Stocks and Funds
CEO David Lesar passed on using Tuesday’s earnings call to apologize after overconfidence in a failed deal cost the company $3.5 bln. Nearly 30 pct of shareholders dissed Halliburton’s executive pay last year. Maybe they’ll send a sterner message in this month’s annual vote.
The billionaire investor starred at Michael Milken’s annual bash, warning global grandees that overcrowding in the hedge-fund world is lowering returns. Now managing $11 bln of mostly family money, his joviality seemed justified: U.S. watchdogs left him bruised but unbowed.
The social network’s new non-voting shares have been challenged in court. A similar spat at Google ended with the search giant paying shareholders just $522 mln – 0.15 pct of its market cap. An equivalent result at Facebook would entrench boss Mark Zuckerberg’s control cheaply.
The Swiss bank is rejigging its wealth unit after trading income as a percentage of invested funds dipped to historic lows. Group return on equity was just 5.1 pct in the first quarter. UBS depends on rich folks being active. When they aren’t, the only option is to trim expenses.
Bids and Buyouts
Healthcare data miner IMS is uniting with Quintiles, a manager of drug trials. Each will own about half the combined company, and other than some cost savings, the reasons for combining are a bit nebulous. The presence of buyout firm TPG on both sides may offer some clues.
The $35 bln oil-services deal is the latest to buckle under regulatory pressure this year, after Pfizer’s bid for Allergan. Baker Hughes pockets a $3.5 bln break fee at Halliburton owners’ expense. Punishing the boss and board would yield a more enduring lesson in M&A hubris.
Bidders for the University of Phoenix parent bumped their offer 5 pct to $1.14 bln. That’s generous, considering the for-profit college faces regulatory crackdowns and dimming financial prospects. With a vote on the deal imminent, investors grubbing for more may look like dunces.
Gannett is asking Tribune shareholders to withhold votes for directors after going public with an $813 mln offer for the L.A. Times publisher. Trib Chair Michael Ferro looks like he’s stalling. Small wonder: He and his management team will struggle to beat Gannett’s 63 pct premium.
Money and Markets
An unexpected contraction in manufacturing is the latest sign that growth is losing momentum. Usually such a slowdown would be unmitigated bad news for the government. Right now, it’s all useful PR fodder for Prime Minister David Cameron in his battle to keep Britain in the EU.
Cutting interest rates to an all-time low of 1.75 percent will weaken the currency and help stave off deflation. Reversing the Aussie dollar’s recent rise will help make miners Down Under more competitive. That offsets the risk of further heating up the country’s housing market.
Russia’s escalating anti-Western rhetoric is damaging its chances of winning back foreign investment. Shifting the blame may keep Russians distracted from economic realities for a while longer, but it can’t replace hard cash.
The lowly UK soccer club has, remarkably, won the Premier League. Victory in Britain’s top division had been the preserve of a five-club oligopoly since 1992, and Leicester was a 5000-1 outsider. Businesses facing seemingly unbreakable glass ceilings have a new role model.