Facebook is likely to go public sometime after late 2012, a board member said. A stock market debut by a company valued in the tens of billions of dollars would be one of the most highly anticipated initial public offerings of the decade. *View article

Andrew Ross Sorkin from The New York Times takes a look at the secondary market’s implied market value for Facebook. Will Facebook ultimately be worth $33 billion or $3 billion? *View NYT article

Southwest Airlines’ $1.4 billion AirTran Holdings deal pays for itself, writes columnist Robert Cyran. *View article *Further reading

AOL has been in deal talks with TechCrunch, the WSJ reports. *View WSJ article

Southwest Airlines’ $1.4 billion AirTran Holdings deal pays for itself.

The dominant discount airline’s takeover gives it valuable gates in Atlanta and several Northeast cities. While AirTran poses operational risk and comes at a 69 percent premium, the value of promised cost cuts is worth about $2.8 billion before accounting for the time value of money. Even if some savings disappear, the deal stacks up. Indeed, investors sent Southwest’s shares soaring 10 percent on the news, adding almost $1 billion to the company’s market capitalization.

For years, Southwest grew by basically repeating the same play. Offer basic service to second-tier airports at U.S. cities at discounted prices. Minimize ticketing costs. Put passengers at ease by having bubbly flight attendants make lots of jokes. Save money by flying only Boeing 737s. And try to keep planes full by sticking to short routes.

Purchasing AirTran mixes up the model a bit, however. For one, AirTran leases more Boeing 717s than 737s. The airline also has some international destinations. Southwest’s even saying the acquisition improves its ability to attract lucrative business customers. And it may be culturally difficult to integrate because of its size — AirTran employees would be close to 20 percent of the combined company’s workforce.

On balance, these risks appear worth taking. Buying AirTran gives Southwest access to Atlanta, where Delta has largely had a lock on the market. That makes the city a fat target for tightly-run Southwest.

The deal’s best attribute, though, looks purely financial. Southwest estimates cost savings of at least $400 million per year by 2013. The after-tax value of these savings would be worth as much as $2.8 billion. Unfortunately for investors, promised savings in the airline industry often disappear, transferred to customers in the forms of cheaper flights.

But only a fraction of the promised synergies need to show up to justify the $400 million premium that Southwest is paying. No wonder the company’s investors are acting as ebullient as one of the company’s flight attendants.

There’s no quick way for the U.S. government to exit American International Group <AIG.N>. Converting $49 billion of preferred stock to common shares and selling them would, like the government’s exit from Citigroup <C.N>, take a while. And that’s assuming other share sales, needed for separate repayments relating to AIG, go smoothly.

As of June 30, AIG owed the government just over $100 billion — though a further $4 billion has since been repaid. AIG has also made progress offloading assets. Big examples include the IPO of AIA, the Asian unit currently expected to debut on the Hong Kong market in the next month or so, and the $15.5 billion sale to MetLife <MET.N> of American Life Insurance, or Alico, which is winding its way towards closing. The New York Fed converted debt into preferred shares in these entities worth $16 billion and $9 billion, respectively, and the deals will help pay that off.

Back at AIG itself, there are around $49 billion of preferred shares owned by the Treasury. The Citi example shows how that block of prefs might be swapped into common equity and then sold, over time. In the Citi case, the government is turning a profit on its shares, potentially making the idea interesting for AIG as well.

But it looks like selling the government’s Citi stake — initially nearly 30 percent — will take longer than the anticipated nine months from March. Offloading the Treasury’s stake in AIG could take far longer, because the government already effectively owns 80 percent of the company, and converting the prefs could take that nearer to 90 percent.

Unfortunately, that’s not all. A planned sale of AIA to the UK’s Prudential <PRU.L> — abandoned in June — would have brought in a big slug of cash, but an IPO probably won’t raise enough to pay back the New York Fed’s preferred interest in AIA right away, let alone give AIG any proceeds to apply to its own obligations. Meanwhile the Alico sale will come with only $6.8 billion of cash. So the government will depend on further sales of AIA and MetLife equity interests to get its money back.

And there’s more. Ahead of all that, at least in strict credit priority, is another $20 billion-odd, including accrued interest, that AIG still owes the New York Fed under a credit facility. The insurer might at some point be able to refinance that. But put the pieces together, and taxpayers could wait a long time before enough shares in enough different companies are sold for them to be made whole.

Wal-Mart <WMT.N> has finally sounded the vuvuzela on African expansion. After months of speculation about how it would try to capitalize on the continent’s growth, the U.S. retailer is offering $4.2 billion to acquire South Africa’s Massmart Holdings <MSMJ.J>. The price could grate on shareholders’ ears. But the deal gives Wal-Mart a local vehicle — and local knowledge — to help it gain access to a market with a profile that should suit it well.

