Record-slow U.S. bank deal offers cautionary tale 30 Sep 2015 The Fed took three years to OK the $16 bln M&T’s takeover of smaller Hudson City, having demanded fixes to the buyer’s back office. CEO Bob Wilmers now looks like he’s paying over the odds for a struggling rival. Others in the industry with problems won’t find M&A a quick fix.
Western Digital deal may thread U.S.-China needle 30 Sep 2015 The data storage company’s sale of $3.8 bln of stock to China’s Tsinghua exchanges a minority interest at a premium price for a seat on the board. Politics make selling control tough, but this kind of arrangement may help smooth Western Digital’s path in Chinese markets.
Fining conflicted bankers doesn’t excuse directors 30 Sep 2015 RBC should probably lose its appeal against a $76 mln penalty for working both sides of a deal. Yet its client’s board had its own skewed loyalties, didn’t question its adviser, and escaped almost unscathed. It’s often poor corporate governance that enables Wall Street mischief.
EU establishes bridgehead in capital markets push 30 Sep 2015 Brussels is to unpick self-defeatingly high capital charges against infrastructure and asset-backed bonds. It is capital markets union’s first tangible win. Yet other barriers like diverging insolvency regimes have been shelved, and tighter regulation is making trading harder.
M&A running out of road on Easy Street 30 Sep 2015 Since July, only four out of 10 U.S. buyers’ stocks have risen after a deal announcement. That’s a big drop from 80 pct in early 2014. Blaming volatility misses the point. Investors just aren’t convinced by increasingly bold and messy deals. The end of a merger boom may be nigh.
Ralph Lauren’s new CEO saddled with high hopes 30 Sep 2015 The fashion icon passed over his son to hire Gap’s Stefan Larsson to run the family-controlled clothier. Corporate America is increasingly open to outside bosses, despite notable failures. Expectations also can be excessive. After all, investors have valued Larsson at $1.6 bln.
VW’s dodgy diesel gains: a measly 4.3 bln euros 30 Sep 2015 That’s what the German carmaker appears to have saved by skimping on state-of-the-art emissions technology. Look only at the U.S. cars that got VW in trouble and it falls to 200 mln euros. Investors have so far lost 140 times that as the shares have plunged. Cheating doesn’t pay.
Draghi lacks arrows to hit ECB’s inflation target 30 Sep 2015 Euro zone consumer prices are falling again, putting near-2 percent inflation further out of central bank President Mario Draghi’s reach. He could ramp up asset buying, but inflation seems ever less responsive to monetary policy globally. Higher prices might be beyond his gift.
Sainsbury draws blood in UK grocer fightback 30 Sep 2015 Shares in the supermarket group popped as much as 14 percent as it said sales and pre-tax profit are beating expectations. Price cuts and cost savings seem to be kicking in. To make sustained progress on earnings, however, established grocers need to win back pricing power.
China criticism makes even Li Ka-shing defensive 30 Sep 2015 The Hong Kong tycoon has rejected accusations that he is turning his back on the mainland. Yet the fact he felt the need to issue a defence shows the hostile terrain now facing business leaders in China. Shrill allegations of treachery will only make them less willing to invest.
Alibaba Indian e-commerce scramble risks conflict 30 Sep 2015 The Chinese giant is investing at least $500 mln in Paytm, India’s top mobile wallet and wannabe marketplace. Alibaba already owns a stake in archrival Snapdeal. It’s odd for competing firms to share strategic investors. Consolidation may be the best way to manage the tension.
ValueAct in Fox henhouse may goose pace of change 29 Sep 2015 Rupert Murdoch’s pick of fund founder Jeffrey Ubben for the board may have both feeling comfortable. But the friendly activist’s lack of a public agenda doesn’t mean a shakeup is off the table. He’s already ruffling feathers with a call to arms against on-demand service Netflix.
Henry Blodget makes most of Wall Street ban 29 Sep 2015 Selling most of Business Insider to Axel Springer for $343 mln is another step in the disgraced former dot-com analyst’s rehab. Blodget’s media outlet has made money and created jobs – despite the distorted market for talent that Wall Street created and Silicon Valley is aping.
Yahoo’s Alibaba spinoff troubles may outlast boss 29 Sep 2015 Marissa Mayer plans to complete the internet firm’s separation from the Chinese e-commerce company. Resolving tax issues may take years, though, if authorities challenge the deal. With Yahoo’s business stagnant and competition rising, the CEO may be gone before wrangling ends.
Mexican thirst for oil revenue ups auction stakes 29 Sep 2015 The nation will again try to solicit investors for its ailing energy sector after a first round of bidding in July fell flat. Falling crude prices and output are already taking a toll on Latin America’s No. 2 economy. Sweetening terms enough to lure big money is a must.
