Time Warner Cable’s deal risk goes down to wire 19 Feb 2015 A $45 bln sale to larger rival Comcast hangs in regulatory balance. Time Warner Cable’s stock price implies a 40 pct chance of collapse. A Breakingviews calculator shows how longer odds of success might hurt investors. The lack of a break fee would add insult to injury.
Amex antitrust loss puts 1 pct solution in doubt 19 Feb 2015 The credit card firm may lose luster with all-important high earners after a ruling allowing stores to tout the virtues of cheaper rivals. Amex may be able to stave off some of the impact. But a big cut in swipe fees would hurt its rewards programs – a draw for the wealthy.
Data czar may be shrewd addition to Obama legacy 19 Feb 2015 This new role ought to underscore the president’s commitment to harnessing digital information. DJ Patil’s experience in climate, defense, payments and social networks makes him an ideal candidate. The danger is that he’s used more for political expediency than the public good.
Greek wordplay paves way for bigger U-turn 19 Feb 2015 Greece’s leader Alexis Tsipras has made his first concession. His government promises to extend the bailout with European creditors and accept temporary troika supervision. Yet the wording is nebulous and commitment to reforms weak. He will need to give more ground.
Wal-Mart wage bump will echo beyond Bentonville 19 Feb 2015 The Arkansas-based retailer is raising hourly pay for a third of its U.S. workforce. That’s a win for critics of inequality – though with unemployment falling, it may be driven as much by creeping wage pressure as a desire to do good. Either way, the move should inspire others.
Dodgy data could leave big banks blind to risks 19 Feb 2015 Risk data is not all it should be. Many top lenders would struggle to assess trading books and loan portfolios if markets went haywire. Systems find it hard to talk to each other. And there’s too much typing and too little automation. These failings have worrying implications.
Barclays dark pool gadfly mixes sharks and minnows 19 Feb 2015 The NY attorney general claims the UK bank’s equity e-traders misled savvy investors. It’s the same line that weakened suits over dodgy mortgages. The judge is right to be skeptical. Banks should be held accountable, but big fish bear responsibility for their own boneheaded bets.
Drinks can merger may yet get flattened 19 Feb 2015 U.S. drinks can maker Ball agreed to pay 4.3 bln stg in cash for British rival Rexam. Ball also pledged to pay a chunky 302 mln stg fee if it is blocked. Rexam’s share price suggests the merger may still fall foul of trustbusters.
Centrica’s new CEO wastes no time 19 Feb 2015 Shares in Britain’s top utility plunged after Iain Conn cut dividends 30 pct, gave a gloomy outlook and began a big strategic review. At least he’s being decisive, unlike German rivals. Political and oil-price pressure is just the start. The business model itself is under threat.
UK competition probe could hinder universal banks 19 Feb 2015 The financial watchdog will assess whether broker-dealers with corporate banking arms have advantages over narrower rivals. The big players already face a host of regulatory challenges. If this review has teeth, smaller players may get more of the $15 bln in annual UK revenues.
Eni has levers to protect dividend 19 Feb 2015 The Italian oil and gas firm faces a cash crunch. Fears that Eni may have to reduce its dividend, as it did in 2009, account for some of the 19 pct share price discount to peers. Yet newly outlined self-help measures give some comfort that the payout may be safer than it looks.
Much trading is probably best left to the experts 18 Feb 2015 After its Swiss franc thwacking, FXCM is abandoning some currencies. If BATS takes another stab at an IPO, it may turn to the Nasdaq or NYSE. And Goldman is one of only a few banks powering ahead in fixed income. Competition is necessary but so is clear focus in risky businesses.
Sony’s Walkman sayonara is step in right direction 18 Feb 2015 Spinning off the division renowned for popularizing personal electronics is the latest mini-move from boss Kazuo Hirai to revive the Japanese conglomerate. The break with tradition could have more than just symbolic value if it augurs further efforts to tackle Sony’s discount.
HSBC suffers a third dose of reputational risk 18 Feb 2015 The UK bank has struggled to dispel charges of money laundering and tax avoidance. Thanks to a new claim its advertising heft caused the Telegraph to tone down its coverage, HSBC may now also need to allay concerns it bullies the capitalistic institution of a free press.
Crude rout lays bare Big Oil’s opportunity deficit 18 Feb 2015 State-owned companies hold the best fields, while Western producers are lumped with the leftovers. High prices subsidized ever-bolder engineering projects during the boom. If low prices linger, a lack of good alternatives may push oil majors into another round of consolidation.
