Time Warner Cable finds money covers Charter flaws 26 May 2015 CEO Rob Marcus rejected a bid from his smaller rival last year, balking at the leverage, cash and stock on offer. Those terms haven’t changed much but the price has gone up appreciably, to $56 bln. Time Warner Cable provides a reminder about what really matters in deal talks.
Greece cries wolf, genuine beast may lurk 26 May 2015 Greek ministers are threatening a default on IMF loans. They might be bluffing, like Aesop’s shepherd boy. That scamp found that lying does not pay. The Syriza government may know more about extreme game theory, but it could end up out of the euro zone, or mauled by the ECB.
Buyers hold cards in $6.4 bln Latam oil deal 26 May 2015 Investors opposed to the takeover of Pacific Rubiales have enough votes to knock the sale off course. But the dissenters would be crazy to push the button. The 34 pct premium looks fair. Without a deal, or a surge in oil prices, Pacific Rubiales’ future looks bleak.
Euro pessimists are taking the long view 26 May 2015 The single currency is below $1.09 for the first time in nearly a month. Its short-term fortunes may depend as much, if not more, on when U.S. rates will rise as what happens in Greece. But options prices reveal that euro bearishness is becoming more and more entrenched.
Spain starts confusing political transformation 26 May 2015 Local election results intensify the decline of the ruling People’s Party. In Barcelona and Madrid, coalitions backed by leftist Podemos upstarts could emerge as winners. November’s general election may clarify the political order. Meanwhile, investors will fear paralysis.
Perceptions about inequality beat the reality 26 May 2015 Poor people often feel rich, the rich think they are hard up, and big income gaps elicit little indignation, says a new multinational study. Income levellers should take note. Accurate economic statistics won’t foment revolt. But perceptions of rising inequality just might.
Samsung’s $8 bln restructuring offer looks cheeky 26 May 2015 The South Korean group’s ruling Lee family is offering shares in its Cheil Industries holding company for Samsung C&T at almost no premium. The deal looks central to the clan’s succession plan. With 4 pct of Samsung Electronics at stake, C&T investors can hold out for more.
Japan’s flood of foreign M&A hits Chinese blockage 26 May 2015 Lixil’s China-focused unit Joyou is set to file for insolvency. Though the financial hit is tolerable, this embarrasses both the $6 bln sanitaryware giant and authorities in Germany, where Joyou traded. It also shows the risks in Japan Inc’s frantic overseas dealmaking.
Japan lesson on China debt: extend, don’t pretend 25 May 2015 Asking Chinese banks to roll over loans to local governments is reminiscent of 1990s Japan, where lenders choked good borrowers to keep zombies alive. The real mistake wasn’t extending losses into the future, but pretending banks could lend to everyone else without more capital.
Hugo Dixon: Greece needs a second election 25 May 2015 Most scenarios facing the country are bleak, but there is one outcome that is not too bad. This will require the prime minister not only to eat his words, but also to call a new election to get a fresh mandate. The timing is tough, but just doable.
M&A dealmakers fight different battle of bulge 22 May 2015 With his energy-focused startup, ex-Barclays bigwig Skip McGee can exploit a trend of smaller advisers winning business from banking supermarkets. There’s new competition by size in the indie world, too, though. Bigger players like Lazard and Rothschild are reclaiming dominance.
Cult of central bank transparency is too powerful 22 May 2015 Rate-setters around the world are in a bind. The zeitgeist demands they share every twist and turn of their deliberations. But too bright a light can be blinding. Hard talk is often best done in private. While some transparency is good, more is not always better.
Review: Modernizing Mexico, one feud at a time 22 May 2015 Two Mexicos coexist, one an insular land of hard-to-kill monopolies in politics and business, the other more outward-looking, embracing modernity and even the United States. In “Amarres perros” pundit-politician Jorge Castañeda recalls a life of trying to change the balance.
Debt extension could help Syriza but hurt Greece 22 May 2015 Europe could split off payments owed to Greece from its second bailout, according to reports. The move could break an impasse over reform talks and avoid a messy default. Yet Europe would have less leverage over the Syriza-led government and the Greek economy would suffer.
UK can use bank reform as EU bargaining chip 22 May 2015 France objects to Britain adopting its own extra-tough bank structural reform, reports say. But there’s little to gain from ring-fencing retail lenders, and a flexible UK can negotiate a better deal with Brussels. A British retreat could kill two birds with one stone.
