TheChek News Flow

Verizon Is Said to Approach AOL for Possible Takeover, Venture

Verizon Communications Inc. has approached AOL Inc. (AOL) about a potential acquisition or joint venture with the Internet company to expand its mobile-video offerings, people with knowledge of the matter said.

Verizon hasn’t made a formal proposal to AOL, and no agreement is imminent, said the people, who asked not to be named because the discussions are private.

Verizon’s primarily interested in AOL’s programmatic advertising technology -- the automated buying and selling of ads online -- which two people said could be paired with a future online-video product. With a takeover it would also gain Internet properties including The Huffington Post and subscribers who pay for Internet access.

AOL ended trading yesterday with a market value of about $3.5 billion and rose as much as 13 percent after the close of regular trading in New York. In German trading today, the stock climbed 11 percent to the equivalent of $49.52 as of 9:22 a.m. in Frankfurt. Verizon’s market value is about $193 billion.

Spokesmen for Verizon and AOL declined to comment.

Just a few years after AOL’s failed marriage with Time Warner Inc. ended in its spinoff, Chief Executive Officer Tim Armstrong has transformed the Web portal into a different company. A venture would allow Verizon to focus on the advertising technology as the company seeks expertise in three areas: online content, mobile video and advertising, one person said. The company also has held talks with several of AOL’s peers about how to bolster those businesses.

Chasing AT&T

Researcher EMarketer Inc. projected in July that mobile advertising would lead 2014’s rise in total media ad spending in the U.S., with advertisers spending 83 percent more on tablets and smartphones than they did in 2013 -- an increase of $8.04 billion.

Verizon is looking to catch up with AT&T Inc. (T) as wireless providers enhance their offerings. AT&T last year struck a $48.5 billion deal to acquire satellite TV provider DirecTV. (DTV)

In a takeover, Verizon would also gain AOL’s 2.3 million paying members, in addition to Internet brands including the Huffington Post, TechCrunch and Engadget. It’s unclear if Verizon is interested in those media properties, which draw more than 200 million unique visitors a month, the fourth-most in the U.S., behind Google Inc., Yahoo Inc. and Facebook Inc., according to November data from researcher ComScore Inc.

Early Portal

Once known for its “You’ve got mail” notification to consumers, AOL was one of the main portals through which people first accessed the Internet. Its trajectory peaked with a now-infamous $124 billion combination with Time Warner 15 years ago, after which it began losing customers to faster services from telephone and cable-television carriers.

After years of losses the merger was unwound with a spinoff in late 2009.

Some of AOL’s members still use its dial-up Internet service, though the company is winding down that business. If Verizon acquired the New York-based company, it could continue that process and convert some of those customers to its FiOS broadband service, one of the people said.

Verizon is dedicating three executives to help develop a mobile-video service and integrate acquired technology, known as OnCue, from Intel Inc. last year and EdgeCast Networks Inc. in December 2013. AT&T and The Chernin Group announced a joint venture to acquire and develop online-video services in April 2014.

AOL Transformed

Verizon is still paying off debt from buying Vodafone’s 45 percent stake in Verizon Wireless last year for $130 billion, and the company is stockpiling cash to acquire wireless spectrum in an auction that began in November. Both could hamper the New York company’s ability to make an acquisition, two people said.

AOL CEO Armstrong has made a series of investments in ad technology that has brought growth, with the promise of profits not far off. Armstrong has revamped AOL through acquisitions, and most of his biggest bets have been on advertising. His largest transaction was 2013’s $418 million purchase of Adap.tv Inc., which matches advertisers and video publishers through an exchange.

The strategy is to make AOL a company advertisers use to automate their purchases of placements on websites and online videos across the Web. While ads are everywhere online, marketers have found it difficult to ensure their messages are getting in front of their ideal audiences, a dilemma AOL’s technology is meant to address.

Activist shareholder Starboard Value LP proposed last year that Yahoo explore a combination with AOL.

