TheChek News Flow

Exxon Mobil Corp. is in advanced talks to acquire a stake in a giant Mozambique natural gas development project from Italy’s Eni SpA, a sign that major oil companies are again hunting for deals after energy prices crashed in 2014.

The acquisition could be announced in coming weeks, according to people familiar with the matter. Terms of the deal aren’t clear, but one person indicated Exxon is in talks to buy a stake of around 20% from Eni, which owns 50% of the development.

As with all discussions over deals, timing could slip, talks could fall apart at the last minute or the size of the stake could change.

Any such purchase likely would be a drop in the bucket for Exxon, which has a market value of around $350 billion. A 20% stake in the concession sold for more than $4 billion in 2013, before energy prices tumbled.

The Mozambique Area 4 offshore development is expected to become a major global supplier of liquefied natural gas. Eni has said Area 4 may hold 85 trillion cubic feet of gas. The Italian company estimates it may hold enough gas to meet U.S. residential consumption for nearly two decades.

For Exxon, the assets would represent an important move toward adding to oil and gas reserves with acquisitions during the downturn in oil prices, a step many analysts have estimated it would take as prices fell. Last year, the Irving, Texas-based company was only able to replace about two-thirds of the oil and natural gas it produced, the first time that has happened in 22 years.

The Mozambique project involves separate giant natural gas discoveries in the Indian Ocean that a host of companies want to exploit. Eni and Anadarko Petroleum Corp. made the original discoveries in the area and agreed last year to coordinate development that is likely to cost in the tens of billions of dollars.

Anadarko owns a 26.5% working interest in Area 1, which is a separate tract not included in the Eni deal under discussion with Exxon Mobil. Area 1 could hold as much as 75 trillion cubic feet of gas. Partners there include Japan’s Mitsui & Co. Anadarko isn’t a partner in Area 4.

The projects come at a difficult time for Anadarko and Eni. As oil and gas prices have plunged, Anadarko has said it would cut spending by almost half, complicating its ability to advance the Mozambique development. Both companies have yet to make a final investment decision on the project. It is unclear how a potential Eni stake sale would impact the funding picture for Anadarko.

The backing of Exxon, which has a AAA credit rating and recently sold $12 billion in bonds to build its acquisition war chest, could be a lifeline for Eni as it seeks to make the discovery viable. Exxon is said to have an interest in becoming an operator in the development, people familiar with the matter said.

Energy deal making has been relatively muted because of the downturn in oil and gas prices. The largest energy deal so far this year is TransCanada Corp.’s agreement to buy Columbia Pipeline Group Inc. for $10.2 billion.

According to numerous sources, Microsoft execs have been meeting with private equity firms mulling over bids to buy Yahoo and telling investors the company might be willing to lend significant financing to their efforts.

As most know, Yahoo has said it is for sale. Some question the company’s commitment to the process, given how glacial it has been, which many attribute to CEO Marissa Mayer’s antipathy toward it, favoring her own turnaround efforts instead.

Today, activist shareholder Starboard Value said as much, mounting a long-expected proxy challenge to Yahoo and naming its own slate of directors to replace current ones.

Starboard’s Jeff Smith noted that the new board was needed to bring “credibility to a process that has been publicly criticized repeatedly for being too slow, fraught with conflicts of interest and very difficult for highly qualified and motivated strategic and financial buyers to access much-needed diligence information.”

Every single possible buyer I have spoken to this week agreed in spades, with many calling the Yahoo sale effort a farce. The current Yahoo board has said it is not, but the credibility of the current Yahoo board is — let’s be honest — under some much-deserved scrutiny.

In any case, adding Microsoft into the mix does give this process some seriousness. Microsoft’s partnerships and acquisition strategy head Peggy Johnson is part of the effort, as well as others at Microsoft, sources said (you can hear my Re/code Decode podcast interview with her from last fall below).

To be clear, the software giant has made no commitments so far to any investors, and any discussions now are exploratory. But sources said that the reason for providing financing would be because Microsoft wants to ensure that if Yahoo is sold, whoever buys it will be a good partner going forward. That makes sense, since Microsoft has close search and advertising ties with Yahoo, part of a longtime partnership.

That deal was struck after Microsoft made a hostile bid to buy Yahoo in 2008. At the time, former CEO Steve Ballmer offered $31 a share; at that time it was worth about $45 billion.

Ultimately, the effort was unsuccessful, but it was ugly by more friendly tech standards.

