Lilly’s $6.1bn offer for Imclone may spark bidding war 6 Oct 2008 M&A bankers may be in hibernation, but biotechs with saleable drugs are keeping big pharma up nights. Eli Lilly has offered a full price for Imclone, an asset with some strings attached. Rival suitor and natural partner BristolMyers Squibb isn t out of the running.
Fed’s latest liquidity bonanza could backfire 6 Oct 2008 The US central bank will pay interest on banks deposits. That should help bring in cash to fund its elephantine loan schemes. It might also offset the effects of flooding markets with liquidity. Unfortunately, though, it could further diminish banks' appetite to lend to others.
Tarp already out of sight and mind for markets 6 Oct 2008 Last week's $700bn US bank rescue plan hasn t calmed the patient. US markets plunged along with the rest of the world before clawing something back. The Tarp was never going to be a quick cureall. If anything, the credit crunch is still spreading.
Hypo will battle to survive being rescued 6 Oct 2008 The E50bn package agreed by Germany s banks and government should keep the stricken mortgage lender and the country s banking system afloat. But the hasty bailout had to be enlarged by E15bn in just three days. That suggests deep problems which means Hypo may be wound down.
Europe struggles to stabilise financial system 6 Oct 2008 The region had fewer financial excesses than the US and the public reaction to bank problems has been excessive. But isolated rescues, national deposit guarantees and central bank pumping haven t steadied nerves. A big move is needed such as a huge UK bank recapitalisation.
Has Ebay bought another Skype or Paypal? 6 Oct 2008 The auctioneer is buying online payment system Bill Me Later for $945m. Investors are still burned by Ebay's purchase of internet telephony firm Skype. Luckily this is more like its savvy 2002 Paypal deal. It may even help Ebay weather economic hard times.
UK bank bailout needs to be big – and punishing 6 Oct 2008 A fat capital cushion, as much as £100bn, is needed to stabilize the sector. But if the taxpayer is paying, the terms should be tough. Let shareholders participate too if they want to. But weak institutions should have little choice in the matter.
Private equity style-drift dangers start to show 6 Oct 2008 It isn t just TPG or JC Flowers that lost money on minority investments. KKR s investments in Sun Micro and Legg Mason and Blackstone s Deutsche Telekom deal are all performing poorly. Private equity can lose more than just their investors' money.
Fuld feels horrible, makes excuses 6 Oct 2008 Despite taking a measure of responsibility, the Lehman Brothers boss still says his firm was a victim of an unprecedented crisis, a loss of investor confidence and naked short sellers. The fact is, like Bear Stearns bosses before him, he didn t get real until it was too late.
Zhevago’s forced asset sale is ominous for miners 6 Oct 2008 Kostyantin Zhevago, Ukrainian billionaire and owner of miner Ferrexpo, dumped his stock and took a 30% hit to meet a margin call on a loan. It s not just that he was highly leveraged. The dramatic fall in metals prices means harder times for the mining sector.
Ken Lewis emerges clear winner among losers 6 Oct 2008 Normally shareholders wouldn t support a $10bn stock issue and dividend cut. But BofA s shareholders should welcome the chief s decision to defensively fortify the bank s balance sheet. Like JPMorgan s Jamie Dimon, Lewis looks to be setting a new benchmark.
Poof! Fortis is a structured credit manager 6 Oct 2008 What was a E1tr Benelux bank and insurance group a week ago is now little more than a E20bn investor in toxic housing assets. The bulk of the balance sheet has been shifted to governments and BNP Paribas. That leaves shareholders with an uninspiring rump that s hard to value.
Reckless banks repeat history in Korea 6 Oct 2008 Korea s current crisis is largely the fault of its banks. The economy has decent growth, low inflation, modest payments deficits and a budget surplus. However, as in 1997, the banks borrowed dollars to lend won. The won s 26% drop brought crisis, but it should prove shortlived.
Hedge fund slump changes the game 3 Oct 2008 Hedge funds are having a rotten year and it s been getting worse, with the average fund down 7% in September. Poor performance, shortselling bans, scarce leverage, market volatility and investor redemptions all play their part. The result could be a reshaped industry.
Wachovia too tasty for Wells to pass up 3 Oct 2008 Its $15bn offer for its eastern seaboard rival has ruffled Citigroup s feathers and put regulators on the spot. Why risk the ire? Because the deal would turn Wells into a retail and commercial banking behemoth. And it has the record to get investors on side.
