PICC seeks strength in numbers ahead of IPO 22 Nov 2012 The Chinese insurer’s 17 investment banks have signed up 17 “cornerstone” backers in advance of its $3.6 bln offering. Though they’re hardly big-name value investors, they are buying more than half the available shares. In a tough market, PICC needs all the help it can get.
EU rebate fudge will be a squandered opportunity 22 Nov 2012 European leaders may not agree on the EU’s multi-year budget at their summit this weekend, but they are drifting towards a compromise. That’s too bad: the EU needs a serious debate on how it spends its money - and what solidarity means.
A Hewlett-Packard primer on how not to do a deal 21 Nov 2012 A $12 bln acquisition at a 64 pct premium should involve more due diligence than looking at public financial statements. Don’t ignore your CFO if she thinks the price is way too high. And never buy anything from Frank Quattrone. Breakingviews sketches out the don’ts.
RBS’s Citizens unit all dressed up, nowhere to go 21 Nov 2012 The U.S. bank, with its $120 bln balance sheet, is a prize asset. That should mean a bidding war if UK taxpayer-owned RBS sells it. But the need to pay cash, keep their own investors happy and satisfy watchdogs may give buyers pause. Citizens could remain foreign for a while.
Disney chief’s unlikely fairy godfather: Murdoch 21 Nov 2012 With News Corp snapping up a piece of the Yankees TV network, Bob Iger’s battle with Rupert Murdoch is becoming more intense. But News Corp’s rich price for the deal implies a punchy valuation for Disney’s much-coveted ESPN. That could make the whole Magic Kingdom worth more.
German press crunch time could imperil democracy 21 Nov 2012 The oldest national paper is insolvent and Financial Times Deutschland is in limbo. German quality publications are suffering from the familiar problems of old media in the internet age. The sector is vital for the country. It might soon have to argue for a public bailout.
Ethical economy: Candidates as consumer products 21 Nov 2012 Supermarket-style data mining was one key to Obama’s victory. The skill is undeniable, but governance is hurt by this manipulative approach to opinion-forming and opinion-following. Scientific electioneering only worsens the problems caused by money and “magical thinking”.
Hedgies’ star quality is in the eye of investor 21 Nov 2012 Hedge-fund managers can get rich and attract new clients by performing exceptionally well for a small number of early investors. But if they disappoint later, many clients lose money. The real stars are those that leave most investors better off. Sadly, they are hard to spot.
Greece needs a positive shock 21 Nov 2012 It didn’t get one at the overnight Eurogroup meeting, which failed again to agree on a plan to make Athens’ debt sustainable. While a deal may be struck when finance ministers reconvene next week, it risks being a fudge. The IMF should stand its ground and demand a proper plan.
BOJ must shed freedom but keep the printing press 21 Nov 2012 Japan’s politicians are making an election issue out of the somewhat quaint subject of central bank independence. While Prime Minister Noda’s dogged defence of the BOJ’s freedom is intellectually outdated, his challenger Abe’s plan to hijack the money-printing process is risky.
Merkel forgets austerity at home as elections near 21 Nov 2012 Europe’s austerity grand priestess seems to have forgotten domestic fiscal prudence as she braces for a tough political fight next year. She is spending freely on pet projects that voters might like. Germany does need more public spending, but not that type.
Egypt’s "dream revolution" still looks distant 21 Nov 2012 Disappointment has replaced hope two years after the Tahrir Square rebellion that ousted Hosni Mubarak. The IMF deal is a boost but the economy lacks direction and support for the Muslim Brotherhood is waning. Investors hoping to profit from Egypt’s potential face a long wait.
HP’s Autonomess should devour Marc Andreessen, too 20 Nov 2012 The Silicon Valley visionary behind Netscape goaded Leo Apotheker, the CEO he recruited to HP, to bet big on Autonomy as part of his “software eating the world” thesis. Andreessen was also integral to the value-destructive Palm deal. HP’s board would be better off without him.
Enforcers keep on casting for biggest SAC fish 20 Nov 2012 The feds hit Mathew Martoma, an ex-trader at Steve Cohen’s hedge fund firm, with criminal and civil insider trading complaints. They say he directly urged his boss to trade, helping make $276 mln. But if they hope Martoma can assist them in landing Cohen, they’ll need to deal.
JPMorgan CFO rejig leaves only Dimon unpunished 20 Nov 2012 Promoting Marianne Lake ticks several boxes. It sidelines another top dog, Doug Braunstein, who failed to spot the London CIO mess; adds another woman to the c-suite; and restores the CFO’s place in the hierarchy. Clawing back some of Dimon’s pay would at last harpoon the whale.