If the deal is accepted by Massmart, Wal-Mart will be paying close to 13 times the Johannesburg-based retailer’s EBITDA. For a company that trades at closer to 7 times, that’s a big premium, albeit a drop in the bucket against Wal-Mart’s nearly $200 billion market capitalization.

But Wal-Mart will get a foothold in what should be a bright spot in the world’s growth map. South Africa, where Massmart operates 232 stores from Limpopo in the northeast to the Western Cape, is one of the CIVETS economies (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) widely hailed as the next sizable emerging markets.

The International Monetary Fund estimates sub-Saharan output will grow nearly 6 percent per annum from 2011. Capitalizing on this would be a stretch for Wal-Mart from its Bentonville, Arkansas headquarters. Sure, the retailer has become a smart international operator and broadly understands poorer shoppers, something Africa has in unfortunate abundance. But Wal-Mart would lack local knowledge in a new market.

Piggybacking on Massmart’s business makes African expansion a much less risky proposition for the U.S. giant. From its home market where it operates a variety of retail formats, the South African group has been rolling out its Game mass-discount stores in Botswana, Ghana, Malawi, Mozambique, Namibia, Zambia and elsewhere.

Moreover, buying Massmart should boost margins in Wal-Mart’s international business, which accounts for around a quarter of its revenue. While Wal-Mart International’s operating margins were around 3.8 percent in the first half of this year, Massmart’s stood at closer to 5 percent. Apply Wal-Mart’s massive purchasing power, and profitability could increase further.

This entry ticket to a CIVETS lair doesn’t come cheap. But with growth elusive at home, it should be a price Wal-Mart shareholders are happy to pay.

American International Group and the U.S. government are moving closer to a deal on how the Treasury Department would exit its investment in the bailed-out insurer, sources said. *View article *View Bloomberg article

Southwest Airlines will purchase AirTran Holdings for $1.04 billion in cash and stock in a deal that will allow Southwest to expand its presence in major East Coast markets. The move by Southwest puts pressure on all major rivals, who are trying to strengthen their eastern markets to leverage more premium-paying business travel. *View article

Consumer goods group Unilever will buy hair and skin care company Alberto Culver for $3.7 billion in the latest move to rebalance its portfolio toward higher growth lines. Analysts said the price of the deal looked high, but could be justified by cost savings and by skewing Unilever’s business to more high growth, high margin categories. *View article

Wal-Mart is in talks to buy South Africa’s Massmart, a $4 billion deal that would give the U.S. retailer a big presence in fast-growing Africa and bolster its emerging markets strategy. *View article

Sanofi-Aventis has not changed its offer of $69 per share for drugmaker Genzyme, a Sanofi spokesman said, declining to comment on a report it may be lining up more funding for a raised bid. *View article *View WSJ article

Hedge fund types don’t have much to complain about. The latest evidence is Blackstone’s seeding of a new fund for commodity traders, led by George “Beau” Taylor, who are leaving Credit Suisse . With even foreign financial institutions in the U.S. wary of breaching the Volcker Rule, opportunities are coming the way of the non-bank system.

The writing is on the wall for the small groups of people who make bets with banks’ capital. Exploiting arbitrage opportunities in the commodities markets is an especially obvious form of proprietary trading. From Goldman Sachs down — or up, depending on how Wall Street’s top dog is viewed — prop traders, uncertain of their career paths thanks to the new U.S. rule, are on the lookout for fresh pastures.

Enter Blackstone, the private equity powerhouse which also operates advisory, real estate and hedge fund businesses. The epitome of what’s known as a shadow bank, the firm’s big fund of funds unit has “strategic alliance” funds for seeding new hedgies. Though private equity and hedge funds haven’t entirely escaped tighter controls, the regulatory spotlight on banks is making talent more readily available to alternative asset managers like Blackstone.

There’s even still the odd case of banks bringing hedgies new riches. The asset management division of Credit Suisse, ironically enough, recently forked out $425 million for a 30 percent stake in York Capital, headed by Jamie Dinan. The Swiss bank carefully noted that the deal was consistent with the Volcker Rule, which allows banks to own hedge fund management firms while limiting the investment of bank capital in the funds themselves.

It’s not all plain sailing. Ex-bank traders trying to start hedge funds on their own are struggling to raise capital. That means existing large funds and the likes of Blackstone are best placed to pick up talent fleeing Wall Street. And returns aren’t so easy to come by in the current directionless markets. For example, the poster child for commodities traders pushed out of banks, Andrew Hall — whose Phibro unit was hived off by Citigroup a year ago amid furor over his $100 million bonus — has seen his fund lose money this year.

Overall, though, the complaints during a town hall-style meeting this week of one hedge fund manager, Anthony Scaramucci of SkyBridge Capital, about being “whacked” by President Barack Obama just don’t wash. Hedge fund types should count their regulatory blessings.