Pfizer unlikely to avoid China anti-trust therapy 8 May 2014 The chance to vet a $106 bln deal for drug-maker AstraZeneca looks too good to pass up. Watchdog MOFCOM is keen to stand up for local consumers. It’s no bogeyman: decisions are slow but mostly well-reasoned. Pfizer might improve its chances by getting Astra’s board on-side.
Alibaba’s IPO filing has strategy-shaped hole 8 May 2014 The Chinese e-commerce giant’s disclosures make little sense of its recent investments. A near-monopoly and fat margins give Alibaba leeway with new investors, but the worry is that having other people’s money to spend isn’t conducive to discipline.
Yahoo’s Alibaba windfall tough to spend wisely 7 May 2014 After selling part of its stake in the Chinese company’s mega-IPO, Yahoo could have $12 bln in cash. Buybacks have been getting pricier, and with Alibaba stock traded separately the U.S. firm may be tempted to throw money at its own business – whatever that may actually be.
Regulators get in on the private equity joke 7 May 2014 After two-and-a-half years of poking around, the SEC has discovered the model lends itself to greedy behavior. For one thing, over half the firms the agency probed had abused expenses and fees. Given where the buyout business is headed, watchdogs could be kept plenty busy.
Mondelez cookie monster fueled by Dutch java deal 7 May 2014 With the sale of its coffee business, the $65 bln Oreos-to-Cadbury group gets $5 bln of cash and a more focused snack-foods portfolio. A simultaneous restructuring should allow it to cut more costs and limber up for new deals, starting with director Nelson Peltz’s bugbear, Pepsi.
Whole Foods could use a double shot of Starbucks 7 May 2014 The organic superstore hopes to triple its stores despite signs the health-food market is saturating. The coffee chain’s crisis six years ago showed the benefits of running existing shops more effectively over opening new ones across the street from each other.
AstraZeneca is not the UK science base 7 May 2014 UK politicians worry that a Pfizer takeover would erode British scientific competence. But if that foundation were strong, the deal would hardly matter. The drug industry has fundamental problems. That’s why Astra has been slashing R&D by itself, and cost-cutting is driving M&A.
Europe’s new coffee house may find M&A addictive 7 May 2014 Douwe Egberts will brew at double strength after blending with the caffeine-rich operations of Mondelez. With $7 bln of sales, the new group will challenge Nestlé in the business. It’s a big step for Bart Becht’s Amsterdam-based coffee shop – and unlikely to be the last.
Edward Hadas: Shhh – don’t talk about higher taxes 7 May 2014 The OECD has echoed the IMF’s call for more equal incomes. But voters aren’t keen on the commonly touted remedy – higher taxes on the rich. Perhaps they dislike expropriating governments more than unjustly large incomes. Taxes aren’t the only remedy.
Shale laggard’s $3 bln deal just a baby step 7 May 2014 Encana is paying Freeport just half the price per barrel Devon paid in a similar deal last year. After snubbing the shift from cheap gas for longer than rivals, the Canadian firm needed to do something. But catching up with shale leaders like EOG takes more than one canny deal.
Alstom chase is distraction from Siemens revamp 7 May 2014 The German engineering giant’s long-awaited new strategy sensibly focuses on improving efficiency and cutting slack. A possible Alstom deal comes at a bad time, even though the French rival would be a good industrial fit. Siemens management has enough to deal with in-house.
SocGen sanctioned by its Russian optimism 7 May 2014 The French bank took a 525 million euro first-quarter hit on its Moscow unit. Yet the economic slowdown, weakening rouble, and potential Western sanctions aren’t shaking SocGen’s bullish take on Russia. That may be correct in the long run; right now, it looks too rose-tinted.
Yingluck ouster makes Thailand Asia’s sick man 7 May 2014 A court has fired the prime minister and a part of her cabinet. While the rest of the caretaker government has survived, the opposition is unlikely to allow fresh polls soon. With no leader to guide it, the economy will be Asia’s worst performer, and perhaps not just this year.
Sainsbury is yet to prove super-market strength 7 May 2014 Price war? What price war? Good full-year results from the UK supermarket group counter the view that competition is crushing British grocers’ profits. Sainsbury’s outgoing CEO Justin King is upbeat on the outlook too. The risk is its pain is being postponed rather than avoided.
Alibaba’s big reveal: high growth, odd governance 7 May 2014 The Chinese e-commerce giant’s IPO filing shows it processed $248 bln of goods in 2013, yet squeezed just a third as much revenue from sellers as eBay. Both numbers should continue to grow. The catch is that new investors have little say: the founders are keeping firm control.
