Cerberus Cries Boo Hoo

Yahoo: Cerberus claims it was misled in deal for Chrysler

Cerberus accuses Daimler of misrepresentations before deal to buy Chrysler closed last year
DETROIT (AP) -- Relations between Chrysler's current and former owners turned ugly Wednesday when private equity firm Cerberus Capital Management LP accused Daimler AG of "intentionally and materially" misleading Cerberus before the German automaker sold Chrysler last year.

Pretty goddamn funny for a bunch of guys who think they're the smartest ones in the room to now claim that they were hoodwinked.

More likely: they learned that not only aren't they as smart as they thought, but also that Six Sigma can't fix everything.

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BCE Totally Screwed

Bad news for shareholders looking forward to the buyout that was supposed to take telco BCE private.

Yahoo!: BCE says buyout in jeopardy, shares sag

Reuters) - BCE Inc said on Wednesday it was unlikely its C$34.8 billion ($28.2 billion) leveraged buyout would close next month after its accountants ruled that the company that emerges from the deal would not meet a solvency test because of its huge debt load.
Shares of BCE, Canada's biggest telecom company, plunged almost 40 percent as investors reacted to the latest twist in the saga of the world's largest leveraged buyout, which is being led by the Ontario Teachers' Pension Plan.
The deal has already faced regulatory scrutiny as well as a Supreme Court of Canada challenge by angry debt investors as it inched its way forward to the scheduled December 11 closing date.
And on Wednesday, BCE -- the parent of Bell Canada -- said its accountants, KPMG, have found the company would not meet the buyout agreement's solvency test because of current market conditions and the amount of debt involved in the financing.

Bad news for shareholders, good news for the underwriting banks that weren't happy with the terms they had written.

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Samsung Yanks Hostile Bid For SanDisk

That didn't take long. I'd only just covered Toshiba's defense of SanDisk this morning.

CNet: Samsung withdraws offer to buy SanDisk

Samsung on Tuesday withdrew its $5.85 billion bid for SanDisk, citing an increasing "risk profile." This follows a new manufacturing agreement between SanDisk and Toshiba disclosed Monday and a stiff rejection by SanDisk last month of the Samsung offer. "After nearly six months of efforts to pursue a transaction with no meaningful progress, we are withdrawing our proposal to acquire SanDisk," Yoon Woo Lee, vice chairman and CEO at Samsung Electronics, said in a letter that Samsung released Wednesday in Seoul.

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Best Buy picks up Napster for a song

Despite my abiding interest in digital delivery, I have to say that this acquisition took me completely by surprise, since I had imagined that Best Buy had the online music store thing all figured out already. Silly me.

Bloomberg.com: Best Buy Agrees to Purchase Napster for $121 Million

Sept. 15 (Bloomberg) -- Best Buy Co. agreed to buy Napster Inc., the pioneer of digital downloading of music, for $121 million.
Best Buy, the largest U.S. electronics retailer, will pay $2.65 a share, almost double Los Angeles-based Napster's closing price on Sept. 12, the companies said today in a statement.
Best Buy, based in Richfield, Minnesota, has tried to move music sales online as demand for compact discs wanes. Best Buy and Real Networks Inc. started a music-downloading test that ran from August 2007 to January, selling digital copies of songs by monthly subscription or individually.

Interesting. It also makes me wonder how many other digital delivery companies are still lurking around, not-yet-acquired by the big dogs. Clearly, I have more homework to do.

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HBC Changes Hands From One Private Equity Company To Another

Who said that the global credit crunch has dried up all the opportunities for dubious, ill-thought out Private Equity plays? The purchase of beleaguered Canadian retailer HBC by NRDC Equity Partners doesn't count as being taken private, since HBC was bought by the late Jerry Zucker's PE enterprise in 2006. TV personality Stephen Colbert might call it being taken private-er.

Yahoo! News: Hudson's Bay Co. bought by U.S. private equity owner of Lord & Taylor

TORONTO - The Hudson's Bay Co. has been bought by the private equity firm which owns American department store chain Lord & Taylor.
The purchase by New York-based NRDC Equity Partners, for an undisclosed amount of money, combines two of the oldest department store retailers in North America. It puts together HBC's Bay, Zellers, Home Outfitters and Fields operations with NRDC's Lord & Taylor group and Fortunoff jewellery and home-decor chain.

