Danish Arla gets green light to acquire British co-op Milk Link

Danish dairy firm Arla Foods amba said on Friday it had been cleared by the European Commission to proceed with its takeover of British co-operative Milk Link Ltd as long as it satisfies a condition related to competition in the UK long life milk market.

Arla will have to offload Milk Link’s milk drinks business at the Crediton dairy, whose product pipeline includes long life milk, long life cream, extended shelf life milk and flavoured dairy drinks and fresh bulk cream. Those operations, which the Danish company has pledged to keep sound until their disposal to a buyer in a deal approved by the EC, will be ring fenced from the remainder of the merged business, the company said.

The condition has no impact on Arla’s British long life milk operations, based at its Settle creamery.

Arla unveiled its plan to buy Milk Link, as well as German co-operative Milch-Union Hocheifel, on 22 May in a drive to cement its European dairy presence. It said then that the amalgamated operations would have an aggregate 12,300 co-operative owners in Denmark, Sweden, Germany, Belgium, Luxembourg and the UK, versus a total of 8,024 only in Denmark, Sweden and Germany at the time.

Arla’s board of representatives gave the green light to the deals on 26 June. The merger in the UK creates the biggest dairy specialist in the country. Completion is scheduled for 1 October.

Wheatley Review sets out Libor reform recommendations

Wholesale reform of Libor is needed in order to restore the credibility of the international benchmark, FSA managing director Martin Wheatley said today.

Releasing his report on the future of the London inter-bank offered rate, Wheatley dismissed the possibility of entirely replacing the benchmark and instead set out a ten-point plan for reform.

This includes the introduction of a new regulatory structure for Libor and allowing the FSA to take action against those who break the rules. Wheatley also called for a fundamental overhaul of the way Libor is run, including taking responsibility away from the British Bankers’ Association (BBA), the banking organisation that currently oversees the rate.

In his speech today, Wheatley criticised the BBA for being careless in policing Libor and for putting too much trust in a system that lacked “the right level of checks and balances”.

The BBA acknowledged yesterday that the review was an “essential step” in reforming the system and indicated that it would support any recommendation that responsibility for Libor should be passed to a new administrator.

Other recommendations of the Wheatley Review include improving some of the data on which the inter-bank rate is based, requiring banks to back up their submissions with evidence of relevant transactions, and also encouraging more institutions to submit rates to Libor in order to make it more representative and harder to manipulate.

Wheatley described Libor as a broken system but stressed that it is not beyond repair. He said that reform is essential to help restore the trust that has been lost, and it is up to regulators and market participants to work together towards a lasting and sustainable solution.

The independent review on the regulation of Libor was set up by the UK government in July, after Barclays was fined GBP290m by UK and US regulators because its traders had attempted to manipulate the key global interest rate.

(USD1=GBP0.62)

Bahrain-based fund agrees to acquire football club Leeds United

Bahrain-based investor Gulf Finance House (GFH) on Thursday said its fully-owned unit GFH Capital Ltd had inked an exclusive deal to head and arrange the takeover of Leeds City Holdings, the parent of Leeds United Football Club (LUFC).

The company gave no details on the financial aspect of the acquisition, or the timetable, invoking a confidentiality agreement.
However, it said that LUFC is one of the best supported English football clubs, with an attendance above the average per match day of most teams in the Premier League.

GFH expects the club to get financial benefits from the recent negotiations of football broadcast rights and sees chances for it to step up into the Premier League, it added.

Leeds United is currently one step below the Premiership, being 12th in the second league of British football. The club, active since 1919, is also known as the Whites, United and the Peacocks. It has so far won three League Championships and one FA Cup, with the last English championship won in 1992.

Ken Bates, Leeds’ chairman, said five days ago that the club was in advanced talks over a potential investment, Bloomberg reported. On 26 June 2012, the club said it had entered into an exclusivity arrangement with a potential investor, Daily Mail reported.

UK-based ICAP Shipping acquires India’s CTI Shipbrokers

UK-based group ICAP plc’s (LON:IAP) shipping arm, ICAP Shipping, said on Thursday that it had purchased Indian dry, tanker and sale and purchase broking specialist CTI Shipbrokers (India) Pvt Ltd, making it a wholly-owned unit.

The transaction involved the purchase of shares with a gross asset value of USD2.464m (EUR1.912m) from Tradex Chartering & Trading Private Limited and Captain Jaideep Kapoor. CTI Shipbrokers (India), which has offices in New Delhi and Mumbai and a workforce of 28, will operate as a unit of ICAP Shipping and will be led by Captain Kapoor as CEO, the buyer said.

