Odds stacked against McCaw’s Clearwire 28 Feb 2007 Craig McCaw is at it again, asking shareholders to join him in another leveraged bet on a speculative new technology. The IPO of Clearwire, his new wireless broadband company, may pop. But its longerterm prospects are murky at best.
Carrefour chairman toyed with LBO – exclusive 28 Feb 2007 A E48bn buyout of the French retailer would make some sense on paper. But the dominant family of shareholders wants a higher price than bidders could afford. Without their support, no deal will be possible.
Will history repeat itself in credit markets? 28 Feb 2007 If the pattern set since 1920 still holds, then the credit cycle should turn in 2007. Moody s expects history to be a reliable indicator. But this time could be different. There seems to have been a Great Moderation in economic cycles. The turn may be delayed and very soft.
Enel crashes E.on’s bid for Endesa 28 Feb 2007 The Italian utility has taken a 10% stake in its Spanish rival and may go higher, making it impossible for E.on to win full control. This reeks of political meddling by both the Spanish and Italian governments. But the Germans won t go down without a fight.
Qualcomm and Nokia shouldn’t play chicken 28 Feb 2007 The US mobile phone company and its Finnish rival face an April 9 deadline to reach an agreement potentially worth $2bn annually. They each need to make concessions to reach a reasonable settlement. Failure to do so would be disastrous for both.
EU politicians won’t leave companies alone 28 Feb 2007 The Spanish government meddling in the E41bn Endesa battle is part of a pattern. France, Germany, Italy and the Netherlands are all guilty. The politicians conversion to free markets has proved skindeep. The shift is likely to make crossborder bids rarer and less generous.
Sonaecom tries bizarre route to beating PT bid hurdle 28 Feb 2007 The group's bid for Portugal Telecom won't fly unless existing shareholders lift legal barriers. So Sonaecom is pledging big future payouts. But that's risky. The lure of money later might stop shareholders from tendering. Sonaecom is walking a fine line.
Numbers are painting the US economy into a corner 28 Feb 2007 Revised fourth quarter GDP figures and January durable goods show the economy s slowing. Housing market is worsening, yet inflation makes rate cuts difficult. That suggests the next downturn could be worse than the 2001 blip.
Politics holds Indian budget to ransom 28 Feb 2007 The weak Congressled government faces national elections in two years. So its budget skirted more contentious issues. Antiinflation policies are taking precedence over more profound reforms. Investors were expecting little, and that s what they got.
Is blood pressure an economic indicator? 27 Feb 2007 Professors Oswald and Blanchflower think so. They ve found that low blood pressure often goes along with a happy view of life. And these economists think that happiness is what economics is about. But curing hypertension isn t enough to make economies healthy.
Asia’s not the problem in world stock markets 27 Feb 2007 Shanghai s 9% drop Tuesday reflected local attacks on speculators, and fears of overvaluation That s triggered some panicselling elsewhere. But Asia with its large trade surplus is not a major source of financial instability. Shanghai s 9% drop on Tuesday reflected local attacks on speculators, and fears of overvaluation
Dutch central banker misses point on ABN 27 Feb 2007 Nout Wellink raises the spectre of hedge funds like TCI forcing the Dutch bank to sell assets. He thinks that would be unacceptable. That maybe so, but TCI doesn t seem to be seeking formal influence of this sort. It s acting as a lightning rod for disillusioned investors.
Who’s the best paid CEO on Wall Street? 27 Feb 2007 And that s despite his investment bank s stock performing worse last year than any of its major rivals. In sheer dollar terms, it s Goldman s Lloyd Blankfein. But measured as a percentage of net earnings, Lehman s Dick Fuld comes out on top.
Is Henry Kravis the next Brian Hunter? 27 Feb 2007 Of course not. But KKR s bet in the $45bn buyout of TXU isn t all that different from Amaranth s it s a play on natural gas prices rising. That s because returns on equity are capped for TXU s regulated businesses. All the juice must come from the power and supply businesses.
Sands puts brakes on Standard Chartered shopping spree 27 Feb 2007 The bank s new CEO has made organic growth his priority. That s a change from the acquisitive ways of his predecessor, Mervyn Davies. But Sands has a big job digesting recent buys. And, with Davies looking over his shoulder, he may have an extra incentive to make them work. The bank s new CEO has made organic growth his priority. That s a change from his predecessor, Mervyn Davies, who had a keen eye for deals.
