ABN-Barclays deal might not start merger stampede 27 Mar 2007 Big European bank tieups are back on the agenda, now the Dutch and UK groups are in talks. But talk is still easier than action. Regulatory hurdles are lower, and activist investors are likely to keep stirring the pot. But willing targets still look hard to find.
Why Asda should consider a £11bn Sainsbury’s bid 27 Mar 2007 A combination of WalMart's UK unit with rival Sainsbury would be an instant marketleader. But that might promote, not limit competition. Even if regulators eventually nix the idea, the lengthy hooha would give Asda an ideal opportunity to grab Sainsbury s market share.
Spanish stock regulator mishandles Endesa battle 27 Mar 2007 The CNMV has tied E.on s hands. And its sanctions against Acciona and Enel after they behaved questionably were limpwristed. The Spanish takeover code is also pretty shambolic. But that doesn t excuse CNMV s for being a toothless watchdog.
Risks lurk in private equity’s secondary market 27 Mar 2007 Goldman has raised $3bn to acquire private equity stakes from investors. The extra liquidity is a boon to the buyout world. But investors in secondary funds have the odds against them. Sellers are often motivated by a desire to pass on their worst investments.
Vista’s slow start sows seeds for success 27 Mar 2007 The software giant s new operating system hasn t generated much wow or many upgrades. But poor sales have caused PC component backlogs that will lead to cheaper computers and widespread adoption of Vista later.
Home Depot may be a good fixer-upper 27 Mar 2007 The collapse of home sales in February delivered the latest hammer blow to Home Depot's stock price. But beneath its weathered exterior, the DIY giant is starting to look like a bargain.
Some credit investors have power 26 Mar 2007 Excess liquidity has given borrowers the upper hand almost everywhere. But European highgrade lenders have clawed back some ground. Marks & Spencer is the latest borrower to offer protection against junking. The explanation: excess liquidity has made the risk unbearable.
Buyout firms may struggle to carry off Altadis 26 Mar 2007 Private equity groups normally stay out of tobacco bidding wars. They don t have the synergies that allow trade bidders to pay top whack. In Altadis' case, piling on extra debt might help them beat Imperial Tobacco s initial bid. But it may not be enough to win the day.
Enel and Acciona trump E.on’s sweetened bid 26 Mar 2007 The Italian utility and Spanish builder are offering at least E1 a share more than the Germans, provided E.on s bid fails. But their bid still carries risks. As for E.on, it will have to do more than throw money at the problem if it wants to stay in the game.
Blackstone’s valuation is higher than the dotcoms 26 Mar 2007 The private equity firm may be floated with a valuation of over $50m per employee. In early 2000 AOL was valued at only $13.5m per head. Operating in an intensively competitive industry, Blackstone lacks the protective moat to justify this high price.
Off-balance liabilities could ensnare US homebuilders 26 Mar 2007 They re not just facing falling sales and land values. They also have pricey commitments to local governments. Walking away would be costly. But so would the alternative continuing to build. Whichever option they choose, the homebuilders look overvalued.
Jupiter buyout risky but probably worth it for private equity 26 Mar 2007 It goes against convention for private equity to take a minority stake behind management. But that's what TA did in the £680m UK fund MBO. Why did TA do it? Because it's backing what it hopes are stars in a people business. And it helps that they're paying a low price.
Investors are spoilt for choice in Russia 26 Mar 2007 Magnitogorsk Iron & Steel Works the next Russian IPO plans to raise about $1bn. But it won t be a cakewalk. The Russian IPO pipeline is set to top $30bn in 2007, so investors can be choosy. This deal will be a test case after recent equity wobbles.
City pay leaves Wall Street blushing 26 Mar 2007 London traders trounced New Yorkers compensation again last year. And the usual regulatory suspects have been rounded up for criticism. With Asia and Europe booming, London is better situated for business. But its spiralling cost of living erases a lot of its advantage.
History’s a poor guide to corporate value 26 Mar 2007 Shares of many bluechips trade at valuation multiples well below those seen in recent years. But that doesn't mean they re a good buy. Valuation is more art than science, and multiples change over time. Investors shouldn t bet that the past will repeat itself.
