VW would be smart to send divi to the junkyard 29 Mar 2016 The German carmaker could save 2.3 bln euros a year by scrapping investor payouts, leaving around 50 bln euros of room to absorb fines from dieselgate. It would show shareholders aren’t getting away unscathed and that VW, whose operations look stable, has room to help itself.
British steel is sad lesson in why price wars fail 29 Mar 2016 The Port Talbot plant probably can’t survive in a world flooded with cheap Chinese steel. Yet it has hung on stubbornly long. Across markets like iron, oil and steel, the idea that price wars drive high-cost suppliers to the wall is proving more complicated than once thought.
FBI schools Silicon Valley on lobbying D.C. 29 Mar 2016 U.S. authorities have dropped a legal fight against Apple after gaining access to a San Bernardino gunman’s iPhone without its help. They have also managed to strongarm both the Obama administration and lawmakers into taking their side. Tech giants can only wish for such suasion.
China’s credit hose leaves many firms parched 29 Mar 2016 Though banks doled out $540 billion of new loans in January and February, companies are saving cash by delaying paying bills. Surveys show the credit drought is worst for small businesses. Extra liquidity is not reaching the parts of the economy that create the most jobs.
Starwood can easily answer the $4.64 question 28 Mar 2016 That’s how much more per share a new cash bid from China’s Anbang is worth over an agreed deal with Marriott. The $14 bln offer is 6 pct sweeter but also comes with financing and regulatory uncertainties. Given the heavy interest from rival hoteliers, Starwood can afford the risk.
Dell’s Perot sale augurs poorly for EMC deal 28 Mar 2016 The computer company is offloading its consulting arm to Japan’s NTT Data for $3 bln, a quarter less than it paid in 2009. Proceeds from what had been Dell’s biggest acquisition are to help it buy EMC for some $60 bln. The outcome, however, is hardly a good ad for its M&A nous.
Pandora sends out bad signal with CEO change 28 Mar 2016 The $2.5 bln streaming-music service abruptly replaced its boss with co-founder Tim Westergren. It’s a worrying sign with Pandora reportedly up for sale amid stiffer competition from Spotify and others. Companies that call on entrepreneurs later in life also have a mixed record.
Review: Erin Callan puts nail in Lehman coffin 25 Mar 2016 “Full Circle” is an introspective and seemingly cathartic memoir by the ex-CFO of the collapsed investment bank. The sexism Callan says she was subjected to in her final months on Wall Street, however, provides the best evidence yet that poor management is what doomed Lehman.
Playboy’s $500 mln price tag has no clothes 24 Mar 2016 The magazine which recently ended its nude centerfold tradition may be on the block again, supposedly after interest in founder Hugh Hefner’s mansion flushed out potential buyers. Based on comparable valuations and sales of publishing brands, the price talk seems like delusion.
Bank capital rules don’t quite go to the top floor 24 Mar 2016 The Basel Committee is keen to prevent banks understating the riskiness of their assets via their own generous models. Good idea, but new proposals to introduce risk floors could wind up too lenient. If so, investors will continue to take bank capital with a pinch of salt.
Cox: The social costs of financial returns 24 Mar 2016 That’s the tension at the center of “Dry Powder,” an off-Broadway play about private equity. Like most dramatizations of high finance, it engages in caricature. But the show also offers genuine insight into the emerging risks Wall Street faces from rising income inequality.
Corporate hacks deserve more regulatory sunshine 24 Mar 2016 The U.S. prosecution of a cyber attack at Boeing is a rare public outing of an attack. Most intrusions are swept under the rug by companies, despite the business damage. Authorities could help by doing more to encourage disclosure and perhaps less, for now, to punish the victims.
Cuervo IPO recipe may revive Diageo’s M&A spirits 24 Mar 2016 The world’s best-selling tequila brand is considering going public. Diageo abandoned its pursuit of the Mexican firm in 2012, leaving it a bit player in a fiery category. If the founding Beckmann family is open to a full sale, Diageo could be tempted to take another shot.
Starboard pushes wrong button on Yahoo 24 Mar 2016 The activist hit the nuclear option of trying to replace all the internet company’s directors. Starboard’s right that performance under CEO Marissa Mayer has been poor. But failure to secure control of the board could hobble its attempt to force a sale of Yahoo’s core business.
Bad Finance: M&A synergies deserve large salt dose 24 Mar 2016 Energy Transfer Equity’s expected EBITDA boost from its deal to buy Williams Companies just went from $2 bln a year to under a tenth of that – even before closing. Many mergers fail to capture cost savings, and most fall short on revenue gains. Skeptical analysis is required.
