KKR’s £11bn bid turns screw on Boots 30 Mar 2007 A 30% premium is a full price, and there's an added risk if the bidder walks: some of group's top management, led by Pessina, may walk too. KKR has probably done enough to wring a recommendation from the board. A counterbid, while possible, would be tricky to pull off.
Man Group finally spins off brokerage unit 30 Mar 2007 This overdue move by the UK hedge fund group was largely in the price, but the news helps gloss over a disappointing trading statement. Investors will be left with a fastgrowing focused asset management business one that could attract the interest of predators.
What’s driving the LBO boom: management incentives 30 Mar 2007 That s the apparent consensus of Wall Street s finest legal and financial minds gathered at their annual wingding in New Orleans. While investors believe this, it s surprising to hear CEOs s greatest advocates admit this Hobbesian dynamic is at work in the aggregate.
Lenders push back on Apollo’s Realogy deal 30 Mar 2007 The normally tame lapdogs of leveraged finance reared up on their hind legs in response to a real estate broker s LBO. Forcing Realogy to pay more was not a tough call. But at least it shows lenders haven t completely lost sight of risk.
TPG’s E3.4bn Iberia bid may not spark auction 30 Mar 2007 The Spanish carrier's attempts to find a partner have finally borne fruit. But not with a trade buyer and at a discount to the share price. It may struggle to get an auction going. Iberia s shares are pricey, and buyers like BA or Lufthansa may be less willing than thought.
Is a subprime CDO crisis already underway? 30 Mar 2007 Investors are beginning to think so. But the market s opacity makes it hard to tell. Even CDO purveyors claim not to know. So far, that s averted a big selloff. But investors can t escape fallout from the subprime collapse forever.
New world order keeps M&A business strong 30 Mar 2007 The $1.1tn first quarter wasn t quite a record, but it is a sign of a healthy and highly liquid global economy. Corporate chiefs are scrambling to keep up with globalisation. Cheap and readily available debt spurs them on. But the peak may be in sight.
Who’s behind VW’s pref share mystery? 30 Mar 2007 Someone has been snapping up VW's nonvoting stock in the past 6 weeks. One theory is that the buyer was Porsche, or someone close to it. That may not seem to make much sense, as Porsche is interested in votes. But preference shares don't have to remain voteless for ever.
No one really understands hedge funds 30 Mar 2007 A study by the Spectrem Group finds that investment in hedge funds is being held back because many people are baffled by what they do. They re not alone. In today s complex financial world many hedge funds are in effect blind pools.
Chevron shouldn’t derail Korean trade deal 29 Mar 2007 Korea is more like Germany than Russia. Its government may dislike foreign buyers, but it s not about to grab their assets. US businesses led by Chevron are overreacting by opposing the USSouth Korea Free Trade Accord because of concerns over property rights.
Amvescap’s plunge looks extreme 29 Mar 2007 Deutsche Bank's raid on Amvescap's fixed income unit isn't good news for the asset manager. But the market's reaction is overdone. Amvescap shouldn't have much trouble finding new bond managers. Meantime, its shares look cheap compared to its peers.
Is relational investing a real asset class? 29 Mar 2007 Former SEC chairman Richard Breeden thinks so. In fact, he believes the $60bn now riding on the strategy could quadruple. The returns of Breeden s own fund suggest these pureplay corporate governance bets have promise. But his success may be hard to replicate.
Bernanke dilemma aggravates market jitters 29 Mar 2007 The Fed chief is worried about both excessive inflation and a softening economy. The result: the market can t count on rate cuts. The disappearing Bernanke put makes the financial world less sure. So the oil price jumps on rumours and yen carry trade is under strain.
Banker swaps half the world for buyout Eldorado 29 Mar 2007 Leonhard Fischer ran Credit Suisse s operations from John O Groats to Cape Town. He s giving up all that for buyouts in Brussels. Investment bankers are always on the lookout for richer pastures. But their timing is often poor.
South Africa bank boss hits Barclays at sensitive time 29 Mar 2007 Central bank governor Tito Mboweni has made himself an international name by slating Barclays while it s in talks with ABN. That may help ensure he s considered top dog the next time a foreign bank invests in SA. But it may leave a cloud over Barclays plans.
