Activist bet on Evercore would have beaten Lazard 24 Oct 2013 Nelson Peltz’s punt on Lazard is paying off nicely, with the stock up 50 pct since CEO Ken Jacobs set stringent financial targets 18 months ago. The firm’s latest figures show he’s on track. But Peltz would have doubled his money owning smaller advisory outfit Evercore instead.
Dr Martens can run faster with private equity 24 Oct 2013 Permira is back in an old stomping ground: fashion. It is paying $485 mln for punk rock’s favourite bootmaker. The price tag is rich, but the target has a strong brand and a growing global footprint. The only spot of bovver would be if the moneymen hurt DMs’ rebel image.
McKesson’s $8 bln Celesio bid falls a bit short 24 Oct 2013 U.S. pharmaceutical wholesaler McKesson has struck a deal with Celesio’s owner to buy the German group in a 6.1 billion euro deal. But the 39 percent premium it implies still leaves the offer on the lower end of what minorities could expect. There may be room for more.
Credit Suisse shoved into another restructuring 24 Oct 2013 The Swiss bank’s Q3 was marred by a bigger fall in fixed income than at most U.S. peers. It is taking the axe to its capital-intensive rates trading business in response. Achieving decent returns from lower risk is a constant struggle. But reducing pay faster would help.
China bank IPO shows rewards of financial alchemy 24 Oct 2013 Bank of Chongqing’s remarkable 32 percent return on equity relies on a trick that is all the rage for the country’s lenders: repackaging loans to look like low-risk investments in other banks. For investors it’s a profit opportunity. For regulators, it’s a potential nightmare.
Santander’s capital headache starts to subside 24 Oct 2013 The Spanish bank reckons all 10 of its core markets will grow next year. The heavy lifting on provisions is over, and next year’s asset quality review shouldn’t throw up surprises. But Santander’s position under the latest Basel III capital reforms isn’t yet convincing.
HTC has no easy exit from competitive rut 24 Oct 2013 The Taiwanese handset maker is losing market share to flashier rivals like Apple and Xiaomi. The shares are down 90 percent in two years. It posted a quarterly loss and may sell some factories to save cash. An outright takeover might seem logical, but while HTC’s products are attractive, the valuation is not.
Goldman’s Gary Cohn not as clueless as he sounds 23 Oct 2013 Saying he’s not “precisely” sure why his traders had a crummy quarter may come across as dim or deliberately obfuscating or even honest. Whatever the case, it’s not confidence-inducing for a top Wall Street executive to express uncertainty about past market conditions.
Market underestimating commodity bust hangover 23 Oct 2013 The end of the 10-year mining super-cycle was bound to cause pain. Yet equipment-maker Caterpillar surprised itself and investors with its fourth earnings miss in a row. The industry leader and rivals are trading at valuations that imply a recovery soon. That’s wrongheaded.
Secret-court foes win battle but not yet war 23 Oct 2013 A U.S. appellate panel said Delaware jurists can’t resolve disputes in private. That ensures the preferred corporate legal forum stays accountable for now. The Supreme Court’s push for closed-door arbitrations, however, may still cheat dealmakers out of useful legal precedent.
Brazil’s wasteful state bank can learn from Chile 23 Oct 2013 Most of the $80 bln BNDES lends every year goes to big firms like Vale or Petrobras, which could easily borrow from private sector lenders. The OECD thinks that’s bad policy. CORFO, Chile’s development bank, does a better job directing resources where they’re actually useful.
Eight questions for three Buffetts 23 Oct 2013 Warren Buffett’s son, Howard G., and his grandson, Howard W., have written a book chronicling their work on hunger, farming and poverty around the world. The three men talk to Breakingviews about the effects of inefficient markets, technology, tax policy and Berkshire Hathaway.
Orange rally suffers reality check 23 Oct 2013 The former France Telecom had gained 38 pct in two months, before quarterly results prompted a wobble. The stock still looks cheap versus peers, so investors may see the selloff as a buying opportunity. But the discount reflects a tough and unpredictable home market.
UK risks return to 1980s labour battles 23 Oct 2013 A major chemical plant is to close after failing to resolve an industrial dispute, while postal workers are following teachers in a walkout. Job and wage flexibility have helped the UK through recession. The country cannot afford a new Thatcherite period of confrontation.
High-tech glass maker finds smashing way to grow 23 Oct 2013 Corning’s taking full control of its Korean LCD display unit from Samsung and other minorities. Samsung gets a chunk of the Gorilla Glass maker and a long-term partner to produce needed high-tech materials. And Corning strengthens its position against its rivals on the cheap.
