Macquarie wrong turns put toll road in bankruptcy 23 Sep 2014 The U.S. route backed in part by the Australian bank went bust because of scant traffic, its operator says. In reality, the buyers created insurmountable potholes by overpaying, loading on debt and losing derivative bets. They need only look in the vanity mirror for blame.
U.S. inversion strike boosts case for real reform 23 Sep 2014 The Treasury is tightening rules to deter U.S. companies from merging with foreign firms to reduce taxes. The changes may have some effect around the edges. For the most part, though, they just lay bare lawmakers’ failure to make broader changes to America’s burdensome regime.
Tax clampdown could deter half-baked pharma M&A 23 Sep 2014 The U.S. attack on companies relocating to avoid taxes will calm pharma’s M&A binge. Deals like AbbVie’s purchase of Shire may survive on strategic logic. Pure tax-driven combinations, like Mylan/Abbott, look tricky. That lessens AstraZeneca’s vulnerability to a bid from Pfizer.
Marissa Mayer stuck with worthless Yahoo rump 23 Sep 2014 Since she was named CEO in 2012, the internet company’s market value has roughly doubled to $38 bln. The problem is that a stake in Alibaba accounts for most of it, and Yahoo Japan and cash the rest. Mayer’s task now is to persuade investors to give Yahoo even some credit.
UK torn between populism and fiscal reality 23 Sep 2014 The Scottish referendum has stirred discontent around the UK. With an election months away, the pressure is on politicians to make populist gestures. Yet the UK’s large fiscal deficit shows the need for serious reform. The risk now is of unaffordable promises.
Giant fertiliser combo looks tough to cultivate 23 Sep 2014 Norway’s Yara is talking to U.S. rival CF Industries about a $27 bln tie-up. The two boast similar valuations and could reap sizeable synergies. Hence a near-$1 bln jump in Yara’s market cap. But a merger of equals is one of the trickiest deal varieties.
Philips discount may survive breakup 23 Sep 2014 The Dutch electronics group has put reality ahead of its 120-year history by spinning off lighting, and merging healthcare and consumer. There’s no quick fix for the former. The rump may still suffer a conglomerate discount. Philips’ problems can’t be solved by flicking a switch.
Raiffeisen capital hike #2 is more when than if 23 Sep 2014 The Austrian lender’s shares are off 10 pct after another hit in Hungary and big provisions in Ukraine. After a rights issue earlier this year, it may have enough capital to deal with EU stress tests. It may not have enough to handle further bad news from the east.
China rich list misses most valuable asset: status 23 Sep 2014 Tech stars like Alibaba’s Jack Ma and Lei Jun of Xiaomi dominate the ranks of China’s wealthy, closely followed by property magnates. But such measures are incomplete. Cash buys status for the lower ranks. For those at the top, political connections are the currency that matters.
Japan’s revival faces paradox of thrift 23 Sep 2014 Higher sales taxes have crushed consumption, forcing Tokyo to lower its assessment of the economy. The Bank of Japan’s money-printing and the weaker yen cannot reverse the savings glut. The government needs a short-term fiscal boost to prevent a setback from becoming a slump.
EMC’s departing CEO can close $13 bln value gap 23 Sep 2014 The data storage giant’s longtime boss Joe Tucci can’t put off retirement forever. Buying VMware for a song was clever. But the market doesn’t fully value the company’s bits. A breakup would best ensure his financial legacy without selling out to a serial M&A destroyer like HP.
Merging law firms risk being in contempt of client 22 Sep 2014 Boston’s Bingham and Philadelphia’s Morgan Lewis may have good reasons for tying the knot. But with lower fees, personal attention and conflict-free counsel rising on clients’ wish lists, bigger is rarely better. Lawyers should leave the M&A boom to those who seek their advice.
Fed’s beleaguered cast of hawks loses more wings 22 Sep 2014 Philly Fed President Charles Plosser’s retirement reduces the tighter-money group on the FOMC, though Cleveland’s Loretta Mester, on the committee in 2016, is a protégé. They may speak and vote against the consensus but must await a new Fed chairman and governors to prevail.
Review: How Big Oil could grease invisible hand 22 Sep 2014 “Pump” contends that democracy at the gas station would help U.S. democracy more broadly. Offering drivers fuel choices like ethanol, as Brazil did, might ease the grip of Exxon Mobil and its peers. The film makes a convincing case, even as it evades some inconvenient truths.
Letter to the Editor: Ecuador’s so-called Miracle 22 Sep 2014 An Ecuadorean consultant takes issue with Rob Cox’s column on President Rafael Correa’s stewardship of the South American nation over the past seven years, pointing to erosion of freedom of the press, greater control over the judicial system and unchecked government spending.
