itself!

‘Mart’ ing it up for you …
The Indian retail place is getting attractive with every passing day. Reliance Industries is planning to launch its home solutions retail venture by end 2007. The Rs30 billion venture will have a chain of 100 standalone specialised home solution outlets. To be rolled out by Reliance Retail (the retail arm of Reliance) these outlets will have a space of 40,000- 60,000 sq ft . Though the name is yet to be decided, the format of these outlets would be shops in shops within Reliance’s hypermarkets. The first hypermarket to be opened in August would be at Ahmedabad while the second would come up two months later in Jamnagar. The next big activity in the retail space is the predicted acquisition of Piramyd Retail by the Aditya Birla Group. The Group had already acquired Trinethra Retail, in beginning this year. Piramyd Retail has seven Piramyd lifestyle outlets and around fourteen Trumart grocery shops around the country.

The Great Wall cementing business!
If trade between the two Himalayan neighbouring countries, India and China, continues to grow at the same pace then not much time is left until when bilateral trade between the countries would touch the $40 billion mark. Analysts believe that the India – China bilateral trade is all set to rise from the current $25 billion to $40 billion by 2009, thus the target would be achieved by one year in advance. In Q1 2007, trade registered a growth of 58% and has touched $8.2 billion. It is being forecasted that bilateral trade between the countries would build up to $43 billion by 2010.