Tribune twists governance to wager investors’ cash 24 May 2016 The board turned down Gannett again and sold stock to an L.A. billionaire, now the publisher’s second-largest owner. The move could draw a higher offer. But a poison pill and other blocking tactics mean shareholders could easily be stuck, powerless, with a declining asset.
Tata’s portfolio power still just about adds up 24 May 2016 Problems at its British steel unit raise questions about the direction of India’s most respected conglomerate under Chairman Cyrus Mistry. The performance of the group’s other big listed companies has been a mixed bag. But viewed as a collective, Tata’s performance stacks up.
Resurgent dollar could revive emerging market fear 24 May 2016 Comments by U.S. Federal Reserve officials have fuelled expectations of an earlier rate hike. That could put renewed pressure on emerging market currencies and capital flows. Fears about China’s slowdown are also due for a comeback. Investors should brace for a stormy summer.
BofA legal escape rubs salt in crisis wounds 24 May 2016 A U.S. appeals court tossed out a $1.3 bln verdict over dodgy loans sold to Fannie and Freddie. Like recent reversals of traders’ convictions, the case suggests greed and a little lying on Wall Street may not be unlawful. Those looking for accountability will be disappointed.
Takata’s funding drive will be a hard sell 23 May 2016 The Japanese auto-parts maker wants financial help to ride out its air-bag recall crisis. A few turnaround investors and industry peers will probably look. But huge unanswered questions about liabilities, prospects, and relations with big carmakers make clinching a deal tricky.
Egos may kill $54 bln health deal before watchdogs 23 May 2016 Cigna and Anthem haven’t consummated their merger, yet the U.S. insurers are squabbling over a lawsuit, information sharing and executives’ roles. The disharmony could make the deal fall apart. At the very least, it will make it harder to push it past antitrust regulators.
U.S. lenders’ $3.4 bln deal pits hope vs. reality 23 May 2016 Ares Capital’s takeover of under-fire rival American Capital may well bring more fees, lower funding costs and better returns. But the market for lending to mid-market companies has become tougher even as banks have retreated. The complexity of the tie-up doesn’t help, either.
Deutsche Bank needs BASF to spare its M&A blushes 23 May 2016 Germany’s biggest bank has no role on potentially the country’s largest deal - the $62 bln offer by Bayer for agrochemicals peer Monsanto. Deutsche’s share of global and domestic dealmaking is down. It sorely needs BASF, its own advisory gig, to hatch a successful counterbid.
Monsanto may strain to make case against Bayer bid 23 May 2016 A $62 bln all-cash offer from the German titan exploits a cyclical downturn in global agrochemicals. Even if Monsanto’s profit picks up again as expected, however, investors would have to value it considerably higher to match the takeover price. The bird in hand will be tempting.
IMF atonement offers natural justice for Greece 23 May 2016 The lender of last resort wants Athens to have less austerity and bigger debt relief. The move frustrates Germany’s desire to avoid overt fiscal transfers. Yet the IMF holds the aces, and its plan comes close to how a bailout should have looked had the fund done its job in 2010.
Redstones keep CBS and Viacom investors guessing 23 May 2016 The ailing mogul abruptly ousted Viacom boss Philippe Dauman and another longtime ally from a trust that someday will control the $40 bln media empire. That gives more power to Sumner’s daughter. It also sets the stage for an epic battle that minority shareholders can only watch.
Austria’s far-right surge should spur reform 23 May 2016 The country may elect Europe’s first fiercely anti-immigration president. Though the role is largely ceremonial, such an outcome would be a triumph for a party with an ugly past. To halt its rise, Vienna needs to fix fears over asylum seekers and flawed welfare and tax policies.
Agro giants will have to wait for Malthus boost 23 May 2016 Tougher U.S. laws on tax inversions are one reason why Dutch fertiliser group OCI’s merger with CF Industries is off. But with supply outstripping demand, fertiliser prices are also falling. That’s delaying the price hikes that should come from rising populations.
Yum’s China split doesn’t look too tasty right now 23 May 2016 The KFC owner’s break-up plan was a sensible victory for activists. But worries about China mean this hasn’t yet done much for shareholders. With one of Yum China’s most logical partners walking away from a pre-spinoff investment, it may be even longer before value is created.
