American Airlines files for bankruptcy

By Kyle Peterson and Matt Daily

Tue Nov 29, 2011 10:20pm EST

(Reuters) – American Airlines filed for bankruptcy protection on Tuesday to cut labor costs in the face of high fuel prices and dampened travel demand, capping a prolonged descent for what was once the largest U.S. carrier.

AMR Corp, the parent of American Airlines, also filed for bankruptcy and replaced its chief executive.

The company, which employs about 88,000, has been mired for years in fruitless union negotiations, complaining that it shoulders higher labor costs than rival domestic and foreign carriers that have already restructured in bankruptcy.

United Continental Holdings Inc’s United Airlines and Delta Air Lines Inc, both of which used Chapter 11 to cut costs and later found merger partners, are now the largest U.S. carriers. American ranks third.

“The world changed around us,” incoming Chief Executive Tom Horton told reporters on a conference call. “It became increasingly clear that the cost gap between us and our competitors was untenable.”

AMR named Horton as chairman and chief executive, replacing Gerard Arpey, who retired.

American plans to operate normally while in bankruptcy, but the Chapter 11 filing could punch a hole in the pensions of roughly 130,000 workers and retirees.

AMR pension plans are $10 billion short of what the carrier owes, and any default could be the largest in U.S. history, government pension insurers estimated.

Ray Neidl, aerospace analyst at Maxim Group, said a lack of progress in contract talks with pilots tipped the carrier into Chapter 11, though it has enough cash to operate. The carrier’s passenger planes average 3,000 daily U.S. departures.

“They were proactive,” Neidl said. “They should have adequate cash reserves to get through this.”

PROBLEMS TO ADDRESS

Bankruptcy gives AMR a chance to pare less profitable operations, and could result in the sale of flight routes. The process also gives AMR more flexibility, according to Jack Williams, a professor of law at Georgia State University.

“There are considerable tax benefits that they will be able to use in a bankruptcy case, and they will be able to more aggressively manage their liabilities,” Williams said.

But analysts question whether the bankruptcy will address operational shortcomings that have eroded revenue.

“Bankruptcy is not necessarily the be-all, end-all,” said Helane Becker, an analyst with Dahlman Rose & Co. “They’ve got more problems to address in addition to the cost problem.”

Shares of AMR closed Tuesday down $1.36, or 84 percent, at 26 cents, down from a 52-week high of $8.89 on January 7. Stock typically is wiped out in bankruptcy.

Shares of rival airlines rallied on expectations that reduced competition could boost fares. AMR had kept a lid on industrywide fares in its effort to keep its airplanes full.

United Continental shares closed up 6.3 percent at $17.63, Delta rose 5 percent to $7.80 and US Airways Group Inc climbed 4.4 percent to $4.46.

AMR shares were halted 28 times on the NYSE on Tuesday for triggering a circuit breaker rule, activated when a stock moves up or down at least 10 percent within five minutes.

SLIMMED-DOWN AMR

In its bankruptcy petition filed in Manhattan, AMR reported assets of $24.72 billion and liabilities of $29.55 billion. The company has $4.1 billion in cash.

One bankruptcy rule is “don’t wait too long,” Harvey Miller, a partner at Weil, Gotshal & Manges representing AMR, said at a court hearing. “Don’t wait until the course is irreversible. That is what American Airlines is doing today.”

AMR’s bankruptcy filing showed few details about how the company would proceed, said Stephen Selbst, a bankruptcy attorney with Herrick Feinstein in New York.

“It’s possible they are still in negotiations and don’t want to put something on paper that might prejudice those negotiations,” he said.

Experts believe AMR stands to save billions by restructuring its obligations in bankruptcy.

“AMR will no longer have its defined benefit pension plan, helping absorb nearly $7 billion in debt,” Morningstar equity analyst Basili Alukos said.

“I imagine the company can save between $1.2 billion to $1.5 billion in labor costs, in addition to savings on repair and maintenance and better fuel burn,” he said.

MERGER IN THE OFFING?

AMR said the bankruptcy has no direct legal impact on non-U.S. operations. It also said it was not considering debtor-in-possession financing.

But it could susceptible to unsolicited takeover bids from rival carriers. AMR has long said it could thrive on its own.

