No chemistry for Reliance at LyondellBasell 2 Mar 2010 The Indian group could afford to raise its offer for the bankrupt U.S. chemicals firm. Some creditors would be tempted by a bid valuing Lyondell at $15.5 bln. But there s no certainty despite the high price. Reliance is known for not overpaying. It should experiment elsewhere.
U.S. states escape interest rate red flag 2 Mar 2010 It s no secret that U.S. state finances are a mess. Yet states bonds have held up well, suggesting few onlookers expect the federal government to let any states go under. In fact, Washington is already lending a helping hand and that could become a problem.
Pru’s jumbo cash call is calculated risk for banks 1 Mar 2010 Prudential will launch the UK's biggest rights issue to fund a deal that will double its size. That looks risky for the three banks underwriting the $20 bln issue. But they won't fix a price for Pru's new shares for two months. Fees of $700 mln should help ease their fears.
Buffett’s crisis bets outrunning his freight train 1 Mar 2010 As he notes in his annual missive, the Sage of Omaha funded Goldman, GE and others at the height of the crisis. The $21 bln invested is now worth a quarter more and yields 10 pct annually. That's more than the similar cash bet on Burlington seems likely to deliver any time soon.
Governance and money vital to earthquake outcomes 1 Mar 2010 Haiti s tremors killed 233,000 while Chile s more severe quake has so far taken 711 lives. Death tolls in natural disasters tend to rise with societal corruption, crime and administrative chaos, and fall with more wealth. In this context, Chile s performance looks admirable.
Activist shareholders are back for good reason 1 Mar 2010 Proxy season is nearly here, and potstirrers like Carl Icahn and Ron Burkle are challenging companies from biotech Genzyme to bookseller Barnes & Noble. Easy pickings are gone and funds that raise a fuss have lagged of late. But activists should outperform over the long run.
Calpers considers removing rose-tinted glasses 1 Mar 2010 The biggest U.S. pension fund may reduce its expected return rate currently nearly 8 pct. Other states including New Jersey and Illinois also assume generous returns on pension assets. Many states are underfunded anyway; biting the bullet with realism on returns is overdue.
Merck pays up to get balance from Millipore 1 Mar 2010 The German chemicals and drugs maker will pay $7.2 billion to beef up the chemicals side with U.S.based Millipore. Shareholders, who just took a big dividend cut, are now paying a high price for expansion. This looks like an expensive way to get a more balanced portfolio.
Bankers aren’t the only conflicted parties in M&A 1 Mar 2010 Whiteshoe U.S. law firm Cravath will this week argue its work for one company didn t preclude it from working with a rival on a hostile bid for its client. Cravath may prevail in court, but the episode starkly highlights the conflicts of interest among legal advisors.
UK’s Pru has some convincing to do with AIA deal 1 Mar 2010 The UK life assurer's $35.5 billion takeover of AIA would create an Asian superinsurer. The growth story is juicy, but AIA has been through years of turmoil and the integration risk is high. Pru will need to persuade investors that doubling the group's size isn't too big a leap.
Air Jordan soars to Peter Principle heights 1 Mar 2010 Basketball s greatest ever player is buying the NBA s Bobcats. Michael Jordan s formidable athletic skills, however, haven t translated well to the front office. No one could keep up with him on the court, but the legendary athlete is rising beyond the limits of his competence.
Uncle Sam can breathe easier with giant AIG sale 1 Mar 2010 Prudential s purchase of AIG s Asian insurer means the New York Fed retrieves not only $16 bln owed by the unit but another $9 bln borrowed by AIG. The U.S. government will still have more than $100 bln tied up. But it s nonetheless a big step towards making taxpayers whole.
Paris, Berlin might find Greek bailout profitable 1 Mar 2010 France and Germany are mulling finance guarantees, backed by their stateowned banks, to ensure Greece can keep borrowing. If the EU and Athens can agree on a tough deficitreduction plan, and if trust returns, the rescuers could end up profiting at the expense of speculators.
Turkey will need luck to prosper 1 Mar 2010 The Erdogan government has done a decent economic job since 2002. With the budget deficit under control, healthy growth should resume soon. But the longer term path is rocky. The Greek crisis makes EU membership unlikely and domestic politics are likely to stay tense.
HSBC a reminder not all emerging markets are equal 1 Mar 2010 Shares in the global bank fell 4 percent in early trading after its 2009 pretax profit came in below expectations. The wholesale bank reported a strong profit, and U.S. bad debts may have peaked. But HSBC's premium rating leaves it little margin for error in emerging markets.
MSCI buys RiskMetrics – and possible headache 1 Mar 2010 The analytics business spun out by Morgan Stanley is paying $1.6 bln for the risk management and corporate advisory firm. The price looks a bit value destructive. A bigger question may be what to do with RiskMetrics proxy service ISS, and potential conflicts of interest.