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Blow For JC Flowers As Kaupthing Drops NIBC DealJC Flowers, the US investor, was dealt a severe blow today after Kaupthing, the Icelandic bank, walked away from plans to buy the Dutch merchant bank NIBC for €3 billion ($4.44 billion), citing the credit crunch. “Together with Kaupthing we agreed that the current market conditions bring the benefits of the acquisition under pressure and don’t form a solid base on which to build a combined future,” Michael Enthoven, the chief executive of NIBC, said in a statement. Kaupthing agreed to buy the unlisted NIBC in August from a consortium of shareholders led by JC Flowers. However, the consortium had not received the go-ahead for the deal from the Icelandic financial supervisory authority. &&&§ionName=IndustrySectorsBankingFinance,mywindow,menubar=0,resizable=0,width=615,height=655); Related Links JC Flowers confirms possible Friends bid Flowers’ secret stake in UK insurer JC Flowers pulls out of Northern Rock raceThe collapse of the deal will be a huge disappointment for Christopher Flowers, the former Goldman Sachs banker at the helm of the New York-based private equity firm. He was recently forced to settle a lawsuit for pulling out of a large buyout deal in America and also failed to get on the preferred bidding list for Northern Rock, the stricken British bank. The collapse of this latest deal could also have a bearing on JC Flowers chances of taking over Friends Provident, the UK life insurer that Mr Flowers is trying to win over. Since the deal was announced, Kaupthings funding costs have skyrocketed in the deteriorating credit markets, and media reports have speculated that the Icelandic regulator could block the NIBC deal or require that Kaupthing raise more funding to protect its own balance sheet. Kaupthing had planned to issue new share capital of up to 210 million shares in total, of which the JC Flowers-led consortium would receive 140 million shares, to fund the deal. Kaupthing has been hit hard in the recent credit crisis. Shares in the Reykjavik-based bank have fallen more than 30 per cent in the past three months, and Kaupthings five-year credit default swap spreads, which measure the cost of insuring against default on debt over five years, have soared amid market jitters over the banks risk profile. Kaupthings five-year CDS spreads have soared more than 300 basis points in the past 28 days and are near 590 basis points. Tag CloudExternal InformationAdditional InformationU.S. Worries Deliver a New Jolt Overseas...World Business Briefing: Japan: Mobile Phone Company’s Profit Surges... Microsoft’s Gates Plans Leave Amid Great Change... No more living on borrowed dreams... Where Am I?News Main Page - Business - Blow For JC Flowers As Kaupthing Drops NIBC Deal |
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