Do Wall Street CEOs make a hoot of difference? 20 Dec 2006 Record pay for Blankfein and Mack beg the question. Both can argue they ve created value $20bn in each company s case. This is mostly right. Investment banks are talent pools not factories. But their real mettle will only be tested in a down market.
BP non-execs need to get a grip 20 Dec 2006 First, there was a boardroom bustup over Lord Browne s retirement date. Now they re at it again over his successor. For a company of BP s stature and facing so many challenges this is unacceptable. The sooner the succession is settled the better.
Ericsson pays up to plug hole in fixed line 20 Dec 2006 The Swedish technology group is filling a strategic gap by buying USbased Redback. But it s paying a rich multiple to do so. It s not much comfort that, at $1.9bn, the deal is small. Ericsson looks a generous bidder and may need to make more acquisitions.
AT&T’s Bell South acquisition put on hold by political impasse 19 Dec 2006 Regulators split evenly down the political aisle have delayed the AT&T merger vote. Now a tiebreaking regulator is abstaining from voting. Markets seem unworried that negotiations may erode merger benefits. But investors should take note of the shifting political sands.
Smith & Nephew hasn’t dodged the Biomet bullet 19 Dec 2006 A consortium of private equity firms may have beaten it in the $11bn buyout of the orthopaedics maker, sending S&N shares higher. But you can bet Biomet will be back on the menu in a few years time, after its options probe is finished and at a higher price than now.
Little new in LSE defence 19 Dec 2006 Essentially the message is both familiar and simple: don t let Nasdaq buy this business on the cheap. But it may fall on deaf ears. Most value investors have now sold out of LSE. M&A arbs may just want to squeeze the best price.
Will Thailand become a dis-emerging market? 19 Dec 2006 Imposing currency controls caused a 15% stock market drop. So the government flipflopped not exactly confidenceinducing behaviour. This won t help the militarybacked government s march toward elections. Chaos looms in 2007.
Circuit City catches Wal-Mart influenza 19 Dec 2006 The secondbiggest US electronics retailer lost money as it slashed prices to compete with WalMart s massive discounting drive. Best Buy, which has also caught WalMart s cold, is in a better position to pull through. Circuit City s problems look deeper.
Smith & Nephew hasn’t dodged the Biomet bullet 19 Dec 2006 A consortium of private equity firms may have beaten it in the $11bn buyout of the orthopaedics maker, sending S&N shares higher. But you can bet Biomet will be back on the menu in a few years time, after its options probe is finished and at a higher price than now.
John Mack finally discovers the value of spin 19 Dec 2006 Morgan Stanley s boss took his time working out that the securities firm would be better off not owning a dowdy creditcard business. But the delay hasn t hurt. The reenergized investment bank has even less need for Discover today than when he rejoined 18 months ago.
Ebay’s latest stumble – in China 19 Dec 2006 The web auctioneer pulled the plug on its Chinese auction site only days after unveiling a salvage plan to revive its troubled Skype deal. Ebay's inability to chart a successful new path for growth makes further retrenchment and an expansion of stock buybacks advisable.
Is Nomura’s Fortress deal a sign of the top? 19 Dec 2006 The Japanese investment bank like many of its compatriots has a history of poorly timed deals in financial services. But the $888m it s paying for a slug of the hedge fund isn t as expensive as it looks. It s Nomura s strategic logic that doesn t stack up.
Suez-GdF merger should be killed now 19 Dec 2006 All parties to the deal privately agree that the SuezGdF deal will not see the end of day. Yet no one wants to be the first to call it off. The wait hurts both companies. They should face up to reality. The deal is all but dead, but no one wants to be the first to say so before the French election.
Cerberus plays good Austrian to get Bawag 18 Dec 2006 Austria s unions appear openminded in selling their bank to the US hedge fund. Other banks have gone to local buyers. But Cerberus boosted its chances by getting Austrian names onside. That may have made it easier for unions to accept its generous bid.
Vivendi is wrong to hang on to NBC 18 Dec 2006 The French conglomerate has postponed selling its 20% stake in the US TV network, largely because it doesn t need the cash. But this merely emphasizes Vivendi s lack of ideas. If it can t spend its money itself, it should return it to shareholders.