Xstrata spends $4bn on nickel boom 26 Mar 2007 The UKlisted miner will pay C$18.50 per share for LionOre. Six months ago, the Canadian nickel miner was selling at C$6.70. But nickel prices have increased 50% since then, from an already highly profitable level. Xstrata is betting on a slow fall back to normal.
Porsche creeps to control at VW with deep-discount bid 26 Mar 2007 The carmaker s aim has always been to maximise its influence at VW for minimum capital. That s what this bid is designed to do. Should it fail, as intended, Porsche will then be free to creep to control of VW without the need to buy all the shares.
Housebuilders put up for sale sign with £5bn merger 26 Mar 2007 The allshare tieup between Taylor Woodrow and George Wimpey may make sense in a consolidating market. But shareholders' best hope may be that a third party breaks in and offers at least one participant a proper premium.
Atos’s management shouldn’t dictate sale terms 26 Mar 2007 Atos s board is right to consider kickstarting an auction now that it has received informal approaches from buyout firms such as Permira. But it is wrong to require suitors commit to keeping the business intact. After all, breaking up Atos could allow for a higher return.
Blackstone’s governance-lite equity 26 Mar 2007 Private equity firms have squeezed creditors by issuing paymentinkind and covenantlite loans. Blackstone is doing the same to investors in its IPO, who will likewise enjoy few of the protections traditionally afforded shareholders.
Microsoft needs Yahoo to make Tellme work 23 Mar 2007 The software giant s $800m purchase of the voice recognition firm will only pay off if it can improve its own search business. Partnering with Yahoo is the best way to do so. This a good time for Microsoft to swallow hard and cut a deal.
Hershey’s outlook sweetened by Cadbury 23 Mar 2007 The breakup of the British company into a softdrinks business and a standalone confectioner puts a spotlight on Hershey. The iconic US brand shares Cadbury s heritage and would be a good match for Cadbury's confectionery business. It s also cheaper.
Amex micro-cap plan boosts sale prospects 23 Mar 2007 The American Stock Exchange is the alsoran of US markets. It lags rivals in volumes, products and technology. Now it wants to become a microcap powerhouse. That ambition could help it reap a windfall when it goes on the block later this year.
How can Blackstone be worth $40bn? 23 Mar 2007 That s the valuation that the Wall Street buzz machine has placed on Steve Schwarzman s buyout firm. It s possible to see how investors might rationalise this figure but it takes a bit of faith to get there.
Arcelor Mittal gains moral victory in Brazil fight 23 Mar 2007 But the steel giant still could end up paying more than it wants for the minority interest in its Brazilian subsidiary. The regulator accepted Arcelor s valuation methodology, but came up with a price that was 38% higher. So the battle isn t quite over
CLOs susceptible to a fire sale 23 Mar 2007 If the managers of these funds of highrisk debt take fright, they might try to head for the exit simultaneously, causing a rout. There would, of course, have to be a trigger. But if the market jitters of recent weeks return, CLOs could be a flashpoint.
Enel/Acciona launch surprise spoiler bid for Endesa 23 Mar 2007 The Italian utility and Spanish builder say they ll make a joint offer for Endesa if less than half of its investors accept E.On s bid. The timing is sharp indeed, and makes it unlikely that E.On will succeed. This longrunning saga has further to go.
Morgan Stanley changes with hedge fund times 23 Mar 2007 The investment bank is erasing the line between fixed income and equities in its sales and trading desks. The move won t do much for oldstyle clients. But Morgan Stanley has to keep up with its most important customers hedge funds.
Eiffage needs more than defensive strategy 23 Mar 2007 The French construction group has done the right thing for shareholders by fending off the advances of Spain's Sacyr. Now it needs more. Rival Vinci also has an unsolicited shareholder to deal with. A merger of the two could make sense if it s not purely defensive.
Congress is right to target carried interest tax 22 Mar 2007 It makes no sense for buyout barons to pay the capital gains rate on what is really, for the most part, fee income. So why are politicians only figuring it out now? That's simple: The birth of the megafund has dramatically changed the calculus.