In a chockablock week, private equity continued its rampage. On Nov. 19, Blackstone Group agreed to buy Sam Zell's commercial real estate unit, Equity Office Properties Trust (EOP), for $36 billion including debt. (Its properties include the Civic Opera House in Chicago, photo.) The price would erase the previous LBO record, the $33 billion ponied up for HCA last July. Meanwhile, a war was shaping up over another REIT, Reckson Associates Realty (RA), for which Carl Icahn and Macklowe Properties bid $4.6 billion on Nov. 16, topping a previous bid of $4 billion.
Private equity also grabbed two battered media outfits. A group captained by Thomas H. Lee Partners and Bain Capital landed radio giant Clear Channel Communications (CCU) for $26.7billion, and a Ripplewood-led team said it would buy Readers Digest (RDA) for $2.4 billion.
See "Sam Zell: A Question of Timing" and "End of the Clear Channel Era" Robert Greifeld, the driven NASDAQ CEO who has zipped through four marathons, is pressing once again to run the London Stock Exchange to ground. On Nov. 20 he offered to buy the 71.25% of the LSE that he doesn't own in a deal that would value the exchange at $5.1billion. After the New York Stock Exchange moved closer to snapping up Euronext when rival Deutsche B?rse dropped out of the running on Nov. 15, Greifeld more than ever wants to "redefine global equity trading" by folding the Brits into NASDAQ, he told reporters. He also sees the London bourse, with its surging popularity for initial public offerings, as crucial. LSE leaders remain resistant, and NASDAQ may have to sweeten the price.
This unlikely marriage never really worked. Charles Schwab (SCHW), discount broker to the masses, bought genteel private banker U.S. Trust (SCHW) for $2.7billion in stock near the peak of the Internet stock bubble in January, 2000. The synergies Schwab predicted didn't materialize, so now, Bank of America (BAC) is paying Schwab $3.3 billion in cash for the unit. Schwab says it will use the money for general purposes and to buy back its stock, which trades around $19, vs. $25, split-adjusted, at the time of the original deal. Bank of America will leap to No. 1 among U.S. wealth managers.
Mining outfits are so busy prospecting for other miners that it's a wonder they get any mining done. The latest union: On Nov. 20, Freeport-McMoRan Copper & Gold (FCX) said it will buy Phelps Dodge (PD) for $25.9 billion, creating the world's largest copper producer. At about $126 a share, the offer represents a shiny 33% premium for Phelps Dodge but still may be a bargain for Freeport, analysts said.
See "Is Freeport McMoRan's Offer Enough?" Newspaper publishers seem to be thinking that maybe those online guys aren't so bad after all. On Nov. 20 seven U.S. chains that run 176 daily papers signed up with Internet portal Yahoo! to share content and advertising. MediaNews Group, Hearst, E.W. Scripps (SSP), and others will start posting classified ads on Yahoo!'s (YHOO) HotJobs site and use its technology to run ads themselves online. The deal, which gives Yahoo! more presence in local markets, follows a recent move by rival Google (GOOG) to sell ads in 50 papers.
See "Yahoo's Classified Ad Division" Allergan (AGN), which has been erasing wrinkles for years with its hit product Botox, now gets to take a crack at another form of enhancement. On Nov. 17 the FDA approved silicone breast implants, sending shares of Allergan up 6%. In 2005 the Irvine (Calif.) drugmaker won a bidding war to acquire breast-implant maker Inamed (AGN) for $3.2 billion. Now that silicone is off the breast blacklist, the $350 million market for implants could double. Allergan competitor Mentor (MNT) saw its shares jump, too, by 13%.
Key properties of Rupert Murdoch's News Corp. (NWS) got whacked twice in three days. First, his ultra-popular social networking site MySpace (NWS) was sued on Nov. 17 by powerhouse Universal Music for allegedly creating a "vast virtual warehouse" to pirate music from Universal acts such as U2 and Mariah Carey. Then, under pressure from critics and its own Fox TV (NWS) affiliates, News Corp. said it was scrapping plans to air a two-hour show featuring acquitted murder suspect O.J. Simpson's account of how he might have committed twin murders. Calling the project "ill-conceived," Murdoch also said his HarperCollins (NWS) unit wouldn't publish Simpson's If I Did It. At least Murdoch can still swashbuckle: In Britain, his 39%-controlled BSkyB satellite service moved to block Richard Branson's plan to start a rival network by buying an 18% stake in ITV, Britain's largest broadcaster. But even there, Murdoch could face an inquiry by antitrust regulators.
It looks as if Robert "Skip" Cummins hit a nerve at medical-implant maker Cyberonics (CYBX). The combative chairman and CEO quit along with another executive on Nov. 20 after a board committee uncovered years of stock option grants that had been improperly dated. Cummins, 52, faced down would-be acquirers and critics alike as he won regulatory approval for his main product: a pacemaker-like device used to treat epilepsy and depression by micro-zapping a central nerve in the neck. Among the spurned: Medtronic (MDT), which offered to buy the Houston company in 2000 at $26 a share. The stock closed at $24.63 on Nov. 21.
Ever since Isaac Larian brought out the Bratz line of dolls five years ago, he has been locked in a market-share catfight with Mattel's (MAT) Barbie. The tarty, trendier Bratz have captured the eye and purses of girls slightly older than those who favor Barbie. Mattel sued designer Carter Bryant in 2004, claiming he developed the Bratz concept while working for the company. On Nov. 20, Mattel amended the suit to add Larian's company, MGA Entertainment, saying it stole key employees and secrets and used them to start Bratz. Larian pooh-poohed the suit, claiming that Mattel has "failed miserably at fair competition through product innovation." Mattel declined comment.
Milton Friedman was equally an economist and a freedom fighter. Right up to his death at age 94 on Nov. 16, he waged war against what he saw as excessive government. Friedman once said: "I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible." The Nobel prize winner stuck to his libertarian principles even when they unsettled the conservative Establishment. Cases in point: He opposed the military draft and favored legalization of drugs. Teaching for decades at the University of Chicago, Friedman challenged the legacy of John Maynard Keynes, the British economist who believed that government should steer economic growth. Paul Samuelson, the more liberal rival with whom he often battled, said in an interview with BusinessWeek: "Milton Friedman was a giant....No 20th century economist had his importance in moving the American economic profession rightward from 1940 to the present."
See "Milton Friedman: Death of a Giant"