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Weekly M&A Digest - November 10, 2017

John Shipman | November 10, 2017

A compendium of highlights and observations from the week’s notable M&A news, compiled by Merrill Corporation which facilitates the sharing and disclosure of financial information in transactions such as these.

AT&T-Time Warner deal in limbo  

The US government’s antitrust review of AT&T’s $85 billion Time Warner acquisition has intensified, with regulators reportedly requesting Turner Broadcasting – and its news network CNN – be sold as a condition for deal approval. Regarding talks with the Justice Department, AT&T CEO Randall Stephenson said he has never offered to sell CNN and has no intention of doing so.    

That comment came after Chief Financial Officer John Stephens said during a Nov. 8 investor conference that the timing on the deal’s closing was now “uncertain,” amid the DoJ review. The company had previously said it was expected to be finalized before year end. Earlier reports had indicated the companies were negotiating with the Justice Department, even as the agency’s antitrust unit prepares a potential lawsuit to stop the merger. The DoJ reportedly also suggested a sale of the DirecTV satellite business as an alternative to a Turner sale.

M&A Weekly Digest November 10, 2017

Reports say Disney sought to buy most of 21st Century Fox

Speculation over major consolidation in the media sector got a jolt on reports that Disney held talks to buy most of 21st Century Fox. CNBC’s David Faber initially reported Disney was interested in acquiring Fox’s movie studio and cable networks, but would exclude the Fox broadcast network, Fox News and Business channel and its sports programming assets.

While no price talk was mentioned, Fox has a market cap of more than $50 billion. Disney is said to be seeking ways to counter growing competition from streaming TV services offered by Netflix and Amazon, while growth in its own TV business has flattened. A large-scale deal between the two media giants would certainly draw regulatory scrutiny, an important consideration given the latest twists in the AT&T-Time Warner transaction.

Broadcom-Qualcomm would duel with Intel on “connected” car chips

Pundits have had ample opportunity to weigh in on Broadcom’s $105 billion bid for Qualcomm since word of the offer broke late on Nov. 3, and there’s a fair amount of skepticism the deal – which would be the largest ever in tech -- will get done. Qualcomm didn’t do much to inspire enthusiasm as it stoically acknowledged the overture with boilerplate language referring to the best interests of shareholders.

If successful, a Reuters story suggests the buyout would enable the combined entity -- along with NXP Semiconductors, which Qualcomm is in the midst of buying – to square off against Intel with next-gen communication chips that will be used in “connected” cars. The chips link autos with the internet “to download everything from maps to entertainment,” a fast-growing market that will also be boosted by self-driving cars.

Brookfield Asset Management said to be in talks to buy more of GGP

Canada’s Brookfield Asset Management, which already owns more than one-third of retail REIT GGP Inc., is in early talks to buy the remainder of the company and take it private, according to Bloomberg, which cited a person familiar with the matter.

Brookfield’s current stake stems from its role in an agreement to bring GGP out of bankruptcy in 2010. Speculation swirled in early 2016 that Brookfield would acquire GGP, then known as General Growth Properties before it renamed itself in January 2017. It has a current market cap of more than $20 billion. Shares of retail-focused REITs have had a tough year amid dwindling mall traffic, with blame generally directed at e-commerce behemoth Amazon.com.

Panera reuniting with Au Bon Pain

Panera Bread, now privately owned by JAB Holding, is buying Au Bon Pain for an undisclosed amount. The deal reunites the two bakery-café chains that were once part of the same company. Panera CEO Ron Shaich, who will step down at the beginning of 2018, started both restaurants. Au Bon Pain was separated from Panera in 1999.

The deal adds to a growing stable of likeminded brands at JAB, including Krispy Kreme, bagel maker Einstein Noah Restaurant Group, Keurig Green Mountain and Peet’s Coffee. It paid $7.5 billion for Panera earlier this year. Publication The Deal said a 2008 recapitalization of Au Bon Pain valued the business at $250 million.

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