AirAsia buyout could fly with fancy 7 Oct 2015 Co-founder Tony Fernandes would need about $800 mln of additional financing to take the embattled budget carrier private. Though buyouts are rare in the cyclical industry, it could make sense for investors willing to bet on a Malaysian recovery and on oil prices staying low.
Scorched U.S. tech and pharma feel the M&A chill 6 Oct 2015 Two of the hottest sectors for deals this year have extended their run. Apple chip supplier Skyworks agreed to buy PMC-Sierra for $2 bln and AmerisourceBergen is purchasing PharMEDium for $2.6 bln. Investors in both acquirers jeered, building on a worrisome trend for mergers.
Rob Cox: Wal-Mart just shy of target on gun front 6 Oct 2015 Like CVS with smokes, the retailer stopped selling AR-15 rifles, the kind used in an Oregon college shooting, because it’s bad business. Yet Wal-Mart blocked a Wall Street parish’s plan to make that and similar policies permanent. The church’s case merits Supreme Court review.
Thicket of bad economic ideas leads IMF astray 6 Oct 2015 The latest World Economic Outlook notes that reported growth is slowing, but cannot quite explain why. The picture would be clearer, and probably look brighter, if the IMF relied less on faulty measures like GDP and productivity. More attention to financial harm also would help.
Internet TV may sink Discovery’s quest for EU gold 6 Oct 2015 The U.S. cable network behind “Shark Week” and other nature fare plans to pad profit with subscriptions to its Eurosport channels. Like Americans, though, Europeans clamor for video streaming from Netflix, Amazon and other upstarts. The bundled-programming ship may have sailed.
Freeport rejig only partly solves credibility gap 6 Oct 2015 Jim Bob Moffett’s energy group is bowing to pressure from activist Carl Icahn. It’s ditching board seats and a controversial management structure and may hive off the oil and gas unit it bought in a bad 2012 deal. Like Chesapeake, though, more fundamental changes may be needed.
EU data ruling could stunt single digital market 6 Oct 2015 Europe’s top court has called an agreement over data transfer between the euro zone and America “invalid”. Legal alternatives exist, but will be costly for smaller companies. It will make it harder for Europe’s tech industry - and a single, regional internet market - to blossom.
Air France staff can beat bosses but not reality 6 Oct 2015 The assault on the troubled national airline’s HR director isn’t the first French use of unconventional negotiating techniques. It’s not totally irrational, as the government often yields to direct action. But with its swollen cost base, Air France can’t afford to be cowed.
SABMiller’s growth focus raises Budweiser stakes 6 Oct 2015 The South African-born brewer used the G-word six times in the first three sentences of an ostensibly ordinary Q2 trading statement. The intention looks clear. Seven days ahead of Anheuser’s deadline to launch a formal $100 bln-plus offer, SAB is saying: pay up or shut up.
BoE’s Carney sails between honesty and expediency 6 Oct 2015 Full disclosure from the UK central bank governor could shake investors’ view that rates won’t rise for at least another year. But this might be inconvenient for Mark Carney since it would result in an economy-harming stronger pound. Carney may try for a calibrated compromise.
How capital union can ease EU banks’ great divide 6 Oct 2015 Europe’s proposals for a capital markets union are a boon for Spanish and Italian lenders. Banks investing in asset-backed debt needn’t use penal rating agency grades to measure capital. That should mean more equal funding for banks across Europe.
European crisis will bend but not break Tata Steel 6 Oct 2015 The Indian steelmaker’s net debt of $9 bln is three times its market value. Its European business, acquired in 2007, is suffering from cheap Chinese imports. Yet last year’s timely refinancing and support from its parent means Tata Steel can avoid the fate of British rival SSI.
DuPont succumbs to activist in absentia 5 Oct 2015 Ellen Kullman is retiring as chair and CEO of the $45 bln chemical giant, five months after fending off a pushy Nelson Peltz. Another profit warning and an interim boss who’s a restructuring guru suggest an abrupt transition. DuPont may have to give a breakup another hearing.
Trade mega-deal will go only so far economically 5 Oct 2015 The Trans-Pacific Partnership, assuming it overcomes opposition in U.S. Congress, should ease trade on everything from car parts to cancer therapies. China’s absence is significant but so is a U.S.-Japan deal. If NAFTA is any guide, however, the broad GDP impact may be limited.
Supreme Court gives good insider trading tip 5 Oct 2015 U.S. justices won’t let the government take another shot at two hedge fund managers, clearly signaling that cases against improper dealings went too far. Prosecutors may squeal, but the result saves them from further excesses that could hurt their credibility on Wall Street.
