We’ve heard some speculation this afternoon that Bausch and Lomb (BOL) may be the target of a take-over. We haven’t heard any names (though considering its size, it could be anyone) and have no idea if the rumors are true but they are up 9%. So maybe there’ll be a buy or maybe it’s just the weather (and the drinks). Anyone have any guesses?
Rumors that we’d seen an announcement today that the Jefferies Group would be acquired by Mass Mutual seem to have gone nowhere. The stock has been more or less flat all day, dipping slightly below where it closed. The chatter about the acquisition has ceased.
We’d say that this is a definite sign that nothing is happening, and that this was all just rumor. But we have a feeling that the reason we aren’t hearing from our Jefferies rumor-mongers is that they all sneaked out of work early to enjoy the first beautiful day in New York City in living memory.
There is no peace in the Valleywag after the site reported a rumor that Weblogs founder Jason Calacanis, now with Sequoia Capital, is trying to nab nappy headed hoedown patron Don Imus to start a web media network.
I’ve never listened to Imus, never spoken to Imus, and have no interest in being in business with the man.
Really dude… come on.
In other news, Dead Horse Media is in acquisition talks with IACI, Elizabeth Spiers writes Socialite Rank and Citi is buying Deutsche Bank.
Blog mogul wooing Don Imus? – [Valleywag]
The banking world is rife with takeover and acquisition talk Yesterday a new rumor added to the cacophony of chatter about JP Morgan Chase getting into the acquisition game , private equity eyeing financial services firms, and the ongoing bidding war for ABN Amro. The newest rumor is that the Jeffries Group may be acquired, possibly by MassMutual.
Reuter’s quotes an options guy on the rumors.
“There is a rumor that MassMutual will make a bid for Jefferies Group between now and Friday,” said William Lefkowitz, an options strategist at brokerage firm vFinance Investments in New York.
In recent months, the options market and rumor mill has been a surprisingly accurate predictor of buyouts. In fact, the accuracy of the options markets at predicting takeover announcements has prompted some to worry that insider-trading has become widespread. At the Dow Jones’ Wall Street Journal’s Deal Journal (which, we guess, might be called DJ WSJ WJ but we’ll stick with Deal Journal), the boys have begun to wonder if it might be smart to assume that all takeover rumors are true.
We spoke briefly to someone insider Jeffries who told us that the rumor was on everyone’s lips at the mid-sized bank.
“Everyone’s joking about how we might be working for an insurance company by the end of the week,” he told us.
Mass Mutual is shorthand for Massachusetts Mutual Life Insurance Company.
Jefferies shares, options up on takeover talk [Reuters]
The raciest rumor swirling around Wall Street today has a certain former big shot banker’s wife filing for divorce. The banker—who we’re not naming at this time because we haven’t been able to confirm the story—was allegedly let go from a top spot with his former employer after news of his close relationship with another well-known Wall Street personality made headlines.
Warning: we heard this story indirectly. From someone who said they heard it from someone who said it came from someone very close to the allegedly divorcing couple. So we’re not vouching for the story. Yet.
None of the parties rumored to be involved could be reached for comment. New York State automatically seals divorce filings so it is not possible to confirm the story through the courts.
It’s widely known that Jamie Dimon’s been jonesing for a big acquisition for some time and, according to our semi-credible sources’ quasi-credible sources, Bear Stearns might just be the fix. While there’s been some whispering on the Street that Dimon could be eyeing Washington Mutual Inc., we’re told that Bear’s issued a firm-wide hiring freeze as a result of Dimon’s imminent shopping spree and Bear’s overtures. Know something we don’t? You can find us in our usual haunts. On a related note, Carney and I watched Heathers three times this weekend. (His idea).
Viacom executives are in London negotiating the purchase of LastFM, the London based “online social music network” (read: internet radio station), according to a music business source familiar with the negotiations. The purchase price is said to be $450 million dollars.
Viacom has been reportedly looking to expand its online presence. Reports have claimed that Viacom executives were disappointed that they did not pickup YouTube. LastFM recently signed a deal with Warner Music Group giving the internet radio station the rights to play WMG’s entire music catalog. Shortly before YouTube signed its deal to be acquired by Google, the video sharing network signed several rights deals with video content owners. There has been some speculation that LastFM’s recent dealmaking might have cleared the way for an acquisition by a larger media or internet company.
Neither Viacom nor LastFM returned calls this morning seeking comment on the rumor.
We just learned that you literally can’t order a cup of coffee on Wall Street without hearing talk about a possible combination of General Motors and Chrysler. It’s a treacherous block-and-a-half of icy sidewalks (remember, some of us DealBreakers are still on crutches) to the Starbucks on Wall Street, and we passed two different groups of people openly discussing the rumors. And forget about the line inside Starbucks. Was anyone talking about anything else? (The weather doesn’t count. But, to be frank, they were also talking about airlines.)
So let’s face it. This is all a bit premature. The Germans have just begun considering what they might do with Chrysler. There’s no doubt the Daimler-Chrysler merger has not worked out as hoped. And surely Daimler wants to do something big with Chrysler. But it seems very early to speculate on an acquisition by General Motors since Daimler doesn’t even seem sure it wants to spin-off Chrysler. It has said it won’t rule anything out but right now it’s announced plans are an internal restructuring.
