Colombia’s land reform talks have handy template 19 Nov 2012 Land is the first order of business for the government and FARC rebels. Getting past ideas of communal ownership and agreeing on restitution or redistribution is crucial. As Hernando de Soto showed in neighboring Peru, solid property titles can be useful fuel for economic growth.
MegaFon should dial down price hopes for IPO 19 Nov 2012 The Russian mobile operator is tackling worries over ownership and governance. But liquidity and country concerns may still deter generalist investors. A maximum $14 bln market capitalisation also looks too rich versus rival MTS, despite MegaFon’s simpler shape and faster growth.
ACS shows who’s the boss at Hochtief 19 Nov 2012 The Spanish group is purging the top management of Hochtief 18 months after gaining control of the German builder. What makes sense for struggling ACS could endanger its subsidiary’s future. Investors should learn to mistrust promises made in the heat of takeover battles.
Intel’s next chief can’t be chip off old block 19 Nov 2012 The semiconductor giant’s shine has dulled with the rise of mobile. Being surpassed in market value by Qualcomm illustrates the shift. Retiring CEO Paul Otellini’s replacement will have to tackle smartphones, but time is wasting. Intel also needs to play tougher defense.
Soft power is priceless – and scarce 19 Nov 2012 When the term was coined in 1990, the U.S. way of life still had broad appeal. But America is now equally distrusted and emulated. No nation has filled the soft power gap. Japan and the UK are powerless despite a new study that says otherwise, and China offers only soft weakness.
Colombia brokerage fail more MF Global than Lehman 19 Nov 2012 Interbolsa’s collapse evokes elements of both Wall Street firms. But the demise of Colombia’s largest brokerage is merely painful like MF Global’s, not systemic like Lehman’s. At least Colombia’s regulators have an excuse: they’re toothless until a firm fails. That has to change.
HSBC needs to put numbers on China ambition 19 Nov 2012 The emerging market lender is in talks to offload its $9.2 bln stake in insurer Ping An. A sale fits HSBC’s focus on capital efficiency. But now CEO Stuart Gulliver should explain why the bank’s even larger shareholding in Bank of Communications still makes financial sense.
Hugo Dixon: Is Hollande more like Rajoy or Monti? 19 Nov 2012 In other words, is France’s president condemned to be always behind the curve with reform like Spain’s PM? Or can he get ahead of it like Italy’s PM? Hollande started off like Rajoy. But he is finally talking sense. What’s not clear is if he has the courage to keep it up.
Qatar dodges shareholder duty on Glenstrata 19 Nov 2012 The emirate may be confident of Glencore’s ability to retain Xstrata’s top talent. But abstaining from the vote on retention bonuses in the merger after pushing aggressively for better terms leaves a job half done and makes the sovereign fund look inconsistent at best.
Bayern’s profits shine in fickle football economy 19 Nov 2012 The German Bundesliga team’s steady profit stands in stark contrast to the exuberant irrationality that is the rule in European football. Other teams, as well as real-world managers or bankers, could learn a few things from the world’s most financially successful team.
Blackstone begins pricey auf Wiedersehen 16 Nov 2012 Its 2.7 bln euro Deutsche Telekom misadventure is unwinding after six years. Blackstone will keep a seat on the German telco’s board, but it dumped a third of its underwater investment. The loss shows why private equity and minority stakes in big public companies don’t connect.
Whatever happened to the fiscal "Cialis plan?" 16 Nov 2012 That was the name given to a piece of U.S. legislation spearheaded by Erskine Bowles that would have given the lame duck Congress a way to avoid the fiscal cliff and set the framework for a grand bargain. Its absence from the debate suggests a mere temporary patch in 2012.
Chesapeake mini-me CEO’s days should be numbered 16 Nov 2012 SandRidge’s top shareholders make a solid case to oust boss Tom Ward, a co-founder of wobbly energy peer Chesapeake. Unless stopped, Ward plans to sell the firm’s best oil assets. And his outrageous pay - $25 mln, or half 2011 earnings - shows directors have neglected investors.
Hostess Brands is dead, long live the Twinkie 16 Nov 2012 The fluorescent yellow cream-filled cakes are a cultural touchstone for generations of Americans. As Hostess limps through a second bankruptcy in three years, the nuclear option of liquidation is being pursued. But the Twinkie brand’s half-life should be longer than its maker’s.
Review: Why Polaroid faded away 16 Nov 2012 The instant photo pioneer had three fantastic decades, and an equally long descent. Digital technology and predatory financiers were too much for weak managers. A pacey new book is weak on finance, but shows how Edwin Land, Polaroid’s dazzling founder, was a lot like Steve Jobs.