ECB’s bank review balances pragmatism and pain 23 Oct 2013 The central bank’s template for its assessment of euro zone banks’ finances looks robust inasmuch as it will help harmonise opaque and disparate balance sheets. It’s not that strenuous on capital buffers – which takes sting out of the question of who will fill the holes.
Local difficulties dent Heineken’s world view 23 Oct 2013 The Dutch brewer has centred its strategy around owning one of the few global brands in beer. Yet disappointing quarterly results reveal country-specific problems in Russia and elsewhere. Management would do well to lavish more attention on local markets.
Li Ka-shing still has what investors want 23 Oct 2013 Asia’s richest man may be an octogenarian but he still knows when to buy and sell. While the listed bits of his empire show a mixed record, Li’s two prized holding companies have matched or beaten the market. That provides valuable pointers as Li readies a new batch of IPOs.
Ferrovial hedges regulatory risk at Heathrow 23 Oct 2013 The Spanish infrastructure group has sold an 8.7 percent stake in the company that controls Heathrow to a top UK pension fund, USS. Ferrovial gets a good price and remains the airport’s largest investor. Bringing in a local partner makes sense for such a regulated asset.
Fleeing multinationals mean India needs hot money 23 Oct 2013 BHP Billiton is all but giving up on exploring for Indian oil and gas because of delayed clearances. Harsh rules on foreign stores have upended Wal-Mart’s plans. With a faltering business climate, New Delhi still craves investment dollars. Fickle short-term cash is its only bet.
Apple jabs at Microsoft with giveaways 22 Oct 2013 Mac users won’t have to pay for the latest operating system. Those who buy a new product won’t pay for spreadsheets or movie creation – on the device or in the cloud. In short, Apple and Google are training users to expect software to be free. For Microsoft, that’s a problem.
U.S. economy needed shutdown like hole in the head 22 Oct 2013 With only 126,000 new private-sector jobs, delayed September data were below ADP numbers released earlier. Labor force participation remained at 1978 levels. As another weak report is due soon and Congress dithers on fiscal policy, the Fed won’t be inclined to taper bond-buying.
U.S. bank living wills now mostly bail-in prep 22 Oct 2013 Having financial firms arrange their own funeral was a key goal for dealing with dying banks. But regulators’ need for them has faded as bondholder bail-ins now seem more likely than wind-downs. Living wills can, at least, help watchdogs stay up to speed on market complexity.
Time for Reckitt to quit prescription drugs 22 Oct 2013 The household goods group is wondering what to do with its heroin substitute. A full disposal would be the best outcome. Sales are sliding, generic competition is mounting, and the business sits oddly with the rest of Reckitt. Still, the parent will be lucky to get 2 bln stg.
Blueprint for new BoE could start with rebrand 22 Oct 2013 The Bank of England has hired McKinsey and Deloitte to review strategy and operations. It’s a chance for the 319-year-old institution to review its KPIs to better leverage its USP and remotivate its key stakeholders.
Big U.S. bank fines far more art than science 22 Oct 2013 In theory there are defined, if loose, legal criteria for penalties. But the largest, like the possible $13 bln bite out of JPMorgan, can seem pulled from thin air. While courts occasionally run the rule over the numbers, regulators’ zeal and public outrage outweigh the logic.
Germany could afford well-designed minimum wage 22 Oct 2013 The Social Democrats want a minimum wage in Germany as a condition of governing with Angela Merkel. Launched with care, it could do some good. Safeguards should include regional flexibility and rigorous independence of the wage-setting process.
Netflix could turn troublesome euphoria into useful cash 22 Oct 2013 The online video company’s stock has quadrupled since January. CEO Reed Hastings warns that momentum investors are too euphoric. Diluting the punchbowl is a better way to calm this rowdy party - and answer doubts about its balance sheet.
Brazilian auction shows the price of oil populism 22 Oct 2013 Roping Shell and Total into the development of a giant offshore oilfield qualifies as a partial win for Brasilia. Unfriendly policies scared off others, who might have given Brazil a bigger share of profits. President Dilma Rousseff is lucky her pandering didn’t do more damage.
At last, central bank candour on property bubbles 22 Oct 2013 The Bundesbank says apartment prices in some German cities could be 20 pct overvalued. Policymakers usually avoid such blatant views on prices, saying distortions aren’t their problem unless leverage is a factor. That’s too narrow: central banks have a role as market critics.