Month: May 2005

Warner Music slashes IPO price by a quarter

11 May 2005

The cut was forced by investor worries about the music industry and their unease about Warner Music s turnaround . Although it was always a controversial float, this doesn t bode well for other private equity IPOs in the pipeline.

Morgan Stanley boss fails to reassure

11 May 2005

In his first public outing since Morgan Stanley s turmoil began, Purcell left investors with a queasy feeling about the firm and the future. His performance underscores the hard slog the investment bank faces magnified by an impending slowdown of Wall Street earnings.

UK pension hole continues to widen

11 May 2005

Despite rising contributions, listed companies' pensions deficits rose 4% last year to £76bn. Rising life expectancy is to blame. Big old companies are hit disproportionately hard. They are trying to run up a down escalator.

Locusts belong in capitalism’s ecosystem

10 May 2005

The hedge funds behind the Deutsche Boerse revolution have been likened to swarming pests by the chairman of Germany s ruling party. He clearly intended an insult. But locusts play a role in the creative destruction of nature, just like hedge funds do in capitalism.

P&O Nedlloyd cashes in at top of the cycle

10 May 2005

Danish shipping giant Maersk is buying the Dutch firm for E2.3bn, with a healthy premium built in. It makes sense for Nedlloyd to sell now, just as freight prices are falling. It makes less sense for Maersk unless the move is defensive.

Euronext deal more likely with LSE than Boerse

10 May 2005

With no CEO, Deutsche Boerse is vulnerable to a merger approach from Euronext. But a deal would face big regulatory and integration issues. A deal between Euronext and the LSE, which shares its model, would be easier to implement if Euronext investors let it pay a premium.

Vodafone cash leaks out to Italian minority

10 May 2005

The group s Italian unit is paying out E8bn, mainly so that its 23% minority investor, Verizon Communications, can exploit a US tax break. This marks a thawing of Vodafone s cool relations with Verizon but only a modest one.

Morningstar IPO sets new fee low

9 May 2005

The WR Hambrechtled auction generated fees of less than $3m from the financial services company s $140m initial offering. But bankers worried about the implications can, perhaps disingenuously, point to the substantial value left on the table by the deal.

More than good luck eases BBVA’s Italian attack

9 May 2005

The Spanish bank has been more successful in its bid for Italy s BNL than Dutch bank ABN Amro has been in its bid for Antonveneta. One reason is lack of amibition. BNL s franchise is less attractive to other Italian banks, so there has been little organised opposition.

Breuer and Seifert to leave Deutsche Boerse

9 May 2005

The chairman and chief executive have bowed to the inevitable after it became clear they had lost the backing of shareholders. This may leave a power vacuum at the German exchange group, but that's better than an ugly public showdown at the annual meeting.

Barclays/Absa could deter cross-border M&A

9 May 2005

The UK bank has finally won shareholder backing to take a controlling stake in South Africa s Absa. But for all its months of hard work, Barclays has not got a bargain. That s no incentive for other banks to chase overseas deals.

EADS may miss targets despite Airbus boom

9 May 2005

The FrancoGerman aerospace group's operating profits had a terrific first quarter after strong deliveries at its commercial aircraft unit. But it may still be knocked off course as favourable hedges run off and its sales mix switches to less profitable models.

Mackay to quit as Compass chairman

9 May 2005

Mackay's departure paves the way for some muchneeded fresh thinking at the UK catering group. Compass needs to convince investors it has a strategy to deal with falling margins and inadequate cashflow.

Duke to swallow Cinergy for $9bn

9 May 2005

Say what you will about the industrial strategy, this is a rare deal that stacks up financially on a variety of measures. Of course, this raises the question of why Cinergy did not hold out for more. Could it be because its boss gets to run the new ship?

Sarin needs to show Vodafone is a growth stock

8 May 2005

The mobile group s boss needs to explain how good results are flowing from his strategy. Then investors may believe they are sustainable. If Sarin can achieve this, it will take the shares nearer to £2.

