Bank CEO letters just warm-up acts for Jamie Dimon 21 Mar 2016 The bosses of BofA, Citi and others have included interesting tidbits in their shareholder missives. With the exception of M&T’s chief, however, they haven’t revealed much about the state of the industry. For that, investors will have to wait for word from JPMorgan’s head honcho.
Valeant’s multiple organ failure puts it in ICU 21 Mar 2016 The beleaguered drugmaker has found accounting improprieties. It is booting CEO Mike Pearson but ex-CFO Howard Schiller has refused to quit as a director. The board, the numbers and the strategy are fractured. Some $30 bln of debt means Valeant risks an Enron or WorldCom endgame.
Marriott’s Starwood deal suffers China syndrome 21 Mar 2016 To trump an interloping bid from Beijing’s Anbang, Marriott raised its offer for its hotelier rival to $13.6 bln. Even with more cost cuts, the math suggests significant value destruction. Anbang may have reasons to pay up, but Western buyers can’t be so careless of shareholders.
IHS-Markit $13 bln merger is long on hope 21 Mar 2016 A bigger, diverse data company could cross-sell to different clients, the theory goes. Markit’s shareholders could end up roughly 10 pct better off. But extra revenue of $100 mln looks aspirational. Big share buybacks and high debts could hobble investment in new products.
Sherwin-Williams deal tinted trustbuster yellow 20 Mar 2016 The U.S. paint maker is buying rival Valspar for $11.3 bln. A healthy premium exceeds the value of expected cost savings, raising doubts about the financial logic. And Sherwin’s avowed confidence of passing regulatory muster is colored by terms that may give shareholders pause.
It’s time for Marriott to check out of Starwood 18 Mar 2016 The U.S. hotelier has 10 days to sweeten its offer after China’s Anbang won over the Westin owner with a $13.2 bln cash deal. Marriott may struggle to top that without destroying value for its shareholders. Pocketing the break fee and moving on beats a bidding war.
Assertive investors get deserved D.C. pushback 18 Mar 2016 A new Senate proposal would force activists to disclose 5 pct stakes within two days instead of 10. Stock buyers could, however, still covertly exceed that ownership threshold. The bill is flawed, but lawmakers are due credit for trying to push stealth holdings into the open.
TransCanada’s pipeline deal suggests safe now sexy 18 Mar 2016 Buying Columbia for $13 bln bolsters the energy company’s business of transporting gas to the eastern U.S. The seller has ample cash and a backlog of low-risk projects to build infrastructure. That adds up to a prudent investment as markets sour on precarious boom-time assets.
U.S. trustbusters look blind to media disruption 17 Mar 2016 The Justice Department sued to stop a $56 mln merger of southern California’s largest newspapers, saying a monopoly would result. Yet regulators approved competitively riskier deals involving the likes of DirecTV. It’s as if they never heard of falling readership and ad sales.
Water industry could turn Enron moment to action 17 Mar 2016 A California utility compared its drought-prompted accounting gimmicks to those of the energy firm, drawing a fine. The incident highlights the H2O sector’s $1 trln funding crisis caused by water shortages, floods and aging pipes. The trick is to make a faux pas an opportunity.
U.S. savings could use Aussie and Blackstone flair 17 Mar 2016 Americans don’t sock away nearly enough for retirement, and Social Security is on an unsustainable path. Blackstone President Tony James and an economist colleague are pushing a new mandatory nest-egg program. A similar plan Down Under has made golden years there worth the wait.
Latam oil prize proves an elusive takeover target 17 Mar 2016 A $6 bln deal to buy Pacific E&P, the region’s biggest non-state-controlled crude producer, collapsed last year when a group of shareholders blocked it. Buyout shop EIG’s second attempt to gain control, through senior debt, is now sputtering. There may yet be another way, though.
Chipotle pay a few ingredients short of a burrito 17 Mar 2016 The U.S. fast-food chain is tying 2016 equity bonuses exclusively to its share price after a food poisoning fiasco consumed $9 bln of market value. It’s too simplistic, encourages bosses to think short term and fails to address all-important qualitative food safety concerns.
Fed delay may put it in U.S. election firestorm 16 Mar 2016 The central bank’s decision to keep interest rates steady means its next potential move will come just as the presidential campaign season intensifies. The Fed already faces Republican calls for oversight. Waiting to move on rates unnecessarily invites more bad political risk.
An activist loss marks a win for all shareholders 16 Mar 2016 The board at U.S. restaurant chain Bob Evans, a third of which was installed by pushy investor Thomas Sandell, nixed his call for a breakup. The law demands fealty to the company first. Seeing representatives of aggressive owners take that duty seriously is a reassuring sign.
Corporate America can get behind Merrick Garland 16 Mar 2016 Obama’s nominee for the top U.S. court has been tough on crime, deferential to agencies and mostly silent on business as a judge. Companies can take comfort in his smarts and centrist rulings. With the GOP intransigent, it’s not obvious someone more palatable will come along.
Permanent capital is Ackman’s smartest trade 16 Mar 2016 His $11 bln Pershing Square fund is hurting from Valeant’s flameout. Ackman has had plenty of wins, too, though. One of the biggest was locking up over $4 bln of investment that can’t be withdrawn. That makes it far less likely short-term troubles can force him off the field.
Emissions reach encouraging pre-peak peak 16 Mar 2016 Pollution from energy production has levelled out. The IEA says that the U.S. and China burning less coal has helped to win a battle in the global fight against climate change. But to win the war on emissions, India must be persuaded to rein in its use of the dirty fuel.
CBS exit from radio in tune with the times 16 Mar 2016 The $24 bln broadcaster is mulling a sale of its 117 U.S. stations, just as internet service Pandora may be on the block. The moves could make sense, given stiff competition from the likes of Spotify, waning advertising and other industry disruption. The trick is to find buyers.
A steady Fed would hike rates another notch 15 Mar 2016 The U.S. central bank raised the overnight cost of money in December, then stood pat in January. At 0.25-0.5 pct, rates are still super low. And conditions look similar to late 2015. If Janet Yellen and colleagues don’t move again, they’re listening too hard to the markets lobby.