Robert Herbst, an analyst with AirlineFinancials.com and a former American pilot, said there was a “95 percent” chance American would join up with another carrier within two years.

“US Airways is probably toward the top of the list but it wouldn’t be the only (potential merger partner),” he said.

A US Airways representative did not immediately return a phone call seeking comment.

Most large U.S. carriers are the products of mergers.

United Continental combined the former United Airlines and Continental Airlines, while Delta bought the former Northwest Airlines. US Airways was formed from a 2005 merger with America West Airlines.

US Airways and United Airlines filed for bankruptcy protection in 2002, and Delta and Northwest in 2005. US Airways had tried to buy Delta out of bankruptcy.

Japan Airlines Co, one of American Airlines’ alliance partners, filed for bankruptcy last year.

American Airlines said it would remain an active member of the oneworld global airline alliance.

LABOR PAIN

American struggled with labor costs despite massive concessions from unionized workers in 2003, which enabled it to avoid Chapter 11 at the time.

“That deal wasn’t good enough,” former American chief Robert Crandall told Reuters. “The other airlines that went bankrupt cut their costs much deeper than American.

“If you look at all of the elements of the problem, they all stem back to costs,” he said. “It hasn’t cut capacity effectively given the constraints” that labor placed.

Contract talks with pilots hit a wall in recent weeks over wages, benefits and work rules. Talks with unionized flight attendants have also flagged.

“While today’s news was not entirely unexpected, it is nevertheless disappointing that we find ourselves working for an airline that has lost its way,” David Bates, president of the Allied Pilots Association, said in a statement.

A wave of pilot retirements this year prompted speculation of a Chapter 11 filing, given that the retirements could preserve pensions that might be at risk of being terminated.

“The 18-month timeline allotted for restructuring will almost certainly involve significant changes to the airline’s business plan and to our contract,” Bates said.

The case is In re: AMR Corp, U.S. Bankruptcy Court, Southern District Of New York, No. 11-15463.

(Reporting by Kyle Peterson in Chicago; Matt Daily, Nick Brown, Caroline Humer, Chuck Mikolajczak and Jonathan Stempel in New York; Tom Hals in Wilmington, Delaware; Karen Jacobs in Atlanta; John Crawley in Washington; John D. Stoll in Detroit; and Tanya Agrawal in Bangalore; Editing by Gopakumar Warrier, Maureen Bavdek, John Wallace, Derek Caney and Carol Bishopric)

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AT&T’s T-Mobile deal could be affected by election

By Lucas Shaw

Mon Nov 28, 2011 10:19pm EST

NEW YORK (TheWrap.com) – The chances of an AT&T-T-Mobile merger grow dimmer by the day, but there may yet be hope on the horizon for the telecommunications giants — next year’s election.

The telecom industry has benefited from a change in administration before: In the 1990s, the Federal Communications Commission opposed SBC’s acquisition of AT&T during a Democratic administration, only to later approve it under a Republication administration.

The current FCC administration has already indicated its displeasure with the proposed deal, which would unite AT&T, the country’s second largest wireless communications service provider, and T-Mobile, the fourth largest.

That prompted AT&T and Deustche Telekom, which owns T-Mobile, to remove their application.

The two companies may still file with the commission again, and the Department of Justice’s antitrust lawsuit is slated for February.

While they would need the approval of both the FCC and DOJ to move forward, both of those opponents may change their tune after the election.

If Barack Obama loses to a Republican, who would then make new appointments, rest assured the regulatory environment will become more favorable.

“If the Republicans win, there is a new FCC and a Republican administration will be a lot more positive toward this merger than a democratic one,” said longtime telecom analyst Roger Entner, founder of Recon Analytics.

Each Republican candidate has been outspoken about reducing the government’s regulatory enforcement. The most famous example is Rick Perry calling for the abolition of the Environmental Protection Agency — and then leaving that off his list of three, er, two departments he’d get rid of.

But each candidate has made clear that America needs to be more friendly to business. Herman Cain says America is ready for a businessman as chief executive. As Cain’s candidacy continues to shoot itself in the foot, enter multimillionaire Mitt Romney.

Romney’s new rival Newt Gingrich has spent the past few years as a lobbyist — or a public advocate. Either way, he is unlikely to increase oversight of any billionaires.

