Asian bourses can afford independence 5 Apr 2011 Australia is blocking the Singapore Exchange's $7.8 billion bid for ASX. Fortunately, each enjoys growth which underpins independent prospects. Though there is industrial logic in mergers, political and corporate realities mean that the Asian exchanges may remain unconsolidated.
Letter to the Editor: Zipcar’s IPO 5 Apr 2011 Our colleague down the hall at Reuters.com is a fan of the car rental service but less impressed with it as an investment opportunity. He disagrees with the bullish case presented by Breakingviews, seeing the high price of gas as a major roadblock to Zipcar's bottom line.
Republican budget should spur Obama counter-offer 5 Apr 2011 By massively cutting healthcare spending, Rep. Paul Ryan's blueprint would quickly reach primary balance and pay off the federal debt by midcentury. It's not a longterm plan the president would ever support. But it should galvanize him into preparing a credible plan of his own.
P&G goes off chips without salting shareholders 5 Apr 2011 The consumer giant is shedding its last food brand, Pringles, through a $2.4 bln splitoff and merger that avoids having to pay capital gains taxes to Uncle Sam. P&G can focus on its core portfolio of brands and Diamond Foods gets to be the largest pureplay U.S. snack company.
Stopping hot money is dangerous soft option 5 Apr 2011 The IMF wants capital controls in the policy toolkit. It may sound like a good idea with so much money sloshing around. But such barriers impose large and opaque costs on the global economy and encourage fiscal indiscipline. Emerging market officials should resist the temptation.
ICE gets better end of joint Nasdaq bid for NYSE 5 Apr 2011 The derivatives exchange gets a smaller share of the cost savings in the $11.3 bln offer and loses its takeover target premium. But it is putting less stress on its shareholders and balance sheet than is Nasdaq. Moreover, ICE winds up owning a business with more growth prospects.
TPG steals march on private equity going public 4 Apr 2011 The buyout firm has sold a 4.5 pct slug of itself to Kuwait and Singapore investors. And no wonder. Public markets are lukewarm on private equity and sovereign wealth funds are stuffed with cash. That helped TPG land a valuation of $10 bln better than Apollo's or KKR's.
China’s price controls are unwelcome throwback 4 Apr 2011 Telling Unilever to freeze prices is muddleheaded. Oldstyle restrictions on the price of goods don't kill inflation, they just stop it showing. If China won't let market forces prevail, a better policy might be to ease consumer goods firms' cost pressures by cutting sales tax.
Solvay brings Rhodia-coaster ride to fitting end 4 Apr 2011 The Belgian chemicals group will buy its smaller French rival for 3.4 billion euros, a 50 pct premium to the market price. The deal brings together two companies with complementary businesses and footprints, and crowns Rhodia's painstaking comeback from investment hell.
Italian banks start to get capital house in order 4 Apr 2011 Intesa Sanpaolo's likely 5 bln euro rights issue shows the country's lenders are no longer dragging their feet on boosting capital ratios. If others follow suit, Italy may avoid embarrassment in Europe's bank stress tests. But weaker banks could still do with a state backstop.
Minmetals road-tests new China M&A model 4 Apr 2011 With a rare combination of Western management and Beijingbacked financing, the Hong Kong listed miner has launched a $6.5 bln offer for Equinox Minerals. Time is short, and Minmetals may need to sweeten its bid to succeed, but it looks to have found a winning formula.
Zipcar’s better mousetrap may give IPO a snap 4 Apr 2011 The carsharing company, popular with city dwellers and college students, is pricing its IPO far above the multiples of traditional car renters Hertz and Avis. But Zipcar's growth, and market disrupting business model, make the targeted $600 million valuation look reasonable.
Vodafone pips Vivendi in $11 bln SFR deal 4 Apr 2011 The UK telco is selling Vivendi its 44 pct stake in mobile unit SFR at a 20 pct premium to sector trading multiples, even though its French rival was the only buyer. That underscores Vodafone's greater success in restructuring and helps justify its shares' outperformance.
