Stability and growth pact comes back to life 6 Nov 2006 A year ago, the deficit limit of 3% of GDP looked like a dead letter. But Germany is now expected to go down to 2% in 2006. France is under the line and even Italy is close. But prudence is easy in good times. The big test comes when the upswing ends.
Ryanair cries wolf on winter of discontent 6 Nov 2006 The Irish budget airline warned prices would fall over the tough winter period. Now it expects them to rise, despite its heady expansion. The reason? Several rivals have given up competing against Ryanair. Except, of course, for Aer Lingus.
What’s pricier than a suite at the Four Seasons? 6 Nov 2006 Buying the company. The $3.7bn founder Sharp, Bill Gates and Prince Alwaleed are paying for the hotel chain is extremely lavish. Yet investors don t seem satisfied. They re betting Sharp will have to pay a conflictofinterest surcharge to go private.
Private equity goes for France, Inc 6 Nov 2006 The French privateequity market has been buoyant over the last years. Funds are now circling around some of the big CAC 40 companies. A few of them could use serious shareholders and more leverage. But it is hard to take French firms private, and time may be running out.
KKR approach underlines Vivendi’s strategic drift 6 Nov 2006 The E40bn friendly offer, which would have kept the French conglomerate whole rather than break it up, might have helped. KKR could have leveraged Vivendi up and provided discipline to its acquisitions. But one also has to ask why Vivendi can t do this itself.
Google comes to aid of ailing newspapers 6 Nov 2006 The search group will begin placing ads in the New York Times and more than 50 other major dailies. If the test works, it could change the way offline ads are sold. Old media s destroyer may become its salvation.
KKR, Goldman pay top dollar for Linde forklift unit 6 Nov 2006 At E4bn, this is Germany s biggest buyout this year and is significantly more than anyone thought Linde would get for it. Yet the German industrial group might have got an even better price if it hadn t put a cap on the leverage the bidders could employ.
Buora wrongly chooses TI over Pirelli 6 Nov 2006 The Tronchetti ally couldn t remain on the boards of both Pirelli and Telecom Italia. But he has quit the wrong one. Buora s continued presence at TI is a problem for new chairman Rossi since few will believe he is truly independent of his old boss. The Tronchetti ally was too conflicted to remain on the boards of both Pirelli and Telecom Italia. But he has quit the wrong one.
S&N’s $10bn Biomet deal could make it vulnerable 5 Nov 2006 Buying the US orthopedics group seems strategically sound. But it doesn t obviously add value. What value it does add comes from gearing up. Unless it can pay less or find more synergies, S&N should probably gear up and return cash. Otherwise it risks being snapped up itself.
CEOs enlist multiple armies 3 Nov 2006 Deals with more than one adviser have doubled since 2000. That s good news for the boutiques that specialise in M&A advisory. But while CEOs may have more consiglieri, they aren t paying double the fees. Advisers will have to get used to splitting the spoils.
Berlusconi’s interest in ProSieben could ease problems at home 3 Nov 2006 Joining Mediaset with the E5bn German TV network may also make some industrial sense, as cross border programming becomes more uniform. But will the Germans really be that happy about a foreign mogulcumpolitician owning one of their top media assets?
Electronics retailers may face holiday disappointment 3 Nov 2006 A retail slowdown appears to be underway. Big box electronics stores Best Buy and Circuit City look doubly vulnerable. Both carry high multiples. And competition is heating up as WalMart makes a big push into consumer electronics.
Chinese trade brings sunshine to Africa 3 Nov 2006 China gets oil and raw materials from sources with little Western competition. Africa gets investment, without economydistorting aid. The result has been economic growth in Africa for the first time in 40 years.
Buora’s position at Telecom Italia looks untenable 3 Nov 2006 Rossi, TI's new chairman, has reportedly called for Buora, the executive vice chairman, to choose between his role at TI and at Pirelli. The right choice would be to keep the Pirelli role and quit TI. Buora is too close to the regime of Tronchetti, the former TI chairman.
The US productivity miracle is fading 3 Nov 2006 The miracle was a good sales tool, but Wall Street now needs a new one. The declining housing market s the chief culprit, but low productivity growth calls into question the justification for high stock prices.
