Stocks and Funds
The company’s new subscription music streaming and online radio services could upend markets dominated by Pandora, Spotify and SiriusXM. Their combined annual revenue of $6.4 bln would be equaled by just 6 pct growth in iPhone sales. The hardware angle sets Apple’s effort apart.
Dealmakers would be forgiven for putting almost any plan on ice, pending some sort of resolution of the Greek debt drama. The $18 billion Towers Watson-Willis merger and the IPO of market maker Flow Traders suggest that deals can still get done, even if it’s with gritted teeth.
Big banks break rules and pay fines. Traditionally it’s just a cost of doing business. Uber, meanwhile, pays fines when drivers violate regulations that stand in the way of its business model. Nowadays banks attract outrage, but Uber is often forgiven in the name of disruption.
The selloff is dramatic but only affects the relatively few people who own equities. A wider risk is that a prolonged slump would slow reforms and undermine faith in China’s rulers. In the short run, overt state support may be the most effective way to avoid losing credibility.
Bids and Buyouts
Emerson said it plans to hive off its struggling network power business, a possible prelude to more spinoffs at the $37 bln conglomerate. And Nelson Peltz took a stake in $12 bln rival Pentair, saying he wants management to do deals. It’s more fuel for the mergers fire.
The insurance broker and the risk consultant plan to merge. There’s positive logic: combining Towers’ knowhow and Willis’ client relationships could drive revenue. But $125 mln of cost synergies would also help the group weather an insurance sector wrestling with low rates.
Celgene is paying a 100 pct premium for a 10 pct slice of two-and-a-half year-old Juno Therapeutics. That sounds bonkers, even for a fast-moving technology like immune cell modification. The sector is on a streak, but the risk of crapping out in drug development remains high.
The firm that helped blaze the trail on LBOs four decades ago has become one of the first to settle with the SEC over expenses charged to investors in its funds. KKR will have company, however. Individual sums may be small but, like the fees themselves, they’ll start to add up.
Money and Markets
Selling $3.6 bln of shares and convertible bonds is punchy after years of destroying value. But Sony is back in favour with investors. Plus, it has a weak balance sheet and a growth business to fund: sensors for the pin-sharp cameras that go front and back on today’s smartphones.
SoftBank’s Masayoshi Son says automatons may outnumber humans in 30 years. It sounds far-fetched. But robots are 80 percent cheaper now than in 1990, and getting lighter and safer for people to use. That makes them a big risk to many of the world’s 6 billion future workers.
With Athens defaulting to the IMF, public opinion moving against the Greek PM and the banks closed, Tsipras seems desperate for a deal with his creditors. But it is not clear they will cut him any slack. They may prefer to deal with his successor.
Athens wants a last-minute EU backstop loan to avoid a technical default if it doesn’t repay the IMF on Tuesday. Assuming the answer is no, it might convince Greeks to vote for euro exit. It could also serve as a signal to the ECB not to cut off emergency Greek bank loans.