M&S offers little cheer for rivals 10 Jan 2006 After last year's festive bloodbath, the UK retailer has beaten expectations, with food sales motoring ahead. But while M&S feels the effects of its turnaround, other retailers may not be so lucky. And even M&S may find the quick wins are behind it.
Unipol should ditch BNL bid 10 Jan 2006 The insurer's new chairman says he's sticking by his predecessor's plans to acquire Banca Nazionale del Lavoro. He should change his mind. Otherwise he will squander a chance to abandon an expensive deal with financial and execution risks aplenty.
Virgin Mobile investor takes bird in the hand 10 Jan 2006 The company is said to be in talks with NTL about a bid at 400p in cash. But the deal is complex and uncertain. Virgin s shares are 71% above the IPO price and 16% above the prebid level. No wonder investors are taking cash off the table.
GM dividend cut a no-brainer 10 Jan 2006 Kirk Kerkorian's top aide shouldn t need to tell the ailing car company to cut its dividend. The board should have moved years ago. The delay suggests the board has not fully grasped the gravity of GM s longterm challenges. But the unions have also been asleep.
Hybrids allow capital-light capitalism 10 Jan 2006 Take Lottomatica. The Italian lottery operator, is engaging in a heavily leveraged $4.8bn buyout of its American competitor Gtech. Yet the deal's structure allows Lottomatica to assume control while retaining an investment grade rating and without diluting its parent.
Danish fund may not want to torpedo TDC deal 10 Jan 2006 By voting against the E12.5bn private equity takeover of the Danish telecoms group, ATP might look like it wants to skewer the bid. More likely, as TDC's biggest shareholder, ATP wants to benefit from a private equity turnaround without paying private equity fees.
Don’t rule out a bid for Easyjet 10 Jan 2006 Easyjet shares may be at 400p, but the Icelandic group stalking the budget airline could pay more than 500p without destroying value. That might not get Stelios dashing for the exit, but the board would find it hard to ignore if minorities were keen.
Tyco split is long time coming 9 Jan 2006 The rationale for the US conglomerate s portfolio of businesses never made much sense as anything but an acquisition machine. But that game ended when the bubble burst and Kozlowski was indicted. If anything, investors have already factored in a full breakup.
HSBC loses its halo 9 Jan 2006 The global bank used to trade at a 40% premium to UK peers. But this has vanished as costs have risen and acquisition prices have rocketed. There's no quick fix. HSBC needs to increase its growth rate and wait for targets to get cheaper. When these happen the stock will rebound.
Rising hedge fund closures are part of evolution 9 Jan 2006 Roughly twice as many firms liquidated in 2005 as in 2004, even though both were average years for hedge fund performance. But if this is the longawaited "shakeout", it is still pretty modest. Indeed, it is evidence of the industry's growing maturity.
Nothing wrong with UK reit proposals 8 Jan 2006 The UK property industry is up in arms over government plans to impose ownership limits and a gearing cap on real estate investment trusts. But the potential valuation uplift from conversion to reit status means the market can easily navigate its way past these obstacles.
Hedge fund fees must come down 6 Jan 2006 It's an open secret that hedge fund charges of 2/20 are too high to satisfy investor requirements. Disappointing investment returns and the prospect of a hedgefund glut may give investors the muscle to demand lower fees.
Boeing tells story of US industrial slippage 6 Jan 2006 The US company had more orders than Airbus in 2005, for the first time since 2000. It s a modest comeback. But over the aircraft cycle, Boeing has steadily lost ground to its European rival. In the last peak it had 70% share. Now it s 50%.
Hedge fund’s assault on Mellon unjustified 6 Jan 2006 Highfields Capital Management wants to break up the US asset management firm. But that ignores synergies binding the business together. Furthermore, Mellon has taken the right steps to reduce its stock discount, and its businesses are performing well.
Weisel Partners IPO looks like a miss 6 Jan 2006 The former Montgomery Securities boss has taken lots of growth companies public. So why debut his investment bank given its poor results? It has made just $7m since 2000 and faces many competitive pressures. The reason must be to get rid of the pesky VCs who backed him.
