Clippers may actually be Ballmer’s least-bad deal 30 May 2014 That isn’t saying much given the ex-CEO’s record at Microsoft. But TV revenue means sports teams are no longer money pits. Even including the ego premium in the $2 bln price tag, buying the Los Angeles basketball squad could work out better than aQuantive, Skype or Nokia.
JPMorgan passes baton of influence to Wells Fargo 30 May 2014 Jamie Dimon’s bank already cedes the valuation crown to its West Coast rival. Wells Fargo boss John Stumpf is also becoming more of an industry spokesman. Now JPMorgan will report earnings later. That makes Wells the new bellwether for both financial institutions and the economy.
Revenue leeway may create too much Autonomy 30 May 2014 Globally aligning rules on how to book sales, as was agreed this week, should create greater consistency. It means more fine print to scour, however, while extra flexibility for U.S. companies could also invite trouble. A cautionary tale may be HP’s allegations against Autonomy.
GoPro pushes to questionable extremes for IPO 30 May 2014 The maker of wearable high-definition cameras is pitching itself to investors as an emerging media brand. It’s a clever trick given the limited lifespan for standalone photography hardware. GoPro’s determination gives it a shot to make the leap, but odds of a face-plant are high.
BNP Paribas fine farce requires swift resolution 30 May 2014 The French bank’s shares sank 6 pct after a media report that penalties for sanctions breaches could top $10 bln. Doubts about the intentions of the U.S. authorities may be creating a false market in BNP shares. Worse, the delay raises the prospect of possible EU retaliation.
UK’s duff credit easing is still a model for ECB 30 May 2014 The Bank of England’s Funding for Lending scheme isn’t boosting bank credit. A rumoured ECB version will likewise fail to spur a massive wave of lending if demand is weak. But a round of credit easing that cuts elevated peripheral bank funding costs would still be worth a try.
Spanish soccer needs a financial bootcamp 30 May 2014 Spain hold the World Cup and Real Madrid are European champions. Yet the domestic game is less healthy, with many clubs deep in debt. The state is enforcing better financial management. Attracting foreign investment, and sharing TV money more evenly, could help teams shape up.
Indian bank recap is painful but necessary 30 May 2014 India’s wobbly state lenders are short about $45 bln of capital. That’s a bill the new government can ill afford. But acting fast would help ease future headaches. And with post-election euphoria buoying markets, now is a good time to raise equity and debt from outside investors.
Markets hold breath over Japan taper talk 30 May 2014 The central bank is debating an exit from its record monetary stimulus. A hasty move would risk a repeat of its mistimed 2006 decision to end quantitative easing. Investors think the talk is little more than hot air. Yet any change in expectations could be self-fulfilling.
Sausage fight may have more sizzle in it yet 29 May 2014 Tyson Foods’ $6.8 bln offer for Hillshire should give it the edge over Pilgrim’s Pride. The meat processor seems to bake in decent synergies and has a stronger balance sheet. But there could be more fat to trim from this hot dish. Too much, though, could leave both bidders burned.
Henry Kravis cultivates private equity perennials 29 May 2014 U.S. firms like his are selling companies to each other at a record pace. Such deals are dubious, especially given how much capital is stockpiled. But KKR’s $1.6 bln buyout of landscaper Brickman and quick merger with rival ValleyCrest suggest the grass can indeed be greener.
Playing nice starts to pay off for Argentina 29 May 2014 The country has added a deal with some creditors from its 2002 default to its recent settlement with Repsol. Its export credit market can now reopen, raising much-needed cash. Selling international debt would raise more – but requires resolving its remaining bondholder lawsuit.
Noise in U.S. GDP revision also contains a signal 29 May 2014 The second reading of the first-quarter number shows a 1 pct fall rather than 0.1 pct growth. Bad weather is largely responsible, causing lower inventories and exports. But even this blip will lower annual average growth, making the IMF forecast of 2.8 pct look out of reach.
Low volatility and high doubt hamstring markets 29 May 2014 Trading volumes are dipping in several asset classes. Low price volatility and tougher regulation can be blamed. So can investors’ bruised confidence, after some big bets went awry this year. It’s safer to sit still than to move in what might prove to be the wrong direction.
Rob Cox: Can we Grand Bargain before going bust? 29 May 2014 Kumbaya has broken out in Detroit: Michigan’s legislature, the UAW and even JPMorgan are chipping in to help the city emerge from bankruptcy protection. While good news, it’s also a sad comment on America’s broken political system that it takes so much failure to come together.
