Dunkin’ deal comes with hefty debt gulp 14 Dec 2005 Bain, Carlyle and TH Lee are borrowing debt equal to 8.5 times ebitda a level not seen since in the US since the 1980s LBO bubble. The private equity firms are buying Dunkin for its growth. But such a heavy debt load could spoil their appetites.
One cheer for Chinese economic recount 14 Dec 2005 New statistics will show China s GDP is 20% bigger than earlier measured. Investors will be comforted, as it suggests a more stable economy. But they should not become much more positive about the country s prospects. Growth is still flattered by an undervalued currency.
Italian bank protectionism backfires 14 Dec 2005 The ringleaders, who tried to stop foreigners buying Italian banks, are on the back foot. Fiorani, the former boss of BPI, is in jail. Fazio, Italy's central bank governor, is besieged by legal actions. Even if he clings onto his job, he looks impotent to block foreigners.
French TV merger may not be as fantastic as it looks 14 Dec 2005 Merging French payTV platforms TPS and Canal Plus group makes all the sense in the world if they can create a monopoly. But, if Italy is any guide, regulatory authorities may demand that they surrender exclusivity to premium content. That would be painful.
Buy.com suggests return of dot-com excess 14 Dec 2005 At the height of the boom the internet retailer was worth $4bn. Its founder bought it back for $13m only 18 months later. Now he is preparing the lossmaking group for a second float. Has anyone learned anything?
Versatel ruling a victory for Dutch governance 14 Dec 2005 The way Sweden s Tele2 was pursuing its takeover of the telecoms group was questionable. Courts have rightly imposed independent scrutiny. That restores some sheen to Dutch corporate governance, which had appeared toothless in allowing Tele2 to squeeze minorities.
Enron’s Lay seeks witnesses to his ignorance 14 Dec 2005 In a speech a month before his trial the former Enron CEO pleaded his innocence and suggested prosecutors are intimidating witnesses. But Lay s problem is an earlier speech the one he gave back in 2001 declaring all was well, just before Enron went under.
France sells motorways for hefty E14.8bn 14 Dec 2005 That's a great result for the French govenment. It's nearly E2bn more than initially expected. The bidders have been able to pay so much becuse they are leveraging the companies to the hilt.
LSE bid is all about price 13 Dec 2005 A takeover of the London exchange by Macquarie Bank raises questions about the impact on users and the City s status as a financial centre. But these are a sideshow. Macquarie needs only to pay a price another exchange could justify, with a discount to reflect a bird in the hand.
Vodafone pays richly to get into Turkey 13 Dec 2005 The UK mobile group has paid $4.6bn for Telsim. That's $500 per subscriber against an average of $300 in such deals, says Goldman Sachs. Telsim is growing fast and Turkey is attractive. But Vodafone will have to sweat to make the deal pay. This won't help its flagging shares.
Thomson turnaround on track 13 Dec 2005 The French technology group came under fire when it admitted revenue growth had slowed. But the company is still heading in the right direction. And it has a lot of room to return cash to shareholders.
Boston Scientific debt deal sign of buoyant times 13 Dec 2005 The medical devices maker has been able to borrow $14bn at thin margins to buy Guidant despite its aggressive leverage. Following hard on the heels of Koch s $11bn mega loan, Boston s deal shows just how eager banks are to lend.
Lehman copes with fixed-income slowdown 13 Dec 2005 The US investment bank's earnings fell only slightly in the final quarter, despite a significant fall in fixed income. Its diversification into advisory, equities and asset management is paying off.
Shell capex boost won’t do much for production 13 Dec 2005 The headline $19bn number looks big. But it's only a $4bn increase. And less than half is on new upstream projects. Much of the rest is just higher costs on existing projects, partly the legacy of its previous poor management.
Microsoft mulls paying search engine users 13 Dec 2005 This is harebrained. If it offers too much, Microsoft will expose itself to fraud. Offer too little, and no one will bite. The best way to beat Google is to offer a better search engine, rather than paying customers.
