UK insurance group Aviva puts its US business on the block

UK insurance major Aviva Plc (LON:AV) is gearing for a sale of its US business after receiving several unsolicited approaches from trade buyers and private equity groups, the Sunday Telegraph reported without specifying its sources.

According to the UK newspaper, Aviva’s finance chief Pat Regan has spent quite a while in Des Moines, Iowa – the city where Aviva USA’s headquarters are located – to make preparations for the sale and launch the process. An investment bank is yet to be formally appointed but Aviva’s executives are believed to have settled on Goldman Sachs Group Inc (NYSE:GS) as manager of the sale.

Aviva agreed to pay GBP1.8bn (USD2.8bn/EUR2.3bn) in mid-2006 for what was then called AmerUs, combining it with its existing US business to create Aviva USA. The sale of the business is expected to leave the UK company with a loss of GBP800m on its initial investment since the division is now estimated to be worth GBP1bn, the Sunday Telegraph said.

Following shareholder pressure, Andrew Moss stepped down as chief executive of Aviva in May, leaving newly appointed executive chairman John McFarlane to fill the gap on a temporary basis.

Earlier in July, McFarlane presented his plan for a strategic overhaul of the company, saying that 16 out of 58 businesses have been designated non-core and will either be sold or shut down. However, Aviva could not be drawn into commenting at the time on whether its US division was one of those businesses.

The company has already pulled out of Hungary, Romania, the Czech Republic and Australia and is set to exit Taiwan as well, selling its 49% stake in its local joint venture.

The Sunday Telegraph was unable to extract a comment from an Aviva spokesman with regard to the US divestment.

Cosmetics giant Coty forms South Korean JV with LG Household & Health

US-based beauty care products maker Coty Inc has formed a joint venture with South Korean sector company LG Household & Health Care Ltd (KRX:051900), or LG H&H, to extend their presence in the Korean cosmetics market, the parties announced today.

The creation of this JV, called Coty Korea, is an important step for Coty through which the company wants to grow its presence in Asia and to strategically expand its cosmetics and skin care operations on a global basis, it said. At the same time, the move strengthens LG H&H’s leadership in the Korean consumer market.

According to Coty Prestige president Michele Scannavini, Korea represents an important emerging market for the beauty sector. The newly-announced development may also be followed by other potential common projects abroad, LG H&H CEO Suk Cha said.

The parties did not provide information regarding the ownership structure of the venture or the amount they will invest in the new entity.

This autumn, the JV intends to introduce its beauty brand philosophy into the Korean marketplace, Coty said, adding that this brand is expected to play a crucial role in the expansion of its product portfolio. Furthermore, Coty Korea will continue to seek for opportunities to further grow and improve its presence in the market.

Coty is a beauty care products manufacturer with annual net sales of USD4.5bn (EUR3.7bn), about 12,000 employees and offices in New York, Paris and Geneva.

US newspapers increasingly outsource journalism to the Philippines

Newspapers across the United States of America are outsourcing the production of local news to low-paid researchers and writers in the Philippines, radio progamme This American Life has revealed.

In an interview with a young American journalist, Ryan Smith, This American Life presenter Sarah Koenig exposes the work of outsourcing company Journatic and the newspapers for whom it works, many of whom would rather remain unknown.

Former Journatic employee Smith says in the report that Journatic’s news is ‘written overseas, half-heartedly edited and slapped on a page’.

Smith, who risked being fired for speaking publicly, says he wrote and edited stories for newspapers in Texas while never leaving Chicago, about 1,000 miles away.

Using freelancers in the Philippines, Brazil, Eastern Europe and Africa, Journatic produces vast quantities of local stories, such as death notices, house sales and bowling scores based on publicly available information, for American newspapers that no longer have the resources to cover the micro detail of daily life.

Journatic and some of the newspaper companies who use it told This American Life that no writing was done in the Philippines itself. Rather, the Filipinos, who earn between 35 to 40 cents per story, ‘assemble information, in paragraph form,’ which is then written and edited in America.

However, it is hard to know how true this is. Koenig spoke to one anonymous Filipino freelancer who claimed to write stories himself. Yet their real names are never published. Instead, American newspaper publishers can click a ‘Select Alias’ button and choose Americanised names such as Jenny Cox or Glenda Smith.

