Fukuda may bring fiscal and monetary tightening in Japan 24 Sep 2007 Fukuda s father was a fiscally conservative prime minister who brought down inflation in the 1970s and gave Koizumi his political start. Japan needs tight budgets and higher interest rates. Under the younger Fukuda, it may just get them.
MACs no panacea for buyers looking to escape deals 24 Sep 2007 KKR wants out of Harman. Finish Line is spurning Genesco. Both claim material adverse changes get them off the hook. But MACs rarely work. If they fail, suitors have to pay break fees and could face shareholder lawsuits. Acquirers may have a lot to lose.
Microsoft can’t justify $10bn Facebook valuation 24 Sep 2007 It implies the social networker s users are worth three times what Google paid for YouTube s eyeballs and Ebay paid for Skype s earlobes. But in a land grab, even the Internet s wacky metrics are meaningless. As with the sale of an AOL stake years ago, this is about territory.
RBS sale of Angel Trains will test infrastructure market 24 Sep 2007 The bank needs cash and is putting its trainleasing division on the block. It is hoping to get £4bn from the sale. But with a Competition Commission inquiry looming and privateequity players more cautious, it might have to revise the price downwards.
Northern Rock should dump its dividend 24 Sep 2007 A week ago, the UK mortgage lender was so short of liquidity it needed a bailout. Yet it is still planning to pay out cash to shareholders. The bank is not legally obliged to pay the dividend and nor should it. Government funding should not be used to reward a failed business.
Emerging market capitalism may change some rules 24 Sep 2007 More money will be spent this year by companies from poor countries buying richcountry companies than the other way around. That s a massive shift in just a few years. Many of the rising companies are stateowned or politically motivated. Expect adjustment pains.
General Motors and UAW both need to blink 24 Sep 2007 The strike may just be a union tactic to prove it s playing hardball. They could start by giving up their last batch of stocks and options. That said, GM s executives need to offer an olive branch. They could start by giving up their latest batch of stock options. The strike may just be a union tactic to prove it s playing hardball. But it can t expect the carmaker to be able to offer many concessions.
Arabs sort of welcome 21 Sep 2007 US politicians have raised concerns about a 20% Arab stake in Nasdaq, but have kept quiet on a bigger Arab interest in an oil refinery. If there s a security question with one, there should be with the other. Political posturing is petty but still potentially damaging.
Weak dollar gives Fed’s confidence shot a chance 21 Sep 2007 The cut in overnight interest rates aims to avert a negative spiral from falling house price. It just might work. True, it won t save housing fast and risks pushing up inflation. But a weak dollar and booming US exports could keep the economy strong.
UK private equity is late to find its new champion 21 Sep 2007 Reuters spin doctor Simon Walker is a good choice to front the UK buyout industry trade body, even if his arrival is nine months too late. His job will be to help agree new rules on disclosure and, more trickily, defend its tax deal. An early election might let him off the hook.
Qatar needs to take fewer lessons from Dubai 21 Sep 2007 The two Arab states are vying to establish themselves as the main financial hub of the Gulf hence the battle for Europe s stock exchanges. Qatar may be bigger and harbour more natural resources. But as yet it lacks the very thing that has helped Dubai lead creative vision.
Crunch shatters commercial property’s shine 21 Sep 2007 The stellar returns of UK commercial property have taken a sudden downturn, with the sector making a zero return in August. It s probably only the beginning. Capital values are going to fall. But the decline shouldn t be as bad as in the early 1990s.
Fortis spreads net to get E13bn rights issue away 21 Sep 2007 The BelgoDutch bank isn t relying on investors word alone for its mega capital raising. It has signed up 13 external banks to help it. That looks sensible, given sticky markets and slightly lower expectations for the ABN Amro purchase for which Fortis is raising the cash.
Has Wall Street become immune to meltdown? 20 Sep 2007 Market conditions in the summer were said to be the worst in two decades. Yet as a group Wall Street s earnings were better than last year. True, Goldman s bumper quarter did the heavy lifting. But past crises often left brokerages near insolvency or facing losses.
Arab funds pile into London Stock Exchange 20 Sep 2007 But then Qatar snapped up 20% of the LSE and said it is looking at OMX. That puts the LSE back in play, with two deeppocketed suitors. Dubai moved first. It agreed to swap Nordic operator OMX if it wins it for Nasdaq s LSE stake and a 20% stake in the enlarged US group.
