Areva’s strength is sapped by Sarko’s hesitation 26 Jul 2007 The French stateowned nuclear company is bagging contracts abroad as demand is booming. But its corporate future is uncertain. Sarkozy would like to merge it with Alstom and Bouygues. But he s yet to make up his mind on whether Areva should even be privatised.
Hedge fund deleveraging could be next big worry 26 Jul 2007 Subprime woes and stuck buyout financing are getting investors roiled. But there could be worse to come. Hedge funds might soon choose or be forced to cut their leverage. That would be tough on many markets.
Absentee landlords shouldn’t call the shots in M&A 26 Jul 2007 But they often do. Look at the Bancrofts in the battle for Dow Jones, or the founding family of besieged retailer J Sainsbury. Noone can force sentimental owners to sell out. But in some cases they might gain more for the family franchise by doing so.
Is it time to say farewell to the LBO put? 26 Jul 2007 Stock market valuations have been pumped up by the assumption that almost every company might be bought. But tighter credit conditions for financial buyers and companies too could wave that prop away.
Ford can avoid Hertz-like fire sale of luxury brands 26 Jul 2007 But that s no reason to sell them cheaply to strategic buyers. Ford doesn t need the cash. And its luxury unit is in the black again. Jittery credit markets may dampen private equity enthusiasm for buying Land Rover, Jaguar and Volvo for now.
China should set its people’s savings free 26 Jul 2007 It relaxed restrictions on insurance company investment abroad. But that will just lead to more bureaucratdirected investments. Chinese savers are fuelling a crazy Shanghai stock bubble. They should be given a key civil liberty the ability to invest freely overseas.
Taiwan leader wisely delays incendiary politics 25 Jul 2007 President Chen would like independence from China. But a declaration would cause economically ruinous reprisals, and maybe an invasion. So Chen s party successor Frank Hsieh has decided to put the issue on the back burner. This political discretion supports economic valour.
Siemens E18bn asset swap looks sensible 25 Jul 2007 The German group will sell its automotive unit to a German firm for E11bn, or 17 times operating profit. The deal should quell union ire. Nearly half the money is going to buy a US medical technology company, at 31 times operating profit. It s a costly investment in growth.
Is Apollo pulling a Blackstone? 25 Jul 2007 At the top of its range, Leon Black s firm would be worth $10.2bn nearly 40% of assets under management. That s a premium to Blackstone s valuation. But factor in expected commitments to its funds and the offering doesn t look so bad.
Europe must act on sovereign-wealth funds 25 Jul 2007 Flush with reserves, governmentcontrolled vehicles from countries like China or Russia are buying chunks of European companies. Europe has the right to limit the risks of politicallymotivated investments. But new rules shouldn t be a cloak for protectionism.
Friends Provident deal looks good for Resolution boss 25 Jul 2007 Clive Cowdery gets the top job in this £9bn merger of equals. And his CEO, Mike Biggs ends up as number two. Cowdery sacrifices Resolution's name, but there's not as much left to resolve. The deal ends his original model of buying closedlife books.
Main LBO lenders face double whammy 25 Jul 2007 Wall Street is turning the screws on CLOs, the biggest lenders to buyouts. It wants more collateral from hedge funds that invest in them. And it s said to be restricting CLO managers ability to make loans in the first place. That could really crimp buyout financing.
Boots debt discount betrays banks’ bearish view 25 Jul 2007 KKR s banks are holding £5bn of senior debt they couldn t sell. But they are offering firesale prices to move £1.75bn of riskier loans. They seem unwilling to bet that the market will improve enough to sell that debt profitably. That s a truly bearish credit bellwether.
Amazon’s growth can’t justify its price 25 Jul 2007 Dotcom veteran Amazon has seen an absurd price increase before. It didn t last. This present surge won t either. The company s earnings would need to outperform the market by over 20% annually for five years to justify its PE. That s highly unlikely.
Morgan Stanley validates London’s ascendancy 25 Jul 2007 Its most senior banker, Walid Chammah, is moving to the City. He ll be joined by the global head of M&A and COO of the bank. No other Wall Street has clustered so many top dogs across the pond. This shows growth in investment banking won t be coming from the US. No other US firm has clustered so many top dogs across the pond. This shows growth in investment banking won t be coming from Wall Street.
