Monday, April 30, 2007

Paperstand (YHOO, JNY)

According to the WSJ, the European bank consortium seeking to top ABN Amro’s (ABN) agreed sale to Barclays (BCS) has lined up much of the funding sources needed to pay for its approximately $98.66bn bid. In recent days, Royal Bank of Scotland and the other banks in its consortium, Banco Santander (STD) and Fortis, have made contact with several other large European banks, asking them to help underwrite the potential offer. They plan to issue more stock to shareholders and sell some assets. The final package could represent a record amount for fund raising. The timing of what would be the world's largest-ever bank acquisition hangs on a Dutch court ruling, expected Thu. The consortium will have to launch its official offer by Sun if the Dutch Enterprise Chamber rules that ABN's related $21bn sale of its LaSalle Bank to Bank of America (BAC) can proceed. If the court freezes the sale, delays its ruling or demands further information, the consortium would have more time. RBS is trying to coordinate an unsolicited takeover and breakup of a bank, something that has never been accomplished before. Financing such a deal is riddled with complications. RBS has said its bid would be 70% in cash and 30% RBS shares. The skirmish over ABN, of Amsterdam, has turned into a global brawl over the Dutch bank's units spread around the world. Other banks still could enter bids, as well.

The WSJ reports that Yahoo (YHOO) today plans to announce a $680m deal to purchase the remaining 80% of closely held Right Media that it doesn't already own.

According to the WSJ, the CEO of Jones Apparel (JNY), Peter Boneparth, has spent his 5-year tenure trying to boost the co's fortunes through acquisitions, cost-cutting and overhauling mature labels. But now, faced with a stagnant stock price, dept-store consolidation and a downturn in the moderate-apparel sector, Mr. Boneparth has an ace left to play: selling the $5bn co's top-performing asset, the Barneys New York chain of luxury dept stores that he engineered the purchase of in ‘04. Jones is expected to pursue a sale, though Barneys isn't officially on the mkt yet.

“Heard on the Street” out saying that the subprime meltdown has shown that few banks were able to resist the appeal of making unconventional home loans to riskier borrowers in exchange for charging higher fees. This earnings season, cracks began showing in the quality of many banks' loan portfolios, such as at Countrywide (CFC). Others such as SunTrust (STI) and M&T Bank (MTB) had trouble finding buyers for their riskier loans and were forced to sell them at a loss or mark down their value on their books. Still, some regional and community banks steered clear of the subprime sector. Hudson City (HCBK), Zions (ZION) and UCBH (UCBH) stayed away from making low-documentation or no-documentation home loans, even to the most credit-worthy borrowers. When they wrote home mortgages, they insisted borrowers put at least 20% down and prove that they could pay them off. They collected deposits and focused almost entirely on commercial lending. As a result, they have some of the cleanest loan books and balance sheets in the business. Still, that hasn't stopped investors from penalizing their shares, which are relatively cheap. "The traditional commercial lenders will continue to do their thing, and the traditional home lenders who lost share to those that got in trouble are getting it back," says David Ellison, of FBR Funds.

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