Cult favorite Ron Paul is more a libertarian than a Republican, so one can only imagine how much deregulation would happen if he were elected.

In this case, the regulatory issue is that only four telecom companies dominate the U.S. market, and the acquisition would reduce that number to three. There would be two giants — Verizon and AT&T — and Sprint, large but much smaller than the other two.

The arrival of a Republican president doesn’t mean the deal would simply pass through without a fight, but it does mean that AT&T and T-Mobile may be cleverly stalling. By withdrawing their FCC application, they not only prolong the process, but prevent some of the information about the deal’s impact from getting out sooner.

Jeff Kagan, an independent tech analyst, said the situation reminded him of SBC’s attempted acquisition of AT&T in the late 1990s.

At the time, Reed Hundt, the chairman of the FCC under President Bill Clinton, said such a deal was unthinkable.

In 2004, with a business-friendly Republican administration — and AT&T weaker than it once was — the deal got approved.

So could such a shift happen if a Republican is elected?

“That’s what happened in the past,” Kagan said.

The DOJ case begins in February, and that may come out in AT&T’s favor. The FCC has also indicated it needs to approve the withdrawal of the application, but AT&T says it is in the right and can withdraw when it wants.

Either way, many analysts have placed the deal on its deathbed.

“I don’t know if it’s dead, but it’s clearly on life support,” said Christopher King, analyst at Stifel Nicolaus. “They have an uphill battle and, quite frankly, even if they win the lawsuit against the DOJ they still need to get FCC approval, which is likely to be even more difficult.”

Yes, the FCC seems to be a major impediment.

AT&T and T-Mobile said they removed their application from the FCC to focus on their antitrust case with the Department of Justice — and that may be true in some respects. However, when FCC Chairman Julius Genachowski said that the deal was not in the public interest back on November 22, it was clear to everyone that the FCC was against the merger.

Entner said he thinks the FCC has been particularly hostile to the deal.

“If you look at it, the FCC did the press conference on the Tuesday before Thanksgiving,” Entner said. “Couldn’t that have waited a week and everybody would have had a nice Thanksgiving?”

The FCC has declined to comment further, referring everyone to its comment on November 24, when it said it would consider the two companies’ request that the application be withdrawn.

Kagan believes the FCC is doing the right thing because the merger would be bad for the market. But whether you think the deal is a good idea or not, most people seem to agree that this FCC has no intention of approving it.

And that’s where the election comes in.

“I’m sure would prefer a different administration with a different head of the FCC and somebody to be more favorable to a merger happening,” Kagan said. “But even if it’s a Republican administration, it doesn’t necessarily mean it’s going to happen.”

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Dealtalk: In twist, blocking AT&T deal could hurt rivals

By Nicola Leske

NEW YORK | Fri Nov 25, 2011 6:15pm EST

(Reuters) – Driven by antitrust concerns, U.S. regulators are fighting hard to block AT&T’s (T.N) $39 billion deal to buy Deutsche Telekom’s (DTEGn.DE) T-Mobile USA. But, in an ironic twist, smaller U.S. wireless rivals may suffer more if the deal is blocked than if it is approved.

T-Mobile USA would emerge as a stronger, scrappier competitor thanks in large part to the hefty breakup fee it is entitled under the AT&T deal. And on its own, it is likely to fight harder for the low end of the market that is currently the playing ground for the likes of Sprint Nextel Corp, MetroPCS Communications Inc (PCS.N) and Leap Wireless International (LEAP.O), analysts said.

T-Mobile USA will “emerge as a stronger, more formidable competitor once the uncertainty of the merger has elapsed and its network quality is enhanced via the acquisition of the AT&T spectrum assets,” said Jim Breen, an analyst at William Blair.

The AT&T deal — the largest transaction announced this year — has run into serious obstacles both at the Department of Justice and at the Federal Communications Commission, which worry about the antitrust implications of a merger of the No. 2 and No. 4 U.S. wireless carriers.

AT&T has said it would withdraw its application to the FCC to focus on persuading the Justice Department. The company also said it would take a $4 billion charge to account for a breakup fee in case the takeover fails.

Under the terms of the merger agreement, a failed deal would entitle T-Mobile USA to $3 billion in cash plus spectrum and roaming agreements.

