The 1980s revival continues. Music fans have been flocking to see the Human League and Spandau Ballet on their reunion tours. Now M&A aficionados can savour their own mini revival. Yes, it’s the return of the Pac-Man bid.
    Two mid-sized British insurers, Friends Provident and Resolution have revived this gambit, named after a mind-bogglingly dull computer game where the objective is to eat your pursuers rather than be eaten yourself. In M&A, this involves the target of a bid approach (in this case, Friends) turning on the bidder and launching an offer itself.
    In the case of Resolution there was a certain logic in so doing. Resolution is effectively a cash shell company, which has opaque governance. Its nil premium share for share approach offered little to Friends other than the chance to hand over 10 percent of the combined company’s profits to Resolution’s management. The proposed nil premium counterbid made little sense (other than to eliminate the 10 percent profit share). But it did at least tease out a slightly more generous bid proposal from Resolution.
    Pac-Man defences are rare in M&A — and for good reason. They’re wholly unconvincing. If you get a bid for your company, and think that the combination has merit, squabbling over who bids for whom seems to miss the point. At worst it smacks of management self interest.
    This is not the only reason there have been very few Pac-Man defences. The bigger problem is that they are uniformly unsuccessful. The target never actually gets to gobble up the predator. It is 10 years since Elf Aquitaine’s desperate  attempt to see off an ultimately successful bid by fellow French oil major Total. The same year, British regional brewer Marston’s also used the defence against a bid from Wolverhampton and Dudley Breweries. It too failed.
    That doesn’t stop it from rearing its ugly head from time to time. Pac-Man defences were raised as a possibility for Rio Tinto  to turn the tables on BHP Billiton and more recently as a means for Anglo American to round on Xstrata. But generally that’s all it is: talk.
    The Resolution-Friends situation is an unusual one. Resolution is a cash company that is desperate to do a deal, while Friends rejected a 150 pence per share bid from J.C. Flowers last year. There are particular reasons they have ended up in a sort of death embrace. So while the Spandaus may be back in favour, the Pac-Man bid is likely to remain consigned to the archive.

An almost heart-warming effort is being mustered by CIT bondholders to keep the troubled lender from getting put under the TARP or stumbling into a much-anticipated bankruptcy. Some $3 billion in survival cash is seen in the pipeline — money that could strengthen CIT’s finances and allow it more time for a debt restructuring. An announcement is expected before the markets open this morning.

What kind of terms might bondholders extract from CIT? Before TARP was modified to target executive pay for those who sought its shelter, banks such as Citigroup and then-independent investment house Merrill Lynch paid what were seen as shockingly high terms on mandatory convertible debt. They were the kind of rates Citi customers paid on credit cards; nothing like traditional bank funding rates.

So, a CIT deal could, and perhaps should, come with a variety of stringent terms. If these are effectively passed on to desperate small and medium-sized businesses that CIT serves, the cost of this rescue could be blamed for stifling the recovery.

CIT Group Inc, which lends to nearly one million small and mid-sized businesses, signed off on a $3 billion deal late Sunday in rescue financing from a group of bondholders to avoid bankruptcy.  And private equity firm Kohlberg Kravis Roberts & Co on Monday moved a step closer to gaining a stock-market listing.

For these stories and all the rest of the latest deals news from Reuters, click here.

And in the newspapers (some external links might require subscriptions):

* Lloyds Banking Group (LLOY.L) and the Royal Bank of Scotland (RBS.L) might have to sell part of their businesses under proposals to be announced by the opposition Conservatives on Monday, the Times newspaper reported.

* Vietnam’s Oricombank, 10 percent owned by BNP Paribas (BNPP.PA), could sell up to another 10 percent of shares to its French shareholder by year end, Oricombank’s chief executive was quoted in a report as saying. Reuters story here.

* Ron Sandler, the chairman of nationalised British bank Northern Rock (NRKx.L), is on the short list to replace Victor Blank as the chairman of Lloyds Banking Group , the Sunday Telegraph said.

* Italian insurer Assicurazioni Generali SpA (GASI.MI) will abstain from Intesa Sanpaolo SpA board meetings until an antitrust dispute is settled, Il Sole 24 Ore newspaper said on Sunday. Reuters story here.

* China Investment Corp (CIC), the country’s $200 billion sovereign wealth fund, has agreed to buy a 40 percent stake in investment firm CITIC Capital Holdings Ltd, the official China Securities Journal reported. Reuters story here.

* HSBC (0005.HK)(HSBA.L) has picked 4 to 5 investment banks in the first round of selecting sponsorships and underwriters in its plan to launch shares in China, Apple Daily said, citing unidentified sources. Reuters story here.

* Singapore-based cooking oils producer Wilmar International (WLIL.SI) aims to raise $3 billion to $4 billion through an initial public offering by its China subsidiary in Hong Kong in the first half of next year, the South China Morning Post reported, citing an unidentified source. Reuters story here.

* DLF Ltd (DLF.BO), India’s largest listed developer, is in talks with Europe-based Gaz de France Suez (GSZ.PA) and Akuo Energy about selling its wind energy business, the Economic Times newspaper reported. Reuters story here.

* French utility group Veolia (VIE.PA) is close to reaching an agreement to buy transport company Transdev, Le Figaro reported. Reuters story here.