Bud’s alternative to a takeover? An activist 30 May 2008 The king of beers faces a potential $46bn unsolicited bid from Inbev. But the Belgian brewer would add little value beyond slashing costs. Bud can do that itself. If it won t, some Peltzstyle activism may be in order.
France Telecom’s Telia obsession is mind-boggling 30 May 2008 The French telecom company has lost E7bn in market cap in a month, after saying it was contemplating a bid for its Scandinavian counterpart. Now it is trying to raise E10bn to finance a deal with few synergies and no industrial logic. Valuedestruction days are far from over.
Libor needs no more than a tweak 30 May 2008 The benchmark interest rate has drawn flak for being unrealistically low. But the technique for calculating what banks charge each other for shortterm money is reasonably fair. It could be improved a little, but a competitor won t easily usurp Libor s leading role.
Game may be ending for the super-rich 30 May 2008 Antiwealth sentiment got little traction in boom times. But the mood seems to be changing. A US tax probe on UBS is the latest sign, following moves in Germany and the UK. Tax advisors might want to tell clients to pay more. Some big charitable donations can t hurt.
CDS clearing house is necessary, but not sufficient 29 May 2008 The plan to launch a central counterparty for credit default swap trading should reduce systemic risk and the need for regulators to bail out the next Bear Stearns. But the popular CDS market needs to come of age in other ways, too, if it is to avoid future snarlups.
Spanish house sales tumble, prices to follow 29 May 2008 Spanish mortgage borrowers are much less stretched than their UK counterparts. And house prices are still going up. But transactions are down by 38%. Buyers suspect that the huge overhang of unsold houses will eventually bring prices down to even more affordable levels.
Barclays hardly gains by dodging rights issue 29 May 2008 The UK s third largest bank may have avoided following its rivals in raising new capital so far. But investors aren t impressed. The shares are being derated even faster than those of HBOS, which has faced the music already. The market seems to fear an eventual rights issue.
Goldman’s failure to mainstream Spacs shows their limits 29 May 2008 The investment bank withdrew a Spac IPO because it couldn t drum up demand. That s odd given the deal had an unusually shareholderfriendly structure. But Goldman didn t peddle the deal to the traditional Spac crowd. Its failure to find broader demand shows the limits of Spacs.
Asia’s fuel subsidy cuts may curb oil price 29 May 2008 Cheap fuel pleases Asian consumers, but governments can t keep up with the soaring cost of oil. India is set to follow Indonesia and Taiwan in pushing final prices up. Inflation might rise and growth fall for a while, but lower oil demand should bring down the global oil price.
Central banks in awkward bind over credit ratings 29 May 2008 Structured finance ratings helped drive the credit boom, but have been discredited in the bust. So why are the Federal Reserve and the Bank of England relying on these same ratings in their bankaid programmes? The central banks should encourage a new approach.
Bear Stearns shareholders deserve our thanks 29 May 2008 It must have stung to hand JPMorgan their shares for a tenner at today s EGM. But it should be some comfort to know their acceptance of the deal stabilised the market and averted financial Armageddon. They are the unsung heroes of the 2008 credit crunch.
Could Inbev use SAB to crack open Bud? 28 May 2008 If the BelgoBrazilian brewer is spurned by Anheuser, it could always bid for SABMiller instead. Molson might then snap up Miller, putting Bud on the defensive and weakening its independent resolve down the road, when Inbev comes back for another swoop.
Indonesia’s OPEC exit reflects market choices 28 May 2008 The country s departure from the oil cartel makes sense it s a big net loser from higher oil prices and the government is cutting consumer petrol subsidies. This reflects Indonesia s increased market orientation and integration with the global private sector.
Steep price tag scares Generali from RBS insurance auction 28 May 2008 The Italian insurer can t justify the £7bn or so that the UK bank wants for its Direct Line and Churchill arms. The withdrawal is mixed news for other bidders. It lowers competition for the asset. But it also highlights the difficulty of making the deal work at RBS s price tag.
