Month: August 2006

Intesa/Sanpaolo: no side-deals with shareholders

25 Aug 2006

Credit Agricole and Santander have interests in Intesa/Sanpaolo IMI that go beyond their equity positions. In the tussle to secure veto rights and bank branches, lessconnected shareholders mustn t be shortchanged.

Isoft secures survival – for now

25 Aug 2006

But the financing isn t cheap. And Isoft s future as an independent company is still questionable. The troubled UK software group has delivered good news: it avoided being delisted; renewed its bank financing; and even won a new contract.

Viacom deserves big Redstone discount

25 Aug 2006

The octogenarian chairman s verbal attack on Tom Cruise underlines why Viacom deserves a greater governance discount to rivals. This unchairmanlike conduct undermined Viacom executives and may hurt Paramount s ability to attract artistic talent.

Unicredit key to next stage of Italian bank consolidation

25 Aug 2006

Its obvious response to the IntesaSanpaolo IMI tieup would be to snap up Capitalia. But that looks fraught with difficulty. The biggest problem is personality. And while there s a possible solution it would in turn throw up political objections.

Intesa/SanPaolo merger compelling – on paper

24 Aug 2006

With over E1bn of annual synergies, there s huge value creation as well as the chance to build a E55bn Italian banking champion. But the deal only adds up if there s streamlined decisionmaking rather than fudged compromises. If not, interlopers may break it up.

Rite Aid’s $3.4bn acquisition is the right prescription

24 Aug 2006

And the firm s paying a fair price for Canadian Jean Coutu s US assets. But it s not a cure for all of Rite Aid s ailments. Adding 1,800 new stores polevaults the US pharmacy chain s efforts to expand its footprint against CVS and Walgreens. The US pharmacy chain has struggled to keep up with its larger competitors since its accounting scandal four years ago. The purchase of Canadian rival Jean Coutu s US stores will allow a fast catch up. And Rite Aid s not stretching finances to pay for them.

Rating hedge funds no easy task

24 Aug 2006

A handful of agencies are developing ratings for hedge funds. But funds are so diverse that creating useful measures is tough. Creditworthiness is one way to go about it. But that might not be the best measure. There is a lot of development to go.

BP falls behind Shell for first time in four years

24 Aug 2006

It's not just BP's reputation that has been damaged by the Alaskan fiasco. Its stock rating has suffered too. Shell's market capitalisation has just surpassed BP's, as its own tattered reputation has improved a tad and BP s halo has slipped.

Isoft implosion teaches harsh lesson

24 Aug 2006

The software provider s update of the UK health service s computer systems has gone terribly wrong. The shares could be suspended. Investors were slow to grasp the disaster. They forget the basic rule in software, the reality is usually worse than you think.

Keefe IPO may fare better than rivals

23 Aug 2006

Unlike the debuts of rivals like Cowen and Weisel, US banks specialist Keefe, Bruyette & Woods has a more defensible business. While it s no Evercore or Goldman, it probably deserves to trade at a decent premium to its book value.

Stubbornness pays off for TDC hold-outs

23 Aug 2006

The Danish telecoms operator s minority investors have gained from snubbing a buyout. They have raked in nearly 14% more than acceptees. True, this isn t riskfree. TDC s new owners could enforce a squeezeout on unfavourable terms. But the upside is worth hanging on for.

BHP Billiton takes middle road on investment

23 Aug 2006

The miner isn t going for splashy acquisitions, unlike Xstrata or CVRD. But it isn t handing back as much cash as Anglo American. Given its size and culture, this looks like a sensible approach, especially when the path of future commodity prices is so uncertain.

Ofwat sticks another spoke in Thames Water sale

23 Aug 2006

The UK water regulator has already told the water company s owner, Germany s RWE, it can t sell to a rival. Now it is warning that it doesn t want a bidder to load too much debt on Thames. That doesn t rule out a buyout, but may reduce the price.

Why is Tom Cruise like a Wall St prima donna?

23 Aug 2006

The movie star is going solo like some top bankers. With a personal brand, you don't need backing from a Hollywood studio or Wall St house. But Cruise's hand was forced. Viacom, his business partner, is embarrassed by his behaviour. Still, he may end up making just as much money.