Hank Paulson gets his $700bn bailout bill 3 Oct 2008 The US House approved the Tarp after getting extra goodies and a painful lesson in market behaviour. As Wells Fargo s Wachovia bid shows, existing government initiatives are enough for some. But the Tarp may be the confidence boost the private sector needs to do its handiwork.
UK makes full deposit guarantee all but explicit 3 Oct 2008 The FSA has pushed the explicit limit up from £35K to £50K £100k for joint accounts. But the more meaningful promise comes from the Chancellor to do whatever is necessary to protect depositors. That should help defuse one crisis. Alas, it s not the biggest one.
TCI battle with Deutsche Börse is too personal 3 Oct 2008 The activist investor emailed the German stock exchange demanding an EGM to remove Kurt Viermetz, the supervisory board chairman. It s not suggesting strategy changes or other board candidates. This looks like a personal grudge not a responsible investment policy.
US economic graph tilts sharply downwards 3 Oct 2008 US employment fell 159,000 in September, more than expected. Factory orders, car sales and the ISM index have all turned weaker. The US economic graph has tilted sharply downwards, looks to be heading for a recession. That will turbocharge calls for more stimulus spending.
Iceland draws closer to the edge 3 Oct 2008 The tiny and overleveraged European nation has already bailed out Glitnir, the smallest of its trio of oversized banks. Kaupthing and Landsbanki could make it, but need the confidence of wholesale lenders. A rescue would make Iceland s looming recession even more savage.
Dutch carve-up of Fortis leaves Belgium hanging 3 Oct 2008 The Netherlands has abandoned a tripartite rescue of the Benelux group after continued funding issues and is, instead, nationalising its Dutch units for E16.8bn. The price seemingly values the ABN arm at a low E5bn, potentially leaving the Belgian rump with a capital problem.
UK economic war cabinet deserves qualified thumbs-up 3 Oct 2008 Gordon Brown hasn t just brought back Peter Mandelson, his old nemesis; he has also tapped the expertise of Paul Myners, the City grandee. Provided these big egos can work together, they should be able to take faster and more effective decisions to tackle the economic crisis.
Wells embarrasses Citi over Wachovia 3 Oct 2008 Citigroup's plan to feed on Wachovia s carcass was ruined by its stronger West Coast rival. Wells is doing it without government help, and taking the whole bank. Citi couldn t have done that deal. Its bosses might feel miffed, but they could be well placed for future deals.
Commercial paper makes ominous grinding sounds 2 Oct 2008 The market for shortterm debt saw a record fall in issuance last week. The market simply isn t open to weak companies or for long maturities. One factor Treasury issuance crowding out corporate borrowers could prolong the pain.
Real economy starts to feel real pinch 2 Oct 2008 In the first year of the credit crisis, the world economy didn t fare too badly. But companies and individuals increasingly can t find the money to borrow and are too frightened to spend it even if they could. If the bailout machine stops working, it would get much worse.
Spain needs to wake up and smell coffee 2 Oct 2008 Pedro Solbes, Spain s economy minister, says the Spanish financial system is in no danger . That might be true today. But liquidity problems and rising bad debts will squeeze the sector hard. It s a good time to think about making the job market more flexible.
UBS turns corner – onto a bumpy new road 2 Oct 2008 The Swiss bank expects to be back in the black after a string of losses. It has overhauled governance and management. But private bank clients are deserting, the investment bank is shrinking and the Swiss may lift the veil on secrecy. Recovery won t mean business as usual.
Bailout plan risks prolonging recession 2 Oct 2008 The US plan to rescue ailing banks will invest up to $700bn in distressed mortgagerelated securities and other loans. In a credit crunch, that will crowd out others more deserving of funding. That could deepen the economic slowdown, and is certainly likely to extend it.
Can John Thain stomach his promotion-demotion? 2 Oct 2008 The Merrill Lynch boss will head a bigger business once the sale to Bank of America closes. But he won t be CEO, a step down few have tolerated for long in the past. And temptation may be put in Thain s path as the credit crisis opens up more corner office jobs at rival firms.
How does Google’s green push help shareholders? 2 Oct 2008 The search giant has announced a plan to wean the US off fossil fuels clearly a worthy goal. But it could also prove a distraction for the company s executives. Google should consider its shareholders before trying to save the world.