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Smoke, Fire

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Reporting on rumors has always been part of the deal with the journalism racket. Speculative stories about company X looking to buy company Y, or company Z hiring Poopsnoop, Flackerie & Grinde, LLP to find itself a buyer, are the thinly sourced stuff that eventual scoops are made of, even if these initial reports consist of nothing more than a one-sentence factoid followed by lots of caveats and boilerplate background.

But deal rumor reporting recently hit a new high -- or is it low? -- a few weeks back when the Wall Street Journal put out a story on what it called "The Big One," which stated: "talk around Wall Street [is] that there is at least one private equity deal now on the table that could top $10 billion in value."

The paper, which ran the story on the front page of its Money & Investing section on May 6, provided absolutely no additional information on a long-rumored deal -- nothing on the private equity firms involved, on the target's industry, on the advisers, on the financing -- that M&A reporters around town (including in The Deal's own newsroom) had been doggedly and unsuccessfully chasing for weeks. But that didn't stop the WSJ from turning out hundreds of words on what this mysterious transaction would mean for the buyout market, intoning that "the fact that a big deal is even in the offing points to renewed vigor not seen for nearly three years in leveraged buyouts."

The Journal was hardly the first outlet to report on the rumored deal. One week earlier, Reuters briefly mentioned the "chatter on a sizable potential deal" within a story on the possible return of megabuyouts. And Dow Jones' Financial News reported that a group of large banks were "understood to be putting together a $10bn (€7.5bn) loan that could finance the buyout of a U.S. public company" back on April 22 -- the same day Blackstone Group LP CEO Steve Schwarzman said on an earnings call that deals in the $10 billion to $15 billion range were possible once again. But the Journal was the first to give the deal chatter major play -- and in the process, outed the paper's inability to nail down what was starting to feel like a phantom story.

Call it the blogification of deal reporting. It's hard to imagine the WSJ, or any big paper for that matter, going public with such a tissue of a story -- devoid even of the simplest of speculation on the companies and firms involved -- as recently as a year or so ago. But in a world where blogs routinely broadcast the merest hint of a rumor within minutes of hearing it, updating, correcting or even retracting as the story develops, the Journal, perhaps frustrated by a long, fruitless chase, apparently decided to roll the dice. Amazingly, the gamble paid off.

A few hours after its piece appeared, the Journal broke the news that a group of private equity firms, led by Blackstone, was in talks to acquire Fidelity National Information Services Inc., a payment processor in Jacksonville, Fla., valued at approximately $10 billion. It's impossible to know if the paper's information-free story on "The Big One" is what caused someone involved in the transaction to finally leak some details of one of the most hotly pursued yet elusive deal rumors in recent memory. But it certainly looked that way.

In any case, it will be interesting to see what the leak's effect will be on the deal if it ever comes to fruition. (As of this writing, no buyout had been officially announced and no offer officially presented to Fidelity National's board.) As Vipal Monga reported in The Daily Deal, the Journal's story essentially put Fidelity National in play and could force the special committee of the company's board to either complete the Blackstone deal quickly or begin a formal auction and solicit bids from other buyers. Meanwhile, on May 12, Bloomberg noted that the potential deal's value had climbed to $15 billion, representing a 20% premium to Fidelity National's stock price the day before the Journal's scoop.

The final outcome will surely help determine how leaky participants in future megabuyouts will be. But even if they clam up, in the wake of Fidelity National one thing is clear: Deal rumor stories will persist, with or without pesky details such as who's buying whom.

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Yvette Kantrow is executive editor of The Deal.