Merck loses $253m verdict in Vioxx case 22 Aug 2005 The US drug company picked what looked an easy win for its first court defence of recalled painkiller Vioxx. It lost spectacularly. The verdict will be reduced. But the group s own goal may cost it billions.
Does FRS17 overstate UK pensions deficits? 22 Aug 2005 It does, according to SEI Investments, because the discount rate it makes companies use is too low. SEI would like companies to use higher rates, linked to their cost of capital. That would certainly shrink deficits but it would be wrong.
Man Group should stick with broking unit 22 Aug 2005 True, this overlooked subsidiary does not contribute as much to the valuation of the hedge fund s shares as it ought to. But there are strategic benefits in retaining it. And it is far from certain that it would fetch a topdollar valuation in an IPO.
This oil squeeze could endure longer than the last 19 Aug 2005 What would be the optimal strategy for keeping oil prices skyhigh? Make exploration expensive and uncertain, and jack up taxes. That s just what the producing countries are doing, as Goldman Sachs points out. It's likely to prove more potent than the 1970s cartel.
Gala’s private equity owners strike it lucky 19 Aug 2005 Cinven and Candover have doubled the £550m they invested into the bingo operator in two and a half years. Why? Gaming is a great place to be right now. And low interest rates mean its stable cashflows can support huge leverage.
Shire tries to extend life of its cash cow 19 Aug 2005 The UK pharma group wants rival Barr to delay introducing a generic copy of the hyperactivity drug that provides nearly half its revenues. Buying off its rival will not come cheap. But this is a necessary step to keep the cash flowing until sales of new drugs kick in.
Mack targets debt and equity middle ground 19 Aug 2005 In a series of changes, the Morgan Stanley boss has pushed together the heads of the bank s equity and fixed income units. The idea is to find more crossselling opportunities to justify the huge investment involved in being a fullservice global firm.
Intesa seeks quickie divorce from Lazard 18 Aug 2005 The Italian bank has leapt on Gerardo Braggiotti s departure as an excuse to accelerate the dissolution of its Italian joint venture. Intesa hasn't added much to Lazard, but the row could still cost the firm and hurt its important Italian franchise.
Google to sell $4bn worth of stock 18 Aug 2005 The internet search group already has a cash pile of $3bn and its stash is swelling. Optimists may say Google is mulling a push into telephony. Cynics will say it is taking advantage of a skyhigh share price while it can.
RBS pays $1.6bn for Bank of China stake 18 Aug 2005 The deal can be funded without issuing more shares. It also offers reasonable value when compared with similar tieups. That has relieved RBS investors for now. But the bank has yet to clear the doubts surrounding its longterm strategy.
Macquarie gives private equity a wake-up call 18 Aug 2005 The Australian bank has a knack for winning auctions. It can pay more because its investors require lower returns than private equity. Another sign that in a lowreturn world, fat private equity returns may be unsustainable.
Morgan Stanley sticks with Discover 18 Aug 2005 At first glance, the move is odd for new CEO John Mack. The credit card business has no obvious synergies with the core investment bank. But as long as the firm s other businesses are lacklustre, Mack has little choice but to retain Discover as a decent source of earnings.
Is Carl Icahn spreading himself too thin? 17 Aug 2005 The corporate raider is best known for attacking poorly performing companies where he can get a rapid financial return. But his latest targets, Time Warner and Morgan Stanley, don t fit the bill. Either he s running out of targets or becoming more patient.
HP’s growth slower, but healthier, than Dell’s 17 Aug 2005 The US tech group s revenues grew 10% in the latest quarter good, but still a third slower than rival Dell. But Dell s growth is being pumped up by vendor financing of rapidly depreciating goods. This sort of stimulant can have nasty side effects.
Nestle finally gets a break 17 Aug 2005 The maker of KitKat bars has met its own sales targets for the first time in over a year, even though pricing is still tough. Nestle is strong in emerging markets. Yet its core food business looks to be valued somewhere below peers like Unilever. It deserves better.
