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Matthew Green

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  • M&A Is Back [View article]
    Excuse me, I meant Dell buying Perot Systems. ACS was purchased by Xerox around the same time.
    Mar 2 07:13 PM | Likes Like |Link to Comment
  • M&A Is Back [View article]
    By "Rescue M&A," I meant the M&A assignments in early 2009 that involved companies fixing up their balance sheets via capital raises, not acquisitions (Alcoa, US Steel etc.) I was not applying that term to the pharmaceutical deals I mentioned. My point was that the few deals that got done in early 2009 involved clearly defined companies doing strategic, yet non-transformative deals. Toward the end of the year, we saw a comeback of sorts of strategic, transformative deals that were not always warmly received.
    Mar 2 02:42 PM | 1 Like Like |Link to Comment
  • Why Is Soros Buying Gold if It’s in a Bubble? [View article]
    Great article. I think the initial reaction to Soros' comments are more symptomatic of the fact that the financial media has not yet turned bullish on precious metals. What I mean is that there will be a day when the personalities on CNBC become full-blown cheerleaders for the precious metals bubble as they were for the tech and housing bubbles (although they currently appear to be addicted to the ad fees brought in by Cash4Gold, etc). What that means to me is that, as someone just mentioned earlier, PM's are not in the late stages of a bubble yet. As soon as Soros made those comments in Davos, countless talking heads and other commentators spun it as if he was saying it was already in a bubble and was going to pop. Then they appeared to be shocked two weeks ago when the SEC released the 4th Quarter filings. As Edward said, What Gives?
    Mar 2 10:27 AM | 9 Likes Like |Link to Comment
  • M&A Is Back [View article]
    Point taken, I should rephrase. By a "true comeback in M&A," I meant a boom by 2004-07 standards, a period that witnessed a historic boom in M&A. I understand that it is a 2-year cycle peak to nadir, so by that measure M&A should be back in 2010, if not back already.

    Additionally I do agree that strategics made a comeback last year, although as you mentioned they saw lukewarm reception. The first half of 2009 was dominated by the "Rescue M&A," companies fixing their balance sheets, and a few large healthcare deals (Pfizer and Wyeth, Merck's reverse merger with Schering-Plough).

    From the end of summer onwards, we began to see strategics making a comeback. Dell buying ACS and Exxon buying XTO were two examples. Although both stocks initially got punished, I think the merits of both these deals will win out. The main problem is that CEO's, especially in 2008-09 were more or less caught in a Catch-22. They got punished if they presided over a low-growth business, and in many cases they also got punished if they attempted to do something transformative. That is why the strategic deals you mentioned, like Pepsi and Pepsi Bottling, shined in 2009. Indira Nooyi and her board wanted to retake control of a vital part of their business they already knew intimately, and the market rewarded the move. The merits of this deal are further enhanced by the fact that Coke just did the same thing.
    Mar 2 09:57 AM | 3 Likes Like |Link to Comment
  • M&A Is Back [View article]
    You mentioned PE being on the sidelines, which indeed has mostly been the case since 2007. Ever since banks became reluctant to lend money for classic leveraged buyouts, their lifeblood of credit has become scarce. Despite their recent struggles, what should not be overlooked is their other defining characteristic: adaptiveness.

    Obviously, PE bigwigs such as Henry Kravis, Stephen Feinberg, and Ted Forstmann, with particular emphasis on the former, are known for being very smart, but also for being adaptive to the times. They thrive on doing deals, and they will find a way to make money in most environments. I agree with you that they are likely to be absent from the big deals ($5 billion-plus) but they are also initiating highly structured deals to put their investors’ money to work. Many assets were on the market in 2009, and they often pounced if they found a deal to be attractive.

    A great example was the Sept. 17 Kohlberg Kravis Roberts deal for Kodak. KKR came in, assisted with Kodak’s liquidity issues, and will buy $400 million in senior secured notes due in 2017, at an interest rate of 10% to 10.5%. As part of the deal, KKR could control about 20% of Kodak's shares via warrants. In typical Kravis fashion, he also received two board seats. At the end of the day, it was a vote of confidence in Kodak’s film-to-digital transformation and long-term health. Of course, that does not change the fact that the M&A market is looking forward to banks becoming more willing to lend money for deals with higher leverage, so that private equity firms and corporations can begin to compete on deals once again. When that happens, there will be a true comeback in M&A.
    Mar 1 03:19 PM | 3 Likes Like |Link to Comment
  • Why Soros Is Probably Buying Gold Now [View article]
    Like I said earlier, with Soros you can't take his comments literally. Keep in mind that in his interview with Maria Bartiromo in Davos, he refused to answer the question of whether or not he was buying gold. Given his history, even if you don't include the 1992 pound coup, I would lean toward assuming ulterior motive with respect to gold in those comments. By ultimate bubble, he meant in the future. So he's buying. And he's buying lots.
    Feb 17 10:01 AM | 3 Likes Like |Link to Comment
  • Why Soros Is Probably Buying Gold Now [View article]
    I bartended a party the night Obama was elected at Soros' duplex on 5th avenue. Paul Volcker himself was there, all 6'7 of him and was talking to George for more than half the night. With Soros, there is always more than meets the eye, but considering his track record and Jim Rogers as well, I'm still long PM's. Attractive entry points are getting more attractive by the day.
    Jan 30 06:04 PM | 7 Likes Like |Link to Comment