While the programme paints the practice in a negative light, Journatic CEO Brian Timpone argues a good case for his model. He says he knows that he will be criticised for his business interests, but he argues that outsourcing information aggregation is the way forward for the financially-strapped media industry.

‘I personally think we’re saving journalism with our approach, ‘ says Timpone.

‘The single reporter model, the old model, just doesn’t work and hasn’t done for 30 or 40 years.’

‘We’ll be able to see more things, things that no one covers,’ Timpone says.

He goes even further, asserting that having journalists on the ground does not produce more accurate or more engaging stories than his at-a-distance model.

Timpone claims that his company can produce more content for less, helping to drive traffic for newspapers and encourage local advertising, an important stream of revenue.

‘If you have a better idea, I’m all ears,’ challenges Timpone.

Written by Will Fitzgibbon of The Bureau of Investigative Journalism.

Listen to the original This American Life programme here.


Forestar’s target Credo Petroleum gets no offers

US oil and gas explorer Credo Petroleum Corp (NASDAQ:CRED) announced on Tuesday it had received no alternative takeover approaches during the go-shop period agreed with its suitor Forestar Group Inc (NYSE:FOR) in June.

The agreement announced on 4 June for $14.50 (€11.60) a share, or some $146m in total, allowed Credo to seek alternative proposals during a 30-day period which ended on 3 July, the target firm said.

At the signing of the agreement, Credo’s chairman James T. Huffman said that the deal, backed by both companies’ boards, reflected the value built into Credo since it started its transition four years ago from natural gas to oil. Forestar’s size and substantial oil and gas portfolio would help step up that transition, while the tie-up would create synergies from the combined human and technical resources, Huffman added.

For Forestar, the acquisition of Credo would more than double its existing oil and gas production and proven reserves, give it operating flexibility and establish a strong platform for future growth, the group’s president and CEO Jim DeCosmo has said. It also serves Forestar’s Triple in FOR strategy to accelerate value realisation and boost net asset value through investments, he added.

Credo expects now to wrap up the deal in the second half of this year, pending a number of conditions, including clearance from its shareholders.

The transaction does not need the approval of Forestar stockholders and it is not subject to financing conditions.

The target company has substantial assets in regions including North Dakota Bakken and Three Forks, Kansas, Nebraska, the Texas Panhandle and Oklahoma.

German Linde to expand in the US with possible deal to acquire Lincare

German gases group Linde AG (ETR:LIN) is racing to buy US Lincare Holdings Inc (NASDAQ:LNCR), a provider of oxygen and other respiratory therapy services, for some USD3.4bn (EUR2.7bn), in a move that would substantially expand its pharmaceutical and medical gases business, according to informed sources cited by the the Financial Times Alphaville blog.

Linde is offering at least USD40.00 a share for Lincare and leads the bidding race which also includes French Air Liquide (EPA:AI) and an unnamed private equity firm, the people said.

A deal would see the German group expand its presence in the US after widening its reach across the sector in Belgium, Germany, France, Portugal and Spain with the acquisition earlier this year of Air Products and Chemicals Inc’s (NYSE:APD) homecare business in Europe. The Air Products deal gave Linde the second position in the homecare sector after Air Liquide.

A potential acquisition of Lincare would boost Linde’s healthcare operations which provides higher margins than its main industrial gases business while improving its position in the high-growth sector.

With a capitalisation of slightly over USD20bn, Linde is seen capable of ensuring financing a potential deal for Lincare, the report said.

Lincare provides homecare services to customers suffering from chronic obstructive pulmonary disease (COPD). It served over 800,000 customers in 48 US states and Canda through 1,108 operating centres as of 31 December 2011.

US private equity sponsor Ceberus exits Guilford Mills in $257m deal

US private equity major Cerberus Capital Management LP said it had completed its exit from Guilford Mills Inc, selling the North Carolina-based manufacturer of automotive and speciality fabrics for USD257m (EUR205m).

The business was acquired by Lear Corporation (NYSE:LEA), the US automotive industry supplier of seating and electrical power management systems. The transaction, which was conducted through a Cerberus affiliate, was finalised on 31 May 2012. The private equity group bought Guilford in 2004.