In a research note, Moody’s said that could also lead to a network sharing deal between the two companies, reasoning that it “would make sense given the spectrum that AT&T will have to cede to T-Mobile and the 3G roaming agreement between the two.”

That would make life especially hard for No. 3 U.S. carrier Sprint, which has been one of the most vocal opponents of the AT&T/T-Mobile deal, going so far as to file a lawsuit.

William Blair’s Breen predicts that because Sprint and T-Mobile serve similar segments of the market, Sprint will have to try and match T-Mobile’s aggressive pricing to win postpaid customers, thereby diluting its average revenue per user.

“In terms of recruiting new subscribers, Sprint will no longer have the luxury of being the only value postpaid carrier in the market,” Breen said.

Smaller rivals such as MetroPCS and Leap Wireless may be affected even more because T-Mobile is eyeing similar customer segments.

A failure to close the AT&T deal will turn T-Mobile into an even more aggressive competitor for urban prepaid users from these rivals.

MetroPCS and Leap would also lose an opportunity to buy T-Mobile USA assets that AT&T would have had to divest to overcome antitrust objections from regulators.

There has been speculation that AT&T — in a move to assuage the DoJ’s concerns — could bolster MetroPCS’ position to ensure that there is a fourth national competitor in the market but MetroPCS has made it clear that it has no ambitions to become a national carrier.

Representatives for MetroPCS, Leap Wireless and Sprint were not immediately available for comment.

The one winner from the uncertainty over the deal is the largest U.S. wireless carrier, Verizon Communications (VZ.N), Moody’s said. Verizon gets room to execute its strategy while competitors try to salvage the transaction, Moody’s said.

(Reporting by Nicola Leske; Editing by Paritosh Bansal, Bernard Orr)

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Soochow Securities says to launch IPO premarketing

SHANGHAI | Thu Nov 24, 2011 7:47pm EST

(Reuters) – China’s Soochow Securities, a mid-sized brokerage, plans to offer up to 500 million shares in its Shanghai initial public offering and will kick off pre-marketing on November 28, the company said on Friday.

Soochow, ranked China’s No. 28 brokerage last year, will conduct the roadshow from November 28-29 and will issue a price range for the Shanghai IPO on November 30, it said in a statement to

the Shanghai Stock Exchange.

It is expected to set the IPO price on December 5.

The company, which has obtained regulatory approval for its listing in September, did not provide a fundraising target.

Citic Securities (600030.SS) is the underwriter for the offering.

Soochow Securities, based in the eastern Suzhou city, has an asset base of 18.7 billion yuan ($2.94 billion). Its larger rival Founder Securities (601901.SS) raised 5.85 billion yuan in August.

($1 = 6.3680 yuan)

(Reporting by Ruby Lian and Fayen Wong; Editing by Jonathan Hopfner)

(This story corrects pricing dates in paragraph two and three)

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Exclusive: Comverse billing unit draws buyer interest

By Nadia Damouni

NEW YORK | Wed Nov 23, 2011 8:28pm EST

(Reuters) – Comverse Technology Inc (CMVT.O), a software developer that became a poster child for a major stock options backdating scandal, has been approached by bidders interested in its core division, sources close to the matter said.

Comverse Technology has been sharing financial information with prospective parties, including large global technology companies, for its telecommunications billing software unit, Comverse Network Systems, the sources said.

The interest in Comverse Technology’s unit comes as the company finally emerges from the aftermath of the long-running scandal, relisting onNasdaq two months ago.

Former Chief Executive and founder Jacob “Kobi” Alexander fled to Namibia in 2006 to escape federal charges related to the scandal. He has fought extradition to the United States since, at one time pledging to invest millions of dollars in Namibia and making political connections there.

More than 200 companies were caught in an options backdating scandal that broke a few years ago.

In December 2009, Comverse Technology settled a class action lawsuit related to the scandal for $225 million, with Alexander contributing $60 million.

Comverse Technology became compliant with its regulatory filings only in September this year.

The CNS unit posted $182 million in revenue, accounting for nearly half of Comverse Technology’s overall revenues for the quarter ending July 31. Comverse Technology has a market capitalization of about $1.3 billion. The company’s shares rose 1.5 percent on Wednesday to close at $6.60.

Hedge fund Cadian Capital Management LLC, which holds 4.18 percent in Comverse Technology and recently ran a proxy fight at the company, said in a regulatory filing last month that the unit alone could be worth more than $2 billion.