Since it's a PE to PE deal, it's going to take some digging to find out what NRDC paid for HBC. A cynic might suspect that it was at a liquidation rather than a premium price given how, you know, nobody actually shops at the HBC family of stores. On the other hand, HBC still has a pretty cherry collection of real estate, as well as lease locations, so the potential is there for a reasonable profit, given that Zucker originally took HBC private at a fire sale price.

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Blockbuster Abandons Circuit City Deal

So much for the entertainment fodder that the notion of beleaguered video rental retailer Blockbuster saving beleaguered CE retailer Circuit City provided all of us.

Bloomberg: Blockbuster Abandons Circuit City Bid After Review

-- Blockbuster Inc., the world's largest movie-rental chain, walked away from an offer of as much as $1.35 billion for money-losing electronics retailer Circuit City Stores Inc. after taking a closer look at its finances.
``Based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster's shareholders to proceed with an acquisition of Circuit City,'' Jim Keyes, Blockbuster chairman and chief executive officer, said today in a statement.

Translation: "Circuit City needs a major overhaul from someone with deep pockets and a keen vision to become a competitive retailer, and that someone is definitely not us. Hell, we can barely look after ourselves!"

To be a little less sarcastic, perhaps their strategic advisers persuaded them that even if they could secure the financing (which, frankly, I doubt they could) the whole notion of tying two turkeys together to create an eagle, while a colorful metaphor, wasn't really all that good of an idea.

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Fire Sale For Circuit City & Blockbuster?

Both CC and Blockbuster are bouncing around absolute all-time lows. If a really masochistic, suicidal Private Equity company felt that they had the cash to burn, they could take majority positions in both companies for less than a $100 million.

At the moment, the light at the end of the tunnel is the vague hope that neither Carl Icahn nor Mark Wattles is yet prepared to give up on their investments, and still want to see a deal get done that nets them a payday. Certainly, at the moment, market sentiment doesn't seem to favor that hypothesis.

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Wallstrip Brings Out The Knives For Blockbuster/Circuit City

Julie from Wallstrip does a great job of reiterating what myself and many other watchers have had to say about the putative Blockbuster/Circuit City merger.





Hat tip to Dealbreaker for posting this video before me.

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Now Blockbuster/Circuit City Merger Arbs Swinging The Other Way

I have been wrong before, you know (don't act all surprised). Earlier this week both here and on CE Pro I insinuated that the spread between both Circuit City and Blockbuster's share prices indicated that investors lacked faith that a deal was forthcoming.

Today the spread inverted, with CC gaining ground and BBI declining. Is something in the offing, or is it just wishful thinking anticipation by investors that a slow day in the market will be made more exciting by an announcement after the bell?

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XM/Sirius Merger Still Lurching Along: Does It Even Matter Anymore?

As the proposed merger between Sirius and XM grinds its way through the wheels of government, one has to wonder if it's really worth it. 24/7 Wall St.'s permabear Douglas McIntyre thinks not.

Tearing The Guts Out Of The Sirius (SIRI) Merger With XM Satellite (XMSR)

Over the year-and-a-half that the merger has been pending, the two companies have gone from being in bad financial share to being in a dire set of circumstance. Each company has well in excess of $1 billion in debt. Neither has ever made a dime and their losses last quarter were not encouraging.
Satellite radio has lost much of its appeal for consumers. The slowing subscription growth rates at the two companies show that. HD radio and the Apple (AAPL) iPod, which can be plugged into a car sound system, have taken away much of the uniqueness of getting music, Howard Stern, and Oprah off the big bird in the sky
The merger may go through. It may be killed. Either way, satellite radio has a dim and perilous future.

I'm in favor of seeing the putative merger die, if only because a united XM/Sirius would pose a humongous hassle for AV hardware manufacturers.

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Is The Party Over For A Blockbuster/Circuit City Deal?

At the same time that Circuit City's share price has dramatically tanked, Blockbuster's has risen dramatically.

For those of you who don't follow these things, typically with merger announcements and rumours thereof, the target stock rises towards the putative buyout price, while the purchaser’s stock declines, in anticipation of the short-term impact of debt and suchlike on fiscal performance. This is precisely what happened when Blockbuster first announced their intentions. Now the opposite is occurring, which leads me to wonder if institutional investors either think or know that Blockbuster’s going to walk away.

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Is There Going To Be A Circuit City Deal, Or Not?

Interested observers will have noticed that Circuit City's share price has been slowly ebbing away from last Friday's spike when financier Carl Icahn announced interest in taking them private, with or without Blockbuster Video.