As a result of the takeover, ICAP Shipping will be able to benefit from the rising shipping demand in India, which is an opportunity for strong growth in shipbroking, ICAP Shipping’s CEO, Henry Liddell, noted.

ICAP Shipping is present in London, UK, Singapore, Stamford, Connecticut, US, Shanghai, China, Hamburg, Germany, and Gibraltar. It specialises in dry cargo and tanker chartering, sale and purchase, freight derivatives and research and other shipping services.

ICAP plc is headquartered in London, UK. It operates as a voice and electronic interdealer broker and provider of post trade risk and information services, with presence in over 32 countries.

GE Capital partly exits Thailand’s Bank of Ayudhya in $466m deal

GE Capital, a unit of US technology and financial services group General Electric Co (NYSE:GE), said on Wednesday it had disposed of 7.6% in Bank of Ayudhya Pcl (PINK:BKAYY) in Thailand, after receiving substantial interest from investors.

GE Capital sold the stake in the lender to institutional investors, it said, adding it would explore options for its remaining 25.3% interest in Bank of Ayudhya.

The vendor gave no financial details of the sale, but Reuters cited an informed source as saying that the US company had gained some USD466m (EUR) from the divestment.

GE Capital said it had committed to sell no more Bank of Ayudhya stock in the market for a six-month period.

The US group, which has been selling non-core assets as part of an overall restructuring under the CEO Jeff Immelt, agreed in 2007 to take a stake in the Thailand bank, investing THB22.3bn (USD720.4m/EUR559.4m) in total, or THB16.00 a share. At the exchange rate at the time, the investment was worth USD626m, Reuters said.

Sources told the news agency earlier that GE Capital, which first bought 25% in Bank of Ayudhya and then increased its interest to almost 33%, sold the 7.6% stake in the lender at THB31.30 a share, doubling the value of its initial investment.

UK’s Rentokil acquires US pest control firm Exterminator

UK business services company Rentokil Initial Plc (LON:RTO) said today it is purchasing US pest control firm Western Exterminator Company for an initial sum of USD99.6m (EUR77.2m) in cash.

In addition to the initial amount, Rentokil will also provide a deferred consideration of up to USD15m within 18 months, using its existing financial facilities. The transaction, which will be EPS enhancing in year one, is seen to be concluded later in 2012, after receiving the needed regulatory approvals. It is in line with Rentokil’s strategy of carrying out acquisitions of pest control businesses in North and Latin America as well as in the Middle East.

Following the takeover, Rentokil will establish itself as the third biggest pest control company in North America and will have pro-forma annual revenues of USD330m and USD90m in pest control services and speciality chemical products distribution, respectively.

Western Exterminator operates via two divisions. The first one is the pest control segment which has 36 offices mainly in California and the adjacent states of Arizona and Nevada. The other is the products division which is engaged in the wholesale distribution of speciality chemicals to the West Coast and central US regions.

Last year, the target business recorded an EBITA of USD4.1m on revenues of some USD149m. The gross assets being acquired have a total book value of USD36.7m.

Shares in toy maker Hornby sharply down after profit warning

Toy maker Hornby plc (LSE:HRN) saw its shares fall more than 40% today after announcing that the company will not make a profit this year.

Hornby has blamed disappointing sales of London 2012 merchandise, as well as a disruption to supplies from China, for its weaker performance.

The company had produced a range of commemorative products, such as model taxis and buses, to mark the London 2012 Olympic Games and at the start of the summer it had high expectations for their performance. However, in the end sales were lower than forecast. This was attributed to a large quantity of Olympics merchandise from other licensees and deep price discounting by retailers.

The supply problems relate to a Chinese supplier that is in the process of rationalising its manufacturing facilities. Although this supplier accounts for up to 35% of Hornby’s purchases, this has been reduced from around 75% four years ago. Hornby noted that it is continuing to diversify its supply base in China and in India.

Macro-economic factors are also impacting on Hornby’s performance, with consumer spending still depressed and retailers continuing to buy cautiously, the manufacturer said.

Last year the company made a profit of GBP4.5m.

Hornby’s directors now believe that its results will be approximately break-even for the financial year ending 31 March 2013. The company noted that it continues to benefit from a strong balance sheet. Net debt at 31 August 2012 was GBP7.8m, down from GBP14.3m a year earlier.