UK Treasury guarantee to the Rock not all it seems 20 Sep 2007 The government guarantee extends to old accounts and the stricken bank s unsecured borrowing, but not assetbacked financing or capital. That should be enough to keep the lender limping along, but no more. The shares dropped another 25% as investors contemplate the endgame.
Bear Stearns eats humble pie 20 Sep 2007 It turns out the Wall St firm s third quarter was even worse than expected. The debacle highlights Bear s lack of scale and US debt focus. Boss Jimmy Cayne may have to cut back on golf and bridge to salvage the firm s reputation and build a credible global franchise.
Flowers not obvious solution to Northern Rock 20 Sep 2007 The entrepreneur s record of turning around failing banks was built on restructuring bad loans. That s not the problem with Northern Rock. What Rock needs is cheap money. Flowers may need more than deft handling of bondholders to get that on tap.
Supermarket price-fixing probe misses the point 20 Sep 2007 The OFT has accused the big supermarkets of rigging dairy prices. But even if true, it's unlikely shoppers will have suffered. Real pricefixing should be punished. But fierce competition means what retailers cream off in one place, they usually give back in another.
Sallie Mae should cut a deal 20 Sep 2007 The consortium buying the student lender wants to lower the price. That s no surprise, since it originally offered a nearly 50% premium. Sallie is sticking to its guns. But it doesn t have attractive alternatives. And its stock is still up 20%. It should cut a deal.
Buy Goldman’s shares, not its hedge funds 20 Sep 2007 That s one lesson to draw from the investment bank s amazing thirdquarter results. Returns at is Global Alpha fund have been horrendous. But Goldman s prop traders felt no pain. Whether in equities, commodities, currencies, and even mortgages, they had another bumper quarter.
Carlyle wisely calls in its Arab chips 20 Sep 2007 The private equity firm is selling a 7.5% stake in itself to petrodollarflush Abu Dhabi for $1.35bn, valuing the firm at $20bn. It raises permanent capital without the embarrassing spectacle of a Blackstonelike IPO. But it also foregoes some of its rival s valuation.
Absolute Capital’s meltdown holds liquidity lesson 20 Sep 2007 The UKlisted alternative asset manager built a seeming gem of a record by stuffing its funds with illiquid penny stocks. It s a warning against Mallorcabased funds listed on exchanges with low standards. But it also reflects the danger of illiquid small caps.
Next European bankruptcy wave will be bloody 19 Sep 2007 The LBO bubble has complicated balance sheets with exotic instruments while fragmenting the creditor body. Europe s bankruptcy laws aren t well attuned for producing negotiated settlements. The credit crunch will therefore produce bitter fights.
Bankers’ First Data contortions may be in vain 19 Sep 2007 They ve structured the deal cleverly to boost its chance of success. It s the bellwether for the Street s ability to offload $350bn of debt. With so much riding on the deal, banks have piled on bells and whistles. But they can t offer what lenders really want: more yield.
High street poorly placed for UK slowdown 19 Sep 2007 Easy credit and a frantic space race have left some retailers saddled with high debt and fixed costs. For some, sales are already declining. That could make them more susceptible to likely consumer pursetightening. As always, expect the supermarkets to be the main beneficiaries.
Morgan vs Lehman: whose LBO indigestion is worse? 19 Sep 2007 Both firms jumped into financing private equity deals late, and both are now hurting. On the face of it, Lehman looks to be in less pain. But that could be misleading. Throw in the hedges and other items Lehman used to calculate its hit, and rival Morgan seems better off.
Bank shares bounce just in time for Fortis deal 19 Sep 2007 The BelgoDutch bank is making a huge E13bn rights issue, to pay for its share of ABN. A postFed cut rally will help get the shares away. That s particularly good news for Fortis s underwriters. The RBS consortium look ever closer to winning ABN with its pricey E70bn bid.
Credit Agricole pays E250m for poor oversight 19 Sep 2007 A rogue trader has wiped out twothirds of the French bank s investment arm's quarterly earnings. It s time to tighten up procedures. But the big loss raises a bigger question whether Agricole waited too long before it decided to shake Calyon up last summer.
Nasdaq could have last laugh over LSE 19 Sep 2007 The US exchange may use its 31% stake in LSE as a bargaining chip to secure a deal with Borse Dubai over Nordic operator OMX. A threeway tieup between Nasdaq, OMX and Dubai would have sufficient firepower to make a bid the LSE finally couldn t refuse.