Princelings on payroll can be proper despite peril 29 Nov 2013 Morgan Stanley, Citi and JPMorgan are under scrutiny for hiring the scions of foreign officials. Making job offers just to gain government business can amount to bribery. But connections are a virtue, as long as they’re combined with experience and other solid qualifications.
Pearson makes a tidy turn in the merger market 29 Nov 2013 The UK publisher is selling Mergermarket to private equity at an enterprise value of 382 mln stg - far more than it paid for the news and data firm. Loyal subscribers, good cashflows, and potential bolt-on deals are probably bigger draws for the buyer than any M&A resurgence.
Dutch downgrade is a lagging indicator 29 Nov 2013 The Netherlands’ loss of triple-A status stems from weaker growth. The economy is recovering slowly from a housing bust that has pulverised household finances. But property prices are bottoming, debt is low and reform is underway. Other euro zone members are bigger worries.
Moncler asks investors to wear premium valuation 29 Nov 2013 The private equity-backed maker of feather-filled winter jackets is preparing a Milan IPO of up to $1.1 bln. Entrepreneurial Chairman Remo Ruffini has built an impressive business, with plenty of growth potential. But the price looks rich set against established luxury brands.
Australia too mealy-mouthed on protectionism 29 Nov 2013 Blocking ADM’s $3.1 billion takeover of GrainCorp is illogical. The U.S. buyer was paying a tidy premium for the Sydney-based wheat trader. While foreign investors won’t be happy, Canberra’s real mistake is in not saying plainly that it prefers a local bully to a foreign one.
Cotton pile tests China’s new appetite for markets 29 Nov 2013 The government has tentatively begun to sell cotton reserves it bought from farmers, valued at an estimated $32 billion. If a recent promise to give markets a “decisive” role were sincere, China’s domestic cotton industry would be hobbled. Theory and practice are still far apart.
Review: A no-nonsense recipe for retail success 29 Nov 2013 Having spent four decades building up Iceland, the UK frozen-food chain, Malcolm Walker makes retail sound pretty simple. A 215 mln stg fortune suggests he knows what he’s doing. Still, the many travails in his autobiography show how easily things can go wrong in the food business.
Carney can do more to curb mad UK house subsidies 28 Nov 2013 The Bank of England governor has rightly binned incentives for banks to pile into mortgage lending. Further focusing cheap central bank funding on small companies also makes sense. But Carney is still pulling his punches. He should demand changes to the UK’s Help to Buy scheme.
Repsol’s boardroom brawl won’t end peacefully 28 Nov 2013 The Spanish oil firm’s second-largest shareholder, Mexico’s Pemex, has publicly attacked Repsol’s boss, his record and his pay. It may have a point, but the form is poor. An open, protracted conflict is in no-one’s interest. It is unlikely to have a happy ending.
UK budget must deliver homes not bubbles 28 Nov 2013 George Osborne can boast that the UK economy is growing and the deficit is diminishing. But the recovery is too typically reliant on house price inflation. The chancellor’s budget update should aim for radical change: getting finance to work for house building, not house bubbles.
Fair exec payoffs require flexibility 28 Nov 2013 Peugeot’s outgoing CEO is waiving a 21 mln euro pension pot; Siemens’ ousted boss is getting 17 mln euros. One is penance for doing a restructuring, the other a reward for profit warnings. Both show that fairness in executive exits is a matter of judgment, not contracts.
Giant Interactive’s $2.9 bln buyout hard to resist 28 Nov 2013 The Chinese gaming group’s chairman is leading a consortium to take it private. At 13 times this year’s earnings, the offer is at a chunky premium to peers. The buyer can benefit from leverage and Giant’s strong product pipeline. But independent investors have few alternatives.
Edward Hadas: Bitcoin is a step back not forward 27 Nov 2013 The web currency delights right-wing, anti-government economists. But private-sector money is a fantasy. Currencies need political authority; money matters are naturally the state’s responsibility. Bitcoin’s appeal has a lot to do with governments being bad monetary managers.
German politics contain tail risk for Europe 27 Nov 2013 Having negotiated a coalition treaty with Angela Merkel, Germany’s Social Democrats now face the harder job of selling the deal to a sceptical party base, which has the last word in an upcoming vote. A “nein” is unlikely, but possible – and would cause political havoc in Europe.
Cameron’s fear of migrants will harm UK economy 27 Nov 2013 The British premier’s restrictions on visitors from Eastern Europe betray a fear of losing votes to the UK Independence Party. But clamping down on immigration is leading to policy inconsistency. It harms British business and risks reducing earnings from tourism and education.
