US should issue perpetual zero-coupon bonds 31 Mar 2006 Treasury boss Snow, now fighting for his job, has been less aggressive than his European counterparts in issuing longdated bonds. Undated zerocoupon bonds would satisfy investor willingness to hold risky assets and be the ultimate expression of US financial hegemony.
Goldman’s ITV bid rightly dies 31 Mar 2006 Although the structure of its consortium bid for the UK TV group was interesting, it was just too greedy and it made tactical errors. Goldman s stingy cash alternative was unrecommendable. But Allen, ITV s boss, shouldn t be complacent. He s had a lucky escape.
Appaloosa makes risky, not mad, bankruptcy bets 31 Mar 2006 The renowned distressed debt hedge fund s shift into buying shares in bankrupt car parts companies should not worry its investors. The rewards, while tough to reap, could be large. And the stakes in Delphi and Dana it has taken are small in any event.
Regulatory problems return to haunt Citi 31 Mar 2006 The US financial group has spent the past two years trying to convince regulators that it's scandal free and fit to return to the bid trail. Now an insider trading court case in Australia could put it firmly back in the doghouse.
Goldman’s Paulson gives investor the bird 31 Mar 2006 The broker s conservationist CEO saw off a shareholder s claim that chairing an environmental group conflicted with running the firm. Investors should be concerned if a CEO s outside directorships hit company profits. That s hardly a problem for Goldman.
Big pharma’s balance sheets are inexcusably flabby 31 Mar 2006 Take Pfizer the world s biggest drugs group runs its balance sheet like a biotech with uncertain prospects. With net cash, slowing growth and a stock that hasn t moved in eight years, Pfizer could easily buy back $50bn in stock.
Rising house prices don’t make Americans better off 31 Mar 2006 Owneroccupiers are not better off when home prices rises since their housing consumption rises in tandem. Factor in escalating property taxes and many homeowners are actually impoverished by the boom.
Serono tries to show it has options other than sale 31 Mar 2006 After failing to sell itself for $15bn, the Swiss biotech is seeking permission to sell $5.5bn in new shares for acquisitions. But it hasn't said it won't sell itself if a bidder shows up. It seems Serono is trying to avoid being left embarrassingly on the shelf.
Google offers novel explanation of why it needs $2.3bn 30 Mar 2006 The search site hasn t spent the last $4.4bn slug of cash it raised, yet it now plans to sell another $2bn in stock. It claims index funds need more liquid Google stock. This looks like an attempt to raise cash while the stock remains in the stratosphere. The search site hasn t spent the last $4.4bn slug of cash it raised, yet it now plans to sell another $2.3bn in stock.
Cable company cuts out bank lenders 30 Mar 2006 German cable company Unity Media has replaced all its bank debt with bonds, giving the company more flexibility for not much extra cost. This is yet another example of investors stepping on banks toes. Before they were buying pieces of loans, now they are replacing them.
Wacker’s E3.8bn IPO will test German capital markets 30 Mar 2006 The familyowned chemicals group is Germany s first big IPO this year and will set the pace for more than 20 big deals in the pipeline. Fortunately, Wacker is an attractive business. It should see good demand for its IPO at the right price.
Has US anti-trust policy been relaxed? 30 Mar 2006 Given the Whirlpool/Maytag merger will have over 70% of the US washerdryer market its approval suggests a rethinking of antitrust policy. If regulators are making decisions by divining the future of a market, it opens many possibilities. Hey, why not a FordGM merger?
Boots still in need of a pick-me-up 30 Mar 2006 The UK health and beauty retailer has staved off a decline in sales. But its standalone prospects are, at best, dull. Boots looks more dependent than ever on its planned merger with Alliance Unichem or a private equity intervention.
Hedge funds upset with Moviles buyout 30 Mar 2006 Telefonica has won a recommendation from Moviles for a sweetened E3.4bn offer to buy out minority investors. Hedge funds expected sweeter terms, given Telefonica s history of coughing up in deals. But their scope to create trouble now looks limited.
Lapthorne must clarify his position at C&W 30 Mar 2006 How nonexecutive can C&W's chairman really be when he has four direct reports and has just replaced the finance director with a crony? Lapthorne effectively seems to be acting as chief executive without having to take responsibility when things go wrong. That s unacceptable.