Citigroup may have stopped dancing 25 Jul 2007 Citigroup is arguing a technical point, but it s a risky game for a small sum. Could the credit music have stopped playing? Two weeks ago, the bank said it was still grooving away at the buyout ball. Now it s stalling on lending Terra Firma £2.4bn to buy EMI.
Chrysler LBO resorts to desperate measures 25 Jul 2007 Cerberus and its banks bent over backwards to get the deal done. The buyout shop actually agreed to provide part of the debt. And its banks agreed to take the first hits if Chrysler defaults. But they may rue setting those precedents if the markets don t recover.
Private equity could find Pret a Manger tasty 24 Jul 2007 The UK sandwich chain has prospered at home, but growth has slowed. McDonald s is a shareholder but has lost interest. So it needs new backers to tackle the US market. Growth might not be easy, but at least financiers should know what they are biting into.
Dollar weakness should frighten investors 24 Jul 2007 Subprime woes have already started to shake lenders in other parts of the market. They may now be making foreign dollarbuyers nervous. That matters. NonUS investors currently dedicate 2% of their GDP to greenback investments. A rapid withdrawal would be painful.
Family politics bad for Argentine economy 24 Jul 2007 Investors are right to worry about Cristina Fernandez s effort to succeed her husband Nestor Kirchner as Argentina s President. The Kirchners meddling, both electoral and economic, has a dangerous populist tint. The likely result: inflation and underinvestment.
Credit chicks come home to roost for US equities 24 Jul 2007 Stocks have powered higher for weeks, despite the credit market s woes. But the news finally became too bleak for investors to ignore. Failed deals, widening spreads and worsening mortgage woes cracked the facade. But stocks could recover if credit problems don t fester.
Allison’s pulled $3.1bn loan bodes ill for Chrysler 24 Jul 2007 The General Motors unit is profitable and its new private equity owners aren t pushing the envelope on debt multiples or borrowing terms. That s different from other stumbling LBO financings. And it makes lossmaking Chrysler s $20bn package look a lot trickier to pull off.
Andreessen tries to upend the tech game a third time 24 Jul 2007 His first company, Netscape, heralded a new industry. His next effort, Opsware, just sold for a solid $1.7bn. Whether his new social networking group will succeed is less interesting than his value as a tech canary, drawn to industry revolutions.
Sports Direct should be taken off the pitch 24 Jul 2007 A profit warning has left the UK retailer trading at less than half the price it floated at only five months ago. It has been a disgrace. Shareholders should be demanding that Mike Ashley, Sports Direct founder, buys back the 43% stake he sold at the company's flotation price.
Is BP silly not to pay silly money to traders? 24 Jul 2007 New chief Tony Hayward said he won t compete with Wall Street. He should rethink that given the importance of trading to BP s profits. The energy giant said trading income fell in the second quarter as it lost professionals to banks and hedge funds.
Permira, CVC fall behind US rivals 24 Jul 2007 Doing publictoprivate deals isn t easy in Europe. And the credit market is starting to tighten. Spending all that cash might prove tricky. The two European buyout firms amassed E11bn megafunds to rival those in the US last year. But they ve struggled to win USstyle megadeals.
SunPower’s clever convertible two-step 24 Jul 2007 The solar power group is both issuing a convertible and lending treasury stock to hedge funds that want to short it. But under US accounting law, neither gimmick is considered earnings dillutive.
Barclays takes crafty route to raising £9bn 23 Jul 2007 The UK bank is selling a big chunk of shares at an attractive price. While its peers are paying to get into China, it is taking money out. True, the apparent premium could prove illusory, but it still looks like a good deal.
TomTom directs its attention to map supplier 23 Jul 2007 The Dutch navigation device maker is offering E1.8bn for Tele Atlas. The rapidly growing industry is getting more rational. At 28 times ebitda, the offer is hardly cheap. The stock rose even higher. But a high price can be justified for this scarce asset.
Golden age over: financial leaders own up 23 Jul 2007 It may seem odd for a string of luminaries Carlyle s Rubenstein, JP Morgan s Dimon, KKR s Roberts to talk down their book. But they are trying to guide markets to a silver age. The risk is that it will turn out to be bronze or even mud.