Blackstone learns from Tishman’s Stuy Town mistake 21 Oct 2015 The private equity giant is leading a $5.3 bln deal for the vast New York apartment complex. The price almost matches what its rival paid in 2006 – before ceding the property to creditors. But with the help of more equity and City Hall support, there’s a foundation for success.
Cox: Peru a governance test shy of frontier status 20 Oct 2015 For an economy set to best its main Latin rivals, Peru’s stock market is so messy MSCI may soon downgrade it to Nigeria and Pakistan levels. Thanks to a sweetheart deal Coca-Cola has launched that shafts investors, Peruvian authorities have a chance to show capital is welcome.
Dell’s tracking stock 2.0 boasts fixes, new bugs 20 Oct 2015 The tech crash of 2000 exposed governance gaps and other risks of synthetic shares pegged to certain assets. The PC maker has patched some flaws in proposing to issue shadow VMware stock in its $60 bln-plus deal for EMC. But investors still might not relish the user experience.
Corporate America can learn from Chicago Cubs 20 Oct 2015 The baseball team’s owner, Tom Ricketts, and President Theo Epstein have transformed the lovable losers into World Series contenders through a combination of investment, savvy acquisitions and, above all, patience. It’s a strategy boardroom bosses would do well to emulate.
Yum split offers value with chance of aftertaste 20 Oct 2015 The KFC parent will hive off its troubled China business into a separate traded company - as suggested by activist Corvex. It’s logical: the two parts are effectively separate already. The catch is that the U.S. unit will still share Chinese growth risks, but without the control.
New Canadian PM faces choppy economic ice 20 Oct 2015 Justin Trudeau’s Liberals trounced Stephen Harper’s Conservatives in Monday’s election. But the global commodities chill hit Canada hard and the weak currency hasn’t lifted trade. Even hockey franchises are hurting. Trudeau will have to make the most of his honeymoon period.
Double Pac-Man healthcare M&A contains triple risk 20 Oct 2015 AmSurg wants to be king of U.S. doctor outsourcing. The $3.8 bln firm made an unsolicited $5.3 bln offer for TeamHealth while also backing its target’s agreed purchase of another company for $1.4 bln. The double gulp raises the odds of overpaying, buying a dog, or poor execution.
Harley-Davidson needs to find a fountain of youth 20 Oct 2015 The iconic motorcycle maker’s brand has morphed from Hells Angel outlaw to retired Michigan dentist. Like the broadcast news, it’s struggling to generate new, younger customers. The shift requires a major overhaul that dents profit – a task that may best be performed in private.
Banks need more than Fed’s help to boost earnings 19 Oct 2015 Execs and shareholders alike place a lot of faith in rate hikes improving the bottom line. Lenders’ stated benefits of an upward move, though, aren’t just unrealistic - they also won’t do much for returns. Higher borrowing costs also tend to hit banks with unforeseen problems.
Dewey leaders may skate but law firms on thin ice 19 Oct 2015 Jurors couldn’t decide whether the defunct legal shop’s bosses cheated lenders with dodgy accounting. Prosecutors blew it, but the case highlights the bloat, greed and intransigence at many big firms. Only the nimble and tech-savvy will escape a harsh verdict from clients.
Valeant’s platform trembles beneath Ackman’s feet 19 Oct 2015 The hedge fund manager bought a 5.5 pct stake because Valeant offered a cure for poor capital allocation by drugmakers. Now it’s scaling back on acquisitions, raising R&D and limiting price increases. The outsiders missed the political benefits to pharma’s spending.
Oprah’s diet-firm stake plumps up her pocketbook 19 Oct 2015 The American talk-show queen is taking a 10 pct stake in Weight Watchers for $43 mln. By investing with her appetite, she follows in the footsteps of Warren Buffett, Victor Kiam and 50 Cent. Swapping corporate sponsorship fees for equity will also add heft to her wallet.
Morgan Stanley Q3 casts doubt on low-risk strategy 19 Oct 2015 The bank’s $740 mln profit equates to a 3.9 pct ROE, the worst of any big bank. Adding back one-offs takes that only to the 7 pct Goldman managed. CEO James Gorman promised a safer and more solid enterprise than its rival. On this showing, it’s more boring without the benefits.
Central bankers add grist to anti-austerity mill 19 Oct 2015 Two Fed officials state that monetary policy can do little to lift the equilibrium level of interest rates, while an ECB policymaker says looser fiscal policy may be needed to secure growth. Such candour gives new ammunition to those who want governments to do more.
Hadas: Ex-Im deniers miss the real world 19 Oct 2015 Fierce attacks on the U.S. government’s trade finance bank are based on a false model of how economies work. Markets matter, but so do competent and powerful states. Promoting commerce is part of their job. The U.S. does it pretty well, with Ex-Im Bank just part of the package.
United board flies into risk-management failure 19 Oct 2015 The U.S. airline’s directors have been buffeted by the turbulence caused by new CEO Oscar Munoz’s illness. Apple’s handling of Steve Jobs’ terminal cancer remains a far worse example. But Goldman Sachs and JPMorgan show it’s possible to both inform investors and respect privacy.
Memo to Netflix: Card swipe may not connect 16 Oct 2015 Plastic purveyors are hitting back after the video-streaming site blamed new chip-enabled credit cards for subpar Q3 subscriber growth. Netflix’s reason sounds weak. More worrying, companies using spurious-sounding ways to rationalize problems sometimes have bigger concerns.
Fortress macro fund closure could help its stock 16 Oct 2015 The alternative manager of $72 bln has lagged peers since its stock market debut in 2007. Now it’s closing a onetime flagship fund and losing a principal, Mike Novogratz. It may not be all bad, though: changes in Fortress’ asset mix could now get the attention they deserve.
Thruppence: Naming that brew 16 Oct 2015 It could be called Anheuser-Busch de Bebidas das Américas und South African et Asian Inter-Breweries (ABBASAAIB). Breakingviews columnists brainstorm some alternatives to this over-fermented concoction of beer-merger dregs past and present.
The Devil’s Dictionary of Post-Crisis Finance 16 Oct 2015 Ambrose Bierce wrote “The Devil’s Dictionary” a century ago, ranging acerbically across government, commerce and life. Breakingviews’ original re-use of the form for finance – in 2007, when the crisis was barely beginning – is no longer adequate. Herewith part two of the sequel.