Banks still rule the roost in Spain 3 Nov 2006 Spanish construction companies are defending the country s vulnerable energy groups. But behind them stand Spain's power brokers: the banks. These, especially Santander, have financed the stakebuilding on what look like aggressive terms.
Liquidity flood offsets housing slowdown 3 Nov 2006 US house prices and residential investment may be falling. But liquidity is awash in the financial system. Record corporate bond issuance is just one indicator of loose credit. Easy money may yet offset the effect of a cooling real estate market.
Silver Lake makes out like bandit on Instinet 3 Nov 2006 Last year the LBO firm bought the broker for $208m in a threeway deal as a favour to acquisitionhungry Nasdaq. Silver Lake is quintupling its investment. But don t be surprised if Nasdaq calls in the favour to complete its London expansion.
Washington Post trumps NY Times 3 Nov 2006 Four years ago, these two newspaper dynasties tangled under the Eiffel Tower over the IHT. But it was a pyrrhic victory for the Times. Since then the Times has lost half its value the Washington Post none. The way they are governed may partly explain why.
Credit Suisse traders come good just in time 2 Nov 2006 The Swiss bank s investment bank climbed out of a hole in Q3. Thanks to a robust trading performance, it outperformed European peers. That gives the division a better case for a slice of the Winterthur sale proceeds. It may also help the group close its discount with UBS.
Northumbrian investors may make killing 2 Nov 2006 If the UK water group is taken at anything like the rumoured 350p, those who bought into 2003's "accelerated IPO" will triple their money. This isn't because accelerated IPO's are a great method. It's because infrastructure funds with lower costs of capital have bid up values.
Unilever gets it half right 2 Nov 2006 The consumer goods giant s Q3 growth of 4.8% is impressive for Unilever, anyway. But how long before that growth turns profitable? Unilever needs to absorb thudding cost increases and plough money into marketing. But the share price leaves little room for disappointment.
S&N takeover of Biomet would make industrial sense 2 Nov 2006 A potential $20bn merger would help Smith & Nephew to grow its US market share and add value from crossselling orthopaedic products. But Biomet is a big mouthful for S&N to swallow. And the UK group would need to raise a significant amount of debt to fund the deal.
Another Russian telecoms scheme flounders 2 Nov 2006 An attempt by Alfa to entice Vodafone into a £15bn merger has been rebuffed. This follows MTS's troubles persuading DT into a similar deal. Putin's upcoming departure is one reason why oligarchs want out of Russia. But that's also why western companies are wary of going in.
AOL has a hidden jewel 2 Nov 2006 AOL's shift to a free, adsupported service shows promise thanks to a littleknown unit, Advertising.com, bought for $500m in 2004. If the momentum continues AOL may become synonymous with something more than value destruction one day.
Canada’s new tax just levels playing field 2 Nov 2006 The country had eliminated most double taxation of dividends in the May 2006 Budget; the new law closes a loophole. US investors will be the main ones to suffer. Lawyers will benefit from unwinding the mess.
Public market for alternative assets weak but not dead 2 Nov 2006 Boussard & Gavaudan Holding has managed a E440m hedge fund float, but it had to make some sacrifices to get it done. The sellers had to pay the underwriting fees a 1.5% haircut. And half the money was just a transfer from the fund to the quoted company.
Deutsche Tel/MTS link fraught with complications 1 Nov 2006 The German group may want to expand into Russia; and MTS s oligarch owner may want to turn an illiquid asset into liquid global paper. But how would the control issue be resolved? DT and MTS Russia s biggest mobile group are both viewed as national champions.
MAN’s currency problem may require unusual tactics 1 Nov 2006 Investor wants the German truckmaker to offer shares in its bid for Scania. But MAN doesn t want to issue more than 20% of its capital. Solving the problem is tricky. One way might be buying out Investor separately. But it means offering different prices to different sellers. Solving the problem is tricky. One way is to buy out Investor separately. But it may mean offering different prices to different sellers.
Wal-Mart looms over CVS-Caremark deal 1 Nov 2006 That s because fear of WalMart is driving the deal. When the world s largest retailer moves into a market, margins tumble. The US pharmacy chain and drug middleman have agreed to merge. Yet the market seems oddly cool to the $47bn combination.