Modelo’s dropping off Bud’s board is wise 16 Jun 2008 The Mexican brewer s CEO resigned from Anheuser s board. That looks smart. Modelo now has several options to improve value for shareholders, including selling itself to the highest bidder or encouraging Anheuser to pay up for its 50% stake. It can explore its options freely now.
French state is GDF Suez’s party-pooper 16 Jun 2008 The marriage of Gaz de France and the FrenchBelgian utility has taken two years and is due finally to be consummated in July. They should make a beautiful couple. But the new company is born of political compromise and the French state s weight will handicap it.
AIG boss is latest to merit walking golden plank 16 Jun 2008 A $20bn crisis share issue sealed Martin Sullivan s fate. He will leave with a $35m payoff. That s a big reward for failure, but Sullivan and other fired finance chiefs largely followed shareholders wishes. The credit crunch has torpedoed leveragebased strategies, and careers.
Bud shouldn’t bank on Buffett defence 16 Jun 2008 It s hard to see why the billionaire wouldn t back Inbev s $47bn offer for AnheuserBusch. Buffett s threeyear investment in the brewer has gone nowhere. The Sage of Omaha could do worse than take his $2.3bn cash and buy a slab of Inbev stock.
Real rates show Fed and ECB behind, BoE ahead 16 Jun 2008 Rising inflation has created widespread expectation of higher rates. Real overnight interest rates, however, show the US to be much further behind the curve than the eurozone, while in the UK real policy is already quite tight and growth prospects quite poor.
Fuld puts on brave face at Lehman 16 Jun 2008 At least the CEO attended the secondquarter earnings call. And at least, unlike Merrill Lynch last year, the firm's actual numbers were in line with its preannouncement. But the firm's wage bill is still rising. And Fuld's optimism about growth and diversity sounds premature.
Barclays fundraising leaves A&L hanging 16 Jun 2008 Unlike Barclays, smaller UK rival Alliance & Leicester hasn t got the cachet to lure a rich Asian investor. But A&L s mortgage exposure means it still ought to raise further equity. With preferred options of a private placing or a rights issue receding, A&L faces stark choices.
Growing double-digit inflation club hard to quit 16 Jun 2008 The number of countries suffering doubledigit inflation has grown sixfold in the past year. Typically, joining the club leads to price controls. But they fail, and only politically toxic interest rate hikes can lead to an exit. Realising that takes time and courage.
Europe shouldn’t copy US watchdogs’ ratings blunder 16 Jun 2008 Market overseer Charlie McCreevy wants to crack down on the raters. Some of his ideas look smart. But piling on new regulations his US counterparts strategy just boosts the rating firms implicit government endorsement. That shields them from healthy competition.
Somersaulting all the way to the bank 16 Jun 2008 Middle Eastern investors are known for making the odd overpriced, trophy purchase. But a $2bn price tag for Cirque du Soleil, a circus? Amazingly, if you think of the 4,000strong troupe as a Disney founded on acrobats rather than cartoons, it starts to make sense.
Barclays organises right deal at wrong time 15 Jun 2008 A plan to raise £4bn from Asian investors needn t be detrimental to the UK bank s existing shareholders, but would have to be handled carefully. Barclays faces tough questions about why it needs the money and why it sat on its hands for so long.
Frustrating merger tactics can sting shareholders 13 Jun 2008 Yahoo inked a search deal with Google last night that acts as a poison pill for Microsoft. Bud looks like it s planning a similar tactic to ward off Inbev by acquiring Mexico's Modelo. Neither offers a better alternative for shareholders who should resist them.
US steps closer to stagflation 13 Jun 2008 Inflation is here. Without some dubious seasonal adjustments, the threemonth annualized rate would be 8.3%. Even the reported 4.2% is too high from comfort. As for stagnation, May s real retail sales barely rose despite tax rebates. Investors haven t yet really caught on.
FSA rides to rescue of HBOS underwriters 13 Jun 2008 The UK regulator s new rules requiring disclosure of short positions in rights issues will help restore integrity to a process that has become a farce and threat to financial stability. That s good news for HBOS. But hedge funds aren t solely to blame for recent volatility.
Shareholders should welcome even flawed activists 13 Jun 2008 TCI is looking tarnished in its fight with US railway group CSX, and the likes of Carl Icahn can overdo it, too. Yet activists arguments are often close to the mark. Investors should give them a fair hearing and make sure executives answer critics, not silence them.