Activists finally take aim at Home Depot 18 Dec 2006 The retailer is an easy target. Shareholders have lost money since CEO Bob Nardelli took the helm, and he has treated them with disdain. But Home Depot has been trying to regain investor favour. Relational will find this a much harder fight than its campaign against Sovereign.
Wulff will struggle to unseat Porsche at VW 18 Dec 2006 Lower Saxony s premier wants to protect Volkswagen from Porsche's creeping control. But he faces a race against time. The archaic voting cap that limits Porsche s power looks likely to be lifted next year. And Wulff could struggle to find many allies.
Regulator to markets: let’s talk 18 Dec 2006 The authorities agree that markets are pricing for perfection . They fret about severe global shocks, sometime in the future. They don t want to risk a slowdown and have foresworn micromanagement. But they can still guide investors through discreet disclosures.
What took Norsk Hydro and Statoil so long? 18 Dec 2006 Norsk Hydro's oil division is at a strategic dead end, while Statoil isn t quite big enough to compete. Combining the oil and gas activities of the two Norwegian energy companies makes a lot of sense and throws up juicy synergies.
$26bn hostile bid for Caremark bid looks canny 18 Dec 2006 Express Scripts has injected itself into the agreed merger between rival drug benefit manager Caremark and drug chain CVS. At less than half the size of Caremark Express' offer is bold. But it has a good chance of success the market dislikes the CVS merger.
The World Bank projects a rosy but unlikely future 18 Dec 2006 The global lender expects developing countries growth rates to be 50% faster than in 19802005. That ignores non economicfactors. Populist policies could trip up the plan. Promarket forces are not strong enough to get their way, even if natural resources don t dry up.
Defaults may not be a bad thing for private equity 18 Dec 2006 It s no surprise that the risk of European corporate defaults is rising there have been few failures so far, and LBOs are growing. But there s now a distressed market to deal with such blowups. And buyout firms might benefit from a correction which lowers asset prices.
CSN-Corus deal would be first corporate LBO in steel 15 Dec 2006 The Brazilian group is proposing to inject unprecedented amounts of debt into its AngloDutch rival twice the level in the Mittal Arcelor. True, this seems risky in a historically cyclical sector, but it s a sign of confidence in steel and benign conditions in capital markets. The Brazilian group plans to inject unprecedented amounts of debt into its AngloDutch rival twice the level in the Mittal Arcelor deal.
Texas Pacific throws its money around 15 Dec 2006 The private equity house has made three bids in the past week for companies worth nearly $40bn. Despite having record cash piles, buyout firms are spending faster than ever. That s likely to have an impact on investment returns.
Opec flexes its muscles 15 Dec 2006 The cartel has kept the oil price from falling below $60, a highly profitable level for all its members. The stars are all aligned for the producers politics, production discipline, demand growth and easy money. There s no end in sight.
Will a US airline LBO fly? 15 Dec 2006 Continental and United may want to combine. But a third US airline, Northwest, holds a golden share in Continental. To get around this, Continental would need to launch a massive cash buyout of the larger United a risky bet if there ever was one.
Google turns volatility into compensation 15 Dec 2006 The search engine s plan to allow employees to sell vested options is neither free lunch nor an outrageous executive perk. It cleverly capitalizes on investors who may be willing to pay something for stock options that employees may not value at all.
Do infrastructure funds care about value? 15 Dec 2006 Techem, a German meterreading business, seems worried that they might not. One concern is that Macquarie would underinvest. LBO firm BC Partners might be able to add more value over time, but its bid is lower. And it will be tough to turn down more money.
Given that the Goldman franchise was critical to extracting its sweetheart deal for the bank, this hardly looks fair. 15 Dec 2006 As its recent results revealed, the firm s owners benefited from only 37% of its slamdunk investment in China s ICBC.
Gallaher’s £7.5bn bid leaves room for counter 15 Dec 2006 Japan Tobacco is paying a 30% premium for its rival. Yet the market still thinks the UK cigarette maker could do slightly better. A higher bid might not create value. But Gallaher's Russian assets are attractive. A breakup could be possible.