Month: February 2007

Stevie Cohen catches private equity fever

7 Feb 2007

The hedge fund kingpin recently teamed up with Henry Kravis on a $3.8bn deal. He s now building his own private equity team. Cohen is smart to diversify. But rapidfire trading is a whole different ballgame than dealmaking. It is hard to excel at both.

BHP brushes off boss loss with bumper $10bn buyback

7 Feb 2007

The AngloAustralian miner can do no wrong. Goodyear's resignation may not be good news, but there are strong contenders awaiting the call. BHP's real conundrum, like other miners, is how to deploy a tsunami of cash. Jacking up buybacks makes more sense than piling on capex.

Sainsbury’s might struggle to rustle up an auction

7 Feb 2007

Sparking a bidding war would be a great way for the UK supermarket group to ensure investors get a good deal. But there aren t many buyers. The big foreign retailers would be foolhardy to try. And in the UK, only M&S would be able to jump the competition hurdles.

Don’t be misled by South Korean politics

7 Feb 2007

Investors take fright when leading industrialists go to prison. But the Korean government is populist, not selfdestructive. In any case, it is likely to be kicked out in the December election. Meanwhile, the economy has good prospects and stock market is cheap.

Private equity settles for quadruple money on Greek mobile

7 Feb 2007

Texas Pacific and Apax are selling TIM Hellas for E3.4bn. That s not much more than last year's aborted deal would have yielded. But they had already got the easy pickings. And selling out now at a juicy profit may help Apax with its E8.5bn fundraising. But they had already got the easy pickings. And selling out now at a juicy profit may help Apax with its E10bn fundraising.

Herbalife $2.9bn buyout looks cheeky

6 Feb 2007

Investors are showing their gumption by resisting lowball MBOs. Rejecting Whitney s $2.9bn offer for the diet pillmaker is a no brainer. The offer from the private equity firm run by Herbalife s chairman came below the stock s price in January before a profit warning.

BP’s outlook deceptively bleak

6 Feb 2007

The oil and gas giant has slashed its production targets. But the drop isn't as dramatic as it looks. BP might just be giving incoming chief executive Tony Hayward a chance to beat expectations when he starts in July.

3i’s £1.3bn infrastructure fund looks ambitious

6 Feb 2007

The private equity group hopes to raise far more than the two other listed infrastructure funds including a large chunk of cash. 3i is betting its strong brand and a dollop of warrants will lure investors aboard. It might work infrastructure remains red hot.

Irony drips from hedge-fund superhero probe

6 Feb 2007

The investor who singlehandedly dashed the SEC s ambitions to force hedge fund registration is now being sued by a regulator. The twist is that the man who fought against disclosure is accused of providing too much information to investors.

SEC insider trading probe is a long-shot

6 Feb 2007

The SEC s decision to investigate Wall Street leaks is a small victory in mutual funds campaign against hedge fund frontrunning. But the regulator is unlikely to find evidence of collusion buried in brokerages trading records. To prove a case, it needs a snitch.

Bond investors send warning to central bankers

6 Feb 2007

Euro, sterling and dollar yields have been trending up for more than a year. That suggests the central banks still have more work to do. These key longterm voters on the prospects for inflation seem to be losing confidence that prices are under control.

Google bows to India’s pressure

6 Feb 2007

The search giant agreed to blur images of military sites but went a step further, also obscuring VIP homes. This allows it to continue to do business in India. But Google s capitulation shows that commercial interests trump its commitment to truth.

Mobile groups too late to stamp on Google

6 Feb 2007

An international consortium of operators is planning to offer a search engine for phones. It s a great idea, if only it could work. But that s improbable. Even if the mobile companies manage to get along, Google is already off the blocks.

Tribune’s Chandlers try bully tactics

6 Feb 2007

They want the publisher of the LA Times to accept their lowball buyout proposal and are threatening a proxy battle to get their way. Their frustration, having kicked Tribune into a failed auction, is understandable. But investors should reject the family s tactics.

Could the M&A boom be close to its end?

6 Feb 2007

Last year saw the 2000 M&A peak finally surpassed, but 2007 hasn't kept up the momentum. A big chunk of recent growth in deal volumes has come from private equity. If credit were less easy, bankers would have time on their hands. Last year saw the 2000 M&A peak finally surpassed. But a big chunk of the recent growth in deal volumes has come from private equity. Were credit to be less easy, quite a few bankers would have time on their hands.

