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Archive for the ‘Mergers and acquisitions (M&A)’ Category

CITIGROUP takes over Wachovia banking operations

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The tumble continues. The Fed’s $250 billion immediate injection to buy toxic assets of troubled financial institutions, followed by the $100 billion based on President’s approval followed by another $350 billion subject to approval of Congress did not help. Read the rest of this entry »

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Wachovia is in trouble

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It looks like Wachovia is going to be the next casuality to get acquired. Potential suitors include Citigroup (NYSE:C), Wells Fargo among others.

http://www.nytimes.com/2008/09/27/business/27bank.html?hp

The $ 700 billion bailout is taking time but taking its casualities as well.

Going forward – I will blog more about the correlation between this credit crunch and a more economics, freakonomics type approach to understanding this credit crisis that will be of more interest to my readers. Watch this space as the new trend unfolds. It will have facts and figures to support it.

Written by Naveen Athresh

September 27, 2008 at 11:30 pm

WaMu goes to JPMChase

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Washington Mutual is the largest bank failure in US history. It went up for grabs yesterday as JPMorgan Chase & Co. quickly acquired it for $ 1.9 billion.

This continues the series of fallouts of companies since last week when Lehman announced bankruptcy and Merrill got acquired by Bank of America.

How did JPMorgan stay clear of this mess? The answer might be here – http://money.cnn.com/2008/08/29/news/companies/tully_jpmorgan.fortune/index.htm?postversion=2008090216. I have a lot of respect and admiration for CEO of JPMChase (NYSE: JPM), Jamie Dimon for staying clear of this.

Buffett swoops down with $5 billion capital infusion into Goldman Sachs

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http://www2.goldmansachs.com/our-firm/investors/financials/current/annual-reports/entire-2007-annual-report.pdf

This was expected. Goldman Sachs (NYSE: GS), an exceptionally run institution could not beat the heat of Wall Street and lately its stock was also hammered down by investors. They converted themselves to a bank a couple of days ago and this immediately meant the ‘smartest man in any room’ – the legendary Warren Buffett and my guru  swoop down and make a minimum $ 5 billion dollars in preferential stock and an option to purchase another $ 5 billion at a later date. Read the rest of this entry »

Fed tries to come up with a solution

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In what is termed as the worst crisis to hit the financial landscape of Corporate America since the 1930’s and the great depression, the Fed made an emergency attempt to get the Congress to agree to a $ 700 billion rescue plan aimed to stem the current financial turmoil by purchasing the bad assets from financial companies at a deep discount and sell it at a later date when things are more bright. This will help take the bad assets off from the financial companies’ balance sheets helping ease the stress and load on the financial system. Read the rest of this entry »

AIG struggling to stay afloat – no pun intended!

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https://ecofin.wordpress.com/2007/08/12/the-us-subprime-crisis-increasing-chance-of-a-us-recessionburst-of-the-us-housing-bubble/

If you have read Warren Buffet’s letters to shareholders and his book – The Warren Buffet way (2nd ed.), then you know what a float is. I am not trying to strike a relation or anything to this problem but am just stating that insurance business is supposed to insure others and AIG (American International group) had that obligation to keep but something clearly went astray. Read the rest of this entry »

Lehman Brothers files for Chapter 11/Bank of America buys Merill Lynch

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Well, it appears that during the time I was away, Wall Street was working over the weekend and I was shocked to see a major Wall Street investment bank/brokerage firm (Lehman Brothers, NYSE: LEH) created in the 1840’s go down under. Such is the impact of the credit crunch caused due to the CDO crises that surfaced just over an year ago.

On a side note, Bank of America is all set to buy Merill Lynch, NYSE: MER (another top Wall Street brokerage firm) for under $50 billion (~44 billion in an all-stock transaction)! This is not really a bail-out similar to the buyout of Bear Stearns by JPMorgan (with backing from the Fed) as Merill’s financial situation is stronger than what Bear Stearns was. The root cause is the same – asset backed securities that have lost a huge chunk of their value and their portfolio of CDO’s.

Again, this points to the Warren Buffet adage:

Derivatives are financial weapons of mass destruction.

http://www.berkshirehathaway.com/2002ar/2002ar.pdf

Its just 6 months since JPMorgan Chase bailed out Bear Stearns – https://ecofin.wordpress.com/2008/03/18/derivatives-the-sub-prime-mess-us-recession-bear-stearns-bailout-by-the-fedjpmchase/

 

https://ecofin.wordpress.com/2007/08/12/the-us-subprime-crisis-increasing-chance-of-a-us-recessionburst-of-the-us-housing-bubble/ Read the rest of this entry »

Written by Naveen Athresh

September 15, 2008 at 3:30 pm