European airlines should merge – but won’t 23 May 2003 Airline bosses recognise that excessive fragmentation is compounding the industry s problems. But red tape, Pollyannaish management and political opposition still stand in the way of consolidation.
Finmeccanica mulls demerger, cleanup 23 May 2003 The Italian defence group may merge its noncore assets into Fincantieri, then spin off its interest to shareholders. If it really wants to unlock value, a better plan would be to spin off its STMicro stake to investors.
Siemens pioneers gimmicky convertible 23 May 2003 The German group won t have to account for how its bond could dilute its earnings per share. The bond contains a socalled contingent conversion right. These are common features of US deals but have not been seen in Europe.
Another buyout firm opts for second bite 23 May 2003 Bridgepoint Capital is buying back a UK health club it listed in 1997 at an 80% discount to the IPO price. Luckily it can count on selling Holmes Place to another LBO fund, because investors won't look kindly on a return to market.
BT blows chance to hike dividend 22 May 2003 The group is stuck in a holding pattern while management vacillates over whether or not it is a utility. But the results have utility written all over them. With net debt down to 1.7 times ebitda, BT's payout rate is indefensible.
Royal & Sun Alliance pleases in Q1 22 May 2003 The UK insurer's share price has warmed to a strong underwriting result. But the underlying performance may not be strong enough to guarantee RSA's return to the FTSE just yet.
Property bids say nuts to NAV 22 May 2003 The UK property sector is bustling with bid stories at outfits like Canary Wharf and Chelsfield. If they have any significance, it's because valuing property firms on their net asset value doesn't work.
Siemens launches E2.5bn convertible 22 May 2003 The terms of the deal are little short of fantastic for the German conglomerate. But with a doubleA credit rating and no net debt, Siemens does not need the money. It must surely have acquisitions in mind.
Browne gets shirty about Black 22 May 2003 Shareholder Tweedy, Browne is threatening legal action against newspaper baron Conrad Black's Hollinger International. Browne wants Black and others to "disgorge" $73m Hollinger paid them. This is corporate governance arbitrage, smart but cynical.
SAB suffers Miller hangover 22 May 2003 The $5.6bn takeover of Miller was already a stretch. As the US brewer's profits deteriorate, the economics worsen. Given this, it is somewhat galling to see SABMiller plunking down such a big price for Italy's Peroni.
Mitchells & Butlers may turn from prey to predator 22 May 2003 The UK pubs group has probably seen off predators by gearing itself up. Its latest promise is to disgorge another £400mplus. It is clearly tempted by the prospect of buy Scottish & Newcastle's pub estate. But it's only worth doing if the price is good.
SSE buys Midlands for less than its debt 22 May 2003 Even so, SSE is not getting a steal. The £1.1bn offered is 10% more than the value of Midlands regulatory asset base. For Scottish & Southern's bid to go through, Midland bondholders have to take a 14% haircut.
Sainsbury’s sales aren’t growing fast enough 21 May 2003 The vast sums poured into the UK supermarket chain don t appear to be having much impact on the top line. Costcutting has allowed underlying operating profit to rise 11%. But ultimately it is revenue growth that shareholders want.
ThyssenKrupp skates on thin ice with debts 21 May 2003 The German conglomerate has bought back shares and hinted at big acquisitions, even though its balance sheet is in a mess. There may be charitable explanations for all this. But ThyssenKrupp upsets creditors at its peril.
Bloomberg throws down forex gauntlet to Reuters 21 May 2003 Reuters equity moat might have crumbled long ago, and ditto bonds. But, until now, forex was an impregnable citadel. But it is not just rivalry that is egging Bloomberg on. Forex is a sweet and profitable spot to be in right now.
Bronfman Vivendi bid defies belief 21 May 2003 Please. The former Seagram chief executive's track record says he can't be trusted to run a bath, let alone $20bn worth of media assets. But a bid from him for Vivendi's US arm would at least put pep into an auction that rebuilds some value in his family's VU shares.
Some Wella shareholders hold out 21 May 2003 P&G may have a longterm tax incentive to squeeze out minorities, but it can easily manage with less than 95% of the capital. Preference shareholders who don't tender will be left with an illiquid security, and a dividend savaged by P&G.
Granada puts Carlton on the spot 20 May 2003 The senior partner in the planned ITV merger has delivered surprisingly good operating results and does not look too expensive. But the longer their merger is delayed, the more it looks like Granada shareholders are being asked to pay a lot for Carlton.
M&S faces testing times 20 May 2003 But the outlook for sales growth is dampening. M&S is going to have to power ahead with margin gains. The UK retailer has turned in a sturdy year. Operating profits grew by 21%.
EMI looks lonely 20 May 2003 The only quoted music major has upgraded its performance and its balance sheet even as the market for records shrinks. With little sign of industry consolidation, the question remains whether it has done enough to get by on its own. It probably has.
WestLB banker’s BHS ties deserve scrutiny 20 May 2003 As German regulators examine WestLB's controls, they should examine how Robin Saunders came to own 0.5% of top client BHS. The investment potentially eroded the natural tension that ought to exist between a lender and a borrower.
Guy Hands may pump £100m into Meridien 20 May 2003 But make no mistake, the private equity guru isn t motivated to rescue the sinking hotel group out of kindheartedness. All investors will take a share of the pain in recapitalising Meridien. And Hands could have a shot at scooping up control.
Zimmer will counterbid for Centerpulse 20 May 2003 At a 20% premium to the seethrough value of the S&N offer, the US company's bid is nearing knockout territory. The UK group will struggle to raise its offer appreciably without hurting its share price.
CSFB tries to create superbankers 20 May 2003 This is an interesting experiment to drive efficiency in a harsh environment. But it relies heavily on the superbanker knowing his onions. The investment bank wants its financial services bankers to cover debt, equities, derivatives and corporate finance.
Not all analysts were patsies 20 May 2003 The failure of Japan s Resona bank is a case in point. One ING analyst saw it coming two years ago. But when he said so, Japan s FSA jumped on ING. The bank published a grovelling apology. Soon after, the analyst left.
mmO2 to write off German 3G 19 May 2003 Reports say the mobile operator's accounts are about to catch up with the fact that the E8.5bn it spent on a German 3G licence was wasted. Don't expect a wave of similar admissions from rivals. O2's writedowns are being driven by a specific need to fix its structure.
UK backs away from fat cat legislation 19 May 2003 This is an outbreak of common sense. Passing laws to stop departing executives from walking away with cash would have been barmy. Far better to leave it to shareholders to control executive pay. They are now doing that: just look at Glaxo.
Marconi emerges from debt-for-shares swap 19 May 2003 The UK group's new £730m enterprise value is small but not cheap. Marconi's big discount to rival telecoms equipment makers is warranted. And pensions deficits worsen the picture.
Court overrules bank regulator on Lyonnais 19 May 2003 This is bad for consumers and rivals. It also drives a coach and horses through European competition rules. The effect of its ruling is to wave Credit Agricole's bid for Credit Lyonnais through without any competition scrutiny.
Suez sells Northumbrian to investor group 19 May 2003 In effect, the French group is floating the water company rather than flogging it to private equity interests. Suez had special reasons for doing so. But it is a blow to private equity that it can t outbid the stock market in a bear market.