Merck cashes in consumer chips for wise drug wager 6 May 2014 The pharmaceutical firm’s $14 bln sale of its Claritin-to-Coppertone business frees cash for developing a potentially breakthrough cancer medicine. With the company’s odds for success better than in years, selling high and doubling down on possible blockbusters seems a smart bet.
Fiat Chrysler boss pumps magic gas into tank 6 May 2014 Sergio Marchionne wants to turbo-boost sales 59 percent by 2018. That would mean doubling demand for Jeep and other U.S. brands while outgrowing the market and bigger and better-funded rivals. Saving Chrysler in the face of widespread doubt looks almost easy by comparison.
AstraZeneca implies surrender can be bought 6 May 2014 The UK drugmaker has launched its defence against Pfizer’s $106 bln approach by detailing a portfolio with a potential 73 pct of added sales by 2023. It sounds more like an inventory waiting to be valued than an argument for independence. The chances of a deal have barely fallen.
Tax steroids justify Bayer’s $14 bln Merck deal 6 May 2014 The German pharma giant is paying an eye-watering 21 times latest EBITDA for Merck’s consumer unit. The price is high in the context of achievable cost savings and hoped-for revenue benefits. But the acquisition makes strategic sense and sizable tax breaks will help.
Applus better play it safe with IPO pricing 6 May 2014 The Spanish industrial testing company plans to raise 1.1 billion euros. The sector’s track record is impressive and Applus is growing faster than rivals. But it’s less diversified, and will still be saddled with debt. As such, it deserves a discount.
Rob Cox: Solving America’s homegrown Putin dilemma 6 May 2014 Critics say that Obama’s targeted economic sanctions against some Russian oligarchs smack of appeasement. Yet silence prevails when it comes to a Nevada tax scofflaw surrounded by vigilantes. If the U.S. can’t uphold the rule of law at home, it can have no credibility abroad.
Barclays shows why it needs to do a UBS 6 May 2014 The UK bank saw Q1 fixed-income revenue fall even more than forecast. Its Swiss peer didn’t fare much better, but UBS is already well into a wealth management-focused turnaround. While Barclays has fewer options, its strategic revamp on May 8 needs to be similarly radical.
Alstom’s train future is with Siemens, not GE 6 May 2014 Paris opposes an offer by the U.S. group to buy Alstom’s power business unless the French company gets the American’s transport assets in exchange. That is a barmy idea. What Alstom should try instead is use GE’s money to build a pan-European train business with Siemens.
India’s wobbly economy needs a factory revival 6 May 2014 The economy perches unsteadily on software exports, hot money flows and fiscal grants to villages. All three stymie manufacturing, which is necessary to create the millions of jobs India needs. A Narendra Modi government could change this with Japanese-backed industrial zones.
China could reform its way into a housing slump 6 May 2014 Prices are sliding; homebuyers are getting wiser. Sales fell by almost a third during the May holidays. It creates a dilemma: financial repression helped blow up the bubble; without it there may be a pop. Still, the case for interest-rate reform is too strong to turn back now.
Mini-me tech bubble is mere shadow of 2000 excess 5 May 2014 The run-up may have paused, but dozens of companies are in line to float, hubris is rampant, oddball metrics abound, and revenue-free startups are still worth fortunes. Even nerd culture has become hip. The latest internet boom is as absurd as the last, but it’s far smaller.
Target boss exit heralds top tech officers’ rise 5 May 2014 CEO Gregg Steinhafel has been held accountable for the retailer’s massive data breach last year. That should put heat on other corporate honchos to take cybersecurity seriously. Chief information executives deserve more say in company policy - if not a path to the head job.
U.S. Nobel winner put useful economic spin on life 5 May 2014 Chicago’s Gary Becker, dead at 83, first gave arguments against discrimination quantitative heft, then applied a certain clear-eyed logic to crime, family structure and “rotten kids.” Critics found his theories dehumanizing, but his insights are still influencing social policy.
Hugo Dixon: Do national champions merit protection? 5 May 2014 Only when the target is genuinely strategic and the bidder may not have the country’s interests at heart. In other cases, including Pfizer’s bid for AstraZeneca and GE’s acquisition of Alstom’s power business, governments should stay neutral.
ECB easing would be better this month than next 5 May 2014 The central bank last eased policy half a year ago. It can always find excuses to prevaricate longer. The euro rally has paused, rises in short-term market rates have yet to lift longer ones, inflation is inching up. But the economy needs help, and the quicker the better.