FCA’s Hannam win makes dealmaking that bit harder 29 May 2014 Former JPMorgan rainmaker Ian Hannam comprehensively failed to overturn a finding he committed “market abuse.” This vindicates the UK watchdog’s zero-tolerance stance. Handling inside information is already risky and complex. This ruling makes things a little bit trickier.
The morning after Scotland votes for independence 29 May 2014 Most analysts have assumed Scots vote No in September’s referendum, but Yes-voters are gaining ground. If they prevail, critical questions that are currently completely up in the air will need to be answered rapidly. The most pressing one will be: who bails out Scottish banks?
Apple gets back to music roots with Beats purchase 29 May 2014 Dropping $3 bln on the headphones maker and streaming service and hiring co-founders Jimmy Iovine and Dr. Dre may reinvigorate the tunes franchise that helped put the iPod creator on top. It also suggests subscription songs – and maybe “smart homes” – are the wave of the future.
Alibaba hints at overseas push with SingPost stake 29 May 2014 Buying a $249 mln stake in logistics operator Singapore Post suggests the Chinese e-commerce group is planning its move overseas. But the concrete benefits are unclear – besides encouraging investors to consider the value of Alibaba’s future expansion ahead of its imminent IPO.
Perella Weinberg gives ego-less banking a whirl 28 May 2014 The boutique appointed ex-New York deputy mayor and Goldman banker Robert Steel as CEO, passing over two of its founders. Such moves often create resentment, but flat management, long-time relationships and big equity stakes should quell the possibility of a bloodbath.
U.S. immigration reform contends with Obamacare 28 May 2014 Amazingly, Republicans and Democrats agree that opening America’s doors wider would provide a much-needed economic boost. That’s why there’s even a tiny hope that legislation could pass this summer. Alas, the new healthcare law casts a bigger shadow than the Statue of Liberty.
Smith & Nephew returns to M&A spotlight 28 May 2014 The British medtech firm’s shares jumped on a report of bid interest from Stryker. The U.S. rival ruled out bidding for six months. But the market looks keen on a takeover of S&N, the subject of perennial bid talk. There could be synergies, scale and tax benefits.
GE’s new Alstom bid makes Siemens a distant second 28 May 2014 The U.S. conglomerate pledged new jobs and an asset swap to improve its $16 bln offer for Alstom’s power units. France seems to be warming to a bid already backed by the board. Rival bidder Siemens looks increasingly like a stalking horse, used merely to wring more out of GE.
Edward Hadas: The problem with the Piketty problem 28 May 2014 The French anti-inequality economist has been accused of using bad data. But any weaknesses in compiling and adjusting figures pale in comparison to his confused use of mathematical theory and social history. Unfortunately, too many economists are ill-equipped to criticise.
Valeant’s sweetener comes off a little defensive 28 May 2014 Upping its bid for Allergan to $49 bln disappointed investors on both sides. Using a messy financial instrument probably didn’t help, especially after the target rejected the deal math and compared its suitor to Tyco. Valeant needs to do more to reclaim the aggressor’s role.
Scottish independence is loser in data fight 28 May 2014 Campaigners for an independent Scotland project a separate country would be better off. The no campaign disagrees. No surprises there. The case from London is stronger, but the economics aren’t clear-cut enough to make a no vote on Sept. 18 a no-brainer.
Nestle’s skincare buy-in has opportunistic streak 28 May 2014 The Swiss company, best known as a chocolatier, is paying Canada’s Valeant $1.4 bln for the marketing rights to a clutch of beauty treatments. It is Nestle’s first big move in the sector after February’s deal with L’Oreal. There are wrinkles. But they are worth wearing.
Glaxo wrestles with its past 28 May 2014 A UK Serious Fraud Office investigation into the pharma group has knocked almost $2 bln off its market value. Fines in China are well flagged, but the scale of SFO’s concern is unclear, as is the cost of staying ethical in future. Investors are still betting on a benign outcome.
Financial elite finally wake up to inequality 28 May 2014 A conference on “inclusive capitalism” brought out the rhetorical best from Christine Lagarde and Mark Carney. The IMF and Bank of England bosses flagged inequality as a problem, rather than side-stepping it. Their backing could make it easier for politicians to take action.
Korean chat app sends mixed valuation messages 28 May 2014 Kakao is going public in a $3.3 bln reverse takeover. That’s just one sixth of what Facebook paid for WhatsApp. The Korean app rules its home market and is profitable, but its metrics offer few clues for valuing rivals. Putting a price on mobile chat is still anybody’s guess.