Stocks and Funds
A novel deal protects the search giant’s non-voting owners against a stock discount – and from the day when Larry Page and Sergey Brin no longer wield full control. The convoluted legal settlement, however, only goes to show it’s better to avoid a caste system in the first place.
Recent scrutiny has made clear everyone from Apple to Citigroup exploits the dense IRS guidebook to maximize profit. Now, Tribune may face a $500 mln tab for sales of Newsday and the Chicago Cubs years ago under Sam Zell. Avoiding the taxman isn’t always easy money.
The bank blamed a tough March and April for a 27 pct drop in Q2 fixed-income trading. That’s at odds with both market data and larger rivals – JPMorgan, for one, was well up on last year as of May. It doesn’t help that newly private Jefferies’ opacity makes comparisons tricky.
A U.S. regulator says Deutsche Bank is “horribly undercapitalised” with assets worth 61 times equity last year. The group insists leverage was less than half that. Both are right, but use different numbers. The drive to simplify regulations is clouded by accounting complexity.
Bids and Buyouts
The mobile giant has stronger finances than U.S. challenger Liberty Global. It would reap more savings from the German cable company and irk regulators less. But it is Liberty’s last chance to get national coverage in a vital market. And Vodafone investors may balk at the price.
The telecom company had a $93 bln bid for Telefonica blocked by Madrid, according to a Spanish newspaper. The target has denied the story. But it’s a sign of the problem AT&T faces: a lofty stock multiple makes M&A tempting, but it seems shut out of both domestic and foreign deals.
First, BTG Pactual extended credit to Eike Batista’s struggling empire. Now, the investment bank led by Andre Esteves has emerged as the unlikely buyer of assets from state-controlled Petrobras. The sketchy details on both deals only add to the unhealthy aura of crony capitalism.
The private equity firm is paying a hefty $2 bln for Rockwood’s CeramTec unit. But at least this is a corporate selloff, rather than yet another “secondary” deal between two PE houses. And there is sound demographic logic in buying one of the leaders in artificial joints.
Money and Markets
Motown took a step closer to bankruptcy last week when the state-appointed fix-it man called on bondholders and public workers to accept steep cuts. Trouble is Detroit needs more than debt relief. It needs to build up its tax base if it’s to become functional as well as solvent.
Ankara’s path to joining the EU has been long and arduous. A suspension of membership talks to force Prime Minister Erdogan to compromise with the protesters won’t help Turkey’s democratisation. But if the government’s position hardens further, the EU will have no other choice.
The rich world summit could come up with a substantive agreement on corporate tax avoidance. It might be an important step towards an efficient global system. But it can’t do much without a broader consensus. Leaders need to be tax reform evangelists, both at home and abroad.
The country’s plan to hike energy prices is a welcome reduction in a $20 billion subsidy bill. But inflation could surge, raising the risk of capital outflows. That leaves the central bank no room to offset the fiscal tightening; sacrificing GDP growth is the only option.