KPN flaunts rich cash flows to get investors back onside

6 Feb 2007

The Dutch telecoms firm says it will keep a lid on its tax and capex bills. That will allow it to keep splurging on buybacks and dividends. That will help KPN get back into investors good books. It may renew the interest of private equity firms looking for a home for their cash. The Dutch telecoms firm has provided optimistic forecasts, which will allow it to keep splurging on buybacks and dividends. Investors may be persuaded. But if not, private equity firms, which are looking for a home for their cash, may take the bait.

Streiff will find no quick-fix for Peugeot’s problems

6 Feb 2007

The new CEO of the French carmaker takes over a struggling company with fastfalling profits and shrinking market shares. The company s woes can only be addressed over time. But Streiff needs to set a firm tone for the longbattered share price to recover.

How will Sainsbury’s Hampton handle King?

5 Feb 2007

Sainsbury boss Justin King stands to make a fortune if a buyout for the UK grocer succeeds and another if the bidder tries to hire him. That creates a tricky situation for his chairman, who could be tempted to use his CEO as bait. The answer is to keep King on a tight rein.

Morgan Stanley’s the victor in Sulzberger spat

5 Feb 2007

Following a Morgan fund manager s criticisms of the newspaper s governance the Sulzbergers are pulling assets from the bank s custody. That may look embarrassing but it s really a great advertisement for the independence of Morgan Stanley s investment division.

How to finance the world’s biggest cash bid

5 Feb 2007

E.on can raise the bulk of the E41bn cash that it needs to take over Endesa from piling on more debt and still keep a singleA rating. The Germans can make up the balance with asset sales, such as its 6.4% Gazprom stake. As a last resort, it could try a rights issue.

Didn’t Tata do India proud?

5 Feb 2007

Not necessarily. Ratan Tata may be a national hero after winning the £6.7bn auction for Corus seen as a symbol of the British Empire. But paying over the top for an old steel company in a mature economy may not be in India s, let alone shareholders interests.

Apple and the Beatles make love

5 Feb 2007

The iPodmaker has put an end to a painful trademark dispute with the Beatles whose music Steve Jobs professes to love. The immaterial pact is good for both parties. But resolving the iPhone dispute with Cisco may take more than amour.

Icahn’s bid puts Lear in play

5 Feb 2007

Carl Icahn has made a habit of bidding for companies he really doesn t want to own. His Lear bid looks like just another bluff. His $2.3bn lowball offer for the car parts supplier appears designed to flush out competing bids so he can cash out.

US budget optimism will be short-lived

5 Feb 2007

The current lack of concern about America s finances has been caused by extraordinary revenue increases in the past two years. The 2008 budget shows a $239bn deficit compared with a $236bn surplus in 2000. Any recession will put the budget into dire straits.

Hedge fund macro bets threaten gambler’s ruin

5 Feb 2007

Global imbalances must eventually resolve. But macro hedge fund managers betting on them have investors who want quick results. That s one reason why former Bank of England ratesetter Sushil Wadhwani has closed down his macro fund.

Investors overreact to State Street’s $4.5bn deal

5 Feb 2007

They lopped $1.5bn off the Boston firm s market value after it forked over a juicy 38% premium for local rival Investors Financial. True, the deal won t boost earnings until 2009. But cost cuts more than offset the price tag, and make for a decent return on investment.

Could it be second time lucky for Goldman with Sainsbury?

5 Feb 2007

The bank was kicked out as an adviser to the £9.3bn UK supermarket group over two years ago after it suggested that it might like to buy it. Now it has turned up advising the LBO consortium which may bid for Sainsbury. Getting a slice of the equity itself hasn t been ruled out.

Falling profits at Nissan send warning to Ghosn

5 Feb 2007

It was always hard to see how the Brazilianborn meisterboss could run two car firms Renault and Nissan at opposite ends of the earth. The fact that both now face problems suggests he shouldn t try any more. Better to get a new boss for Nissan and focus on the French group.

E.on’s E41bn Endesa bid should be enough to win

4 Feb 2007

The Spanish utility s shareholders would be crazy not to sell. The German utility is offering a generous price 9.1 times ebitda. If the bid goes through, Acciona will do well. The construction company won t control Endesa, but it would make a 30% return in six months.

Overlapping shareholders may sway EOP battle

2 Feb 2007

The company has a $22.4bn cash offer from Blackstone and a $23.2bn cash/stock offer from Vornado. Shareholders may be tempted to take cash. But not so fast. Vornado s stock might appeal to EOP s top investors, who own 44% of the shares and are also the biggest backers of Vornado.