Even imperfect shareholder democracy has value 4 Jun 2016 Facebook’s board is proposing curbs on Mark Zuckerberg’s future power, while investors in Swiss Sika are fighting a sale of control. A Tribune Publishing vote may be a mere protest, but at T. Rowe Price an error is costing hard cash. Corporate ballots are more than lip service.
Ménage à REIT exposes financial-engineering lusts 4 Jun 2016 Two years after NorthStar Realty separated a business to “unlock value,” they’re reuniting and getting into bed with Colony for a three-way merger of equals. Savings and scale could heat up the relationship. Investors might, however, expect such fickle lovers to fall out again.
Peter Thiel is Exhibit A for medieval law revival 4 Jun 2016 The Silicon Valley billionaire’s funding of Hulk Hogan’s case against Gawker might have violated archaic prohibitions on stirring up lawsuits for spite. U.S. courts largely bounced those rules as stifling access to justice. Thiel’s free-speech smackdown could merit a comeback.
Fed can raise rates despite one bad jobs figure 3 Jun 2016 Only 38,000 new U.S. positions were added in May, the worst monthly report in six years. Even so, payrolls have increased by a solid 116,000 jobs on average over three months and hourly wages rose again. The bigger picture demands more serious consideration.
Sops for overworked bankers miss real problem 3 Jun 2016 While UBS now offers two hours of personal time a week, Morgan Stanley is dangling paid sabbaticals. If only gruelling work culture were going out of fashion. A temptation to wring more out of fewer people will persist as long as firms and investors fixate on the short-term.
Bayer-Monsanto could be squeezed in hungry world 3 Jun 2016 Population growth and climate change will boost demand for seeds and agrichemicals. Bayer's strategic rationale for a $62 bln Monsanto bid looks sound. But if food shortages really bite, the merged group's pricing power may come under attack. There are precedents in pharma.
Bank of Italy has little room to talk on bailouts 3 Jun 2016 Governor Ignazio Visco has argued that governments should have more freedom to rescue banks. His case for bailouts in limited circumstances is defensible, except in Italy, whose banking crisis is a result of government failure and poor oversight. It sounds like special pleading.
Life lessons from a German corporate failure 3 Jun 2016 With six profit warnings, four CEOs and its share price halving over two years, German industrial services group Bilfinger is a huge corporate disappointment. Now it is finally dismantling itself. Other companies can learn from some of Bilfinger's more glaring mistakes.
Noble’s cash call will buy it one year 3 Jun 2016 The commodity trader is tapping shareholders for $500 mln days after its CEO resigned. The rights issue and other disposals should cover $2 bln of debt due next year. But Noble is still asking investors to believe its core business will be able to consistently generate cash.
Thaihot’s $1.4 bln HK insurance deal looks fiery 3 Jun 2016 The little-known Chinese group has paid almost double recent valuations for local bank Dah Sing's insurance unit after a fierce auction. The deal is part of a drive to diversify from property. But China's currency controls may interfere with efforts to attract mainland customers.
India’s smartphone giant eyes China role reversal 3 Jun 2016 Micromax has bested Chinese rivals in its home market. To realise its lofty goal of being one of the world's top five handset makers by 2020, it must succeed in the People's Republic. Raising the fresh capital required might be the easiest part for the Indian firm.
Bank stress tests get stressier for shareholders 2 Jun 2016 The largest U.S. lenders are just getting the hang of the Fed’s annual exam. Now regulators are changing the game by adding a capital surcharge to future tests. It will take time to figure out how to pass the new standard. That means further uncertainty for banks and investors.
Italy’s bailout fund is more grower than shower 2 Jun 2016 Buying shares in just two Italian banks may use up half of the money the Atlante fund was given to clean up the financial system. Its remaining 1.7 bln euros pales next to Italy’s 300-plus bln euros of bad debt. Making a dent in that calls for leverage and luck.
OPEC silence beats hollow pledges 2 Jun 2016 Oil producers’ failure to agree on a policy to curb supply is not all bad. A deal would have boosted prices in the short term but been hard to enforce given Saudi-Iran tensions. The already-weak cartel can ill afford the reputational damage of promising more than it can deliver.
Cox: Disruption flops will spare old-line targets 2 Jun 2016 Venture capitalists have wagered on plenty of highly valued startups to destroy the established corporate order. But some so-called unicorns, probably including Theranos, will turn out to be mythical. A wave of “gluenicorns” would be good news for public companies under threat.