Russian aluminium merger aims at global dominance

22 Aug 2006

A £10bn merger between Rusal and Sual wouldn t just be the world s largest aluminium maker, leapfrogging Alcan and Alcoa. It would aim for a London listing to get currency for even more deals. But it would first need clean governance and finances.

Cutting worker costs won’t save Ford

22 Aug 2006

The car company s stock fell 5% despite rumours it will follow General Motors lead and offer enhanced layoff payments to its workers. Such a move would saddle Ford with extra charges as it cuts back on production. Investors took that as a signal to sell.

Rohatyn move shows age has value in banking

22 Aug 2006

The 78yearold banker, who helped rescue New York from bankruptcy in the 1970s, is joining Lehman as senior adviser. Rohatyn has given up his attempt to build his own boutique and, instead, evolved into the financial equivalent of a village elder.

DaimlerChrysler’s merger haunts it again

22 Aug 2006

The unsuccessful merger of DaimlerChrysler happened eight years ago, but shareholders are still trying to recoup their lost value. The irony is that they don t even have to be consistent. Saying Chrysler is undervalued or overvalued both have had their successes.

Quattrone belongs in his own boutique

22 Aug 2006

Now that the technology banking supremo has been cleared, he wants to get back into the business. Of course, no bank would dare hire him. Good thing, too. Quattrone s single greatest feat on Wall Street has been his penchant for running firms within firms at owners expense.

Anglo American takeover doesn’t quite stack up

22 Aug 2006

Rivals are rumoured to be eying the giant miner. There is a case for hidden value, but it s not what it used to be. The stock is up and management is moving. Still, in a bull market nothing should be considered impossible.

Foreign investors rescued by Brazilian regulator

21 Aug 2006

Moves to improve corporate governance in the country have been undermined by oldstyle abuses of minority shareholders. A reorganisation at Brazilian telecoms firm TNE disadvantaged foreign investors. Now they ve triumphed with the regulator s help.

Worried about inflation? Think about buying some

21 Aug 2006

Inflation is an asset class that produces a steady zero real return. That may not sound very inviting, but it s better than losing money. Inflationresistant assets reduce volatility. With commodity prices already high, inflation could be a cheap hedge against inflation.

Mining companies struggle to keep on top

21 Aug 2006

But governments are a far bigger threat to shareholders than unions. High metal prices could make government greedier. Everyone wants a share of the industry s abundant cash flow. The workers at the giant Escondida copper mine are the latest to try.

Increased debt explains corporate wall of cash

21 Aug 2006

Cash on corporate balance sheets has exploded over the past five years nearly tripling at FTSE 100 companies. This probably isn t pessimism. The oil bonanza explains part. But mostly it appears to be a function of rising levels of net debt.

Lampert’s no Buffett and Sears is no Berkshire – yet

21 Aug 2006

Eddie Lampert is often likened to Warren Buffett. Some even argue that Lampert's Sears Holdings could be the next Berkshire Hathaway. While Lampert is a great investor, Sears does not yet give Berkshire a run for its money. For now, it remains a pricey midtier retailer.

Brokers and exchanges battle for flow

21 Aug 2006

Nasdaq and the NYSE have been pushing into brokers' territory. The exchanges want more buyers and sellers to deal directly with them. Brokers are fighting back by investing in oncemoribund regional stock markets. The National Stock Exchange looks like the latest recipient.

Google looks to books revenue

21 Aug 2006

But instead Google is forging ahead, recently cutting a fresh deal to scan the University of California s 34 million library books. With litigation stacking up against it, Google might easily have dropped plans to make millions of library books searchable on the internet.

Providence should call Huff’s bluff

20 Aug 2006

The powerful NTL investor is talking big money the UK cable operator. But that doesn t mean its private equity suitors should cave in. NTL faces tough times in telephony and TV, and is already pretty geared up. That may make a big premium hard to justify.

Icahn faces long wait at Time Warner

18 Aug 2006

After failing in his quest to breakup the media giant, Carl Icahn is planning to buy more Time Warner stock. The company looks cheap compared to competitors like News Corp. But a rerating depends on a successful turnaround at AOL.

France mulls anti-market carve-up – report

18 Aug 2006

The scheme is creative offering Italy a chance to pop troubled Alitalia into Air FranceKLM so long as Italy's Enel doesn't bid for Suez. But it would be disgraceful market meddling. Hopefully, this is just a rumour that vanishes as soon as everybody returns from the beach.