Bankers get ammo but no ally in regulation tussle 22 May 2015 Financiers unhappy with tougher regulation can cite new analysis from the BIS. The central banks’ own central bank says new standards will probably change how economies and markets work. But the BIS is firmly focussed on coping with the new paradigm, not returning to the old one.
HP’s China deal extracts harmony from awkwardness 22 May 2015 Selling 51 pct of its Chinese networking unit for $2.3 bln to a state-owned company looks like a partial retreat from an unfriendly market. But the U.S. tech giant now has a powerful ally with deep ties to Beijing. Rivals from Cisco to Microsoft should consider similar matches.
Real cost of Hong Kong mega-slump: under $3 bln 22 May 2015 The mystery collapse of Hanergy, Goldin Financial and Goldin Properties wiped $44 bln off their market values in two days. But actual losses for those who bought during the rally in recent months are far smaller. Big numbers aren’t always what they seem – especially in China.
Malaysia’s GDP blueprint has a credibility deficit 22 May 2015 Najib Razak has vowed to make the country rich by 2020. Investors are wary. The opposition chief is in jail, race relations are tense, and a scandal-plagued state investment fund has hurt the prime minister’s authority. A slumping ringgit shows there could be trouble ahead.
HP improves on logic of its split 21 May 2015 CEO Meg Whitman originally thought separating the company’s PC arm would incur $1 bln a year in extra costs. The figure is now down to about $425 mln. That should help the split narrow the $61 bln HP’s stubborn conglomerate discount, even if it won’t create a glowing new future.
Shake Shack unveils a cluckin’ $250 mln sandwich 21 May 2015 The value of Danny Meyer’s upscale burger chain shot up 8.5 pct, seemingly on news that it may start outlets serving up chicken-based fare. Investors seeking signs of exuberance in wearables might do better looking at edibles. Shake Shack is now worth 550 times earnings.
Spendthrift U.S. retirees set up somber stagnation 21 May 2015 Dour days lie ahead for Americans, thanks in large part to Baby Boomers. The biggest generation, just beginning to leave the workforce, has saved even less than past groups and isn’t likely to reap more government benefits. Their relative penury will slow down GDP growth.
Sale would add to gnarly Ancestry.com family tree 21 May 2015 The genealogy website went public in 2009, only to sell itself to a Permira-led private equity consortium three years later. Now it’s on the block again, according to Reuters. The company has been struggling to turn nostalgia into profit. A new owner may not fare any better.
John Malone’s trigger finger could get itchier 21 May 2015 The original cable cowboy’s home turf has been invaded by Patrick Drahi, a protégé who rode in guns blazing to buy Suddenlink. Malone typically leads the industry herd, but might be challenged anew for Time Warner Cable. Then again, maybe the deal is big enough for both of them.
ECB struggles with central bank news frenzy 21 May 2015 When markets hang on your every word, rate-setters have to be careful what they say to whom. An ECB board member crossed the line and the euro zone central bank is under fire. Now it’s clamping down on dealings with media. Such undersharing can be just as bad as oversharing.
Laggard fund managers miss LTIP-ping point 21 May 2015 Two-fifths of FTSE 100 companies are heeding calls to reform bosses’ long-term incentive plans. But several of reformer-in-chief Fidelity’s UK quoted fund manager peers are yet to sign up. They should be championing governance best practice. Non-compliance merits explanation.
CVS-Omnicare portends lower doses of pharmacy M&A 21 May 2015 The drugstore giant’s $10 bln purchase of the pharma services firm gives it entrance to nursing homes and expands specialty medicine distribution. But the increasingly concentrated industry is already raising antitrust concerns. The era of frantic mergers may be nearing an end.
Deutsche’s cosmetic rejig puts pressure on Jain 21 May 2015 Germany’s biggest bank tweaked its management ahead of today’s AGM. The shift in responsibilities falls short of the leadership overhaul some shareholders seek. But co-CEO Anshu Jain’s new strategy role makes him directly accountable for much-needed cost cuts.
Renzi is still dodging big Italian pension fight 21 May 2015 The prime minister has found a clever way to blunt a constitutional court ruling on pensions that threatened to blow a hole in Italy’s budget. That avoids a conflict with Brussels. But he hasn’t bitten the bullet on the bigger pension issue: bloated spending that stifles growth.
Royal Mail’s second share sale could come quickly 21 May 2015 The end of the British coalition government removes the biggest obstacle to accelerating the state’s sale of its remaining 30 pct stake in the postal operator. Royal Mail is managing its challenges well, which helps buoy the share price. The new government can take advantage.