Oil-rich Gulf looks to diversify funding 29 Mar 2007 Corporate bonds from companies in the region grew almost sixfold in 2006, to $18.2bn. Much of the money came from foreigners. Why not just borrow from oilrich neighbours? International bonds provide prestige and help prepare for a less oilrich future.
Tetragon listing is a question of trust 29 Mar 2007 Investors must hope Polygon s synthetic bank won t succumb to traditional bank vices: poor credit skills and chasing unprofitable growth. This matters particularly with Tetragon, given its real governance shortcomings. But at least management s interests are aligned for now.
Voestalpine saves Boehler from CVC with E4bn bid 29 Mar 2007 The Austrian specialty steelmaker has found a local white knight to fend off an unwanted approach from private equity. The 11% premium looks modest. But shareholders may never know what they missed, since CVC wasn t allowed to make a bid.
America’s problem isn’t free trade 29 Mar 2007 Leading economist Alan Blinder claims that globalisation is more disruptive to US workers than had been expected. This pain is exacerbated by the country s perennial trade deficit, which has distorted the economy and damaged American industry.
ABN rejects break-up call 28 Mar 2007 The bank may be right to argue that breaking itself up for cash now won't deliver the best value. It needs to sort its businesses out first. But if the board really believes in value creation, it should not close off discussions with any other suitor in a merger or takeover.
Persimmon should bulldoze homebuilder merger 28 Mar 2007 Scale and price are two reasons why the UK housebuilder might try to break up the planned £5bn merger of rivals Wimpey and Taylor Woodrow. Woodrow, the less efficient of the two, could be the more attractive. Offering a better deal than the one on the table wouldn t be too hard.
TNK-BP made to look silly in Yukos auction 28 Mar 2007 The RussoBritish venture pulled out of the auction for a 10% Rosneft stake. It's excuse that it was hard up looks plain ridiculous. But TNKBP may not mind that. It had other motives for bidding than the desire to buy anything.
Junk debt investors ignore rating agencies 28 Mar 2007 Credit investors keep piling into highyield debt, pushing spreads down to historically low levels. The agencies are predicting higher defaults in 2007, perhaps tipping the bonds into loss. Of course, the agencies were too gloomy last year.
Stub equity could resolve Clear Channel impasse 28 Mar 2007 It has been mooted as a way to end the disagreement between buyers Bain and THLee and sellers Fidelity and Highfields. But it s not that simple. As the UK example has shown, shareholders don t like stub equity because they forfeit liquidity and influence.
Is Sam Zell trying to Blackstone Tribune? 28 Mar 2007 The mogul proposes using only $300m to buy the $12bn newspaper company. That s a huge amount of debt on a business with declining ebitda. So to pull it off, he ll have to employ the same trick Blackstone used when it bought EOP from Zell and quickly sell off some of its assets.
Europe rebounds while US slides 28 Mar 2007 German confidence is up and US house prices are down. It s typical Europe looks healthy while the US totters. Despite outperforming US equities in recent years, European share prices are still catching up. So the European discount ought to narrow.
Relying on value-at-risk is highly risky 28 Mar 2007 60% of institutions use this statistical method to keep tabs on how much money they might lose. It relies on overly optimistic assumptions. The model says that things go wrong in isolation. But in finance, troubles tend to feed on each other.
Should Microsoft buy DoubleClick? 28 Mar 2007 Snapping up the online ad broker looks like a smart way for the software giant to leapfrog Google in a potentially lucrative business. But it s no sure thing. At $2bn, DoubleClick looks expensive. And Google is building its own system, which might work better.
Russian real estate is fraught with risk 28 Mar 2007 Office rents may be only second to London, but with yields twice those in the rest of Europe, Russian property is still attractive, right? Not necessarily. It depends how fussy you are about property rights. Investors should be careful with the raft of Russian real estate IPOs.
Ohio’s financial alchemy lifts subprime blues 27 Mar 2007 The Midwestern state has raised $100m to bail out subprime borrowers and lenders. This deal also costs nothing provided house prices rise. And even if they don t, losses are pushed into the future.