Of course, hardly anyone buys that the announced restructuring will go far enough to turn around the troubled Chrysler division. So something bigger must be in the offing, right? But spinning off Chrysler poses more than a couple of problems. First, no-one really knows how to price Chrysler’s US business as a stand alone entity. It’s got earnings of $61 billion but took a sizeable loss last year. And as hot as the domestic US auto-parts business might be these days—helped out by a declining dollar making US manufacturing relatively cheaper—there really aren’t that many people clamoring to get into the business of designing, making and selling cars and trucks. Even Kirk Kerkorian seems to have thrown in the towel.
Let’s face it. If you are a private equity shop with a couple of billion in your pocket, do you get into the parts business with multiple customers or do you put all your eggs in one basket and pick up an entire auto-manufacturer? And do you really want to pick-up all those union, health-care and pension legacy costs? When the union strikes, do you want them boycotting the goods of every company in your portfolio?
And this is probably one reason the idea of a combination with General Motors won’t go away. Because if Daimler is selling, there probably aren’t all that many potential buyers. The New York Times story on a possible joint venture between Chrysler and General Motors involving a big SUV at least tells us that Rick Wagonner is talking to the Germans. (An aside: apparently, US car-makers still spend a lot of their time thinking about those SUVs. Now they just want them all to be hybrids.)
The story is being pushed most heavily by the Detroit auto press and rumor mill, especially Automotive News—folks who actually know a lot about what goes on in Auburn Hills, Flint and all those other Detroit-y places where cars are made. A lot of the speculation to be based on the fact that General Motors replied to questions about the possible merger with a terse “no comment.” But this seems to rest in part on a misunderstanding of the disclosure rules governing public comments by publicly held corporations. The board and management of General Motors probably have fiduciary duties to at least consider the possibility of combining with Chrysler—just as they had a duty to consider proposals last year coming from Carlos Ghosn about a three way GM-Nissan-Renault deal. That produced a lot of sound and fury, but signified nothing much. Here GM probably can’t say “no way, no how” right off the bat. But they can’t say much else either without issuing a press release and filing it with securities regulators.
Would the deal make sense? We’re hardly auto-industry experts but we can rattle off some more problems with the deal off the top of our caffeine-and-oxycodone addled brains. Take the potential dealership glut. What are they going to do with all those GM and Chrysler’s sales shops? Surely there’s way too much geographic overlap. (But then again, how much is this property worth? Maybe there’s some hidden real-estate value here.) And when did “bigger and bigger” become the future of US manufacturing? Is that the lesson we think GM learned from watching Chrysler’s combination with Daimler-Benz?
Another problem: GM boss Rick Wagoner is a tightwad. Remember the outsized dowry he and the GM board demanded from Ghosn when they considered the combination with Nissan-Renault? How much would GM pay up for Chrysler? When we called one of our banker friends to ask for a valuation on what GM might pay for Chrysler, he joked that GM might ask Daimler to pay them to take it off their hands.
Want to hear something really devious? Here’s the most under-handed “explanation” we’ve heard so far. And remember, this is all blind speculation by people who are prone to paranoid speculation (albeit people who have made a considerable amount of money trading on paranoid speculation). Here goes: the whole SUV joint venture has been a ruse to feel out Daimler’s dedication to Chrysler and to fish around for possible plans to sell to a GM rival. GM learned that Daimler was talking to someone—possibly Ghosn—and floated the GM-Chrysler merger rumors through the Detroit press to scare off the rivals. Too scheming? As the saying goes, we report (the unsubstantiated, irresponsible speculation), you decide (based on your own prejudices and gut-feelings).
But all this leaves us with a couple of questions: anyone know what Ghosn’s been up to lately? Where’s he been having meetings?
Citigroup is awash in rumors these days. Someone’s leaving. No she’s not. It’s some one else. No it’s not. They’re hiring so and so. No they’re not. They are planning a major corporate restructuring. No they’re not. They’re all on crack. No they’re not, it was just that one guy. It can be hard to keep it all straight. In any case, the stock is trading heavily on these rumors. So we’ve decided to create a little guide to the talk about Citigroup.
Smashing The House That Sandy Built. For quite a while now people have thought that if Citigroup isn’t planning on breaking itself up, it ought to be. While the share price of Citi’s biggest competitors JPMorganChase and Bank of America shot up 20% this year, Citi’s stock performance has lagged behind. Lots of analysts think the parts could be worth more than the whole, and think splitting the huge bank former chief executive Sandy Weill worked so hard to put together might be the best move.
Citigroup is refusing to comment on possible break-up, of course. Thanks to things like Regulation FD, this is more or less a legal requirement—that kind of news would have to come from an official company press release. But that hasn’t stopped traders from making bets on Citi options.
Here’s CNBC.com’s report from today.
“There are rumors surrounding Citigroup that they are seriously considering breaking themselves up into different entities,” said William Lefkowitz, an options strategist at brokerage firm vFinance Investments in New York. “If Citigroup pursued this strategy, some believe the stock will move up to at least $60.”