Edward Hadas: What Greece teaches emerging markets 18 Feb 2015 Forget the crisis. The euro is almost irrelevant to the serious developing economy issues which face Athens: weak institutions, dysfunctional politics and excessive capital flows. As Greece shows, outsiders can help or hurt, but these problems are ultimately domestic.
Tesco’s new chairman is logically logistical 18 Feb 2015 Investors may be a little disappointed to see John Allan heading up Britain’s largest retailer. Asda’s Archie Norman would have been a bigger name. But Allan is a decent choice: his logistics experience will be very useful for the grocer and his financial credentials are sound.
Malaysia can regain credibility with fund revamp 18 Feb 2015 The empire-building delays of 1Malaysia Development are over. To reduce its $12 bln of debt, the opaque energy-to-real estate sovereign vehicle will give up on new deals and bring in partners. A well-handled overhaul could restore battered investor confidence in the country.
Rusty Peugeot’s restoration has further to go 18 Feb 2015 Carlos Tavares has beaten most of his goals in his first year as boss of the French carmaker. Shares are up 52 pct too. The company is debt free, cashflow positive and more cost efficient. A 2018 operating profit margin target of 2 pct looks modest. Peugeot may gain speed more quickly.
Japan Post pays $5.1bln for global expansion stamp 18 Feb 2015 The giant postal operator has offered a 49 percent premium for Australia’s Toll Holdings, despite few obvious synergies. The acquisition delivers Japan Post an international strategy ahead of its upcoming IPO. More deals will follow as Asia’s logistics industry consolidates.
Indonesia rate flip flop shows Asia price worries 18 Feb 2015 The quarter percentage point cut in interest rates came just three months after an increase. Such jumpiness is rare, but rational. From China and India to Singapore, disinflation has taken central banks by surprise. They are now scrambling to keep real borrowing costs in check.
Chesapeake extracts self from all but its founder 17 Feb 2015 The energy firm has cut costs and debt since ousting Aubrey McClendon. Earnings have been decent, too. But complex terms of the ex-CEO’s exit have led to charges he stole secrets. It’s a lesson for companies enmeshed with creators that, when the time comes, clean breaks are best.
Easy money undermines Canada’s property prudence 17 Feb 2015 Sound lending and sensible regulation are formidable barriers against a housing crisis. Rising prices and debt weaken defenses. The Bank of Canada warns valuations appear too high – but its most powerful protection against a bubble, interest rates, are moving the wrong way.
Italy could host Europe’s next bout of mobile M&A 17 Feb 2015 Previous deal talks between Hutchison Whampoa and Vimpelcom led nowhere. Still, there’s a big incentive to unite the duo’s Italian units. That combination could create financial benefits worth 4.1 bln euros – and lead to a 30 percent uplift in value.
Fresh flames rise from Sealy’s ever-burning bed 17 Feb 2015 Uppity investor H Partners, alleging serial underperformance and stale private equity directors, wants Tempur Sealy’s CEO fired and a seat on the board. The company and the mattress industry have a torturous financial history. It probably means where there’s smoke, there’s fire.
Transocean helps case against activist myopia 17 Feb 2015 The offshore driller is parting ways with the CEO who reinstated a dividend under pressure from Carl Icahn, and slashing the payout. Plunging rig rates mean Transocean can’t both invest for the future and return cash now. As a result, cage-rattlers may encounter sterner defenses.
Investors still bet on a rational Greek outcome 17 Feb 2015 The market impact of Greek bailout talks breaking down has been subdued. The history of euro zone negotiations points to last-minute compromise, as does economic logic. The danger is that markets are allowing financial hope to trump political reality.
Caixa’s BPI bid is a smart way to grow in Portugal 17 Feb 2015 The Spanish bank is bidding 1.1 bln euros for the remaining 56 pct of Portugal’s BPI. The price is decent, though synergies look ambitious. Caixa may not get to 100 pct but will exercise control. The obvious follow-up, buying Novo Banco, will be harder given the capital needed.
Commodity rout adds new stress to valuation debate 17 Feb 2015 Noble Group’s market value dropped $820 mln amid questions about the trading house’s appraisal of a $670 mln coal investment. Falling prices are forcing resources groups to rethink what assets are worth. It’s another case where accounting standards and market signals diverge.
China developers build up four storeys of trouble 17 Feb 2015 The default and restructuring of housebuilder Kaisa may have been unexpected, but China’s property developers are also showing visible signs of strain. From financial extensions to split-level sales, there are a few recurring features that give cause for concern.