UK bank exposure to mortgages: not all bad 13 Jun 2008 Taken as a whole, the UK banking sector s mortgage exposure is well collateralised, less exposed to first time buyers than the last crash, and with better legal protection than US lenders. That does not mean the banks are immune from a recession but it helps.
Ambani squeezed in MTN tie-up 13 Jun 2008 The Indian billionaire wants control of its larger South African rival. Politics mean Ambani s Reliance must become a subsidiary of MTN. That would leave Ambani struggling to get more than 37% of MTN low enough to let brother Mukesh accuse Anil of giving away the family silver.
Irish No vote exposes EU weakness 13 Jun 2008 Ireland s rejection of the Lisbon treaty is not a disaster for the EU, which can function under its existing arrangements. But it s further confirmation that given a choice between hanging together and hanging separately, some Europeans prefer the latter. That s worrying.
Pfizer’s woes won’t be solved with trip to India 13 Jun 2008 The drug company may start a bidding war for Indian firm Ranbaxy, according to reports. The fact this loopy idea is being taken seriously shows investors are starting to panic over Pfizer s looming clash with makers of generic drugs.
Dick Fuld needs to step up 12 Jun 2008 The Lehman boss has made fall guys out of secondincommand Joe Gregory and highprofile CFO Erin Callan. But Fuld needs to come out of the shadows and reassert his leadership credentials if Lehman is to overcome fears about its future. Otherwise, there s no point in him staying.
Tosca was the wrong target for a raid 12 Jun 2008 The Londonbased hedge fund manager came under speculative attack on Wednesday after the market wrongly assumed it was dumping positions. Sure, this month s NAV won t be pretty, but low leverage, net inflows and a long track record make Tosca more robust than most.
Leverage and complexity sink Babcock & Brown 12 Jun 2008 The Australian investment firm s shares tanked 28% on Thursday, triggering a review by lenders who could force debt repayment. Like other trashed financials, B&B pointed the finger at shortsellers. Whether they are to blame or not, some business models are simply out of favour.
UBS wishes everything worked like research 12 Jun 2008 One thing the troubled Swiss bank knows how to do well is European equity research and sales. The eighth straight Extel Survey top prize is proof. It s an oldfashioned business right in the UBS genes, unlike, say, US mortgage speculation. Shame about the profits.
New corporate gusto for DIY buyouts looks risky 12 Jun 2008 Quite a few companies have piled on LBOlike amounts of debt since the credit crunch started, including Mars, United Rentals, Time Warner Cable and, soon, InBev. That s great for banks, but too much leverage may weigh down even strong borrowers.
Icahn’s dissident slate deserves chance at Yahoo 12 Jun 2008 The internet company's board needs a shakeup. Yet a clean sweep by the dissidents would trigger a poison pill pay plan. Electing four of Icahn's choices would avoid this, yet pressure management. It might also be the best way to fetch a good price from Microsoft.
How to raise $40bn of debt in a credit crunch 12 Jun 2008 Who said debt markets were closed? If Inbev s offer for rival Anheuser Busch succeeds, it will need all that debt but still manage to keep an investment grade rating. Even banks wracked by the creditcrunch are helping out. The leverage looks aggressive, but feasible.
SEC sees credit rating problems, but will it act? 12 Jun 2008 The US watchdog appears to have understood the flaws in structured finance ratings, and its proposed rule changes mostly make sense. But while SEC boss Chris Cox might not mince his words now, there s a danger that the regulator pulls its punches later. That would be a pity.
Spanish fuel strike a harbinger for Europe 11 Jun 2008 Truck drivers are blocking roads in protest at high oil prices and fresh food could run out in days amid growing panic. The government doesn t have much room for manoeuvre. But the outcome will have ramifications in other countries where fuel prices are a hot political issue.
Peloton boss shouldn’t get second chance 11 Jun 2008 One of the founders of the bust Londonbased hedge fund plans to launch a new fund in September. Grant is entitled to try his luck again. But investors who agree to fund hedge fund failures are simply encouraging more reckless risktaking.
Lehman needs to consider life after Fuld 11 Jun 2008 On Wall Street that is almost heretical. Fuld has led the firm to great success since its 1994 spinoff from Amex. But confidence in its ability to remain a viable, independent concern is shrinking. Thursday's executive shuffle highlighted the apparent lack of a succession plan.