Satellite radio merger flaunts regulators 20 Feb 2007 Sirius s $13bn merger with rival XM makes financial sense. Combined, the two lossmaking radio companies could save a heap of cash. But there appears little in it to change the FCC s stance that the two should remain separate. Sirius boss Karmazin has his work cut out.
LSE’s new AIM rules could not be better timed 20 Feb 2007 Recent scandals involving AIMlisted NETeller, Torex Retail and an FSA probe into Adamind have damaged the UK growth market s reputation. But the UK s comparative advantage is its lighttouch regulation. LSE s new AIM rules should reassure investors without burdening companies.
Barclays gets back on the front foot 20 Feb 2007 The UK bank s drive to shore up its weak spots is working. It s getting a grip on costs in UK retail and slowing provisions growth. That should help Barclays hold on to the rerating it gained last year. But getting further into investors good books may prove harder.
Essar’s intransigence may raise Vodafone’s India bill 20 Feb 2007 Hutchison Essar s minority shareholder, Essar, isn t settling for a huge gain on Indian mobile. It wants to stay on board on better terms. Vodafone may be able to bat away many of Essar s demands. But compromises may be needed to put its Indian acquisition on the firm foot.
Warner takes EMI regulatory problem into its own hands 20 Feb 2007 The US music group has managed to get Impala, the independent music label association, to support its bid for EMI. After two profit warnings and a management clearout, EMI looks more vulnerable. Warner might finally get its way.
Ponzi scheme’s latest victim: Bear Stearns 20 Feb 2007 A court has ruled Bear Stearns should have blown the whistle on Manhattan Investment sooner. But the firm did raise red flags. Bear Stearns must cough up $160m. But prime brokers have better reasons to scrutinise their clients than avoiding court penalties.
Bangladesh poses a tough challenge 20 Feb 2007 Nobel Peace Prize winner Muhammad Yunus revolutionised rural lending and now wants to run Bangladesh. He faces a tough challenge. The country s extreme corruption and overpopulation make its future bleak.
Eads’ investors should take profits 20 Feb 2007 The FrancoGerman Airbus maker is in dire straits. Political meddling is preventing management from executing its turnaround plan. What s more, it is facing major industrial risks and its financial situation is shaky. The 20% discount to Boeing isn t enough.
PAI joins Europe’s private equity catch-up effort 19 Feb 2007 A mooted E8bn fund from the buyout firm would be triple the size of its last fund. But Europe still lags the US in the big buyout arena. The Europeans have been held back by a fragmented local market, and a slow awakening of their global ambitions.
Equities have rough start to 21st century 19 Feb 2007 There are another 93 years to go, but annualised real returns on stocks for the first seven were a meagre 1.3%, according to ABN Amro. But if history is worth anything, stocks should catch up with the longterm 5.8% annual real return since 1900. The question is when.
Buyout returns require greater scrutiny 19 Feb 2007 Goldman is marketing its new $19bn fund boasting its past success in generating 44% annual returns. But that s before fees. On the whole, the reported performance of buyout funds at their midlife can differ radically from their total return.
Smurfit seeks to cut debt through E1.3bn IPO 19 Feb 2007 The company wants investors to see the float as an opportunity to share in the upside of a private equity restructuring. And in a way it is. But investors need ask why private equity is asking them to the party. And that may be simply to shore up a very highlyleveraged company.
Metrovacesa shareholders settle their feud 19 Feb 2007 The Sanajuha and Soler/Rivero families have decided to split the company in two to settle a longrunning battle for control. This sounds sensible in principle. But the details are fuzzy and it s not clear what it means for minority shareholders.
Vista’s slow start could hit semi firms 19 Feb 2007 Semiconductor companies are geared up for a party. But the slow uptake of Microsoft s new operating system has intensified a chip glut. The chipmakers are likely to suffer. And their suppliers may get hit too.
BBVA $9.6bn US deal has a whiff of empire building 16 Feb 2007 The Spanish bank is meeting its strategic aims with its buy of Compass Bancshares. But, at nearly 19 times earnings, it s paying richly. BBVA will have to work hard to make the deal add value, and get the support of its investors which the bank is again tapping for cash.
