Rob Cox: Eat or be eaten is real Kraft calculus 31 Mar 2015 It had a chance to buy Heinz two years ago. Instead of securing more of the combined value for itself, it’s now ceding control and renting its balance sheet. While selling to Warren Buffett gives the board cover, it raises questions about the sort of managers shareholders want.
Comcast’s golden lasso forestalls CFO parachute 31 Mar 2015 The $140 bln U.S. cable operator is pumping $4 bln into a new investment firm to be led by finance chief Mike Angelakis. It’s a novel way to keep a shrewd dealmaker happy and close, but a questionable use of shareholder money. The Roberts family fiefdom strikes again.
Jay Z’s new music app may founder on pirate shoals 31 Mar 2015 The recording mogul has lured Kanye West, Deadmau5 and other artists to his Tidal streaming service with equity and the promise of higher royalties. The model worked for iconic movie studio United Artists. But steering clear of illegal copying could prove a daunting task.
Draghi’s QE is doing all it can for securitisation 31 Mar 2015 The ECB chief’s bid to boost asset-backed security markets has produced few new deals, and its purchase programme is small. But the falling cost of issuance is tangible enough, and regulatory hurdles are lifting. Besides, politics preclude Mario Draghi from buying riskier assets.
Charter deal may not be final word on Bright House 31 Mar 2015 The $10.4 bln acquisition, contingent on Comcast buying Time Warner Cable, suggests some confidence those rivals will get approval. If not, however, the U.S. cable puzzle could realign. Charter again might chase Time Warner Cable, which actually has first dibs on Bright House.
Yoox and Net-a-Porter make a striking combo 31 Mar 2015 Europe’s two biggest players in selling fancy clothes online are combining in an all-share deal worth about 3 bln euros. Both should gain, and size matters as Amazon eyes luxury. Yoox of Italy gets clear control and scale, while NAP owner Richemont keeps a toe in a growing sector.
Philips earns credibility with lighting selloff 31 Mar 2015 The Dutch group sold 80 pct of its lighting components unit for $2.8 bln. An Asian tech fund paid a surprisingly high 1.65 times last year’s sales. Buyout firms’ hunger for corporate cast-offs helped lift the price. A bigger test looms: splitting off the main lights business.
Japan shows euro zone the limits of bond-buying 31 Mar 2015 The European Central Bank has barely begun buying government debt. The Japanese experience of massive purchases suggests low expectations are warranted. The Bank of Japan has yet to revive inflation. And it seems even to have lost the power to depress the yen and bond yields.
China housing rescue uses right tool for wrong job 31 Mar 2015 Homebuyers can now get bigger mortgages more easily. If fundamentals drove Chinese house prices, such loosening might help. As it is, arresting the slide requires a belief that property values will go up again. That’s not in the gift of Beijing’s mandarins.
New IPO rules won’t keep India’s Alibabas at home 31 Mar 2015 The regulator wants to ease standards to discourage start-ups from listing abroad. The catch is that the rules only apply to a junior market. Though that’s unlikely to tempt the likes of Flipkart and Snapdeal, it stops India joining the race to the bottom on governance.
Mexico faces hardest task kicking Latam graft 30 Mar 2015 The Petrobras kickback probe shows Brazil is getting better at dealing with corruption. A Chilean boardroom dispute highlights the role foreign pressure can play. NAFTA has helped set new rules in Mexico, but its one-party history and drug money present huge obstacles.
Silicon Valley’s noble goals hit home in Indiana 30 Mar 2015 Apple, Google and other technology companies often fall short of promises to make the world a better place. Opposing discriminatory laws in the Hoosier State and elsewhere could make up for lost ground. An economic boycott helps put weight behind the industry’s lofty ideals.
BoE will test banks for deflation ECB didn’t see 30 Mar 2015 The darkest scenario of British banks’ annual stress tests sees prices fall for over a year at home, and nearly four in the euro zone. Last year the ECB didn’t factor in deflation risk at all. The Bank of England is obviously freer to consider the possibility of its own failure.
$12.8 bln prescription may clear up pharmacy M&A 30 Mar 2015 UnitedHealth should generate savings worth more than the 27 pct premium it’s paying for drug middleman Catamaran. But United is playing catch-up. And its target is usually a buyer. Catamaran’s capitulation indicates benefits managers no longer need a dose of dealmaking.
Hugo Dixon: Tsipras needs rupture with far left, not Brussels 30 Mar 2015 Even if Greece avoids imminent default, its prime minister will have to break with radical allies before Athens’ position in the euro zone is secure. It is not clear he has the courage to do so. But such a move would make far more sense than a break with euro creditors.