“In the options market, investors are speculating that this scenario can occur in the very near term,” Lefkowitz said.
He said this is evidenced by the strong activity in the December calls that give the right to buy Citigroup at $52.50 a share by Dec. 15. Nearly 17,000 of these contracts have traded in the U.S. options market in early Friday trade.
Off With The Head: So if Citigroup isn’t going to break-up, might it be about to be about to oust its chief executive, Chuck “One Buck” Prince? That’s definitely something people are talking about. And Citigroup is doing very little to put down the rumor. There’s widespread dissatisfaction with Prince’s leadership, in part because he is seen as resisting the break-up mentioned above.
So Long Sallie: Citigroup’s chief financial officer Sallie Krawcheck was brought in to restore confidence in the bank after it was rocked by scandal in the late nineties. Charlie Gasparino reported on November 22 that his sources had told him that “she had been expressing her displeasure so much lately to so many people” that it seemed likely she would leave.
Reuter’s today ran with a story about this rumor, including a flat-out denial that Krawcheck was leaving Citigroup.
Citigroup Inc. (C.N: Quote, Profile , Research) on Friday denied persistent speculation that Chief Financial Officer Sallie Krawcheck was leaving the biggest U.S. bank, but declined to confirm she will stay in her current role.
“She is not leaving,” a Citigroup spokesman said.
Asked if Krawcheck would change posts at Citigroup, the spokesman said: “All I can tell you is that she is not leaving the company. I’m leaving it at that.”
This denial, of course, only sparked more rumors. So she’s not leaving but that doesn’t mean she’s staying put as CFO? Krawcheck might be eyeing a new post at the bank. What would her new role be? Well, when you put this rumor together with the one that has the CEO being ousted, you arrive at the possibility that Krawcheck is angling for Prince’s job.
A New CFO? Bank of America’s former Chief Financial Officer, Alvaro de Molina, had hardly left his job when rumors started circulating that he might be going to Citi. His proffered reason for leaving BofA was that new regulations had taken all the fun out of the job. Which is probably true but Sarbanes-Oxley has become just about the excuse for everything these days. It’s almost a cliche. (At least he didn’t say he was leaving to spend time with his family.)
But if the rumors of Krawcheck leaving the CFO post are true right, it would make a lot of sense that Citi would want to bring de Molina on board. The other side of this rumor is that de Molina might be up for consideration for the CEO slot. (See how these things work?)
They’re all on crack. First of all, it was meth. Second, it was an IT guy—albeit a kind of high ranking IT guy—not someone involved in actual banking. Third, DealBreaker actually did some reporting on this, hoping to find a secret ring of meth addicts inside Citigroup. No such luck. Everyone we spoke to expressed extreme skepticism about the entire idea.
“Meth is for Midwest white trash and gays,” one junior banker told us. “Bankers blow rails.” For obvious reasons he asked us to keep his identity under wraps.
Well that concludes this session of rumor-mongering. We’ll update you as the rumors transform into newer, stranger shapes.
From the Wall Street Journal‘s MarketBeat column:
Citadel Investment Group LLC, the $12 billion Chicago hedge fund, says it continues to enjoy a successful year and isn’t suffering from big energy bets gone bad — despite speculation coursing through financial markets today that the firm is dealing with heavy losses.
“We are aware of the rumors. They are completely unfounded,” says Bryan Locke, a spokesman for Citadel.
Mr. Locke wouldn’t give details about the firm’s performance this year. However, an investor in Citadel said the firm remains up about 20% so far this year, despite sharp price declines in the energy markets in recent days. Citadel’s returns are better than major stock market measures this year.
Denial’s not just a river in Chicago. When people deny things you have to ask: well, wouldn’t they say that anyway? Cynicism is usually a safe posture whenever someone in the financial community denies something that might not reflect well on them. In this case, however, the denial is so public and concrete that it seems likely to be accurate. It’s linked to a specific spokesperson and in the Journal--not the way you issue a phony denial. Too much credibility on the line.
So you can probably cross Citadel off the list. But that doesn’t mean the rumors are entirely wrong. There are other hedge funds out there who may be in trouble. It wasn’t long ago that, for instance, Vega Asset Management had to issue a letter to investors reassuring them that the fund was in good health. Anyone spoken to Vega about today’s rumors? We tried calling earlier but haven’t reached anyone yet.
Citadel: Rumors Unfounded [Wall Street Journal]
We’re hearing lots of talk about a rumored hedge fund meltdown. Emails and a conversation with well-placed source all carry the same message: that some hedge fund, somewhere is in the process of crashing and burning. Now it’s finally hitting the wires, with Reuters reporting that the rumors may be pushing up bond prices.
We haven’t been able to confirm anything yet. One source mentioned some bad bets on oil. We need your help! What have you heard? At this point we’ll take anything from unsubstantiated rumor to something your cab driver told you he heard. Of course, informed opinions and people with real knowledge are also welcome. Please leave us a comment or email us at tips(at)dealbreaker(dot)com. And, as always, the identities of all tipsters will be kept anonymous.