Posts filed under “M&A”

AOL-Huffington Post: Why the Heavy Breathing?

It’s day two of the $315 million AOL-Huffington Post deal and the non-news just keeps on coming. On the same day that there was $16 billion in M&A, we’re still talking about a tiny deal for advertising inventory. Tim Armstrong’s deal isn’t really the issue.

The most important takeaway from the deal is the limited valuation. No one, not HuffPo’s venture money or AOL or anyone else in the internet business, sees advertising as a business with growing margins. The valuation on Huffington Post is low because of the insistence on cash and the dark prospects for advertising in a world driven more by Groupon than by simple display ads.

Ok. Fine. Pretty boring business stuff that belongs in a couple of inside stories on the advertising and media industry. Instead we get a fixation on Arianna Huffington and willful mis-reading of her figurehead role at AOL. Take a look at the Washington Post story on the deal:

Always-charming, ever-clever Arianna Huffington became something else in the late hours after the Super Bowl on Sunday: a shrewd and unimaginably successful businesswoman. [...] Rough estimate of Huffington’s personal cut of the deal: $100 million, virtually all of it in cash, according to Wall Street analyst Laura Martin.

Really? Unimaginably successful for making $100 million in a world where a 20-something kid is worth several billion? Journalists have such meager imaginations, I guess. There are a bunch of self-made billionaires who are women who were able to imagine more than that (Oprah, J.K. Rowling, Meg Whitman)–and dozens more women who are not billionaires.

More to the point, that $100 million makes no sense. The cash deal was driven by Softbank. Arianna said on CNBC that she took 25% in stock. She suggested others did too. Even if she took all of the stock, that would max her take at $60 million.

There’s been speculation that with so much money in her pocket, Huffiington would be eager to leave. But that view requires a suspension of any knowledge of Huffington’s career and personality. She’s no editor and certainly not a manager. Her goal in starting the Huffington Post was to build a platform for herself.

That has worked out beautifully. Huffington regularly appears on all the shows and a the big conferences (the formal offer was made at Davos, enough said.) To appease her vanity, Armstrong had to give her the titular role as Editorial Director or the whole company. With her speaking schedule and need to be in on “the conversation,” AOL’s other properties don’t have to worry about Arianna’s meddling.

Viewed from the perspective of Huffington’s own ambitions to be a meaningful public figure, the Huffington Post has succeeded far beyond what anyone (especially Tina Brown) thought Huffington could achieve. Though I’m sure it has fallen short of Arianna’s own imagination. Here’s a woman who saw that the right was over-crowded with leggy firebrands and pulled off a careerist conversion to rebrand herself as a leftist.

As an editor, however, no one can point to the writer she’s discovered and championed. Indeed, there’s no success that comes out of the Huffington Post in pure content terms. Here’s Jack Shafer on Huffington’s relevance as a journalist:

How to account for Huffington’s remarkable success? If you’ve ever edited Huffington’s raw copy (I have) or read a galley of one of her books before the published version comes out (which I’ve also done), you know that she’s not much of a journalist. But instead of impeding her, those limitations actually gave Huffington an advantage over other sites—Slate included—that hewed to old-media standards. Old-media types don’t feel right about rewriting the copy of their competitors and calling it a story. Huffington glories in carving the meat out of a competitor’s story, throwing a search-engine optimized (SEO) headline on it, and posting it. She even claims to believe that she’s doing the originator a favor by sending traffic back to it via a crediting link.

So Huffington’s relevance to journalism is nil. It’s all SEO page views. And there’s a reason that the New York Times, which has fewer uniques than the Huffington Post according to many of the press accounts, is worth a lot more than $315 million even in its hobbled financial state today.

Category: Financial Press, M&A

AOL Buys HuffPo for $315 Million

The Huffington Post, Ariana Huffington’s news and political focused website, has been acquired by AOL for $315 million — $300 million cash, the rest in stock. Huff Po began in 2005 with a $1 million investment; it has since grown into one of the most heavily visited news Web sites in the country. The NYT…Read More

Category: Financial Press, M&A, Web/Tech

Insider Trading Prove Focused on M&A Tips

> The WSJ is reporting that the SEC is looking at specific Health Care takeovers that seemed to be tipped in advance to several big hedge funds. The chart (above) shows the extent and timing. There are many legal reasons to have owned these names, but the issue here is whether or not the funds…Read More

Category: Legal, M&A

WSJ: Expert Networks = Insider Trading

The WSJ occasionally buries huge stories in its much less read weekend edition; recall the option backdating investigation in 2006. This past weekend was a classic example of this: “Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation, according…Read More

Category: Analysts, Legal, M&A

The History of Google Acquistions

Jess Bachman, who did several of the fantastic illustrations for Bailout Nation, turns his attention to this epic infographic of all of Google’s acquisitions in the pipe: > click for ginormous graphic > via SEO site

Category: Digital Media, M&A, Web/Tech

2010 M&A by the Numbers (1H)

Barron’s has some interesting data points on deal activity in 2010: • 1,701: volume of deals in the first half, about stable with the like period in 2009 • $362 billion: total value of deals in the first half • 8.7%: rise in first-half deal value from the 2009 period • $41.6 billion: value of…Read More

Category: M&A

As Goldman Bagged Clients, Merrill Bagged Itself

As a stark counterpoint to How Goldman Sachs Bagged Clients, I recall ever so fondly how Merrill Lynch bagged itself:  With a Sept. 2006, top-of-the-market, $1.3 billion acquisition of sub-prime originator First Franklin from National City: First Franklin is one of the nation’s leading originators of non-prime residential mortgage loans through a wholesale network.  [...] “This…Read More

Category: Bailouts, M&A

William Ackman on Kraft/Cadbury

Discussing Pershing Square’s stake in Kraft, with William Ackman, Pershing Square Capital Management.

Part I

Part II

Airtime: Wed. Jan. 20 2010 | 7:21 AM ET

Category: M&A, Video

Buffett Sells Moodys, Buys Burlington Santa Fe

Dump the dog, buy the thoroughbred: • Berkshire Buys Burlington Northern in Buffett’s Biggest Takeover (Bloomberg) • Buffett’s Berkshire Sells More Moody’s (Barron’s) Prior to the takeover, Berkshire owned 22.6% of Burlington Santa Fe. At the end of 2008, Berkshire held 48 million shares of Moody’s. Their stake is now down to 38 million shares,…Read More

Category: M&A

Some of the emails that recently came to light — from prior to the Merrill acquisition closing — makes it pretty hard for the company to claim MAC — Material Adverse Condition. The email exchanges make clear it they had a pretty good idea about the lousy condition Merrill Lynch was in. To my read,…Read More

Category: Bailouts, Corporate Management, Legal, M&A