Cadian drew that conclusion based on the revenue multiple paid by private equity firm Permira for Alcatel-Lucent SA’s (ALUA.PA) global telecommunications business last month. Permira paid $1.5 billion for the business.

Goldman Sachs Group Inc (GS.N), which has been working with New York-based Comverse Technology for the last two years, is advising it on strategic alternatives, including any bidding interest. Investment bank Rothschild ROT.UL is advising the board, these sources said.

Representatives for Comverse Technology, Goldman Sachs and Rothschild declined to comment.

This would mark the third attempt since 2006 that Comverse Technology has tried to sell itself or its assets, the sources said.

In its last attempt in 2010, Comverse drew interest from Oracle Corp (ORCL.O) and Israeli competitor Amdocs Ltd (DOX.N), sources told Reuters at the time.

But a deal did not happen in part because Comverse was not current on its financial statements.

Amdocs declined to comment, while Oracle was not available for comment.

CROWN JEWEL

Comverse Technology said in September it would look to unwind its holding company structure, which also includes its 54.5 percent stake in security intelligence software maker Verint Systems Inc (VRNT.O) and 66.5 percent ownership in cellular software company Starhome.

The board is looking for tax-efficient ways to spin off Verint, creating a holding company that would have certain liabilities and cash, but no operations, a source said.

Comverse Technology would continue to own a majority stake in Verint under this structure, the source said.

This would then give Verint the option of purchasing the holding company and “collapse it” through a reverse merger.

“It could be a relatively tax-efficient way for Verint to be liberated, free to do what it needs to do to grow its business and shareholder value,” the source said.

Comverse shareholders have eagerly awaited the spin-off or sale of Verint, which is considered Comverse Technology’s “crown jewel,” two shareholders who requested anonymity told Reuters.

“Our preference is that they use that controlling position to engineer a strategic transaction with someone and even a financial transaction,” one shareholder said.

These shareholders said they believe one of the best combinations for Verint would be merging it with Israeli-based peer Nice Systems Ltd (NICE.TA), creating a more significant competitor against companies such as IBM Corp (IBM.N).

However, Nice would have to be willing to take on Verint’s significant debt, which was $591 million as of July 31.

“A Nice merger is the best way to get value for the shareholders of Verint,” a shareholder said. “But I don’t know if the Comverse board sees it that way.”

Nice Systems declined to comment. Verint was not immediately available for comment.

DISSIDENCE

In October, New York-based Cadian launched a proxy contest recommending that shareholders vote against three of the company’s directors.

Cadian and proxy advisers Institutional Shareholder Services and Glass Lewis & Co said at the time that Comverse Technology had not managed the restatement process well and so the board needed to be held accountable.

“The duration and expense of the accounting restatement begs the question Cadian has raised about the board’s sense of urgency throughout the process,” ISS said at the time.

Cadian, run by Eric Bannasch, won the campaign on November 16, with the removal of two directors, Raz Alon and Joseph O’Donnell.

Two other directors — Alex Porter and Richard Nottenburg — did not stand for reelection, reducing the board from 10 directors to six.

“There was an assumption made that Alex and Rich were frustrated that the board was not moving in ways that they thought they should be moving,” said one of the sources.

The next board meeting is expected to be held in May, giving shareholders several months to examine whether the current board can create value for the company.

“In a relatively short period of time. The pressure is on the board to deliver,” one shareholder added.

(Reporting by Nadia Damouni; editing by Paritosh Bansal, Bernard Orr, Andre Grenon, and Bob Burgdorfer)

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PCCW’s HKT Trust to raise $1.2 billion in Hong Kong IPO

HONG KONG | Tue Nov 22, 2011 9:15pm EST

(Reuters) – PCCW Ltd’s (0008.HK) telecom business spinoff, HKT Trust, is raising $1.2 billion in an Hong Kong IPO, pricing the deal at the bottom end of an indicative range as global market turmoil dented demand despite the high yield offered.

PCCW said in statement on Wednesday that HKT Trust’s initial public offering was priced at HK$4.53 per share-stapled unit, the bottom of an indicative range of HK$4.53 to HK$5.38.