Nasdaq hit by curse of LSE 30 Mar 2006 Like the other bidders for the London Stock Exchange, Nasdaq is having to withdraw after seeing the share price run away from its offer. The LSE won t be too upset by the 7% drop in its shares. It s still worth more than it was three weeks ago before it disclosed Nasdaq s bid.
Sainsbury gets it half right 29 Mar 2006 The UK supermarket group s core growth is bounding ahead at 5.3%. At that rate, it should overtake closest rival Asda within a year. But price cuts and cost increases mean beefing up Sainsbury s skinny margins will be tough. That makes its premium to Tesco hard to fathom.
Enron defence looks a brilliant failure 29 Mar 2006 The case against Jeff Skilling and Ken Lay was better and simpler than the government could have possibly hoped for. However innovative their it was a mistake, not a crime defence may now appear, it s truly a long shot.
Ferrovial wins Macquarie backing for BAA bid 29 Mar 2006 That s bad news for the UK airports operator. Not only does it make it more likely that the Spanish will go ahead with a firm offer. But it also removes a potential rival bidder. Even so, Ferrovial still has to raise its bid substantially if it is to stand a chance.
ECB should take rates to 4% 29 Mar 2006 The current eurozone interest rate of 2.5% is barely higher than inflation. That can no longer be justified. With Germany rebounding and credit booming, euro rates should end the year much higher than the market currently expects.
Alcatel’s bid for Lucent could trip on flowback 29 Mar 2006 The French telecom equipment maker s shaky balance sheet means any offer for its US competitor is likely to be entirely in paper. But many US investors will not want to hold Alcatel shares. This could cause problems especially in a nilpremium merger.
Restatements imperil GMAC sale 29 Mar 2006 Selling a majority stake in GM s finance unit was proving to be tough as it was. Now GMAC is restating three years of financials. That could scare off bidders. Or it could force down the price. A sale is looking increasingly troubled.
How Goldman can square ITV circle 29 Mar 2006 The Goldman consortium will have to offer cash as an alternative to its dividendcumstub equity offer to win over the UK TV group s board. But it then risks everybody taking cash, leaving it to write a much bigger cheque. It s possible but not easy to square the circle.
Iceland threatened with meltdown 28 Mar 2006 The tiny country s economy has been puffed up by borrowing. That s created huge foreign debts and a stock market bubble. Frightened foreign lenders have started to withdraw. Even if contagion is avoided, roving Icelandic capitalists could be in trouble.
GUS finally limbers up for the splits 28 Mar 2006 After a lengthy wait, the UK group is finally demerging its retail and creditchecking divisions, Argos and Experian. Listing the units separately won t make them less tempting to private equity. But this way, investors are more likely to get a fair price.
Finmeccanica woos Thales 28 Mar 2006 The Italian defence group wants to inject its E4bn defence electronics business into Thales in return for a big stake in the French group. The political issues will be thorny. But the industrial benefits of creating a panEuropean defence electronics champion would be large.
FSA should not be swayed by Jabre appeal 28 Mar 2006 The UK regulator is facing public hearings into the £750,000 market abuse fine it levied against the star GLG hedgefund manager. It may be tempted to smooth Jabre s return to work on condition he drops his appeal. But if it believes in its case, it should tough it out.
European M&A wave doesn’t spark Wall Street exodus 28 Mar 2006 The last time Europe boomed like this, firstclass lounges at JKF airport were crammed with investment bankers catapulting into the action. That s not the case this time around, largely because Europe has been structurally overstaffed for some time. Now it s pulling its weight.
Temasek’s £2bn stake raises Standard Chartered’s defences 28 Mar 2006 The emerging markets bank looks a less likely target with the Singaporean fund on board. Temasek is probably in for the longterm. Its deep pockets may help Standard do deals itself. But the bank should be wary of cosying up too much to the stateowned fund.
US homebuilders offer value trap 27 Mar 2006 Some investors suggest that US house builders like KB Home and MDC could soar if the American market enjoys a Britishstyle soft landing. But this argument ignores a massive supply glut in the overbuilt US housing market. Homebuilder buyers beware.