Private equity firms stalk TDC – report 17 Aug 2005 Having lost out to trade buyers on Auna and Cesky, buyout firms have turned their attention to Denmark's DKr54bn (E7.3bn) telecom incumbent. Breaking up TDC could unlock value. But with telecoms companies getting keener on M&A, a trade buyer may yet sweep in and do the job itself.
Mervyn King takes the minority view 17 Aug 2005 The Bank of England voted in a rate cut in July by just 54. And for the first time in its eightyear history, the governor was outvoted. Read it as a tribute to democracy at the Monetary Policy Committee. Or as confusion about the direction of the UK economy.
Costly oil spooks investors 17 Aug 2005 WalMart is fretting about the impact of higher energy costs on consumers, while inflation is rising in the US and the UK. A slowing economy and rising prices? Smacks of stagflation.
Leica auction still carries risks 16 Aug 2005 The Swiss tech group s investors seem to be betting that a raised offer from Sweden s Hexagon will succeed. Either that, or that rival bidder Danaher will raise its lower allcash offer. But there s no assurance of either.
Spanish politicians mess up electricity market 16 Aug 2005 Demand for power is surging partly because the state stops utilities charging a market rate for electricity. The best thing would be a price hike. But politicians are planning reforms that would embed even more perverse incentives in the system.
Schroders should be wary of big deals 16 Aug 2005 The UK fund manager has plenty of surplus capital available to make acquisitions. But this a risky way to grow in the asset management industry. And Schroders results show it is generating decent growth organically.
C&W wins over begrudging hedge funds 16 Aug 2005 They made a huge fuss about the telecoms firm's bid for Energis mainly because its share price rose sharply during the negotiations. But many of the same funds have done pretty well out of the deal too.
Macquarie Bank reveals interest in LSE 15 Aug 2005 That's good news for the UK exchange's investors: the Australian investment bank has a reputation for paying high prices for businesses. But it's bad news for rival bidder, Euronext. It makes it more likely that it will have to pay up if it is to win the LSE's hand.
Thus makes eleventh-hour Energis bid 15 Aug 2005 The telecoms operator clearly hopes to spoil Cable & Wireless s bid for Energis. The snag is that its bid doesn't offer any more value and runs the risk of offering significantly less.
Xstrata buys 20% of Falconbridge for C$2bn 15 Aug 2005 The Swissdomiciled miner has bought the stake from longterm seller Brascan without paying a premium. It's a cheap option over good assets. Mick Davis, Xstrata s ambitious chief executive, has learned from his failure to get WMC. Falconbridge will not escape so easily.
KKR and Silver Lake buy Agilent unit for $2.7bn 15 Aug 2005 The private equity firms chose an unlikely target in the US tech group's semiconductor operation. It's a volatile and lowmargin business. Improving returns won t be easy. And KKR s tech experience is limited. Silver Lake s greater skill in this area will be vital to success.
Airline investors lulled into false security 15 Aug 2005 Airline shares are up across the board mainly because travellers have so far taken fare increases on the chin. But that might not last. If the oil price stays high, and airlines continue with their expansion plans, investors may be in for a rude awakening.
German election outcome in doubt 12 Aug 2005 The result of the September 18 vote looks less clearcut. Squabbling within Angela Merkel s CDU coalition has shrunk her early lead. If she fails to win a majority, the best hope of reform may lie in a grand coalition. But that would be hard to manage.
British Airways union fires a warning shot 12 Aug 2005 It has seized a flimsy pretext to launch the airline's third wildcat strike in as many summers. The union's real agenda may be to flex its muscles ahead of the arrival of new chief executive Willie Walsh.
DrKW slumps in the first half 12 Aug 2005 Trading income fell 73% in the second quarter. Overall revenues were down 37% in the quarter, and 22% in the first half. That s worse than UBS, Deutsche and CSFB. The commitment of parent Allianz to its investment bank is being sorely tested.