Welcome to September, always a key month for big mergers, but now more than ever. We’ve seen four huge tie-ups in a week, and it tells us this: Big money seems to think economic conditions are uber-ripe.
Here are 4 big mergers you should be keeping an eye on right now:
In the world of mega-merger drama, this tie-up wins all the prizes for the heated rivalry between Comcast and Disney.
In April, reports were that Disney could step in to buy up Sky News if Fox acquired Sky. That would have pushed them over a British regulatory hurdle because the UK authorities feared that control of Sky would give Murdoch too much influence over local media. Rumors at the time were that Murdoch was prepared to increase his original $16.4-billion offer for Sky. Comcast, though, had already bid $31 billion earlier for sky.
Fast forward to September and Comcast ended up outbidding Fox for Sky in a deal valued at over $40 billion. The drama was ratcheted up to fever pitch because Comcast and Fox had to bid blindly. Comcast really came through on this one, outbidding Fox by more than $2 per share. Fox bid $20.60 per share, while Comcast bid $22.71 per share for Sky.
The result? The biggest takeover in European media history.
#2 Randgold Resources – Barrick Gold
Now we have a new $18-billion gold-mining giant to drool over thanks to the all-share merger just agreed. The deal gives Barrick shareholders some 66.6 percent of the new company, with Randgold shareholders getting the remaining 33.4 percent.
The merged company will be the biggest gold miner in the world and will produce over 200 tonnes of gold annually.
The entire gold-mining industry has been under pressure for a while over “undisciplined growth” and “poor returns”, according to Barrick Executive Chairman John Thornton. This deal creates a company designed to end that criticism.
"Its goal will be to deliver sector leading returns, and in order to achieve this, we will need to take a very critical view of our asset base and how we run our business, and be prepared to make tough decisions," Thornton said in a statement.
#3 Sirius XM – Pandora
Pandora music-streaming service accepted a $3.5-billion bid from New York-based digital media company Sirius XM on Monday.
Pandora is hoping this will be its revival, but the jury seems to still be out on that.
Sirius is smaller—with just over 30 million paying subscribers—but it has more money. Pandora is bigger—with some 70 million active listeners (mostly ad-supported), but it’s not on-demand listening (you don’t get to choose, specifically, what you listen to because of copyright laws). Related: The Best Time To Prepare Is While The Bull Runs
Pandora is in a bit of a money pinch because it is paying higher copyright fees to record labels due to the set-up of its contracts. Some say it lost over $100 million last year and the year before on this. The hoped-for comeback is largely based on the possibility that Sirius could re-negotiate these record label contracts for Pandora.
#4 Michael Kors – Versace
The fashion industry is also getting into September’s merger mania, with Michael Kors’ agreement to buy Versace—esteemed Italian fashion house—in a deal valued at $2.1 billion.
“With the full resources of our group, we believe that Versace will grow to over US$2.0 billion in revenues. We believe that the strength of the Michael Kors and Jimmy Choo brands, and the acquisition of Versace, position us to deliver multiple years of revenue and earnings growth,” Michael Kors Chairman and CEO John D. Idol, said in a press release.
And mergers might see some better times all around …
According to the Wall Street Journal, Justice Department’s antitrust chief, Assistant Attorney General Makan Delrahim, said the department is going to significantly reduce the review time of proposed mergers.
By Michael Scott of Safehaven.com
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