French banks may have further to go 24 Nov 2005 BNPP and SocGen have strongly outperformed their peers this year partly by focusing on hot areas like derivatives and commodities. Yet despite this, they continue to trade at a discount to other European banks. This discount is too wide.
Obesity is the next big thing 24 Nov 2005 Many Americans eat too much and diabetes is soaring. This healthcare problem is an opportunity. Many diabetics look set to switch to inhaled insulin. But investors haven t priced in the change. Pfizer and Sanofi are the ones to bet on.
Fed removes speculators’ licence to print money 23 Nov 2005 Leveraged speculation in the bond market has been encouraged by the Fed s predictability in babystepping interest rates higher. The move to stop the Fed giving clear indications on the direction of interest rates threatens the future of the carry trade.
Santander win may not end Sovereign rumpus 23 Nov 2005 The Spanish bank has gained the right to buy into Sovereign without shareholder backing. But it has had to make concessions. These leave the door open to further rows with Sovereign s irate investors. Santander's shareholders are rightly unimpressed.
GMAC auction has Wall Street worried 23 Nov 2005 No, not because it's anxious about systemic risk for the financial system. The banks' real worry is what happens to GMAC s fees. Whoever gains control of GMAC nabs one of the world's biggest issuers of debt and $200mplus in fees and top leaguetable credits.
Bouygues stock looks pricey 23 Nov 2005 Shares in the French conglomerate have risen by a third since June on hopes that it will sell its prize mobile telecoms unit. But a sale looks unlikely while Telefonica remains sidelined. And Bouygues appetite for acquisitions may resurrect its historic discount.
Can hedge funds save the retail investor? 23 Nov 2005 The public is used to paying high fees for closettracking, underperforming mutual funds. Mutual funds with hedge fundlike strategies won t mimic the index. But they come with still higher fees.
Arcelor’s E3.2bn Dofasco bid looks flawed 23 Nov 2005 The EU steelmaker already lost auctions for more attractive assets in Turkey and Ukraine before making an offer for the Canadian producer. The hostile bid is expensive. And probably too late in the steel cycle. It would be better to return cash to shareholders.
Investors pay high price for Wind junk bonds 23 Nov 2005 On current mobile sector multiples, the Italian group s enterprise value barely exceeds the value of its debt. Yet bond investors are receiving singledigit coupons on their investment. That s pretty punchy.
Blow to Tchenguiz Spirit bid as S&N pulls out 23 Nov 2005 The property tycoon hoped to sell about half the UK pub group to S&N. Now he needs a new solution. Spirit must now choose between Tchenguiz, who is the highest bidder but may need more time, and Punch, who could close a deal immediately.
Sovereign dissidents should watch what they wish for 22 Nov 2005 They are aggressively lobbying the NYSE to challenge Santander s $2.4bn investment in the bank, forcing it to a vote. But if they stymie Santander, Sovereign is still on the hook for the $3.6bn purchase of Independence. Sovereign has laid a booby trap.
E.on right to walk away from Scottish Power 22 Nov 2005 The German utility deserves credit from shelving a potentially valuedestructive acquisition after its 570p a share offer was rejected. Scottish Power is to boost its dividend. But in the absence of another bid, its shares are unlikely to see 570p a share again for some time.
Sainsbury family lifts its dead hand 22 Nov 2005 The family trustee is on course to cut its holding in the eponymous retailer by up to 5%, taking its stake below the critical 30% level. This is good news. The family was long an absentee landlord at Sainsbury, which helped precipitate last year's crisis.
Rhodia back from brink with E604m rights issue 22 Nov 2005 The highlyleveraged French chemicals group has been bailed out by a big equity injection, judicious disposals and rising Chinese demand. The snag is that recovery seems priced into the shares. The only upside now is a big legal claim against its former parent.
Sprint affiliate deal is good news for Nextel Partners 21 Nov 2005 The US telecoms group is required to buy out its joint affiliates with Nextel following the August takeover. It is paying a 70% premium to the premerger price of Alamosa, in a deal that translates into greater valuation for Nextel Partners.