Since then, the companies have had a more cooperative relationship, although there was some recent tension when Mayer tried to get out of parts of the current search deal via a lawsuit that failed. She ended up renegotiating the deal a year ago on more favorable terms for Yahoo and later signed another search deal with Google, too.

Preserving its current status is important to Microsoft, said sources, which is why it has been mulling the financing of possible Yahoo buyers, who will have to come up with billions of dollars in cash to be competitive. “If Microsoft put in a billion, it would cost them almost nothing,” said one investor who had spoken to the company. “It’s a minor thing and it buys them a lot.”

Yahoo’s market cap is currently $32.5 billion, but that includes its stakes in its Asian assets. After the spin-off of its Alibaba Group assets and minus-ing out its shares of Yahoo Japan, most peg the price of its core business at $6 billion to $8 billion.

But sources close to Yahoo’s board said it wants $10 billion in a sale. (By way of comparison, I want a pretty pony from Microsoft comms head Frank Shaw and have a better chance of getting it.)

Sources within Microsoft said the company had no interest in making a more significant bid, but others do. This week, sources said, Yahoo began engaging with “strategic” bidders that include AT&T, Verizon and Comcast. PE and other investment firms will come next, the sources said, and those interested include Advent International, Vista Equity Partners (this one interests me the most), TPG, KKR and others.

A Microsoft spokesman who will not buy me a pony anytime soon declined to comment.

- Sells €496M in 3.10% Sept I/L 2026 BTPei bond; Avg Yield: 0.55% v 0.83% prior; Bid-to-cover: 2.39x v 2.00x prior

Outdoor retailer Cabela’s is getting serious about tracking down a buyer.

The 27-store chain — a destination for hunting, fishing and camping enthusiasts — in the past two weeks opened its financial books to rival Bass Pro Shops and other potential suitors, The Post has learned.

Cabela’s has been under fire since October from activist billionaire investor Paul Singer’s Elliott Management hedge fund, which bought an 11 percent stake and pressed management to consider options for boosting the stock price, including a sale.

The Sidney, Neb., company said in December it would explore strategic alternatives but held off distributing confidential financial information to potential buyers until now.

Bass founder John Morris, who controls the closely held Springfield, Mo.-based company, has long wanted to buy his closest rival, sources said.

Cabela’s, in which the founding family holds a sizable stake, generated $3.5 billion in revenue last year, or roughly the same as Bass’s. But Cabela’s is less profitable in part because it still runs like a family-owned business, sources said.

Cabela’s last month started seeking buyers for its credit-card business, which is responsible for about 30 percent of total sales, and expects to have those bids soon.

With those in hand, it wants to see what Bass and other potential bidders such as private-equity firms are willing to offer with and without the credit arm, sources said.

Shares fell 2.3 percent, or $1.07, to $45.48 on Wednesday. Cabela’s did not return calls, while Bass declined to comment.

This is a list of “companies to follow” in German-speaking countries. They are interesting, organic-growth businesses with hidden potential to use M&A now or in the future.

Germany

Holemans, a gravel plant operator, is constructing new facilities

Geta, a vehicle interior producer, is eyeing growth

SolarisBank, a digital banking operator, is considering expansion

Aktivbank, a bank serving midsized companies, is investing in digitization

Pleines Fashion Optik, an eyewear maker, aims to grow its chain

Franz Gaissmaier Baustoffe, a building materials company, is expanding its location

Otto Bock, a prosthetics company, raised EUR 600m

Austria

Danzer, a decorative hardwood producer, plans further investments

Switzerland

Transa, an outdoor equipment maker, took over the Spatz tent range

Holemans builds new facilities

Holemans, operator of the Wesel-based gravel plant Kieswerk Ellerdonk, is constructing new facilities, Rheinische Post reported on 21 March. A new treatment plant has been under construction for about eight weeks, the report noted. It cited Thomas Derksen, the technical director, as saying the gravel plant will be more densely furnished, allowing the new facility to be 17 meters high instead of 26 like the older one. Operations are expected to become more efficient. Construction is proceeding according to the time plan, according to the article. Production is expected to resume in early summer.

Geta aims for more growth

Geta, the Wangen-based vehicle interior producer, is eyeing growth, Schwaebische Zeitung reported on 17 March. The company pursued strong international growth in 2015, founding operations in Russia and Italy, the report said, citing Chief Executive Peter Buhmann. Since 2006, it has had a joint venture serving the Chinese market, while Russia has also been a major focus for its business, the report said. In the coming two years, it plans to establish three further international partnerships. The 30-year-old company mostly produces items for train interiors, the report said. Last year's turnover reached EUR 50m.