JP Morgan Chase times Pakistan badly 27 Feb 2007 The bank missed out by exiting the Pakistan brokerage business in 2001. The stock market is up sevenfold since then. But it might be coming back too late. Pakistan has problems with corruption and terrorism. And the stock market is expensive.
Lillywhites owner bags unorthodox £2.2bn IPO 27 Feb 2007 The float of Sports Direct may have shrugged off comparisons with the illfated IPO of Debenhams last year. But it s just as unusual. Sure, it's not a private equity quickflip but Sports Direct still has plenty of red flags. Investors may be too forgiving.
Stock markets panic in unison 27 Feb 2007 It s globalisation at work. A 9% drop in overheated Shanghai went round the world in hours. Calm bond markets are reassuring. The sharp fall in share prices is probably just the result of adjustments in global trading books.
Madrid places bet on a Spanish stitch-up for Endesa 27 Feb 2007 The Spanish Industry minister said a Spanish solution for the power utility is more likely than E.on s bid succeeding. His reference to a shareholder pact injects uncertainty. Once again, the Spanish government is out of line on Endesa.
Foxtons pushes for punchy price 27 Feb 2007 The Londonbased estate agency is famous for pushing aggressive valuations for its properties. Now it is doing the same for itself. Foxtons' business model justifies a premium. Yet the mooted £400m pricetag, 70% higher than the ebitda multiple of Countrywide, is racy.
A Dow Chemical mega-buyout seems unlikely 26 Feb 2007 The $54bn chemical giant s stock soared on speculation it would be private equity s next big target. But with the chemicals business coming off its peak, the smart money would be selling not buying. The $43bn chemical giant s stock soared on speculation it would be private equity s next big target.
Vietnam tiger burning too bright 26 Feb 2007 Vietnam's stock exchange is up 252% since December 2005. That's driven by hedge fund buying. Valuations are at bubble levels and the market's tiny. This may be a rare case where capital controls are warranted.
Citi’s new CFO brings Amex breakup blueprint 26 Feb 2007 Gary Crittenden, who takes over for Sallie Krawcheck, knows a thing or two about winnowing down a conglomerate to its component parts. Amex created heaps of value over the years by hiving off Lehman and splitting its cards and brokerage. It s a model Citi may follow.
Will foreign companies flee the US exchanges? 26 Feb 2007 A legal quirk forces foreign companies that pull their US listings to continue to meet SEC disclosure rules including SarbanesOxley. That s about to change. Foreigners that have checked in but couldn t check out of US markets may take this opportunity to skitter away.
Virgin Media and Sky should end ridiculous spat 26 Feb 2007 The current dispute between the two UK pay television channels isn t just about how much Sky charges for its channels. It is another front on Virgin s fight to dilute Sky s dominant position in the UK television landscape. But it will probably blow over.
TXU will be private equity’s biggest PR challenge 26 Feb 2007 Even in freewheeling Texas, utilities are highlyregulated, political, consumersensitive and the target of environmentalists. The record $44bn buyout of the US utility will require asyet unseen powers of persuasion on the part of KKR and Texas Pacific to succeed.
New Look not yet a private-equity pin-up 26 Feb 2007 Permira boss Damon Buffini says the UK fashion retailer is an example of how private equity can grow businesses and create jobs. But fashion is fickle. It s too soon to tell whether New Look s journey is the real deal, or an unsustainable dash for growth.
Should supermarket shareholders agree to buyouts? 26 Feb 2007 Private equity shops are circling grocers. It s easy to see why. Stable cash flows and abundant property makes them attractive targets. Shareholders may worry about selling too cheaply. But as US supermarket Kroger shows, a buyout offer can be their lowestrisk alternative.
Saint Gobain restructuring has further to go 26 Feb 2007 The French building materials giant has launched the E4bn sale of its noncore packaging unit, part of a move to focus on shareholder value. The shares are up 17% this year and the company has accelerated its restructuring. But it shouldn t stop there.
Is private equity a possible Chrysler saviour? 26 Feb 2007 Perhaps. But that might not suit Daimler best. It might have to pay an LBO buyer as much as $8bn to take the ailing US unit off its hands. A better option would be to forge an alliance with a rival like General Motors. It s the most likely way to salvage some value.