Biotech has mixed record on 30th anniversary 6 Jan 2006 The industry may have bright prospects, but biotech stocks have not been a cureall. Returns have been unevenly distributed and volatile. The market doesn t appear as attractive now as it did in 2002. But some value probably resides in the biotech minnows.
Sixt’s Europcar bid may be hard to pull off 6 Jan 2006 The German car rental firm has joined buyout house Apax in an audacious bid for its larger rival. That may help it pay the highest price. But the pair will also have to agree on a workable strategy, including getting around the antitrust authorities. That could prove tough.
Second-lien loans fail to supplant mezz in LBOs 6 Jan 2006 This form of subordinated debt is popular in the US and was touted as cheaper replacement for mezzanine debt in Europe. But it hasn't proved so easy to sell as hoped. Its longterm future remains unclear.
BT looks unlikely suitor for ITV 5 Jan 2006 A deal has attractions. It would ease ITV s fears about a lack of digital distribution and would turn BT into a real rival to NTL and BSkyB. But ITV looks expensive. In pursuing a deal BT might reawaken fears it is once again courting value destruction.
Betfair struggles to overcome management jinx 5 Jan 2006 The online betting exchange may have revolutionised UK gambling, but it has a poor record at recruiting and retaining executive talent. That s because it tried to float too soon. Unless the latest management changes prove more successful, the best option may be a sale.
Crosby’s exit from HBOS is praiseworthy 5 Jan 2006 The resignation of the UK bank s boss is good for everyone. After all, Crosby has always been more of a fund manager than a banker. By leaving early, he has prevented his worthy successor retail banking maestro Andy Hornby becoming CEO elsewhere.
LBO firms aren’t reckless, says KKR’s Roberts 5 Jan 2006 No surprise there. But why say it? Perhaps because of concern that private equity is piling too much debt on ever bigger buyouts. Low interest rates and abundant liquidity currently support Roberts's case. The real test will come when financial conditions deteriorate.
Sovereign denies last right to shareholders 5 Jan 2006 The US bank's decision to delay its AGM until it sells a near 20% stake to Santander strips investors of their last way to vote on the deal. It s the latest in a string of decisions taken by chief executive Jay Sidhu to defy his shareholders.
BASF fails to justify $5bn hostile Engelhard bid 4 Jan 2006 The German company has excess capital from the oil boom. But the cash acquisition of the US chemical group will give returns of roughly 5%. That's less than the 9% BASF could have earned simply by buying back its own shares.
Euro stocks still undervalue economic upturn 4 Jan 2006 The region is enjoying the fruits of labour reform higher production but no pressure on wages. That s unusually supportive for profits. But the equity market has not fully caught on, despite a strong 2005. Compared to the US, eurozone stocks look attractive.
Europe misses out on oil M&A boom 4 Jan 2006 US oil firms racked up an impressive $110bn of deals in 2005, while European firms managed a meagre $15bn. That's partly because European firms preferred to build reserves through exploration. But pressure is building for megamergers everywhere.
Time to switch from M&S to Next 4 Jan 2006 Next, which had a dismal time before September, has put in a decent performance over the crucial Christmas trading period. Meanwhile, M&S s shares have had a great run. The retailer s recovery may be on track, but its near15% premium to Next now looks too wide.
Draghi faces conflict of interest on Unipol 3 Jan 2006 The Bank of Italy has to rule on the insurer s bid for BNL. It's an important test of the central bank's independence. But it puts the bank s new governor in a bind. He comes from Goldman Sachs, which advised on a rival bid. He should take a back seat.
Both sides at fault in Ukraine gas dispute 3 Jan 2006 This is a commercial dispute, not the start of a new cold war. Russia is right to demand that Ukraine pay market prices for its gas. But Russia is playing hardball with its demand for control of Ukraine s pipeline. Both need to back down.
Where will forecasters go wrong in 2006? 3 Jan 2006 The consensus missed the oil price rise and the weak yen is 2005. The best call was for steady US growth. They are expecting no big shifts this year. That may sound dull, but it is actually a bold forecast, given all the world s uncertainties.