Sonaecom blinks first in PT battle 16 Feb 2007 The Portuguese telecoms group has raised its bid for the former national monopoly operator, despite swearing it wouldn t do so. This may look like a climbdown, but it is a rational one. Even at the higher level, the deal adds value for Sonaecom.
Credit crunch threatens housing stocks 16 Feb 2007 Housing stocks are up since August, yet starts are dropping. They plunged 14% in January alone. Subprime mortgage losses are making lenders cautious. If the marginal buyer cannot get finance, the marginal house is dead inventory.
Merck generics auction may fetch juicy price 16 Feb 2007 Predators of all sizes are eyeing the German unit. Its size and distribution networks make it an attractive buy in a consolidating sector. The likelihood of an auction may lead to a Corusstyle shoot out. That could leave Merck laughing all the way to the bank.
American Airlines makes unlikely LBO candidate 16 Feb 2007 British Airways and Goldman are supposedly mulling a joint bid for the biggest US carrier, according to a report. Formidable legal obstacles stand in the way of such a bid. And AMR makes a poor buyout target too.
A GM-Chrysler deal makes sense on paper 16 Feb 2007 Imagine a deal whereby Daimler injects Chrysler into GM for an equity stake and the three of them fashion a NissanRenault type alliance. That looks easy. The challenge would be shuttering much of the merged GMChrysler and their overlapping brands. But it s not impossible.
InBev and Anheuser Busch belong together 15 Feb 2007 A $82bn merger of equals would create value, stack up financially and make strategic sense. So what s the hitch? One stumbling block could be control. The Busch s would play third fiddle. But Bud s directors shouldn t let that stand in the way.
Carrefour board rift could hinder turnaround 15 Feb 2007 This is the wrong time for a battle. Carrefour s turnaround is far from over and the stock has been underperforming. A fight may be brewing between the family that owns 13% of the French retailer and the company s chairman.
Japan’s recovery could signal end of carry trade 15 Feb 2007 Economists were wrongfooted by Japan s surprise recovery late last year. That could lead the Bank of Japan to raise interest rates. If it does so, the global credit bubble could start to burst.
London miners don’t need more aluminium 15 Feb 2007 Sure, metal fever is still running high. But the likes of BHP Billiton and Rio Tinto aren t natural buyers for aluminium giant Alcoa. The company is tied into the relatively mature US market. And aluminium profits have as much to do with electricity as with mines.
World frets needlessly over Russian gas cartel plans 15 Feb 2007 Even the country s energy minister agrees that an Opecstyle gas cartel is impractical, uneconomic and implausible. But the word Opec is so emotive that it has still unsettled western gas consumers, which is the whole point.
Don’t bother with equity protection products 15 Feb 2007 They are a costly way to reduce the volatility of returns. That s one message from the ABN Amro Investment Returns Yearbook. Over time, investors get better results by simple asset diversification. But time is one thing many investors often lack.
Reed turns into a sexy media stock 15 Feb 2007 The publisher s decision to sell its underperforming education business makes a lot of sense: it was holding the company back. Reed now looks set to deliver doubledigit earnings growth a rarity in today s media industry.
Overstock.com’s conspiracy theories suffer a setback 15 Feb 2007 The online retailer claimed that research firm Gradient Analytics colluded with hedge funds, journalists and regulators to punish its stock. But investigators found no wrongdoing. Overstock.com should focus on sorting out its business, not indulging in more conspiracy theories.
Investors don’t trust Hutchison Telecom 15 Feb 2007 The shares are down 13%, even though the emerging market telecoms operator is set to make a mint from the sale of its largest business. It looks like investors fear the company will waste the money. It s another vote of no confidence in the Hutch telecoms strategy.
Playboy is one rich bunny 15 Feb 2007 Despite its litany of woes and Hefner s determination not to go private, Playboy trades at a thumping 23 times 2008 earnings. This is too sexy a multiple for a company that just missed consensus earnings and is under siege from racier rivals.