Hedge funds burned on GM trade

6 May 2005

Some funds thought GM s bonds overreacted to its notorious profit warning. They bought the credit, shorting stock to hedge the position. This capital structure arbitrage ploy has suffered a double whammy: GM s early junking; and Kirk Kerkorian s raid on the stock.

Dissident shareholders make big mistakes

6 May 2005

Campaigns like those at Morgan Stanley and Blockbuster are fueled by latent discontent among a large section of the firms shareholders. But the leading campaigners have found it's one thing to try ousting a chief executive; quite another to propose oneself as the replacement.

Private equity turns on itself in E13bn Auna pursuit

6 May 2005

The chase for the Spanish telecom firm is rewriting the private equity hunting game. One group has switched wolf packs to boost its chances. But the hunters have also pushed up Auna s price to levels that have eaten into future returns, whoever wins the deal.

Hedge fund moans about shorting campaign

6 May 2005

London s Bailey Coates claims hedge funds and prop desks are shorting its portfolio, hoping it will sell down further to meet redemptions. It's odd for a longshort fund to sob over shorting. And if its portfolio isn't overvalued, it should be able to persuade clients to stay.

Two cheers for Unilever

6 May 2005

At last, good news from the AngloDutch group. First quarter results weren t as bad as expected, and it seems Burgmans may step down early. But it is too early to tell wether Unilever has turned the corner. Meanwhile, it continues to significantly underperform its peer group.

Is the euro the new carry trade currency?

5 May 2005

The right ingredients seem to be in place. The European economy is weak, and interest rates are at record lows. The trade is mostly taking place within the eurozone, but there are signs it is spreading abroad. If this continues, the euro will fall.

Wasserstein pulls off Lazard IPO

5 May 2005

The investment bank sold $1.8bn of securities, ending 157 years of family control and putting the wily Wasserstein in control. Setting aside Lazard's investment prospects which are shaky Wasserstein has proven why he is one of the world s greatest dealmakers.

Slower sales cloud ICI outlook

5 May 2005

The British chemicals group has so far successfully increased prices to offset higher raw material costs. But sales in Europe, its largest market, are slowing. This will make it harder to increase prices again. But sales in Europe are slowing. This will make it harder for ICI to increase prices again.

BSkyB grows – but at a cost

4 May 2005

The UK payTV company added more subscribers in the latest quarter than expected. But churn is rising and revenues per user are falling.

Fresenius buys Renal Care for $4bn

4 May 2005

The deal has industrial logic, beefing up the German group s presence in US dialysis. But at 17 times operating profit, it won't come cheap. The alldebt financing may help make the numbers work. But it will leave Fresenius very highly leveraged. The deal has industrial logic,beefing up the German group s presence in US dialysis. But at 16 times operating profits, it won't come cheap. The alldebt financing may help make the numbers work. But it will leave Fresenius very highly leveraged.

Has Kerkorian gone mad with GM buy?

4 May 2005

The casino mogul is buying the carmaker s stock at a premium, raising his stake to some 9%. What does he know that the market doesn t? His success with Chrysler gives him credibility. But it s hard to see why anyone would own GM equity when the story is all about the debt.

Credit Suisse warns of considerable slowdown

4 May 2005

The Swiss bank has been much more bearish than rivals about the extent of the market downturn in the second quarter. Perhaps it doesn t want investors overexcited about its restructuring. But mixed Q1 results mean they shouldn't be getting excited anyway.

Kingfisher warning sparks bid rumours

4 May 2005

Even after its share price decline, the £6.7bn DIY retailer would be a huge morsel for private equity. And, while the numbers make more sense for trade buyers, the UK consumer slowdown might give them pause for thought.

UK inches towards new £10bn nuclear programme

4 May 2005

Once the election is out of the way, Blair seems likely to bow to environmental realities and launch a new programme. But for investors to buy into it, the politicians will have to show them they can earn a decent return through future electoral cycles.

Malcontents go after controversial IPOs

4 May 2005

Lazard and Warner Music are being publicly bashed by neglected interest groups. A bit of bad publicity probably won't scupper either IPO. But it won't help much either.