The (presently) 6% slide since last week may be a sign that large, well connected investors are doubting that after examining Circuit City's books, either Icahn or Blockbuster (or both) will advance an offer. It seems unlikely at this point, especially given Blockbuster's earlier ardor towards making a deal, but stranger things have happened.

**The content contained in this blog represents the opinions of Mr. Distad. This commentary may contain forward looking statements and definetely contains sarcasm and rude sentiments. This commentary in no way constitutes a solicitation of business or investment advice. If you're looking for stock picks from me, look somewhere else. Really, what were you thinking? If you came here because you were trolling Google looking for someone to help you get rich in only twenty minutes a month, you need to seriously re-evaluate your worldview. This blog is intended solely for the entertainment of the reader, and the author, and not neccessarily in that order.

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Carl Icahn Serious About Circuit City

Things appear to be coming to a head in the struggle for ownership of beleaguered retailer Circuit City. Now financier Carl Icahn, himself a director of Blockbuster has said that he would be willing to consider paying Circuit City out of his own pocket if it is not feasible for Blockbuster to do so.

TWICE: Carl Icahn May Buy Circuit City

Circuit City had previously resisted Blockbuster’s $1 billion-plus buyout offer, citing its questionable financing. But in a statement released this morning, the CE chain said it had received a letter from Icahn, the billionaire investor and Blockbuster director, indicating that he would be willing to buy Circuit City if the video rental chain is unable to.

Given how the previously volatile CC had risen and plunged like a roller coaster since before Christmas, the last couple weeks of relative calm had signaled that perhaps something was in the works.

Will a deal go through, with or without Blockbuster? Watch this space.

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I'm Far From The Only Person Mocking Blockbuster's Bid For Circuit City

Exhibit A: This otherwise straight-faced, but slyly cruel coverage from TWICE.

TWICE: Blockbuster/Circuit Gets Mixed Reviews

Some industry observers contacted by TWICE were also unsure of the deal’s merits. “Absent the short-term accretive benefits, it’s a questionable marriage,” observed Dave Workman, executive director of the Progressive Retailers Organization (PRO) Group buying organization and former CEO of Wattles’ Ultimate Electronics chain. “I’m not really sure where the benefit comes from. On the surface, it doesn’t appear to be a match that brings a lot of strategic value to either company.”

Exhibit B: Bill Maher saying what everybody was thinking.





Hat Tip to CE Pro for the initial link to the video

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This Week In CE Pro: All The Cool Kids Are Doing Mergers

CE Pro: Merger Mania: Who’ll Be Acquired Next?

It's been a weird year for aquisitions in the CE industry so far.

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Partnerships & Mergers In CE: More To Come?

Christine at Marketnews has some perspective on the rash of mergers, proposed mergers, and strategic alliances that have cropped up lately among CE manufacturers and retailers.

MarketnewsGadgetTalk: Have Partnerships & Acquisitions Become a Necessary Evil in CE?

In some cases, partnerships are indeed made to strengthen a company/brand by utilizing resources that the other can provide. In others, it's to "take out" the competition. But it appears that, as of late, we're seeing more and more traditionally considered "competitors" looking at one another and saying "I need you and you need me. We can't do this alone."

The impetus for her post is the looming dogfight over who's bidding for a 49% stake in D&M Holdings:

Dealerscope: Kenwood is Latest to Enter D&M Bidding

Another day, another new bidder for D&M Holdings. The Stratecon Group reported
Tuesday, citing Japanese news service Nikkei, that Kenwood has teamed up with Bain Capital to make a bid for D&M, a 49 percent stake of which is being auctioned off by RHJ International.
Stratecon added that final bidding is expected to take place in mid-May, and that the four “finalists” are Best Buy, the Bain/Kenwood group, Merrill Lynch, and Advantage Partners LLP.

Bear in mind that mergers and alliances don't always reap positive results. As one of my regular inside sources told me in an email today when I asked him how he expected it to shake out:

Depends on who gets it and how much they borrowed to pay for it. Do they expect a return this quarter or next? 2 quarters is long term planning for many of the suitors named. One thing is for sure, Boston Acoustics sure didn't gain any strength after the D&M takeover.

Just because everyone's rushing to make a deal doesn't mean that they'll be a winner even by time the honeymoon's over. Most analysts and industry watchers are certain that there's no way Blockbuster will scrape together enough loot to buy out Circuit City. And Best Buy's foray into Venture Capital and Private Equity has been called a sign of the apocalypse Market Top.