Why is BofA’s Ken Lewis blowing $2bn in China? 28 May 2008 It might look imprudent to sink precious capital into China Construction Bank when the US economy is pickling. But if current prices hold up, he could effectively triple his money within months. Lewis would be daft to pass up free money.
Could Mishkin’s departure herald harder money? 28 May 2008 Fed governor Mishkin s departure alters the Fed balance of power he was a noted soft money man and supporter of Ben Bernanke. The Fed has also raised its inflation forecast. Could these be the first signals of a policy reversal and a rate rise?
What next for Sarin? 28 May 2008 Vodafone s outgoing boss will be in hot demand. After five years leading a successful UKbased global telecom operator, the Indianborn, USeducated executive has many options. Something else mobile, or a move into finance look obvious, but he might just do most good in India.
Activist victory at Atos could shake up France SA 28 May 2008 Two hedge funds have won their battle to force the IT services company to focus on shareholder value. The French companies that already feel the pressure of such professional investors should take notice. More companies might even start to accept tough love from shareholders.
US airlines fly toward mass bankruptcies 28 May 2008 With oil at $130 a barrel, nearly every US airline is burning cash. If fuel prices remain high and passenger volumes decline as is likely in a recession several could go bust.
Inflation deals first blows to bond markets 28 May 2008 Yields are rising despite slipping growth prospects. The combination reflects the new reality that global inflation could be here to stay. But the market has not yet abandoned its optimism. At 3.9%, the yield on 10year US treasuries is no higher than the inflation rate.
Search for market manipulators in Bear’s downfall is quixotic 28 May 2008 US market watchdogs are scouring Bear's trading records in search of evidence that market manipulators were behind the firm s downfall. But there were plenty of legitimate reasons to pull cash and credit lines, and to short the stock. Proving nefarious intent will be difficult.
Eurozone finding unity in economic slowdown 27 May 2008 True, Germany grew five times faster than Spain in the first quarter, but German consumers were cowed. Eurozone divergence is set to give way to a shared slowdown. The strong euro and high oil and food price inflation are weighing on exports and disposable income.
VW minorities sidelined in golden-share tussle 27 May 2008 Porsche, the German sportscar maker, wants to eliminate a state veto at Volkswagen, in which it holds a 31% stake. This is no blow for shareholder rights. If Porsche wins, VW could end up swapping one undemocratic system for another.
American family dynasties face extinction 27 May 2008 In the past year, the Wrigleys, Hiltons, Bancrofts and Chandlers have all sold out. Budweiser s Busch family could be next. While mostly willing sellers, it s hard not to see family control buckling under the forces of global competitive dynamics.
Inbev-Bud deal may look better on paper 27 May 2008 A $55bn plan to crunch together the two brewers looks simplicity itself. But the mooted $8.4bn of capitalised synergies won t come easy. To make a takeover stack up, costkiller Inbev will need to lob a handgrenade into Bud s sleepy valley.
Bond insurers given grim six-month prognosis 27 May 2008 That s about how long the US monolines have until a new rule kicks in that will force them to record losses immediately on troubled debt insurance policies. With the municipal bond market coming under pressure, the timing couldn t be worse.
Sarin makes timely Vodafone exit 27 May 2008 Two years ago, few would have believed the mobile operator s chief executive would survive to depart under his own steam, and in glory. Sarin s deals shifted Vodafone s growth to emerging markets. His chosen successor is left a fight to keep that momentum going.
Exxon split defeat a result of bad packaging 27 May 2008 At today s AGM, the motion to split the chairman and chief executive posts received even fewer votes than last year. That s the result of a good governance idea being misidentified as hostile to investors interests.
MTN won’t go easily 27 May 2008 The South African telecom operator is in exclusive negotiations with Reliance Communications. Yet if talks with India s Bharti Airtel failed because MTN didn t want to be taken over, it s hard to see why one empirebuilding Indian mobile operator will be better than another.
Price elasticity suggests $200 oil is a long-shot 27 May 2008 Data on miles driven and oil products consumed in the US suggest the price elasticity of oil is currently around 16%. If that applies globally, $200 oil would cause a 12m bbl/day drop in consumption. Speculators who tried to hold the price there would run out of money fast.