HKT Trust offered 2.05 billion share-stapled units, putting the total deal at HK$9.3 billion ($1.2 billion), the biggest Hong Kong offer since Citic Securities Co Ltd (6030.HK) raised $1.7 billion in September. The units (6823.HK) will start trading on November 29.

Three sources with direct knowledge of the deal told Reuters late on Tuesday PCCW’s HKT Trust was set to price its IPO at the bottom of an indicative range.

Controlled by Hong Kong tycoon Richard Li, PCCW launched the IPO on November 9. HKT Trust, which will become the first single investment trust to list in Hong Kong, was offered at an attractive 2012 yield of 7.5-8.9 percent. At the offer price, the units will have 2012 yield of 8.9 percent.

However, Hong Kong retail investors, who care more about the first-day pop of IPOs, shied away from the offer, while institutional investors were generally cautious on the poor performance of some big listings this year and HKT Trust’s rich valuations.

“Despite the very challenging economic environment and financial markets during the roadshow, HKT has attracted a broad list of globally renowned institutional investors who appreciate the high quality, defensive nature of HKT,” Alexander Arena, PCCW’s group managing director, said in a statement.

The trust consists of the telecoms business of PCCW and was spun off, but the structure will help Li retain a majority of the business.

China International Capital Corp, Deutsche Bank (DBKGn.DE), Goldman Sachs (GS.N) and HSBC (HSBA.L)(0005.HK) were hired as joint global coordinators for the offering, with JPMorgan (JPM.N), Standard Chartered (STAN.L) (2888.HK) and Singapore’s DBS (DBSM.SI) also helping to underwrite the deal.

($1 = 7.792 Hong Kong dollars)

(Reporting by Donny Kwok; Editing by Jonathan Hopfner and Matt Driskill)

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Netflix raises $400 million in shares, debt

By Himank Sharma and Alistair Barr

Mon Nov 21, 2011 8:44pm EST

(Reuters) – Video rental company Netflix Inc said late on Monday that it raised $400 million in fresh capital by selling convertible debt to long-time backer Technology Crossover Ventures and stock to funds managed by T. Rowe Price.

Netflix has lost about two-thirds of its market value since the company’s shares touched a high of almost $300 in July.

The company, which had $159.2 million in cash and cash equivalents at the end of September, has struggled to renegotiate video content deals. It has also lost subscribers and warned of a first-quarter loss.

The $200 million note sale and the $200 million stock sale will help the company replenish its war chest.

When Netflix Chief Executive Reed Hastings “said hey I’m going to double content spend in 2012, we couldn’t see how it could happen. It was blowing up our model … But if they really had to go out and double content spend, he had to do something to get the cash,” UBS analyst Brian Fitzgerald told Reuters.

“It’s necessary for the company because they have to get some content ahead of the launches in the UK and Ireland.”

As part of the agreement, TCV will receive zero-coupon notes, due in 2018, that convert to Netflix common stock at a price of about $85.80 per share.

Fitzgerald said the valuation of the private placement was indicative of the risk attached to the company’s business model.

“The problem with the stock is you have other deep pocketed technology companies like Amazon, Google, Apple and even the incumbent MSOs (cable companies) and companies like HBO Go, and they are all starting to get their content out just as ubiquitously as Netflix,” he said. HBO Go is an online streaming HBO service.

“I think that the riskiness to the model is baked into that $85 share price.”

The deal required Netflix to raise at least $200 million by selling common stock to other, unaffiliated investors, according to a filing with the Securities and Exchange Commission.

It met that obligation by selling the T. Rowe Price funds 2.86 million shares at $70 per share.

Shares of Netflix fell 0.6 percent to $74 in extended trade on Monday.

TCV, a leading venture capital firm, has been an investor in Netflix for many years. TCV co-founder Jay Hoag is on Netflix’s board.

TCV also has investments in Groupon, Facebook and Electronic Arts.

(Reporting by Himank Sharma in Bangalore and Alistair Barr in San Francisco; Editing by Maju Samuel, Steve Orlofsky and Carol Bishopric)

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Blackstone to buy office portfolio for $800 million: report

Fri Nov 18, 2011 9:25pm EST

(Reuters) – Private equity firm Blackstone Group (BX.N) is set to buy a portfolio of 16 office buildings for about $800 million, the Wall Street Journal reported on Friday, citing people familiar with the matter.