SolarisBank targets expansion with banking license

SolarisBank, the Berlin-based digital banking platform operator, is eyeing expansion having obtained a full banking license. The company stated that it has received a license from the German financial supervisory authority (BaFin) and aims to boost the growth of the digital economy. The company has built a modular platform for digital companies, letting them develop financial solutions suited to their requirements. It said it is filling a gap left by traditional banks, which are generally ill-suited to the digital economy. Besides ecommerce businesses, SolarisBank will serve fintech companies aiming to launch new business models and financial technologies. Managing Director Andreas Bittner said partners can pick SolarisBank services like building blocks to create custom solutions. The company was launched in 2015.

Aktivbank invests in digitization

Aktivbank, the Pforzheim-based bank serving midsized companies, is investing in digitization, Pforzheimer Kurier reported on 19 March. The firm boosted its turnover last year by 1.8% to EUR 2.78bn. Manager Hauke Kahlcke was cited as saying the bank is continuing its investment in digitizing business processes in order to provide up-to-date services. He said there will be a focus on electronic billing and a customer-oriented development of the firm's factoring services. The year 2015 already saw Aktivbank making investments in new financial services for midsized companies and their groupings, the report said. Its factoring turnover rose by EUR 41.1m. During 2016, investment will go into IT solutions in building up the corresponding personnel base. Moreover, Aktivbank was cited as saying it may seek to acquire stakes in companies with suitable digitization solutions.

Pleines Fashion Optik plans more outlets

Pleines Fashion Optik, the Korschenbroich-based eyewear maker, aims to expand its chain of outlets, Rheinische Post reported on 4 March. Based largely in Germany's Lower Rhine region, the company aims to grow beyond this while staying inside the state of Nordrhein-Westfalen, the report said. Owner R. Dieter Pleines mentioned the major city of Düsseldorf as one place where the company is not yet represented. The 60-year-old family company sees growth potential through internet sales, with which it is complementing its traditional sales, Pleines was cited as saying. The company operates a chain of 17 optical businesses and 15 acoustics ones. Pleines said it is in the top 20 of 12,000 ophthalmic businesses in Germany. The company has 110 employees.

Franz Gaissmaier Baustoffe expands with new property

Franz Gaissmaier Baustoffe, the Tettnang-based building materials company, is expanding its base location by 5,400 square meters, Schwaebische Zeitung reported on 16 March. The report cited Managing Director Peter Gaissmaier as saying the company has acquired land and buildings from the construction components company Aich in Schaeferhof, a part of the city of Tettnang, and will use these for its work. The company has long been seeking expansion of its 10,000 square-meter headquarters, as it wanted more space for storing materials, he said. Aich is relocating operations.

Otto Bock raises EUR 600m with promissory notes

Otto Bock, the Berlin-based prosthetics company, has raised EUR 600m through a promissory note (Schuldschein) issuance, Boersen-Zeitung reported on 17 March. The transaction was arranged by Deutsche Bank and legally advised by White & Case.

Danzer to invest in deck layers

Danzer, the Austrian decorative hardwood producer, plans further investments in its business with deck layers for hardwood flooring, it announced on 3 March. That part of its business saw strong growth in 2015. Chief Executive Hans-Joachim Danzer said EUR 15m will be invested in expanding and upgrading factories in France and the Czech Republic. The year 2016 will see a launch in production of deck layers at the company's US plants, too, the company announcement stated. The company boosted sales in 2015 by 9.5% to EUR 254m. In its first business year located at its new head office in Dornbirn, the company acquired a veneer splicing plant in the Czech Republic. The family-held Danzer has three production plants in Europe, five in the Americas and one in Africa. Its employees number 2,600 worldwide.

Transa to produce acclaimed tent brand

Transa, the Swiss outdoor equipment maker, has taken over production of the acclaimed Spatz tent range, Neue Zuercher Zeitung reported on 22 March. The report said Transa is an investor in a new Wädenswil-based business that will make tents and sleeping bags. This follows an auctioning off of the tent production operation under the Spatz brand name, the report said. According to the article, the entity that will continue the production is a cooperative venture launched in January by Transa and the businessman Olivier Lüthold. The report cited Lüthold as saying there is much business potential in the venture.