General Motors doesn’t cut deep enough 21 Nov 2005 Rick Wagoner s plan to close plants, cut an extra 5,000 jobs and find another $1bn in costs won t turn around the ailing car maker. These don't solve GM's larger issues of pension and healthcare burdens. A bankruptcy filing has not become less likely with these moves.
Empire’s threats to Partygaming look desperate 21 Nov 2005 Friendly takeover talks between the gambling websites have collapsed. Now Empire is talking about suing its suitor and largest customer. Both companies remain below their float prices, but Empire s more so. Reaching for the lawyers looks like sour grapes.
Investors too complacent about euro rates 21 Nov 2005 The market knows rates will start rising in December and is betting on slow and steady increases thereafter. But the ECB wants to squash excessive lending growth. It is likely to move as fast as it can. Rates could easily be close to 4% in a year.
Vultures prepare for credit crunch 21 Nov 2005 Investors are putting cash into second lien loans, which would perform better in a downturn than junk bonds. Meanwhile, hedge funds are assembling information and firepower so that they can profit from a turn in the cycle.
Medicis nips off more than it can tuck in botox battle 21 Nov 2005 The US plastic surgery group thought it was stealing a march on rivals when it bid $2.8bn for botoxpeddler Inamed. Instead it triggered a far from cosmetic fourway freeforall, which will probably cost it its independence and see Inamed broken up.
Elan’s stock is cheating death again 20 Nov 2005 The Irish biotech s stock has lost more than 90% of its value on two occasions. Yet it is coming back to life again. That's pretty amazing. But there s still a good chance the stock will fall back in its tomb not dance on it.
Food sector is ripe for further consolidation 18 Nov 2005 The food industry is obsessed with finding top line growth. Yet its meager successes have come at the expense of margins and earnings. Consolidation could deliver synergies of 69% of sales. That would boost margins, cut capacity and deliver significant shareholder value.
France wins ambitious EdF pricing gamble 18 Nov 2005 The electricity behemoth has priced near the top of an already expensive range. Strong retail demand explains why. But many institutions said no. As they were supposed to supply market discipline, this suggests the stock may perform poorly.
Swiss Re humbles GE with $7bn insurance buy 18 Nov 2005 The last of GE s insurance assets has been bought at a knockdown price, and the purchase comes with a thumping reserve increase. GE is rarely the meeker party in M&A deals. Its consolation is that it has made a clean break from a sector it never really got on top of.
Cisco’s latest deal predicated on the vision thing 18 Nov 2005 The $5.3bn cash purchase of ScientificAtlanta adds the video component to John Chambers "convergence quadruple play." The deal may make sense strategically, but the price is high. It will be hard to make a decent return, even given Cisco s rosy forecasts.
Black day for Black 18 Nov 2005 The former media baron asserts his innocence in the face of eight fraud charges. But one of the US's toughest prosecutors is out to get him. Lord Black has also been let down by the fact that his closest business partner, Radler, has pleaded guilty to fraud charges himself.
Hedge funds aren’t the only bullies 18 Nov 2005 Traditional longonly investors are also getting uppity, kicking companies into play and heaping pressure on errant chief executives. This is a good sign that they are taking their fiduciary obligations more seriously and learning from the hedge funds.
Goldman’s MMC sale shows blocks can work 18 Nov 2005 The problem with block trades is generally that banks overbid for the stock because they are desperate to do the deal. The Mitsubishi sale didn t fall into this trap. Why? Probably because the shares were so intrinsically risky.
Can creeping takeovers be a good thing? 18 Nov 2005 The gut reaction is never. But like all matters in the area of corporate governance, each case must be considered on its individual merits. On that basis, for example, a bid to control theme parks operator Six Flag is a good thing. Santander s bid for a chunk of Sovereign is not.
Man Group equity issue signals more M&A 17 Nov 2005 The hedge fund group is a master at shortterm trading placing shares at a 20% premium to where it was buying them back a few months ago. Having bought Refco s regulated assets, Man s tail is up. Hedge funds looking to sell themselves should put in a call.