Google’s M&A machine stuck in antitrust limbo 4 Apr 2011 The search giant again led by Larry Page once offered the best alternative to an IPO for fastgrowing startups. But the 9month delay in approvals for its $700 mln ITA deal shows how regulators have changed that. Absent huge breakup fees, what hot company would sell to Google?
Obama’s biggest 2012 obstacle: income, not jobs 4 Apr 2011 As the president kicks off his run for a second term, the issues battlefield is shifting. Although job growth is slowly returning, worker wages are still stagnant. As a result, income growth may emerge as the critical economic factor in the 2012 race for the White House.
Goldman wallops pay restraint with one-two punch 4 Apr 2011 It was bad enough giving CEO Lloyd Blankfein and four others 40 pct extra in stock bonuses after earnings and returns both fell in 2010. Now, another afterhours Friday filing reveals $5.4 mln more in cash for each of them. Tear the longterm greedy page from the Goldman hymnal.
Buyout barons could help pay for U.S. tax reform 4 Apr 2011 Looking to offset the budget cost of lower corporate rates, Congress may alter the treatment of publicly traded partnerships. That might mean a bigger tax bill for Blackstone, Fortress and Apollo. Recent efforts to make firms pay more have failed but this time could be different.
Fed needs to treat markets like a serious addict 4 Apr 2011 Rate hike talk is in the air. Yet, the central bank is still injecting money directly into the financial system's bloodstream. Current policy would have markets go cold turkey after June, but there's still time to tweak QE2 to minimize disruptive withdrawal symptoms.
QE2 countdown comes at risky time for Asia 1 Apr 2011 With Fed money printing due to end in June, Asia's markets are bracing for a liquidity withdrawal. Investors may underestimate how much QE2 cushioned the impact of worries over China property, oil and Japan. As June nears, markets will only get more sensitive to these unknowns.
U.S. joblessness stubbornly stickier this cycle 1 Apr 2011 While March saw 216,000 new jobs created, the average duration out of work crept back up and remains far above previous cycles. The risk is that as the skills of workers atrophy, wage inflation and shortages may kick in before full employment is reached.
Ireland’s bank stress test shows euro zone the way 1 Apr 2011 The country's 24 bln euro bailout ensures lenders will have a 6 pct core Tier 1 capital ratio in a severe downturn. It also forces them to wean themselves off wholesale funding. To have any hope of being credible, Europe's forthcoming stress tests should take a similar approach.
Fed transparency puts Goldman’s Cohn in a pickle 1 Apr 2011 The central bank's data dump on borrowings made during the crisis so far hasn't unearthed shocking revelations or sent financial markets tailspinning. But it seems to have contradicted the Goldman COO's account of events. It just goes to show how disclosure keeps everyone honest.
Deutsche Boerse has limited Plan B’s after NYSE 1 Apr 2011 The German exchange won't want to get into an auction for NYSE. It may prefer a standalone strategy if it can't save its deal. The LSE, which Deutsche Boerse tried to buy in 2004, doesn't look like a tempting alternative. But in time, a merger with the CME might well suit.
With NYSE bid Nasdaq stretches to avoid obscurity 1 Apr 2011 The joint $11.3 bln bid with ICE strains its balance sheet and dilutes shareholders. If it wins, Nasdaq will be dominant, albeit in a lowly valued business. But forgoing the chance would have left the exchange forgotten on the sidelines and given Deutsche Boerse a free pass.
ECB shouldn’t rush troubled banks lifeline 1 Apr 2011 The European Central Bank has not yet produced a hopedfor debt facility for Irish banks. Ringfencing addicted lenders would help the ECB normalise its liquidity operations. But it should be wary of taking on too much risk. Europe's governments must do their bit first.
Brazil sends bad market signal scalping Vale’s CEO 1 Apr 2011 Roger Agnelli fought the state's designs to push the $180 bln mining giant into lowreturn, if laborintensive, businesses like steel production. With President Rousseff getting rid of him, investors must prepare for a strategy that favors jobs over profit more Pemex than BHP.