Merck’s mega-deal leaves pharma in need of a fix 22 Sep 2014 The German drugs and chemicals maker will buy U.S. life-science group Sigma-Aldrich for $17 bln. The deal defies expectations that Merck would bulk up in pharmaceuticals. It makes strategic sense, and isn’t too expensive. But the humdrum pharma unit is left in need of repair.
Tesco takeover looks less and less crazy 22 Sep 2014 Shares tumbled after Tesco admitted overstating first-half guidance. The idea of a merger, buyout or breakup of Britain’s top retailer was until recently unthinkable. It still looks unlikely. But Tesco’s shrunken market cap of $27 bln should have suitors running the numbers.
Ackman bridges gap in race against Loeb 22 Sep 2014 A new $5 bln Amsterdam-listed fund from the Pershing Square founder should dust one in London run by his Third Point nemesis. Ackman’s lower fees and ease of valuation offset questions over governance and discount controls. The hedgie peloton has a new leader to follow.
Tesco chairman approaches his sell-by date 22 Sep 2014 The UK retailer’s warning that guidance was overstated by 250 mln stg reflects a serious controls failing. Chair Richard Broadbent recently delivered a new CEO, but has been slow to fix the board. His own lack of retail experience is starting to look like a drawback.
Siemens pays up for late entry to shale party 22 Sep 2014 The German engineer will pay a hefty $7.6 bln for Dresser-Rand, a U.S. maker of oilfield kit. This trumps Dresser’s possible merger with Sulzer of Switzerland and should stop a GE counterbid. But Siemens risks destroying value by joining a bandwagon late, as it did in solar.
Hugo Dixon: Now on to the Brexit referendum 22 Sep 2014 With the Scots voting to stay part of the UK, attention will turn to the next potential referendum: on whether Britain will remain in the EU. There are comparisons and contrasts between the two votes, as well as lessons to be learned.
Alibaba IPO highlights SoftBank’s value dilemma 22 Sep 2014 Following the Chinese e-commerce group’s listing, the Japanese conglomerate’s 32 pct stake is worth $75 bln. It eclipses the value of SoftBank’s core businesses. The near-5 pct drop in SoftBank’s shares after the IPO is a reminder the investment is both blessing and burden.
China’s jobs market in need of serious work 22 Sep 2014 The 9.7 million urban jobs created this year are a worthier achievement than any GDP growth rate. But in modern China good jobs matter as much as new ones. That calls for repurposing millions more workers from industry into services, and tackling some grave social injustices.
Magic word greed opens $228 bln Alibaba valuation 19 Sep 2014 The Chinese e-commerce giant led by Jack Ma saw its shares pop 36 pct at the open. Staggering growth and margins proved irresistible to global investors. The company’s cloudy governance, frenetic dealmaking and corporate structure could yet prove a trap.
Review: VC bigwigs reveal Valley’s contradictions 19 Sep 2014 Peter Thiel’s new book sets out possible features of the next world-changing startup that will earn its founders a monopoly – another Google, say. Ben Horowitz’s focuses on running a tech company amid fierce competition. One is about vision, the other – for most people – reality.
GSK graft case raises risk for executives in China 19 Sep 2014 The drugmaker is paying a 297 mln stg fine for bribing non-government officials in China. That sets a floor for penalties in future probes. But the suspended sentences for five executives also send a warning that pain in such cases falls on individuals just as much as companies.
Federal UK is easier to promise than to deliver 19 Sep 2014 After the Scottish rejection of independence, the UK prime minister pledged a speedy devolution of more powers. Giving regions greater control of taxes and spending sounds sensible. But the politics and practicalities of knotty issues like devolving borrowing powers will be daunting.
SAP’s biggest takeover is hard to Concur with 19 Sep 2014 The German software giant is buying the U.S. travel specialist for $7.36 bln. That’s SAP’s fifth sizeable “cloud” deal in three years. Concur brings blue-chip clients. But at 9.5 times historic sales, SAP is overpaying. And it now has a big backlog of acquisitions to integrate.
Scots’ no to independence still leaves UK in limbo 19 Sep 2014 The roughly 55:45 vote against secession in a landmark referendum reduces many risks: financial instability, a UK exit from Europe and a sharp fall in trade. But the bribe to No-voters of more devolved powers creates other dangers – including a weakening of the union.
Larry Ellison cedes driver seat with hand on wheel 19 Sep 2014 The Oracle founder is stepping down as CEO, but his 25 pct stake in the software giant – and dual role as chairman and chief technology officer – ensure he’s far from relinquishing control. Splitting his old job between two executives could, however, lead to a bumpy transition.