Economic choice is murky in French vote 3 May 2007 Nicolas Sarkozy says he will be a president who promotes growth, while Segolene Royal promises to protect the welfare state. But if Sarko wins, he might backtrack. If on the other hand Sego pulls an upset victory on Sunday, she might just do what she says.
Winner’s curse haunts SSAB’s $8bn Ipsco deal 3 May 2007 The Swedish specialty steelmaker unnerved investors by buying a business almost its own size. Its shares dropped 6%. The deal makes industrial sense, but leaves SSAB with a good dose of debt. The key question how long will steel s good times last?
UBS to shut internal hedge fund unit 3 May 2007 The Swiss bank's experiment in running its own trading book through an internal fund looks to have been a costly failure. To say this is a bit of an embarassment for the world's largest money manager is putting it mildly. To say this is a bit of an embarrassment for the world's largest money manager is putting it mildly.
Highland IPO caters to credit bulls 2 May 2007 Hedge funds, private equity now CDO funds are joining the asset managers queuing to go public in the US. Highland is the latest. But IPOs of European structured credit funds have had mixed results. US investors should be wary too.
Shipping shortage set to soar 2 May 2007 The futures markets is forecasting that rapid vessel construction will force down shipping costs. That s the normal cycle, but Chinese commodity demand is growing even faster than shipping capacity.
Wolfowitz and Browne show risks of excess 2 May 2007 Love affairs got both the World Bank boss and the head of BP into trouble. But their arrogance and enemies made them vulnerable. Ambition and passion are necessary to get to the top. But they have to be kept under control.
Dougan makes transition easy at Credit Suisse 2 May 2007 The incoming boss won t have too many worries about his old business, investment banking. It hit its 30% margin target in the first quarter. The Swiss bank was hardly slowed down by US mortgage problems, or by anything else. Dougan should stick to the strategy he has inherited.
Chavez lands his first major blow on the US 2 May 2007 By nationalising the Orinoco tar sands projects, Chavez has dramatically weakened US oil supply security. Orinoco is the world s largest oil reserve, and Chavez may make it unavailable to the US.
Sky’s big bet on broadband starts to pay off 2 May 2007 The UK payTV group had strong subscriber growth despite a marketing blitz from Branson s Virgin Media group. Better yet, each subscriber is spending more on Sky products. This doesn t look like a oneoff.
Time Warner’s AOL bet starts paying off 2 May 2007 The media giant rolled the dice when it converted AOL from a subscriptionbased service to a free, advertiserdriven platform. But the gambit is working. With ad revenue exploding and subscriber expenses shrinking, AOL's operating income is expanding smartly.
US newspaper rally likely short-lived 2 May 2007 That's especially true in the case of The New York Times and Washington Post, where families in control have no interest in selling. While newspaper shares soared in response to Murdoch's bid for Dow Jones, the gains are not justified by fundamentals or takeover prospects.
CDR takes second bite at US Foodservice 2 May 2007 Clayton Dubilier made a sixfold return on Foodservice in the late 1990s. Ahold, the subsequent owner, was almost sunk by the business. CDR and KKR should add value with the $7.1bn purchase. Ahold, having closed this unhappy chapter, should break itself up totally.
News Corp unfairly punished for Dow Jones bid 2 May 2007 Investors have wiped $3bn off News Corp s valuation this is more than the $2bn premium it has offered the publisher of the WSJ. There may be few synergies, but this reaction assumes the Murdochs will make a hash of an acquisition. History suggests this is a bad bet.
Groenink ties ABN in knots 2 May 2007 The Dutch bank s sale of the US unit to Bank of America may not legally be a poison pill. But it reduces the chance of a higher bid. What s worse, it is almost impossible to undo without landing ABN in damaging litigation. No wonder ABN s investors are cross.
Not all media dynasties are equal 2 May 2007 The irony in News Corp s bid for Dow Jones is that one dynasty, the Murdochs, are proposing replacing another, the Bancrofts. The big difference is that the Murdochs are a young dynasty. The founder s vision is still very live. The Bancrofts have become rentiers.
Eni need not fret over Enel comparisons 1 May 2007 Chattering classes in Italy are speculating what Eni's Scaroni might do after Enel s Conti, his former employee, bought Endesa. Repsol is the obvious target. But it doesn t look terribly appealing and Madrid is unlikely to let two champions go.
Browne makes ignominious early exit from BP 1 May 2007 The BP boss had no option but to leave early after it emerged he had lied on oath over allegations about his personal life. Browne is leaving £15m on the table, but the cost to his alreadybruised reputation is likely to be higher.
TPG may have to sell itself at a discount 1 May 2007 Alternative asset managers are being valued at around 30% of assets under management. On that basis, the US buyout firm is worth $10bn. But TPG isn t floating on the stock market, it's selling a stake to pension funds. These investors should demand a pricecut for illiquidity.
Turkey’s economy not ready for political crisis 1 May 2007 Under its Islamist government, the country has been modernising. But with a trade deficit of 7% of GDP, it needs the support of foreigners. Threats of a secular coup could scare them away. If investors start worrying, other fragile European economies could suffer.
Time takes its toll on the Qantas offer 1 May 2007 Because equity markets are strong, buyouts which take long to close are exposed to shareholder pushback. Qantas is the latest example. One shareholder wants to take stub equity. But the buyout s tax advantages diminish if too many investors hold out.
HSBC calls time on London real estate 1 May 2007 The bank has sold its Docklands tower for £1.1bn, the highest price ever paid for a UK building and at a low rental yield of 4%. Space is scant in the world's financial capital, and liquidity abundant. As long as there's a wall of cash, prices can stay sky high.
Market gives satellite radio merger up for dead 1 May 2007 Both stocks are trading below the preannouncement level. This gives shareholders a free option on huge mergerrelated savings. While both Sirius Satellite and XM Satellite are pushing the deal, the market is pricing in a zero change of regulatory approval.
Murdoch probably doesn’t face interloper risk 1 May 2007 WSJ is a prize asset that will interest lots of other media groups not least Pearson, NYT, Washington Post and Bloomberg. But it is hard to see any, apart from possibly Bloomberg, going headtohead with Murdoch since he is offering such a fat premium.
How to slow China’s market mania? 1 May 2007 Beijing attempted moral suasion without any effect. Raising banks reserve requirements has been equally futile. But there are several moves the authorities could make before ordering the tanks onto the Shanghai stock exchange.