By Liz Hoffman
Two takeover deals have been delayed amid slower-than-expected
government approvals, the latest sign of the regulatory hurdles
facing companies pursuing global mergers.
French advertising company Publicis Groupe SA said Wednesday it
would extend its offer to acquire Sapient Corp. as it awaits
approval from U.S. national-security groups. Boston-based Sapient
provides technology and other services to the U.S. Marine Corps and
the Department of Homeland Security, among other U.S. government
entities.
Meanwhile, an investment group seeking to buy fruit grower
Chiquita Brands International Inc. pushed back its time frame as it
waits on antitrust regulators from at least two countries.
It is the second such delay for both deals. Earlier extensions
had separately given shareholders of Chiquita and Sapient until
Tuesday, Dec. 23, to tender their shares. Those deadlines now have
been pushed into early next year, Jan. 5 for Chiquita and Jan. 7
for Sapient.
Cross-border merger activity surged this year to nearly $1.1
trillion in announced tie-ups, according to Dealogic. That is the
highest since 2007 and up from $773 billion in 2013, according to
the data provider.
But many of these deals are running into a growing corps of
global deal cops. More than 100 international jurisdictions now
have their own merger regulators, each wanting a say over
transactions that touch their industries, economies or interests.
The mandates of these agencies often include protecting consumers,
corporate icons, key industries and national security.
"We have these conversations on every deal now," said Alan
Zoccolillo, a corporate lawyer at Baker & McKenzie LLP. "Often,
what looks like a purely domestic deal isn't viewed that way by
regulators, and multiple filings can affect both the timing and
certainty of deals."
The pending $50 billion merger of cement giants Holcim Ltd. and
Lafarge SA needs approval from 20 jurisdictions, while the
private-equity buyers of H.J. Heinz Co. last year submitted their
$23 billion deal to regulators in about a dozen countries on five
continents. The Holcim deal is expected to close in the first half
of 2015, while the Heinz sale closed about four months after the
deal was announced.
In many cases, the approval process can be opaque and slow,
stretching out deal timelines and testing investors' patience. Chip
makers Applied Materials Inc. and Tokyo Electron Ltd. have been
waiting more than a year to close their merger, which would create
one of the world's biggest global semiconductor manufacturers.
Applied Materials said in a filing earlier this month it was still
awaiting regulatory approvals.
Chiquita's would-be buyers, orange-juice producer Cutrale Group
and Brazilian investment firm Safra, are still awaiting approvals
from Ukraine and Ecuador, according to regulatory filings.
Concerns over national security and infrastructure have weighed
heavily on deals, especially in North America. U.S. regulators
looked closely last year at the sale of pork producer Smithfield
Foods Inc. to a Chinese company amid concerns over the U.S. food
supply. Smithfield was also a leading provider of an agent in a
crucial blood-clotting medication. The deal was approved and closed
in fall 2013.
Some deals include sweeteners meant to help win over regulators.
When Burger King Worldwide Inc. agreed earlier this year to buy
Canadian doughnut-and-coffee chain Tim Hortons Inc., it promised to
list the new company on the Toronto Stock Exchange--a move partly
driven by a desire to appease Canadian regulators who could have
been sensitive about the loss of an iconic brand, according to
people familiar with the matter. Canada approved the deal earlier
this month.
Write to Liz Hoffman at liz.hoffman@wsj.com
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