Dev Kapadia, managing director at Cerberus, said that his company was pleased with the closure of the sale, which places Guilford under the wing of a world-class corporation. The deal with Lear represents the achievement of a key objective for Cerberus since it leaves Guilford in the hands of a market-leading enterprise.

Under the ownership of Lear, Guilford will be able to reach new heights in terms of performance and success. This has proved a good investment for Cerberus, which is proud of its contribution to Guilford’s achievements over the course of their partnership, Kapadia stated.

Guilford’s former chairman Chan Galbato said that the support provided by Cerberus had helped Guilford become a market leader in the automotive and specialty fabrics business. The partnership had made it possible for Guilford to streamline production, launch best-in-class products and assemble an exceptionally strong management team, Galbato added.

Kinder Morgan and El Paso complete $21bn merger

US natural gas pipeline operator Kinder Morgan Inc (NYSE:KMI) said it had finalised its planned USD21bn (EUR16.7bn) combination with peer El Paso Corp (NYSE:EP) announced last October.

The transaction, effective as of 25 May, converts Kinder Morgan into the largest midstream company and the fourth largest energy company in North America, based on enterprise value.

Its new position as the US’ largest transporter and storage operator of natural gas, ensures many growth opportunities for Kinder Morgan in the US, which it plans to pursue as means to create value for shareholders and to benefit employees and customers, chairman and CEO, Richard D. Kinder, said.

As part of the merger, El Paso agreed in February to sell its exploration and production business EP Energy to a group led by private equity firm Apollo Global Management LLC (NYSE:APO) in a deal worth some USD7.15bn, which has also been completed, the companies said.

In order to secure regulatory clearance for the tie-up, Kinder Morgan had agreed to sell some of its own assets, which it plans to do in the third quarter this year. The Federal Trade Commission gave it six months from the date of its ruling on 1 May to complete the divestment.

The acquisition of El Paso was financed with cash and stock.
Kinder Morgan said the combination will be accretive to its results. It will generate annual cost savings of over USD400m, above Kinder Morgan’s initial projection of around USD350m, the buyer added.

Thermo Fisher acquires Doe & Ingalls for $175m in cash

Thermo Fisher Scientific Inc (NYSE:TMO), the US provider of analytical and laboratory products and services, announced the acquisition of North Carolina-based Doe & Ingalls Management LLC in a cash deal valued at about USD175m (EUR132m).

Doe & Ingalls serves life sciences and microelectronics sector players by providing them with speciality production chemicals and supply-chain services tailored to their specific needs.

Service offerings such as MOR, Smart Sourcing and Streamline are designed for the purpose of managing risk, quality and overall costs in the chemical supply chain associated with manufacturing activities.

The company has established service centres in key North American biopharmaceutical and microelectronics hubs. In 2011, Doe & Ingalls delivered revenues of about USD110m.

Thermo Fisher will integrate Doe & Ingalls into its Customer Channels business, which in turn operates within the Laboratory Products and Services Segment.

Thermo Fisher’s president and CEO Marc N. Casper said the addition of Doe & Ingalls would open up new growth opportunities as the channel capabilities of Thermo Fisher combine with the comprehensive production chemicals line of Doe & Ingalls and its related services.

The acquisition brings in products and services that will enhance value for customers by addressing their production needs. Historically, Thermo Fisher has mostly catered to the research needs of its vast customer base, Casper noted.

Deloitte’s advisory US advisory arm acquires restructuring specialist CRG Partners

US Deloitte Financial Advisory Services LLP, a unit of accounting firm Deloitte LLP, on Monday announced it had taken over New York-based operational and financial restructuring services provider CRG Partners.

The company has acquired all of CRG’s assets so that it may improve its financial restructuring, turnaround management and bankruptcy reorganisation capabilities, it said, without disclosing the value of the transaction.

According to Deloitte Financial’s chief executive officer, David Williams, there are still firms that experience significant operational and financial issues even though the economy is improving.

The reorganisation services group of Deloitte will now immediately tie up with CRG and begin operating under the name Deloitte Corporate Restructuring Group, or Deloitte CRG. The practice will be co-led by William Snyder and Sheila Smith. The buyer also said that 18 professionals from CRG have become Deloitte principals or directors.

The acquisition unveils a significant growth opportunity for Deloitte, Smith commented. In turn, Snyder said that the combination of the two entities will allow them to establish a world-class restructuring practice.