Looking ahead, Hornby said that its performance would be “constrained significantly” in the current financial year but the company would be focusing on cost control and has also stepped up its efforts in innovation and product development.

Groupon acquires restaurant booking firm Savored

US online commerce marketplace operator Groupon Inc (NASDAQ:GRPN) said that it had taken over domestic restaurant reservations provider Savored.

Groupon did not reveal the conditions of the deal, which has been finalised.

Savored’s platform for yield management is complementary to Groupon’s initiatives in the yield management field, where it is active via Groupon Now!, Groupon Now’s vice president, Dan Roarty, noted. The acquired business’s online platform Savored.com allows for booking reservations at restaurants with automatic deductions of up to 40% of the bills when customers visit the locations. Through its platform, Savored has connected over 1,000 US restaurants with clients.

Groupon was set up in November 2008 and is headquartered in Chicago, Illionis. The company has an office also in Palo Alto, California, locations across North America as well as regional offices globally, including in Europe, Latin America and Asia.

It has a global workforce of some 10,000. Via its eponymous website, groupon.com, Groupon provides third-party offers of goods and services at a discount in North America and worldwide. It connects businesses and consumers, delivering over 1,000 deals per day globally. The company publishes offers from 48 countries.

Groupon’s consolidated revenue soared 45% on an annual basis to USD568.3m (EUR440.5m) in the second quarter of 2012. The company swung to an operating income of USD46.5m from an operating loss of USD101m in the second quarter of 2011.

Private equity sponsor Advent plans €775m offer for Dutch Mediq

US private equity firm Advent International Corp, via AI Garden BV, a new established wholly-owned subsidiary of funds managed by the company, intends to make a recommended public offer of EUR13.25 (USD17.16) per share in cash for Dutch drug distributor Mediq NV (AMS:MEDIQ), the two parties said in a joint statement today.

The offer, which values the target’s capital at EUR775m, is expected to be launched in the fourth quarter of 2012. It represents a premium of 53% over the closing price of Mediq on 21 September and a 47% premium over Mediq’s average closing price for the last three months. Advent said it would fund the deal via a mixture of debt and equity.

The offer was unanimously agreed by the target’s management and supervisory board. In addition, Advent already secured support from shareholders holding 20.2% of the target’s outstanding share capital.

The offer is conditioned upon securing a minimum acceptance level of 95% of Mediq’s issued and outstanding stock. It is also subject to getting regulatory clearance, among other conditions.

For Advent, the planned acquisition is in line with its strategy to invest in high quality businesses. On the other hand, the buyer is expected to provide support and resources to Mediq, which will help it carry out its growth strategy and cope with the challenges in some markets, the pair said.

Advent has employed Deutsche Bank AG (ETR:DBK), Rabobank Group, BNP Paribas SA (EPA:BNP) as financial advisors, Freshfields Bruckhaus Deringer LLP as legal counsel, Marlborough Partners ltd as debt advisor and FTI Consulting Inc (NYSE:FCN) as communications advisor in connection with the offer. ING Bank NV, ABN AMRO Group NV serve as financial advisors, Allen & Overy LLP as legal counsel and Citigate First Financial as communications advisor to Mediq.

UK insurer Tawa sells stakes in reinsurance firms KX and OX

British insurer Tawa Plc (LON:TAW) said on Monday it had inked a deal to sell its interest in KX Reinsurance Co Ltd (KX Re) and its wholly-owned unit OX Reinsurance Co Ltd (OX Re) to Catalina Holdings Ltd for a maximum of USD30m (EUR23.1m).

Under the terms of the agreement, Catalina will pay a minimum of USD28m in cash plus up to USD2m more based on KX Re’s financial performance till closing. The transaction is awaiting clearance by UK’s Financial Services Authority (FSA) which is expected to be obtained by the year end.

Tawa will use about USD15m of the total proceeds to repay an inter-company loan facility between it and KX Re on closing. The company intends to use the balance to fund new opportunities as well as for further debt repayment and general working capital purposes.

The divestment is part of Tawa’s strategy to shed some of its portfolios, the company said, adding that the previously announced formal sales process of its entire share capital is continuing as planned. Tawa estimates that the disposal of KX Re will reduce its equity by USD19m, if the maximum consideration is received.

Tawa bought KX Re and its wholly-owned unit in May 2007 and March 2011, respectively. Including the sale proceeds, the total value extracted from its investments in the two entities is projected to be USD126m. Last year, the company earned management fees of USD2m from KX Re.

KPMG consulted the vendor on the transaction.