Business Insider picks deep German pockets 29 Sep 2015 Axel Springer is buying the business and tech news website at a $442 mln valuation. Nine times sales implies a long run of fast growth. It evokes Dresdner’s acquisition of Wasserstein Perella, a deal from the days when Business Insider boss Henry Blodget worked on Wall Street.
Japan Tobacco gives Reynolds breath of fresh air 29 Sep 2015 The buyer is paying $5 bln for the overseas rights to the U.S. cigarette group’s American Spirit brand - a whopping 250 times earnings. It’ll allow Reynolds to exhale a cloud of debt as it focuses on U.S. sales. Its strategy is a handy guide for similarly challenged sectors.
Pure Storage unicorn shivers in cooling market 29 Sep 2015 The computer-storage maker was valued at over $3 bln last year, as backers latched onto its fast growth selling flash memory that’s cheaper and more efficient than rival offerings. But losses and competition are mounting, and the risks threaten a lower valuation at IPO.
Wolseley follows Glencore into equity market funk 29 Sep 2015 Shares in the 10 bln stg UK-listed building products group sank 11 pct, just one day after the miner-cum-trader’s stock fell 30 pct. Each company has its challenges, but the stock moves look exaggerated. For both, the most serious threat looks to be skittish investors.
Hollande risks political hara-kiri for French good 29 Sep 2015 France’s Socialist government is trying to push through the sort of spending cuts and regulatory reforms which have eluded centre-right predecessors in the past. President Francois Hollande may have to wait for posterity to thank him. Today’s voters probably won’t.
Li Ka-shing’s power deal is at risk of a jolt 29 Sep 2015 The tycoon’s Cheung Kong Infrastructure unit wants to buy cash-rich affiliate Power Assets for $11.6 bln in stock. Investors have the motive and the means to push for better terms. But they need to believe the rewards of a sweetened offer outweigh the risks of Li walking away.
Abu Dhabi creates overhang risk for Malaysia bank 29 Sep 2015 Gulf fund Aabar may refuse to take up RHB Capital’s $565 mln rights issue despite owning one fifth of the lender. Though underwriters will step in, excess shares would weigh on RHB. The snub would also prompt worries Aabar may join foreign investors selling out of Malaysia.
Alcoa split is canny move – not least for its CEO 28 Sep 2015 The $12 bln aluminum producer is cleaving sluggish smelting from healthier aerospace. Based on rival valuations, Alcoa shareholders can expect a modest uplift. Boss Klaus Kleinfeld, however, gets a new gig atop a more promising business, one he has been building by acquisition.
Valeant’s back-foot problem flares up in Congress 28 Sep 2015 The pharmaceuticals company keeps fighting through chronic skepticism about its acquisitive ways and the related borrowing. Now, U.S. lawmakers’ questions about drug prices have cost Valeant $11 bln in market value. Always being on the defensive could eventually take its toll.
Donald Trump’s tax plan is true to form 28 Sep 2015 The boisterous billionaire says 75 mln Americans won’t pay taxes if he’s U.S. president and business rates will be halved. Missing is how to pay for these cuts and more. Fuzzy numbers are the hallmark of a man whose wealth can’t be verified and is linked to four bankruptcies.
Glencore shares priced for commodity apocalypse 28 Sep 2015 The Swiss trader’s shares fell by a quarter after an analyst suggested its equity could be worthless. The fear rests on cataclysmic maths. But Glencore’s quirky model means its valuation is highly dependent on confidence in management – a resource that is much depleted.
VW’s emissions scandal needn’t break its own bank 28 Sep 2015 The carmaker’s financial services arm is being sucked into its current crisis. The group’s funding costs are rising and the ECB won’t buy its asset-backed debt. The $164 bln-by-assets lender is vulnerable to a brand implosion - but should cope with more realistic scenarios.
VW tests U.S. enforcers’ fairness to foreign firms 28 Sep 2015 The German carmaker skidded into a legal system that extracts bigger fines and more guilty pleas from overseas companies than American peers. Differences in the cases may explain the discrepancy. But any prosecutor bias may get as much scrutiny as Volkswagen’s emissions tricks.
Shell’s Arctic retreat better late than never 28 Sep 2015 The Anglo-Dutch major faces a write-off of up to $4.1 bln after ditching oil and gas exploration in Alaska. Environmentalists will be happy. But if the group wants to bed down BG and ride out low oil prices, investors should cheer the demise of costly and brand-dilutive forays.
Hostile bid makes best TV in U.S. broadcast fight 28 Sep 2015 Nexstar wants to buy Media General for $4.1 bln, breaking up the latter’s agreed merger with Meredith. The new offer makes financial sense for Media General owners and would create a local TV player minus the baggage of magazines. The mystery is why Nexstar wasn’t first choice.