The buildings, spread across six U.S. cities, are currently owned by a Morgan Stanley real-estate fund, which acquired them when it bought Glenborough Realty Trust in 2006, the business daily said.

The real estate fund decided to transfer the remaining buildings to Blackstone rather than repay some $820 million in loans due in December, the paper reported.

Blackstone is talking to lenders to arrange financing for the acquisition, the Journal said.

Blackstone is buying more assets and attracting new money from investors, flexing its muscle as losses pile up at private equity firms. Last month, it agreed to buy 82 suburban office properties for $1.08 billion from Duke Realty Corp (DRE.N).

“Dry powder,” or capital available to invest, reached a record $33.4 billion, giving Blackstone plenty of time and firepower to buy assets when others are pulling back or finding it harder to do deals.

Blackstone did not immediately respond to a request seeking comment.

(Reporting by Jochelle Mendonca in Bangalore; Editing by Viraj Nair)

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Motorola stockholders approve acquisition by Google

Thu Nov 17, 2011 8:02pm EST

(Reuters) – Motorola Mobility Holdings Inc said late on Thursday that its stockholders approved the $12.5 billion deal to be acquired by the search giant Google Inc.

Motorola, which was one of the two parts split from Motorola Inc, said that 99 percent of the shares that were voted, voted in favor of the $40 per share deal. The shares represented about 74 percent of the company’s total outstanding shares.

In August, Google said it will buy the handset device manufacturer in its biggest deal ever, paying a steep premium of 63 percent.

Libertyville, Illinois-based Motorola’s shares closed at $38.94 on Thursday on the New York Stock Exchange while shares of Google closed at $600.87 on Nasdaq.

(Reporting by Kavyanjali Kaushik in Bangalore; editing by Carol Bishopric)

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Australia’s Spotless rejects $709 million bid

SYDNEY | Wed Nov 16, 2011 9:05pm EST

(Reuters) – Australian services firm Spotless Group (SPT.AX) on Thursday rejected its second takeover offer since May, saying the A$698 million ($709 million) bid from Pacific Equity Partners was too low, a move that pushed the buyout firm to seek talks with the board.

Spotless in a statement said its directors intended to take no further action on the proposal, signaling a higher offer could open the door for negotiations.

Spotless shares rose to a 12-month high of A$2.50 in early trade, but trimmed gains to trade 1.7 percent higher at 0130 GMT.

“We are well prepared and willing to develop a compelling offer to shareholders and, with a reasonable level of engagement, we could move quickly to turn our proposal into a binding offer,” a spokesperson for Pacific Equity Partners said in a statement following the rejection. “We hope to be able to engage with the Board on this basis.”

Pacific Equity Partners has entered into pre-bid agreements with certain shareholders for 19.64 percent of Spotless. Pre-bid shareholders include Investors Mutual Ltd, Lazard Asset Management and Orbis Investment Management, it said.

Spotless is tightly held, with 10 fund managers holding 61 percent of its shares.

Spotless, which provides services including cleaning, security, and catering, said that the offer did not reflect the fundamental value of the company.

OFFER FOLLOWS BLACKSTONE BID

The offer comes six months after Spotless rejected a A$657 million offer from U.S. buyout giant Blackstone Group.

The latest proposal was pitched at A$2.63 a share, a 12 percent premium to the last trade in Spotless. Its shares closed on Wednesday at A$2.35, up 20 percent this month on speculation that a fresh bid was in the works.

The offer assumes no further dividend would be paid until a successful deal is concluded and the proposed timetable showed the deal would not be complete before the record date for interim dividend, Spotless said.

Spotless is expected to pay a dividend of about 5 cents in February.

The bid is being backed with financing from banks including Citigroup (C.N), Investec, Australiaand New Zealand Banking Group (ANZ.AX) and HSBC (HSBA.L).

Pacific Equity Partners was planning to use the commitment letters from the banks to approach investors before going to the Spotless board with its proposal, two sources had previously said.

Pacific Equity Partners is advised by Citigroup (C.N) and Investec. Spotless is advised by Goldman Sachs (GS.N) and Clayton Utz.

($1 = 0.984 Australian dollars)

(Reporting by Narayanan Somasundaram; Additional reporting by Sonali Paul in Melbourne; Editing by Ed Davies)

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