Asian online giveaways echo past internet follies 23 Nov 2015 Chinese and Indian web groups are helping subsidise the cost of everything from manicures to mobile phones to attract users. It’s reminiscent of previous frenzies that put growth ahead of profitability. Customer loyalty may prove scarce when the money runs out.
Argentina faces choice between magic and realism 20 Nov 2015 Voters look likely to choose uncharismatic, pro-market Mauricio Macri as their next president in Sunday’s runoff election. Latin America’s No. 3 economy needs a dose of orthodox management after years of Kirchnerist magical thinking. But he could become unpopular very fast.
C&W deal exposes John Malone’s paper-thin trackers 20 Nov 2015 The Latam and Caribbean cable operator’s $8 bln sale to the media mogul’s Liberty Global presents shareholders with three forms of payment. The C&W board is recommending the one without a tracking stock. That partly undercuts the reason for creating such shadow shares.
Bombardier subsidies offer crucial but costly lift 19 Nov 2015 The Canadian aerospace firm’s rail unit agreed to a $1.5 bln infusion from Quebec, days after the province struck a deal to invest in its wobbly jet project. Public cash buys time but comes with pricey terms and governance risks. Potential mergers may be harder to pull off, too.
Pfizer’s $150 bln plan is high-risk, low-benefit 19 Nov 2015 Buying Allergan would give the drug giant a low-tax domicile in Ireland and one good drug, Botox. At the reported price, Allergan would accrue nearly all of the obvious upside. Pfizer would be left with a possible integration hangover – and tax savings that might disappear.
Starboard’s Yahoo flip-flop misses the point 19 Nov 2015 The pushy investor now wants the $31 bln tech company to offload its main business instead of its Alibaba holding. A switcheroo won’t erase a discount and residual tax liability on the stake. However it’s engineered, the real problems for Yahoo boss Marissa Mayer will remain.
Investors get too comfy over US-euro divergence 19 Nov 2015 Twin the prospect of higher U.S. policy rates with the chance of more euro zone easing and the result is eye-catching divergences in currency and interest rate markets. The problem is, such price trends are vulnerable to setbacks even if rate-setters do what’s expected of them.
Public investors lasso Square to tame the unicorns 19 Nov 2015 Jack Dorsey’s payments firm has priced below its indicated range and at less than half the value of its last funding round. A two-timing CEO, rising competition and losses provided ammunition for old-school mutual fund managers demanding big discounts to lofty private valuations.
Willis could kill merger-of-equals conceit 18 Nov 2015 The UK-based insurance broker’s $18 bln union with U.S. consultancy Towers Watson is on the rocks. Investors have turned some $5 bln of promised synergy value into $1 bln of value destruction. A rescue would probably unbalance the economics, undermining the promised equality.
ConAgra carve-up gives activists just a slice 18 Nov 2015 The $17 bln food giant is separating frozen fries from Chef Boyardee and Slim Jim. It’s the second big move for fast-acting boss Sean Connolly who joined in April and was followed into ConAgra by pushy investor Jana. Spinning rather than selling, however, demands more patience.
Wells Fargo shows rivals how CEO succession’s done 18 Nov 2015 JPMorgan boss Jamie Dimon has pushed out or lost possible heirs. BofA and Citi have created chaos at the top. But the most valuable U.S. bank has positioned Tim Sloan to replace John Stumpf while also grooming other long-serving executives to step in. It’s a lesson in leadership.
Chancellor: The illusion of debt-fuelled earnings 18 Nov 2015 Low borrowing costs enabled acquisitive drugmaker Valeant to ratchet up EPS with leverage. Earlier episodes of financial engineering - like Japan’s zaitech and the 1960s conglomerate boom - came unstuck after rates rose and stocks fell. It won’t be any different this time.
Rail deal needs more than $28 bln to stay on track 18 Nov 2015 Canadian Pacific justifies its hostile bid for Norfolk Southern by touting cost savings worth over $12 billion. But CP shareholders will keep $5 billion of that amount for themselves. Given antitrust risks, a higher offer will be necessary to bring this merger into the station.
Airgas schools market on long-term greedy 17 Nov 2015 Shareholders will receive $10.3 bln in cash selling to Air Liquide. That’s a 51 pct premium, which also means Airgas has outperformed rivals and the S&P 500 since early 2010 despite being the target of an unsuccessful hostile bid. Successive CEOs played their hand well.
Wall Street gets early warning from Veritas LBO 17 Nov 2015 Banks are on the hook for $5.6 bln of debt after pulling the refinancing for Carlyle’s buyout of the data-storage unit. It may be a blip, but raises fears of a high-yield market stall. It’s also a reminder of the risk lenders take helping pile leverage on low-rated companies.
Hyatt’s M&A fail is small win for good governance 17 Nov 2015 The U.S. hotelier lost to Marriott in the $12 bln takeover of Starwood. One factor was the Pritzker family’s tight grip on Hyatt. It conceded the flaw by offering to alter its super-voting share scheme in the bid. The rejection provides a warning to other feudal companies.
Media General ups M&A game with Goldman on side 17 Nov 2015 The U.S. local TV broadcaster rejected Nexstar’s $4 bln bid but said it would negotiate. That’s an improvement on sticking blindly to its own deal to buy Meredith, which looks worse for shareholders and strategically odd. New advisers may be helping – and Nexstar could pay more.
VW victims eclipsed by firms that bet on lawsuits 17 Nov 2015 A firm backed by hedge fund Elliott is bankrolling a case claiming the carmaker duped shareholders. There are other customer and investor actions, too. The financial muscle makes huge awards more likely. But the real losers may take a back seat if court fights are just business.
Cox: Quarterly reporting to get a major rethink 17 Nov 2015 From BlackRock’s Larry Fink to presidential contender Hillary Clinton, “quarterly capitalism” has become a four-letter word. Big publicly traded asset managers could change habits by abandoning their own three-monthly results. Watch for that in the coming year.
Congress’ insider traders finally out of excuses 16 Nov 2015 A U.S. judge has ordered lawmakers to cough up evidence about a dodgy tip, ending more than a year of stonewalling and bogus claims of immunity. With Capitol Hill contemplating an even stronger ban on improper Wall Street trades, the least it can do is play by its own rules.