Opening Bell: 11.6.06


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Four Seasons Receives $3.7 Billion Offer (AP)
Bill Gates' private investing firm Cascade usually gets attention for investing in stuff like clean diesel and fuel cells. But though they may help burning his image as a worldly, "green" man, they're risky bets. So it balances them out with boring stuff. Alongside Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, Cascade has made a $3.7 billion buyout bid for the Four Seasons hotels. We're not sure whether this qualifies Gates to be called a hotelier, though that would certainly be a nice image for him to cultivate. The last time we stayed at a Four Seasons, it had horrendous WiFi, like all nice hotels, we suppose. But we got free refills on ice tea in the lounge all day, which made paying $18/day tolerable. Presumably, Bill Gates being a tech guy will take care of this, starting with the one pictured on the left.
Merrill Arm Draws U.S. Questions In Informal Probe of Private Equity (WSJ)
We can't imagine that all of the intrigue surrounding private equity will ever get to be as loud as that surrounding hedge funds, but the Justice Department's probe into collusion in the industry is slowly expanding. Merill is the latest firm to come downtown for questioning. This could be to its participation in the Hertz sale, one of the largest of the so-called club deals. Obviously, sellers like club deals to some extent, because they can unload assets that an individual buyer might not be able to afford. But really, it's obvious that there has to be some collusion going on. So it's a matter of whether the company's behavior was technically appropriate, not whether they really did anything wrong.
Deal talks drive 888 shares ahead (BBC)
Last week there was rumor that online casino 888 might merge with Partygaming, as companies looked to link up and split the rent amid the crackdown in the US. Now it looks as if the company will merge with Ladbrokes. Shares of 888 were up sharply on word of the buyout, which would value the company at £470m. Another possibility for the company is that it merges with some sort of traditional -- legally secure -- gambling company. Would be interesting, certainly a lot of physical-world casinos would like to expand online. As we've said before, if any of these online casinos get into real dire straits, they could always keep accepting bids from American gamblers. Seriously, nothing's gonna stop them. Just don't make any stopovers in the US.
Lakshmi Mittal appointed CEO of Arcelor Mittal (Reuters)
Can't imagine that Mittal would have ever pursued the acquisition of Arcelor if it meant that Laskshmi Mittal would have to give up his helm. But, just in case there was any lingering doubt about what the world's third richest man will be doing, he's been appointed CEO of the newly formed Arcelor Mittal. The reason there was any issue at all is because Mittal (the company) had suggested it would keep someone from Arcelor near the top to assuage political concerns over the merger. Arcelor's Roland Junck is still a member of the management board. As an aside, doesn't it seem a little strange how Europe gets so bent out of shape about political issues, like which country the CEO is from? Isn't that what the EU was supposed to take care of?

Google to broker print ads in U.S. newspapers (Reuters)
There's a lot of talk this morning about Google's brave foray into the offline world, as it sets itself up as a broker for newspaper advertising. Of course, they already tried this once with magazine advertising, and it didn't seem to get real far. It's hard to see what kind of strengths it could have in the area, though they say that they have a real nice web interface for placing the ads. The real thing here, probably, is that Google knows it's a loser of a business that won't make much money for it. But if it can send a little cash the newspaper's way, they'll remain on good terms, and won't complain about stuff like Google's cache or Google News.
Novartis to Establish Drug R&D Center in China (WSJ)
For quite some time, tech firms have gone beyond backoffice outsourcing to Asia, actually setting up major R&D labs in India and China. The drug industry may be next. Swiss drug maker Novartis announced it would set up an R&D center in China, hiring up to 400 people. Not surprisingly, the cost of a Chinese chemist is a lot less than an American, by a factor of like 10. Apparently, one can be hired for about $25,000. Another angle on the deal is that the Chinese drug market is itself booming, so anything these companies can do to get a toehold there looks appealing.
As Drug Prices Climb, Democrats Find Fault With Medicare Plan (NYT)
For some reason, drug companies are among the companies that Democrats love to hate. Probably because they're products are seen as too expensive, and because they're purchased by the elderly and infirm, so it's a double whammy. There's some fear that if the Democrats take control of Congress (believe the latest polls? maybe it won't happen), they'll revoke some of the generous provisions in the new medicare bill. Good. And while they're at it, maybe they can, say, revoke the whole medicare bill. If one you to identify one reason why this Republican Congress ought to go, creating the country's newest enormous entitlement program would probably be it. Then again, we can't imagine the Democrats denying pills to the old.
Vivendi’s Talks With Kohlberg Suggest Even the Biggest Are Fair Game (NYT)
It's far from a sure thing, but it's possible that media giant Vivendi could be on the chopping block. It apparently held early talks with Kohlberg about doing a deal, perhaps for the whole thing, or maybe for some pieces of the business. If it were taken private, it would easily be the largest private equit deal of all time, at least in nominal dollars. We have to imagine that two or more firms would have to conspire to make it happen. Really, this would be a mammoth and a big prize to those involved.