Conoco pays royally for Mulva’s ambitions 13 Dec 2005 In the oilthriller Syriana, an American protagonist berates a Middle Eastern prince for squandering his Emirate s oil wealth. The chief of Conoco, JJ Mulva, is doing something similar with the $36bn overpriced takeover of Burlington Resources.
Fed rate hike brings closer yield-curve inversion 13 Dec 2005 If the Fed continues raising rates, the yield curve is likely to invert next spring. This will not necessarily hurt the US economy. The example of New Zealand shows that rising shortterm rates attract hot money flows, boosting home prices and consumer spending.
Cadbury still pick of food industry 13 Dec 2005 Margins may stay under pressure from high energy prices into the second half of next year. That could lead to modest shortterm downgrades. But the UK confectioner is one of Europe's faster growing food groups, thanks to innovation, expansion and the sale of European beverages.
BPI could be a tasty takeover morsel 13 Dec 2005 That may seem odd given the scandalridden E3.5bn Italian bank, which lost out in the battle to buy Antonveneta, is such a can of worms. But if BPI cleans up its act, it could be attractive. The bank that tried to keep foreigners out of Italy may even fall into foreign hands.
Canada’s M&A boom not over 13 Dec 2005 Takeovers are at a fiveyear high, most of them focused in the natural resource, energy and metals areas. All this has pushed up prices. While that may give some foreign bidders pause, other sectors are still ripe for deals. Canadians can use their bloated stock as currency.
HealthSouth turncoat had it coming 12 Dec 2005 The 5year sentence for the former HealthSouth finance officer who testified against acquitted boss Scrushy may look harsh. But it's wrong to conclude he s paying for Scrushy. There s a lesson here for cooperating witnesses in future fraud trials.
Investors at risk of take-unders in big LBOs 12 Dec 2005 They have bid up shares of likely targets, such as Albertsons and Knight Ridder, in the anticipation of juicy bids from private equity. The shares have shot up beyond what is sensibly financeable. Boards may need to consider selling at below market prices.
ProSieben owner pulls strings for E2.5bn deal 12 Dec 2005 Saban has warned off regulators seeking concessions from buyer Axel Springer: if they block the deal, ProSieben may be sold to foreigners. As if to give substance to this threat, France s TF1 has expressed interest. A coincidence? Maybe, but remember Saban sits on TF1's board.
Conoco makes $30bn bet on Burlington – report 12 Dec 2005 The thirdlargest US oil major is beefing up its natural gas production in the hopes that natural gas prices will stay high. But this won t come cheap Burlington s share price has nearly doubled this year.
The UK house price bubble never existed 12 Dec 2005 UK property prices will end the year higher than at the start, confounding those who predicted a crash in 2005. Why did people get it wrong? Perhaps because they failed to take account of the substantial shift in the longterm equilibrium level of house prices to earnings.
Change of control clauses can be poison pills 12 Dec 2005 Pharma companies already sell a lot of products developed by biotech groups. And the figure is growing quickly. These agreements can complicate mergers and put seeming takeover bait such as ScheringPlough out of play.
Meet Britain’s unknown billionaire 11 Dec 2005 James Ratcliffe, a chemicals entrepreneur, has just bought BP s petrochemicals and refining business for $9bn. He has built an empire through a series of megaacquisitions entirely funded by debt. That way, he has kept control of his company.
Bond should review Vodafone’s global strategy 11 Dec 2005 Investors are treating the mobile operator like a conglomerate. It is trading at a steep discount to its fair value. Incoming chairman, Sir John Bond, should insist on a change of course, that should include a sale of Vodafone's US and Japanese interests.
Cisco’s Chambers hypes internet 2.0 9 Dec 2005 Video will cause internet traffic to grow 300% to 500% a year, according to the internet equipment group s optimistic boss, John Chambers. Once again Chambers is exaggerating the net's growth potential. There is enough capacity to handle the projected video internet traffic.
Bear Stearns looks cheap 9 Dec 2005 Not too long ago, Bear and Lehman were derided as bond houses and sported identical market caps. Lehman has pulled ahead in a big way. But Bear may be the better stock pick. Strip out its global clearing arm at a decent multiple and the rest is undervalued.