Choose outside man for Bank of England governor 16 Nov 2012 Any private company which performed as badly as the UK central bank would be in for a major restructuring, starting with an untainted and imaginative leader. Insider Paul Tucker, the current favourite for the top job, does not fit the bill. John Vickers would be a better choice.
Counterpoint: Tucker best man for impossible job 16 Nov 2012 The new Bank of England chief will be expected to preserve growth, prevent bubbles and keep banks safe. Whoever is chosen will probably fall short. Deputy governor Paul Tucker has the best credentials. And despite being an insider, the contrast with Mervyn King will be large.
Reckitt enters vitamin wars with a Bang 16 Nov 2012 The consumer powerhouse behind Cillit Bang has gatecrashed Bayer’s bid for U.S. vitamin maker Schiff. At a 23.5 pct premium and 16.5 times EBITDA, the $1.4 bln counterbid is potent stuff. But trust Reckitt to extract big synergies, as it did in previous punchy deals.
Fraser and Neave investors edge closer to success 16 Nov 2012 The Singaporean conglomerate has attracted a rival $10.7 bln offer from a consortium including 15 pct shareholder Kirin. Now the Japanese group has put a firm price on its target’s food and drink assets, F&N’s break-up value is becoming clearer. Further upside looks limited.
BNP and SocGen smiling after Hollande U-turn 16 Nov 2012 Remember how France’s president promised a war on banks? Now his finance minister says Paris will only crack down on proprietary trading, leaving market-making untouched. This could undermine the Liikanen report’s call for market-making to be ring-fenced across the EU.
BP’s Macondo deal comes with criminal hangover 15 Nov 2012 A sigh of relief is in order at the embattled UK oil major. It settled with Uncle Sam for $4.5 bln - less than feared. But it’s not over. BP’s admission of criminal guilt in the 2010 Gulf spill could be used in a high-stakes civil trial. No wonder investors aren’t cheering.
Jon Corzine may yet do some good for finance 15 Nov 2012 A congressional report lays MF Global’s collapse at his feet. Lawmakers also blame a familiar litany of cavalier Wall Street behavior, but say a combined SEC and CFTC would have helped. If Corzine’s actions inspire the move, something positive will have come from the situation.
Law firms face same merger risks as their clients 15 Nov 2012 There may be sensible reasons for Norton Rose and Fulbright & Jaworski to unite and for SNR Denton to seek a three-way tie-up. Cross-border deals can help serve companies going global. But culture, pay and conflicts are hard to manage. The danger is sacrificing quality for scale.
China has easier path than buying West’s resources 15 Nov 2012 Companies from the PRC and elsewhere have met political flak trying to acquire U.S. and Canadian energy firms that hold oil and gas rights. A smarter strategy could be to snag know-how needed to unlock reserves at home. Oil services experts like $7 bln Weatherford fit the bill.
"No" vote on Glenstrata pay creates little value 15 Nov 2012 Glencore’s $32 bln Xstrata offer will probably succeed now lead shareholder Qatar is backing it. A $220 mln retention plan for top staff may fail. But paying up to keep talent, while unpalatable, makes sense. The enlarged company will struggle to hold on to the savings.
Diamond Foods recovery looks a hard nut to crack 15 Nov 2012 The snacks purveyor finally cleaned up its books, more than a year after Breakingviews helped uncover errors. The upshot is $57 mln of lost profit and pricey debt equal to a hefty 7.5 times generously adjusted EBITDA. Getting back on track requires more than better accounting.
Euro zone dodges disaster but doesn’t rebound 15 Nov 2012 With the exception of Greece, the third quarter shows that the monetary union’s members have avoided the vicious cycle of debt deflation and GDP decline. France even managed a little growth. With no exceptions, GDP growth is not fast enough to make debt problems melt away.
Prokhorov’s RenCap grab likely prelude to a sale 15 Nov 2012 The Russian oligarch has had it with propping up RenCap. He is taking control after the investment bank, hit by sluggish emerging economies, slipped in its domestic core market. For the now politically-focused billionaire, a quick turnaround-and-sale is the order of the day.
China’s leadership line-up gets 6.5 out of 10 15 Nov 2012 The new Standing Committee looks conservative, but its seven members don’t lack experience. Judged on criteria like crisis management and economic growth, there’s enough to offer encouragement. But factional ties and a lack of diversity count against them.
Old hands to become China’s new finance guards 15 Nov 2012 China’s central bank chief may retire after being left out on the Party’s central committee. The head of China’s sovereign wealth fund and Bank of China’s chairman are likely to take key finance jobs. Although the state keeps a tight grip, personal styles still matter.