Energy Transfer scorches its own Williams earth 24 Mar 2016 The buyer is slashing expected merger synergy benefits by 90 pct and warning of big reductions at its target’s Oklahoma operations. It may put pressure on Williams to return to the negotiating table. For now, ETE seems more hostile to the deal than its reluctant seller ever was.
Italian bank revolutions set unappetising template 24 Mar 2016 Banco Popolare and BPM have sealed the first merger in Italy’s mutual reform. Yet mooted cost savings don’t look generous enough to offset messy governance and tough capital needs. That’s not great news for others, particularly stragglers like Monte dei Paschi di Siena.
German M&A rules leave targets worse off 24 Mar 2016 An attractive tie-up of U.S. cash dispenser Diebold and German rival Wincor Nixdorf was left hanging in the balance because of safeguards meant to protect minorities. The deal stacks up strategically and financially. Rules and taxes that prevent sensible value creation don’t.
British retailers need more age-appropriate attire 24 Mar 2016 Next’s same-store revenue is falling and inventory is taking a week longer to clear than a year ago. Yet it plans to grow its selling space by 8 pct. Other retailers too are expanding even when shrinking looks smarter. The maths of such strategies can quickly turn unattractive.
Yum’s China growth goals face market reality check 24 Mar 2016 The U.S. fast-food giant may sell up to 20 pct of its Chinese unit to private investors before spinning it off. On current trends the stake could fetch $2.4 bln, Breakingviews calculations suggest. To do better, Yum’s more ambitious targets will have to survive China’s slowdown.
Myth of central bank omnipotence is hard to kill 24 Mar 2016 A few weeks ago global policymakers were supposedly out of ammo. Now a weakening dollar and recovering markets have prompted gossip they were secretly in cahoots. A better explanation is that central bankers have recognised that trying to boss investors around is futile work.
Tidjane Thiam has a PAF back to credibility 23 Mar 2016 Credit Suisse’s boss blamed colleagues for hiding distressed debts that cost the bank $1 bln. Saying he’d take a bonus cut “out of solidarity” only dug the hole deeper. Thiam could partly redeem himself by being paid in toxic assets, as bankers once were in a plan called PAF.
The Fed and the S&P 500 are unhealthily aligned 23 Mar 2016 U.S. stocks increasingly pop on days when the central bank makes policy decisions, whatever they are, investment firm GMO reckons. Without the cumulative boost, shares might be far cheaper. Maybe the Fed wants to prop up investors, but the mutual dependence looks risky.
Economic promises reflect Clinton and Trump appeal 23 Mar 2016 The Democratic presidential front-runner’s plan so far implies little growth, befitting her goal of building on existing trends. It’s a stark contrast to the Republican’s tax-slashing proposals. It’d be costly, but the willingness to shatter the status quo is also the attraction.
U.S. gene tester puts China bids under microscope 23 Mar 2016 Affymetrix is in a bind. Rival Thermo Fisher made a solid $1.3 bln offer that’s now below the target’s share price. Former bosses swooped in with a higher non-binding bid backed by little-known Chinese funders. The board must choose – and fast. The question: Does it feel lucky?
Chancellor: Lessons from the Mississippi Bubble 23 Mar 2016 This year marks the 300th anniversary of the start of John Law’s ambitious, and ultimately failed, economic experiment. Much like today’s central bankers, Law thought printing banknotes and forcing interest rates lower would solve all of France’s problems. He was so very wrong.
Credit Suisse’s epiphany is late and embarrassing 23 Mar 2016 By adding cost cuts and lowering risk assets, the Swiss bank should make acceptable returns in 2018. Tidjane Thiam could have done more when he outlined his strategy in October. Instead, positions in illiquid assets have helped lose $1 billion – and the bank is on the back foot.
Telecom Italia faces test of two towers 23 Mar 2016 Rival bids for Telecom Italia’s towers could be a useful independence test for the company’s board. One looks better for shareholders today. The catch is that the other deal is with Mediaset, which is also in separate talks with big Telecom Italia shareholder Vivendi.
Gas faces a lost decade as customers dry up 23 Mar 2016 Australia’s Woodside has scrapped a costly $30 billion liquid natural gas project after struggling to find customers. A global oversupply and weakening market in Asia meant the project was no longer bankable. It could take a decade before giant LNG projects again make sense.
When a 90 pct takeover premium isn’t enough 23 Mar 2016 That’s what Premier Foods, the UK owner of Mr Kipling cakes, has knocked back from $12 bln rival McCormick. It sounds crazy. Yet the suitor can clearly afford much more. Premier’s low valuation explains the gap. The board is doing shareholders’ work for them.