Activists torpedo their own case with "greenmail" 27 Nov 2013 Uppity investors like Carl Icahn say their rattling of corporate cages benefits all shareholders. That’s one reason they can exert pressure on large enterprises with small investments. But the argument is weakened when they sell their stock to their targets in exclusive deals.
Europe’s pay populism makes a useful distinction 27 Nov 2013 Swiss voters rejected broad salary limits for top executives. Yet the Dutch are plotting a banker bonus cap that makes existing EU curbs seem generous. The discrepancy is understandable. While pay shouldn’t be regulated, the taxpayer-rescued finance industry isn’t showing much restraint.
Give thanks for the pope’s anti-free market views 27 Nov 2013 Wall Street bigwigs often lean economically right and socially left. Pope Francis takes the opposite stance. He might like the relatively uncommercialized Thanksgiving holiday. And over turkey, America’s rich might ponder a financial system that “rules rather than serves.”
Royal Mail risks are as real as ever 27 Nov 2013 Shares in the newly privatised UK postal firm have risen two-thirds in six weeks. Superficially, interim earnings endorse the view the IPO was woefully underpriced. But the deep-seated challenges facing the company have not gone away. The current market value looks far too rich.
Chinese “tapering” may worsen U.S. bond woes 27 Nov 2013 Large dependable buyers of Treasuries may be thin on the ground in the coming years. The Fed will trim, and eventually stop, its asset purchases. And now China is talking about halting its reserve accumulation. U.S. bond yields could rise faster and further than expected.
Monte dei Paschi poised to perform Houdini act 27 Nov 2013 Not long ago, the ailing Italian lender looked unlikely to fill its 3 bln euro hole privately. Now it’s secured underwriters. For local worthies that once owned half, it should mean near-total dilution; for other investors it’s a cheap option on a still-elusive Italian recovery.
How Cinda squares China’s debt triangles 27 Nov 2013 The “bad bank” has spotted a clever arbitrage: borrow cheaply from other banks and buy companies’ short-term loans to each other. That addresses one of China’s most worrying trends, and reduces the risk of contagion if debts go bad. But it will only work in China’s closed system.
New U.S. mortgage supremo set to be step backwards 26 Nov 2013 Congressman Mel Watt is President Barack Obama’s pick to be Fannie Mae and Freddie Mac’s new regulatory overlord. Last week’s Senate rule change makes him a shoo-in. But with no experience, clear political bias and campaign cash from both companies, he’s a bad choice all round.
Proponent is odd part of $27 bln Canadian oil plan 26 Nov 2013 A west coast refinery to process domestic crude into products for Asia makes decent sense. What’s headline-grabbing is that the idea comes from David Black, a newspaper mogul, not from an energy specialist. Despite hints of Chinese financing, that makes the proposal seem flaky.
Scots secession opens bank resolution can of worms 26 Nov 2013 Supporters of an independent Scotland envisage a sterling area where financial regulators in Edinburgh and London act in tandem. But resolving a crisis would only be possible with mutual trust. Cross-border regulation all around the world is becoming less collegiate, not more.
Turning suit deal inside out reveals silver lining 26 Nov 2013 After fending off a hostile bid from Jos. A. Bank, Men’s Wearhouse is now proposing to buy its smaller rival. Cost savings worth up to $1.1 bln cover much of the price and the combined company would be less indebted. Structured this way, the deal is financially more fashionable.
Repsol nears underwhelming YPF deal 26 Nov 2013 The Spanish oil group may accept $5 bln from Argentina as compensation for the expropriation of its stake in YPF. The snag? It might be paid in government debt. Still, investors expected less and Repsol probably has little scope to get more in this politically charged situation.
Bayer can pay more for cancer blockbuster partner 26 Nov 2013 The German drugmaker has made a preliminary 1.8 bln euro bid for Norwegian partner Algeta. The target’s shares immediately priced in a higher offer. That looks right. A counterbidder is unlikely. But Algeta’s cancer drug has huge potential and Bayer can afford to pay more.
Question for dealmakers: what would China do? 26 Nov 2013 Microsoft’s 5.4 billion euro offer for handset maker Nokia met unexpected opposition from workers in Guangdong. With spotty legal protection, the easiest option is just to pay up. The result may be to push up the cost of deals, even where neither buyer nor seller is Chinese.
Thailand’s biggest economic risk is politics 26 Nov 2013 Growing protests in Bangkok have again exposed the country’s deep-rooted divisions. Though the economy is able to cope with higher U.S. interest rates, it needs spending and investment to sustain growth. Political upheaval threatens to derail confidence both at home and abroad.