Asian growth may slip into more sustainable gear 5 May 2011 Oil, inflation, and hot money flows pose growing threats to Asia's economic growth. That's not entirely bad news. Asia needs more equitable and sustainable growth as much as a percentage point less. Looming threats give authorities the opportunity to hit the brakes.
GM struggles to fire on all cylinders 5 May 2011 The U.S. carmaker's firstquarter profit trebled. But strip out oneoffs and its U.S. margin was less than 6 pct, way below Ford's, even though factories were near full capacity. Despite a bankruptcy doover, GM hasn't proved it can lead the field or cut taxpayers' losses.
Queasy Dunkin’ buyout looks set for healthy return 5 May 2011 Bain, Carlyle and TH Lee looked amped up on the doughnut chain's wares when they bought it for $2.4 bln five years ago. They paid a fat 13 times EBITDA and larded on leverage of 8.5 times. But Dunkin' looks in better shape now for its IPO and the trio may double their money.
Don’t worry about UK coalition spat 5 May 2011 Relations around the cabinet table could become increasingly fraught if the LibDems are defeated in Thursday's referendum on electoral reform. But given that it would be suicide for the junior partner to quit the government, the UK's deficit cutting programme will stay on track.
Oil’s slide below $100 sets record straighter 5 May 2011 Like a slowmotion echo of the flash crash a year ago, Thursday s market plunge reflected not one factor but many. With Fed policy stoking speculation, U.S. data suggesting another slowdown and Europe running at two speeds, more volatile trading may be the logical response.
New chairman gives CVS Caremark chance to split 5 May 2011 The Q1 results emphasize why the drugstore chain and pharma middleman units don't belong together. They could be worth $13 bln more apart. With David Dorman stepping in to lead the board next week, the company has a chance to reconsider. He oversaw a similar carveup at Motorola.
Carrefour woes offer cover to shelve property IPO 5 May 2011 The French retailer dropped plans to list its property division amid signs it is still struggling in its home market. Though activist investors Colony Capital and Bernard Arnault were pushing the controversial idea, others disagreed. CEO Lars Olofsson was right to desist.
Flagging bank reform could take heart from Nigeria 5 May 2011 It's not the obvious source of financial advice. But as part of a postcrisis cleanup, Nigeria's central bank fired the CEOs of flailing financial firms. Many developedworld bank critics, including Warren Buffett, would approve. If only Western officials would talk so plainly.
Lisbon can do a bit more to loosen grip on economy 5 May 2011 Portugal's plan to speed up its 5.5 bln euro privatisation programme and eliminate golden shares is welcome. But it could go further and scrap quirky shareholder voting restrictions in companies like EDP.
Commodities’ correction is good for growth 5 May 2011 Bullish investors in commodities are choking on their own bubbly. What's frightened the speculators most is weaker data, especially in the United States. The pullback is welcome and necessary because the excessively high prices are a big obstacle to global recovery.
ConAgra needs two more scoops to bag Ralcorp deal 4 May 2011 The Chef BoyardeetoJiffy Pop food group is being stingy with its $4.9 bln hostile bid for the maker of raisin bran and other cereals. At $86 a share, it's offering a real premium of just around 19 pct. But it could afford to pay up to $100. Ralcorp has good reason to resist.
Makeovers don’t make SPACs much prettier 4 May 2011 Blankcheck acquisition vehicles are back with a new look. They're no longer confined to specific sectors and investors can get their money back if they don't like a proposed deal. But SPACs also have been booted off the big exchanges. All told, these investments still look ugly.
Portugal’s bank rescue plan has one hole 4 May 2011 The EU/IMF plan for recaps, stress tests and privatisations is a punchy blueprint to restore confidence in the financial system. But funding remains a problem. Allowing banks to issue stateguaranteed bonds is only a partial solution when the government's credit is still weak.
Mega-syndicate puts Glencore investors in the dark 4 May 2011 With 23 banks and brokerages on the trader's flotation, independent voices on the company's valuation are few and far between. Pricing Glencore's quirky business mix was already going to be tough. It's hard to see how investors benefit from such large syndicates.
Poorest at most risk from 10 bln world population 4 May 2011 The UN's new, higher estimates see the world's population hitting that figure and counting by 2100. Most of the increase comes in very poor countries with already stretched resources. Without efforts to change the pattern, their economies will face a serious demographic drain.