Dufry pays up to become duty-free heavyweight 30 Mar 2015 The Swiss travel retailer will pay 3.6 bln euros with debt, or 13.8 times reported 2014 EBITDA, for Italian-listed World Duty Free. That’s bold as Dufry digests another big deal. Despite a big equity-raising backed by wealth funds, debt will hit a punchy 4.3 times EBITDA.
Hefty German wage hikes make ECB’s life easier 30 Mar 2015 German unions are proving a key ally for Mario Draghi. Civil servants and chemical workers have followed metalworkers in securing pay rises significantly above inflation. Real wages will keep rising, fuelling a consumption-driven recovery and softening deflationary forces.
Clipping Indian central bank’s wings is bad idea 30 Mar 2015 The Reserve Bank of India is facing a campaign to undermine it. Subjecting its regulatory decisions to judicial review will erode its authority. Removing the bond market from its control serves little purpose. Investors can live with a bossy RBI, but not a weak one.
China offers lessons for Saudi market opening 30 Mar 2015 Despite the differences between the two, the kingdom is copying China’s cautious approach as it grants foreigners direct access to its $523 bln stock market. The experience of the People’s Republic suggests Saudi Arabia’s opening is likely to be a whimper rather than a big bang.
Silicon Valley trials start as sexism lawsuit ends 28 Mar 2015 Venture capital firm Kleiner Perkins beat gender discrimination allegations, but the likes of Facebook and Twitter face similar lawsuits. The court of public opinion also has yet to deliver its verdict. Scrutiny of how the tech world treats women is just getting under way.
Dow Chemical tempts fate with $5 bln chlorine sale 27 Mar 2015 The company is offloading its bleach and vinyl-related chemicals to smaller rival Olin using the esoteric reverse Morris Trust structure. The valuation looks solid, especially considering the tax savings. Yet investors should remain wary given the history of such complex deals.
Sharing benefits may be lost on real economy 27 Mar 2015 The likes of Uber and Airbnb are rising fast. A new report projects, for example, the new breed of lodging services alone will grow nearly 20-fold over the next decade, to over $100 bln of bookings. Sharing is also cutting prices. The effects could elude official GDP figures.
Review: If only U.S. elite education didn’t matter 27 Mar 2015 Many American parents and teenagers believe a top-flight university degree is a necessary ticket to success. A new book tries to calm them down. The sentiment is comforting, but the statistics don’t quite support the meritocratic message. The Ivy League still gives a big edge.
Germanwings tragedy requires industry response 27 Mar 2015 The crash has drawn attention to less evident aspects of flight safety – possible risks posed by crew rather than passengers. That raises questions about procedures at parent Lufthansa and all airlines. But safety is an iterative process that innovates for unforeseen situations.
Yemen fighting could lead to lower oil prices 27 Mar 2015 It’s easy to see danger in the Saudi-led bombing of the strategically located country. But it might end in a standoff in which neither Iran nor Saudi Arabia dominate the Middle East. That could lead to an uneasy truce, much higher Iranian production, and cheaper crude.
Novo Nordisk can stay on Glaxo’s level 27 Mar 2015 The Danish drugmaker’s shares jumped 10 pct on hopes of drug approval. That puts its market cap above $140 bln: firmly in pharma’s big league and now well above GlaxoSmithKline. Novo’s much higher earnings multiple is deserved, given its inventiveness and focus on diabetes.
China’s banks turn lens on unhappy economy 27 Mar 2015 Lenders’ annual results give a chance to see what’s happening in corners of the country other data doesn’t show. The numbers reveal companies hit by falling commodity prices, small businesses struggling and consumers losing confidence. Banks may soon be called to the rescue.
India’s boardroom diversity drive has weird result 27 Mar 2015 Companies have met demands they dilute male dominance by installing wives and stepmothers as directors. Some women now sit on as many seven boards. Indian corporate governance needs improving and gender diversity can boost financial returns. But mandating change isn’t the answer.
Hacked JPMorgan can leapfrog peers on cyber danger 26 Mar 2015 Big U.S. lenders scarcely mentioned the risk in their annual meeting documents in 2014. Since then, though, Jamie Dimon’s firm was hacked and cybersecurity has surged up the agenda. Wells Fargo and Citi said more in this year’s proxies, but JPMorgan could set a new standard.
Nomura’s lonely mortgage stand could yet deliver 26 Mar 2015 JPMorgan and 15 other banks paid Fannie Mae and Freddie Mac $18 bln to settle home-loan fraud charges, yet the Japanese lender is fighting back at trial. It’s a risky move that may prove shrewd after U.S. court rulings this week. It isn’t a requirement to roll over for Uncle Sam.