Cheap oil pays mixed dividends for Asia 23 May 2016 The region’s consumers gained surprisingly little from cheaper crude. That’s partly because it reflected deficient global demand, which hurt exporters in China, Korea and Taiwan. Meanwhile, governments in India and Indonesia pocketed the windfall by slashing generous subsidies.
Credit Suisse labours to spin misfortune into gold 20 May 2016 A bond that wipes out if the Swiss bank encounters big operational losses, from rogue trades to cyber crime, has not been an easy sell. Even for investors who specialise in natural catastrophes, this product is esoteric. Such cleverness is impressive, but unlikely to catch on.
Goldman could easily assuage shareholders on pay 20 May 2016 Only 66 pct backed how the Wall Street firm compensates its bosses. A $5 bln fine over dodgy mortgages didn’t help. But Goldman is also one of the few banks not to use long-term incentives in determining salary and bonus. Doing so would be a cheap way to win investor support.
Investors may rue framing art as an asset class 20 May 2016 Collectors increasingly see paintings as investments – and collateral. The value of loans secured by art has doubled to $10 bln in four years. Yet as this spring’s big auction downturn shows, the business is volatile. Best to rely on the aesthetic return.
Tribune turning tables on Gannett is fanciful 20 May 2016 The chairman of the Los Angeles Times publisher may counter an unwanted takeover bid by trying to buy the suitor instead. For Tribune to acquire Gannett, though, probably would require larding itself with immense debt. And that’s what made it vulnerable in the first place.
Clinton wealth harder to spin than Trump’s 20 May 2016 The Democratic U.S. presidential front-runner has attacked her rival for not releasing his tax returns. Hillary’s are public and widely analyzed. But the Clintons make millions on the back of years in public office. That way into the 0.1 pct is a tough sell to disenchanted voters.
New Petrobras boss is step toward needed change 20 May 2016 Brazil’s interim president has picked former Bunge Brasil boss Pedro Parente to run the scandal-hit $40 bln state oil producer. While no stranger to government, Petrobras’ fourth boss in five years has promised to end political appointments. That would be a boost for governance.
Deutsche’s latest mess looks like a Protium moment 20 May 2016 The German bank is probing a deal that enabled ex-trading boss Colin Fan and others to profit, with leverage provided by their own employer. The investigation is ongoing. But it looks to have similar flaws to Barclays’ Protium deal - with staff interests above shareholders’.
Euro zone rules need more carrot, less stick 20 May 2016 Spain, Portugal and Italy are getting free passes to break Europe’s fiscal rules. Political calculations explain why, but even if penalties were enforced they’d be self-defeating. Instead of punishing sinners, the single currency needs simpler rules that reward those who comply.
How a $12 bln UK buyout could ring up returns 20 May 2016 Private equity is reportedly circling Telefonica’s local unit after Brussels blocked a sale. That would be one of Europe’s largest-ever leveraged buyouts. The numbers might just add up - if the buyers can get O2 for a reasonable 8.5 bln stg or so, and then lift margins.
Richemont accepts new tempo for luxury watches 20 May 2016 The Cartier owner faces a drawn-out downturn in demand. April sales fell 15 percent, even compared to a terrible 2015. The Swiss group can cut costs, but the bigger problem is that luxury watch demand is less resilient than it once seemed.
Oilmen fix smart $2.2 bln deal in Papua New Guinea 20 May 2016 Oil Search’s offer to buy InterOil is canny and opportunistic. The buyer will only pay later for future gas discoveries. An agreement to sell a big chunk straight on to France’s Total also cuts the chance of a rival bid. It leaves InterOil investors with an unattractive choice.
Chip deals will set tone for Taiwan-China ties 20 May 2016 New president Tsai Ing-wen will soon decide whether to approve investments worth almost $1 bln by a Beijing-backed group. China’s push into semiconductors is a challenge for Taiwan’s tech-dependent economy. The outcome of the stalled deals will shape broader economic relations.
Robots are more solution than problem for China 20 May 2016 Factory jobs have lifted millions from poverty, and China is obsessed with social stability. Despite that, a huge push to upgrade via automation still makes sense. The workshop of the world is inefficient and low-tech, and the workforce is already shrinking.
Puerto Rico fix gives everyone something to hate 19 May 2016 U.S. lawmakers’ latest effort to provide a framework for the island to restructure $70 bln of debt would impose strong oversight. While it appears to bolster senior creditors’ claims, holdouts could end up with a bigger haircut than they’d like. That makes it a decent compromise.