Abu Dhabi’s Glencore bet won’t be an easy win 4 May 2011 One of the emirate's flagship funds is ploughing $1 billion into the commodities trader. Crisisera investments in Daimler and Barclays delivered stellar returns. But with commodities already hot property and other investors lining up, Abu Dhabi may struggle to repeat the trick.
Glencore boss can’t afford to stop at $10 bln 4 May 2011 That's the value of Ivan Glasenberg's stake in the commodity trader at the midpoint of its IPO valuation. The worry for new investors is that the CEO has little incentive to add to his wealth. But executives made billionaires by IPOs tend not to lose their ambitious gene.
Glencore price range is a stretch 4 May 2011 The commodity trader's IPO values it at $47 to $58 bln before new money. If EBITDA returns to peak levels this year, the lower end marks a reasonable price by mining benchmarks. Cornerstone investor support is striking, but a solid performance post float is far from assured.
Portugal gets bailout at last – but no done deal 4 May 2011 The Portuguese caretaker prime minister says he has secured a 78 billion euro EU/IMF bailout. But the opposition is yet to agree to the terms, interest rates are not decided, and euro zone unanimity is far from certain. At best, the cashstrapped state is only half way there.
Gazprom’s Novatek sale deserves investor scrutiny 4 May 2011 The Russian gas giant's indirect sale of 9.4 percent of independent gas producer Novatek to two wellconnected businessmen has cost its shareholders over $1 billion. This raises serious questions about the group's murky relationship with its erstwhile banking arm, Gazprombank.
Smaller chips are driving bigger announcements 4 May 2011 Applied Materials and Intel have grown huge through their mastery of making semiconductors smaller and more complex. Applied's $4.9 bln purchase of Varian, and Intel's most significant technology announcement of the year are all part of staying on the right side of Moore's Law.
Goldman got a steal of a deal on Facebook 4 May 2011 That's if Renren is any guide. After shares surged on their debut, China's answer to the social network giant was valued at about 100 times last year's revenue. On that basis, Facebook is worth $200 bln and Goldman bought in at a quarter of that. Here's a bubbly justification.
Hong Kong’s hot IPOs more style than substance 4 May 2011 Glencore, Prada and Jimmy Choo show the city can attract big resource companies and luxury brands. But less cyclical companies and Chinese growth stocks still prefer other bourses. Hong Kong must look beyond big names and investment fads if it wants to be a global financial hub.
Fiat’s Marchionne gets auto deal of the century 3 May 2011 Chrysler is finally profitable, but still struggling. So the $1.3 bln Fiat will soon pay to own another 16 pct may not look like a steal. The juice lies in synergies. The present value of cutting just 3 pct of combined costs is some $17 billion, double Chrysler's implied worth.
Europe’s junk bonds can cope with some bumps 3 May 2011 Highlyleveraged deals are making a comeback, as are credit bubble relics like paymentinkind bonds. Rising interest rates or a pickup in defaults could spook investors. Still, with bank loans shrinking and money flowing in, highyield debt has not yet reached its high point.
Dollar bounce back will hit bubbly markets hard 3 May 2011 The dollar is at a threeyear low as global markets are dominated by a carry trade centred on the greenback. The trade may persist for a while longer. But as the U.S. economy recovers and interest rates rise the dollar will rebound and many bubbles will be popped.
Renren hardly looks worth huge premium to Facebook 3 May 2011 The Chinese social network's IPO aims to fetch twice the implied valuation of its larger unlisted U.S. peer. Yet Renren's revenue growth is slowing, its audit chief just quit and user numbers deserve scrutiny. That means Facebook should be worth more or Renren less.
Deutsche mortgage misstep is doubly embarrassing 3 May 2011 Being sued for mortgage fraud is bad enough. Deutsche is taking solace in 90 pct of the loans being made before it bought the alleged offender, MortgageIT. But it calls Deutsche's due diligence into question. That's a bad advert for a bank trying to sell M&A advice to clients.
Glencore’s peak timing not only echo of Blackstone 3 May 2011 It has become a Wall Street meme that the commodity trader's planned $12 bln IPO marks the top of its industry's boom, just as Blackstone's did. But similarities of opacity, nonstandard governance and sovereign fund investment may also make the comparison apropos.
Nasdaq/ICE wrestle hostile history as much as NYSE 3 May 2011 The duo may feel the Big Board's double rejection left them no choice but to go right to shareholders. But the tactic didn't work when Nasdaq's Greifeld chased the London Stock Exchange. Other hostile bourse bids, including one by ICE, failed too. Precedent isn't on their side.