That said, I expect we'll see many more high profile pairings announced this year, even if they're totally goofy.

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Blockuster Makes A Play For Circuit City: Nobody Saw THAT Coming!

I've declared for about a year now that beleagured CE retailer Circuit City is a prime takeover play. However, I never expected beleagured video rental retailer Blockbuster to make a bid!

Yahoo!: Blockbuster offers up to $1.3 bln for Circuit City

Blockbuster Inc said on Monday that it was offering up to $1.3 billion for electronics retailer Circuit City Stores Inc , a bid that left some analysts scratching their heads.
While Blockbuster touted the proposed combination for its synergies, investors were skeptical about its value, and shares of the video rental chain fell nearly 11 percent.

This is far from over. For a start, this is a classic example of tying two pigeons together to make an eagle, and calling it "synergy."

For another thing, the first thought that popped in my head this morning was "How is Blockbuster going to finance this?" Unless BBI's board just found a billion dollars in their sofa cushions just now, it seems like a bit of a stretch, which is an opinion shared by Circuit City's board:

TWICE: Circuit City Questions Funding For Blockbuster Bid

Circuit City is doubtful that Blockbuster can swing the $1 billion it has offered to buy the struggling CE chain, and is unwilling to provide further due diligence information until the funding issue and other “fundamental questions” are answered

Will this go forward? Will this light a fire under Mark Wattles' ass to up the ante on his own takeover plans? Watch this space.

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Martha Stewart Buys Emeril: Is It Really A Good Thing?

Forbes: Martha Stewart Buys Emeril Franchise
Martha Stewart Living Omnimedia Inc. is bringing in a new celebrity: popular TV chef EmerilLagasse.
The New York-based media and merchandising company founded by domesticity mavenMartha Stewart announced Tuesday that it bought the rights to the Emeril Lagasse franchise of cookbooks, television shows and kitchen products for $45 million in cash and $5 million in stock at closing. The final price could rise to up to $70 million if certain benchmarks are achieved.
Martha Stewart did not acquire Emeril's Homebase, which includes Lagasse's 11 restaurants andcorporate office.

Sorry, correct me if I'm wrong, but isn't Emeril's image a little stale? I mean, I'm a huge foodie, and the minute I can get Food Network in HD in my area, I'll be all over that, but to me, "BAM!" is so 2002.

Then again, Martha Stewart Living Omnimedia, Inc. is a brand that is well past its sell-by date, losing money by the handcrafted beribboned cloisonee bucketful. Off the top of my head, Martha's lines of linens and housewares have been picked up and then dumped by at least three major department stores. Even the notoriety of going to prison didn't give her brand much more than a brief uptick.

In cases of dodgy looking mergers, pundits are always fond of analogies about "tying two things together to make another, better thing." I will refrain, and say that it looks like Martha is trying to revive her flagging fortunes by hitching her wagon to a falling star.

As for Emeril, bully for him for managing to successfully monetize his fifteenth minute.

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Circuit City Denies Buyout Rumors

Reuters: Circuit City says not looking to sell company

Retailer Circuit City Stores Inc. (CC.N: Quote, Profile, Research) is not looking to sell itself and is instead focusing on lowering its cost structure and growing its business, its chief executive said on Wednesday.

Are they telling the truth, or is it Opposite Day, and this is just a variation of "playing hard to get?"

I have my suspicions, personally.

In related news (ie: not quite worthy of a separate post), Circuit City has succeeded in nearly tripling their line of credit:

TWICE: Circuit City's Credit Line Raised To $1.3B

Circuit City’s chief lenders have raised the chain’s credit limit from $500 million to $1.3 billion under terms of a new loan agreement that went into effect Jan. 31.

My suspicious nature leads me to believe that they're up to something a little more complex than just digging themselves a deeper grave.

Watch this space.

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Does ANYONE Think That Microhoo! Is A Good Idea?

I have yet to find anyone amongst the commentariat and the chattering classes who thinks so. If you have, drop a link in the comments section below and enlighten us all.

So far, the sheer mass of opinion, both informed and uninformed is that this is a bad move. The more I ponder it, the more it looks like Microsoft is trying to fight the last war (for search and ad supremacy), instead of working on something new, hot, and game changing.

As I said elsewhere, the Microsoft/Yahoo! deal was basically a great opportunity for those individual and institutional bargain hunters who snarfed up YHOO stock on the cheap when it was getting drubbed two weeks ago. That's great and all (and bully for you if you did it), but it's no sign of long term growth or strategic value.

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