Insurer TBTF capital rules take baby step forward 5 Oct 2015 Regulators want to stop global insurance groups being too big to fail. New solvency add-ons make sense, and for now insurers don’t need extra capital. But the models are sensitive to volatile markets, and politics may impede a further leveling of the international playing field.
New Twitter CEO flaps with one wing behind back 5 Oct 2015 Co-founder Jack Dorsey is now the micro-blogging site’s permanent boss. But he also leads payments service Square, which is considering an IPO later this year. Perhaps he can succeed at these two very demanding jobs. Twitter, though, has saddled its investors with a risky gamble.
GE is overdue Nelson Peltz’s kid-glove activism 5 Oct 2015 His investment firm now owns 1 pct of the slimmed-down $266 bln U.S. conglomerate. But the usually forceful activist is playing nice. That’s because CEO Jeff Immelt’s plan to ditch most of GE’s finance unit should work. Any fumbling, though, will create an easy target for Peltz.
Suncor’s hostile oil sands bid is sign of divide 5 Oct 2015 The energy group is offering $3.3 bln in stock for JV partner Canadian Oil Sands. The 43 pct premium will be tempting for owners of the beleaguered bitumen miner, whose shares have tanked alongside oil prices. Sturdier players like Suncor are well placed for opportunistic deals.
UK takes needless risk with Lloyds retail sale 5 Oct 2015 Britain is to hawk 2 bln stg of its remaining 12 pct bank stake to retail investors at a discount. Shareholder democracy is all very well. But further institutional sales would have meant more value for all taxpayers. And if shares tank, an avoidable political storm will erupt.
Poland’s coal mine meddling saps its credibility 5 Oct 2015 Premier Ewa Kopacz’s Brazilian-style intervention in the country’s energy sector has seen one state-controlled company replace defiant executives. It may soothe irate unions with elections imminent. But it’s far from what Poland’s capital markets and vibrant economy need.
Portugal vote shows scars of euro-crisis policies 5 Oct 2015 A weak poll victory may force incumbent PM Pedro Passos Coelho into a centre-right minority coalition. His reforms and fiscal austerity – following the euro zone template – lost votes. But Portugal is far from a political crisis. The Greek mess looks increasingly exceptional.
Hugo Dixon: Greek bank recap is race against time 5 Oct 2015 Capital must be injected by year-end to avoid a disastrous bail-in of uninsured depositors. To meet the deadline, Europe’s central bank must finish its stress test and decide how much capital is required. The banks then need time to see if private investors will take part.
Potash selloff shows flaws in K+S takeover defence 5 Oct 2015 Slumping demand for the fertiliser ingredient has prompted Canada’s Potash Corp to withdraw a 7.9 billion euro ($8.9 billion) offer for its German rival. For three months, K+S played hard to get even as prices fell. Shareholders may now regret its reluctance to negotiate.
Overseas investors fire warning at China Inc 5 Oct 2015 Hong Kong shareholders rejected China Merchants Bank’s employee share scheme after the lender gave them too little information. It’s a small sign big investors are turning less tolerant of shoddy governance. Chinese companies used to silent acquiescence may be in for a surprise.
Broad U.S. jobs trends withstand weak September 2 Oct 2015 Knee-jerk reports of the labor market’s sudden ill health are exaggerated. Sure, many fewer jobs than expected – 142,000 – were created last month as workforce participation fell. But underemployment, long-term joblessness and other metrics are still showing steady improvement.
Albertsons may have limited investment shelf life 2 Oct 2015 The U.S. grocer is seeking $2 bln in an IPO. Although it’s larded with $11 bln in debt from a nine-year shopping spree under buyout firm Cerberus, deal-related cost savings make it worth dropping in the trolley for now. Growth for Albertsons, however, probably has an expiry date.
Lazy ants upend economic folklore 2 Oct 2015 The thrifty and hardworking insect is the stuff of fable. It’s also a long way from the truth, according to recent entomological research. Almost half of an ant colony has no obvious employment. It’s time for a new formic fable: communities need a leisure class to be successful.
Schaeffler gets second time unlucky with markets 2 Oct 2015 The German car-parts maker delayed its IPO amid a scandal at customer VW. It’s not Schaeffler’s first unhappy brush with markets. In 2009, the financial crisis foiled a hostile takeover of rival Continental, leaving the group almost bankrupt. Management again face a tough choice.
Edward Hadas: VW shows two sides of pushy culture 2 Oct 2015 If the carmaker’s workers had been on the lookout for bad news, the scandal over falsifying emissions could have been avoided. But VW’s management was geared for growth. The problem is perennial. The determination that drives business success also sows the seeds of its undoing.