J&J’s corpulence defense weighs heavy 2 Jun 2016 The bulging healthcare conglomerate is swallowing hair-care firm Vogue for $3.3 bln in defiance of calls to break up. J&J’s $312 bln market value makes it a hard target for activists. Yet its obesity has created ailments from poor M&A digestion to mediocre shareholder returns.
Russian retailers can expand but they can’t hide 2 Jun 2016 A devalued rouble and deep recession have hit Russian shoppers. More are going to open-air markets for bargains instead of Western-style retail chains. To compensate for less spending per capita, the big supermarkets are building in every place they can reach.
Flighty shoppers keep UK grocers on their toes 2 Jun 2016 Customers still visit Tesco and Sainsbury’s in the same numbers, but not for their entire trolley. A new pick ‘n’ mix approach to shopping shows customers are no longer a captive audience. The challenge for the Big Four is to make a visit to the German discounters less worthwhile
Models are a surprising face for cartel economics 2 Jun 2016 UK competition authorities are investigating price-fixing at London’s top model agencies. Creating a cartel from a market that has apparently low barriers to entry sounds tricky. But setting up a new entrant isn’t that easy – and antitrust tsars only need to prove intention.
OPEC has an oily blind spot over Brexit 2 Jun 2016 Britain leaving the EU would present the cartel with a tricky demand problem. Brexit could slow economic growth in Europe and reduce consumption of crude in the world’s third-largest market for fuel. If that happens OPEC may have to cut output, or risk prices falling again.
India’s unicorns limp along without foreign funds 2 Jun 2016 As capital dries up, signs of stress are emerging among the country’s few $1 bln-plus startups. Delayed hires have prompted a business school spat, while a founder ranted about valuations on his blog. At least unprofitable habits are vanishing along with unreal expectations.
MSCI can still afford to shun China stocks 2 Jun 2016 The index compiler must once again decide whether to add mainland shares to global benchmarks. Though regulators have made some reforms, memories of last summer’s mass suspensions and state intervention are still fresh. Another delay would give China more reason to open up.
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Uber receives ultimate disruptor stamp of approval 1 Jun 2016 The taxi-hailing app has snared a $3.5 bln investment from Saudi Arabia’s Public Investment Fund. It’s not just a hedge against the kingdom’s oil dependency. It also confirms Uber as one of the probable central players in the shift to electric, autonomous vehicles.
Deutsche Bank’s mortgage mess hits new low 1 Jun 2016 The SEC is investigating whether the German lender masked up to $1.5 bln of losses by mispricing mortgage bonds. Now it seems Deutsche’s own risk managers warned of a problem, to little avail. Such post-crisis shenanigans justify Wall Street’s name remaining in the gutter.
Staples makes mockery of ousting CEO 1 Jun 2016 Ron Sargent is leaving weeks after antitrust concerns squelched its bid for Office Depot. The board did, at least, pay lip service to shareholders’ concerns last year about executive comp. But Sargent nets a huge pay day and remains chairman. It’s a lavish reward for failure.
LSE-Deutsche Boerse offers jam tomorrow, tomorrow 1 Jun 2016 The two exchanges reckon their merger can create 250 mln euros of new revenue - eventually. But there are plenty of hurdles to delivering the goods, from a potential Brexit to the 20-plus regulatory approvals needed. The inherent slipperiness of boosting sales is a poor lure.
It’s time investment banking had an easyJet 1 Jun 2016 The industry’s value destruction mirrors that of airlines, which a major study found made no economic profit over a 13-year period. Low-cost alternatives in aviation eventually shook up staid business models. Banks are different, but the no-frills approach offers useful pointers.
Chancellor: Helicopter money risks financial chaos 1 Jun 2016 Some investors, including fixed-income supremo Bill Gross, have been advocating a central-bank cash drop. Inflation would burn off the world’s excess debt. But bond markets might collapse and asset values sink. Protecting capital under such circumstances would be nigh impossible.
Keeping Kuka German may require going French 1 Jun 2016 Economic minister Sigmar Gabriel is trying to forge a counterbid for the robot maker. Yet Chinese Midea’s $5 bln offer is already frothy. Berlin would have to turn to industrial politics à la française, and maybe even take a direct stake. Better to let markets run their course.