Baseball is due to face a financial curveball 20 Nov 2012 Rupert Murdoch is buying into the New York Yankees cable network at a Ruthian EBITDA multiple. Player salaries and ticket prices have surged at triple the rate of inflation over 20 years while franchise values are at 42 times operating income. These diamonds aren’t forever.
Deloitte tests whether TBTF applies to accounting 20 Nov 2012 If what HP says is true, Autonomy’s auditor will be in a tight spot. Deloitte keeps popping up in scandals despite a public shaming by its regulator. It’s becoming increasingly clear that the Big Four structure is leaving companies too vulnerable. It may be time to break them up.
HP’s $8.8 bln Autonomy trouble sown by dysfunction 20 Nov 2012 Sure, the granddaddy of Silicon Valley blames accounting improprieties at the UK software company it bought for nearly $12 bln last year. But HP, facing declining businesses and boardroom disarray, was too eager. CEO Meg Whitman’s already tough job just got even harder.
HP-Autonomy row suggests bankers did not compute 20 Nov 2012 There’s plenty of blame to go around in the explosive bust-up between the U.S. tech giant and the British data-sifter. But it raises tough questions for the M&A advisers who shepherded the $12 bln deal, chiefly Frank Quattrone’s Qatalyst, Barclays and Perella Weinberg.
UK tech suffers with fall of lonely star 20 Nov 2012 Autonomy and ARM Holdings were the only gigantic tech successes in a country anxious to develop Silicon Valley-style hubs. Now one of the two national champions has fallen badly. For today’s British start-ups, Autonomy’s problem may make fund-raising a bit trickier.
UBS rogue trader verdict leaves open question 20 Nov 2012 Kweku Adoboli was found guilty of committing a fraud that led to a $2.3 billion loss at UBS. But he was acquitted of false accounting. The trial shows Adoboli did something wrong, but it did not determine whether he worked in a bank, and industry, with a defective culture.
New Glenstrata chair faces big repair job 20 Nov 2012 Xstrata chairman John Bond is going after shareholders approved Glencore’s $31 bln takeover, but snubbed the board in a complicated vote. His successor needs a forceful personality. Glencore fluffed the chance to get a strong chairman before its float. Now is the time to fix it.
Credit Suisse shrinks to fit new realities 20 Nov 2012 The Swiss bank has to deal with straitened times and regulatory pressure for more capital and simpler structures. So it is slashing headcount, including three big chiefs, and making businesses more separate. It looks like the beginning of the end for the one-bank strategy.
Moody’s downgrade is good news for France 20 Nov 2012 The U.S. ratings agency has followed S&P in stripping France of its AAA status. The arguments are well known, and markets yawned. But the move will add to the pressure to plough ahead with reforms. It could even help François Hollande convince the French there’s no time to lose.
Fiat Industrial unearths more value in CNH tie-up 20 Nov 2012 The Italian tractor maker’s no-premium merger bid for 88 pct-owned unit CNH was rightly rebuffed by a committee of the U.S. company’s board. FI is back with a 26 pct cash bump. The bidder’s not above some arm-twisting too. But this looks more like a fair squeeze-out premium.
Short-seller raises stakes with Singaporean attack 20 Nov 2012 Shares in Olam have been suspended after Muddy Waters founder Carson Block questioned its accounts. His record of exposing Chinese frauds will make investors take notice. But the commodity trader, and largest shareholder Temasek, are bigger game. Both sides have much to lose.
Weibo has reason to “open sesame” to Alibaba 20 Nov 2012 China’s Twitter may be considering selling a stake to the country’s largest e-commerce group. It could pave the way for owner Sina to spin Weibo off, and create revenue synergies for both. Minority stakes have limits, but co-operation might ultimately make Weibo more valuable.
Amazon of China defies down-round blues after all 20 Nov 2012 The valuation of online shopping site 360buy swelled by 15 pct to $7.6 bln in a year, despite widening losses. VCs continue to pour money into China’s crowded e-commerce space. But as players increasingly compete for market share by discounting, profits look ever more elusive.
India in depth: Economy unmoved by shock therapy 20 Nov 2012 The government’s high-decibel reform campaign hasn’t brought much succour to the listless economy. The stock market rally is losing steam, and the rupee is weakening. The slowdown in bank credit, which is critical for an investment revival, may continue into next year.
If Apple becomes Microsoft, investors should cheer 19 Nov 2012 At least, that is, for their wallets. Middle age for tech stocks can hurt as growth shareholders lose interest and value-oriented owners await stability. But Apple has already made the transition. Even if its next decade echoes Microsoft’s last, the company is worth over $1 trln.