The transaction is likely to be in the $580 million-plus range, but under $600 million, financial and market sources said. An announcement is expected this week but could be as early as today or Wednesday.

If it completes the transaction, Coach will have to beat out Advent International Corp. and Brown Shoe Co. in the latest round of bidding. It would also represent the first time the U.S. accessories giant has made an acquisition. The company historically has focused on organic growth of its core Coach brand. Coach also has been the subject of takeover rumors over the past few years, with the latest involving LVMH Moët Hennessy Louis Vuitton as the possible acquirer. With an acquisition of Stuart Weitzman, that could make a takeover unlikely in the near term. Coach’s market capitalization is currently $10.1 billion.

Shares of Coach closed at $36.73, down 1.6 percent, in Big Board trading on Monday. Word of the Weitzman transaction came after the markets closed. The stock fell 0.5 percent to $36.56 in after-market trading.

A deal of just under $600 million for Weitzman would be far less than the $800 million some bankers thought might occur on expectations of a bidding war. However, heading into the homestretch, it was learned by WWD that some potential buyers, such as Leonard Green & Partners, had taken a look and elected to walk away. Financial and market sources said the prospective buyers couldn’t get to the $600 million-plus asking price because they questioned what the brand was worth if the firm’s founder, Stuart Weitzman, were no longer involved in the company.

It couldn’t be determined at press time whether Weitzman would stay on at the firm following the acquisition.

Officials at Sycamore declined comment on Monday. A spokeswoman for Coach could not be reached for comment. Her voice mail said the company is currently in its “quiet period” as it prepares for its release of second-quarter results.

A Coach acquisition of Weitzman would substantially expand the company’s business in footwear, since it has traditionally been centered on handbags and small leather goods. At the same time, an acquisition comes at a time when the group’s management under chief executive officer Victor Luis and creative director Stuart Vevers continue to struggle to turn around the Coach brand, which has lost market share to the likes of Michael Kors, Kate Spade and Tory Burch. Luis and Vevers are undertaking an ambitious relaunch of the brand to turn it into more of a lifestyle label, with ready-to-wear for women and men, as well as more expensive accessories collections. So far, however, the strategy has failed to reignite Coach’s growth.

The Weitzman business, while mature in the sense that it’s already an established brand, still has some room to grow internationally. The business has been focusing on expansion in Asia and could likely have freestanding stores in 14 cities in Greater China by yearend. It also has been developing its e-commerce strategy in the region, particularly in Hong Kong, China and Australia. The company also has a selection of handbags, clutches and wallets — a natural accessories complement for many footwear firms.

A Coach deal to buy Weitzman was first reported by The Wall Street Journal online on Monday.

Now might be the right time to sell a brand such as Weitzman, given the current mergers-and-acquisitions focus on accessories and footwear brands and Jimmy Choo’s recent joining of the FTSE-500 ranking of top stocks in London with a valuation of more than $1 billion.

Weitzman was part of The Jones Group, which was acquired by Sycamore in April 2013 for $2.2 billion. Sycamore recapitalized the business earlier this year. The Weitzman brand has been sold before. Stuart Weitzman sold his firm to a European company in the Seventies, and then bought it back about a decade before he resold the company to Jones Apparel Group, later renamed The Jones Group. Jones acquired its first stake in May 2010 and then the balance in August 2012.

{http://www.agefi.fr/articles/l-actionnaire-de-sika-fait-appel-a-la-justice-pour-tenter-de-debloquer-la-vente-a-saint-gobain-1343468.html}~

- Corporate Credit Available Net: 2% v 2.6% q/q- Corporate Credit Available Next 3 months: 3.6% v 1.7% q/q

- Secured household credit available: 7.8% v -28.5% q/q

- Secured household credit available next 3 months: 1.5% v 17.7% q/q

- Unsecured household credit available: 16.7% v 13.6% q/q

- Unsecured household credit available next 3 months: 8% v 17.8% q/q