Kraft investors bet Heinz can refill secret sauce 25 Mar 2015 The Velveeta cheese maker’s stock jumped a third – making the company worth nearly $50 bln – on news of its sale to the ketchup giant, which 3G Capital and Warren Buffett took private in 2013. The math works if Heinz can repeat its margin magic and leap hurdles to scaling Kraft.
Heinz and Kraft prove that one M&A bank is enough 25 Mar 2015 The companies have a single adviser each in their mega-merger: Lazard for the ketchup maker and Centerview for the mac-n-cheese king. The involvement of Warren Buffett and 3G helps, as does the absence of outside capital. But a lone consigliere per side suffices in most tie-ups.
Kraft buyout may work with a slathering of ketchup 25 Mar 2015 Mac-n-cheese maker Kraft is reportedly in talks with the Brazilian group that took Heinz private with help from Warren Buffett. A Heinz-style takeout looks doable, but the equity required is daunting. A merger with Heinz might be the best way to make a deal stack up.
Amazon faces double whammy from shipping costs 24 Mar 2015 One of the internet retailer’s biggest weapons against rivals has been fast and cheap delivery. The associated losses have been a clever marketing expense, driving revenue growth. Increased competition and delivery costs are blunting this edge - and dimming Amazon’s prospects.
Banks may need bruises for living wills to impress 24 Mar 2015 HSBC, RBS and BNP failed to provide credible resolution plans again, regulators say. They join 11 big banks watchdogs demanded new failure schemes from last August. Stress test results improved when dividend cuts caused pain. Whacks may be needed here too for better results.
Google’s CFO search should have it feeling lucky 24 Mar 2015 There’s a dearth of executives with the financial, tech and government experience needed to help run a $400 bln company. Even fewer women fit the bill. Silicon Valley and Wall Street just can’t find enough Ruth Porats fast enough. The challenge is to create more like her.
U.S. oil company drills to new depths – in markets 24 Mar 2015 Whiting Petroleum is raising up to $3.2 bln of new equity and bonds after failing to find a buyer. The deeply discounted share issue will slash debt added as part of the recent acquisition of rival Kodiak. The dilution stings, but getting ahead of the industry rush also is wise.
Forex reform is an uphill struggle 24 Mar 2015 Global supervisors are nobly trying to improve a market which has too often pitted traders against clients. Increased transparency and stricter discipline can help make the culture more professional, but it will be hard to stamp out profitable and entrenched bad behaviour.
Elliott emits ray of pragmatism in Argentina feud 23 Mar 2015 The hedge fund and a U.S. judge say Citi can process two of the country’s bond payments, despite a court-ordered block. It’s a concession to cover the bank’s back, not a broader shift in holdout creditors’ intractable spat with Argentina. But it may qualify as progress.
Global water woes mix with trickle of good news 23 Mar 2015 The planet faces a 40 pct H2O deficit by 2030 as rising populations require more food and energy. Droughts in Sao Paulo and California may become harbingers of doom. But progress on everything from data to usage to business awareness to international agreements offers some hope.
Fannie, Freddie bailout fear revives reform debate 23 Mar 2015 A watchdog says the U.S. mortgage guarantors could lose $190 bln in a crisis. They lack capital cushions because Congress is stripping their cash. Changing that would require a policy rethink and could embolden undeserving equity holders. But the status quo is not sustainable.
Activism is lost in translation at Vivendi 23 Mar 2015 The French media group is the object of a transatlantic clash between U.S. investor Peter Schoenfeld and group chairman Vincent Bollore. Vivendi could indeed be more shareholder-friendly. But Schoenfeld may struggle to win large institutional support in Paris.
Biotech-insurer connection looks wildly premature 23 Mar 2015 Early results for Biogen’s Alzheimer’s drug added $10 bln to its value on Friday. Now an analyst comment that it might cut long-term care payouts for Genworth has sent the insurer’s stock up 5 pct. Past failed treatments make that a step too far – and even a sign of a bubble.
Holdout investors can survive beating on the bayou 20 Mar 2015 At the New Orleans M&A jamboree, dealmakers slammed merger appraisal cases that allow shareholders to sue for higher prices. Even the Delaware chief judge’s fiery rebuttal didn’t carry the day. In the real world, though, the suits are proving sturdy checks on dodgy transactions.
First stab at U.S. fracking rules strikes balance 20 Mar 2015 A long-awaited federal edict on hydraulic fracturing addresses big environmental worries while sparing oil and gas drillers heavy new costs. It applies only on government land and may evolve. But it’s a workable step toward replacing patchwork state rules with national standards.
Global trends through a Tiffany glass, darkly 20 Mar 2015 The luxury retailer’s tarnished outlook reflects a new economic normal. A slump in Japan reflects that nation’s fiscal constraints, while the rising dollar has hit sales elsewhere. On the bright side, growth in Europe is rebounding and Chinese consumers are playing their part.
China’s world bank has rickety foundations 20 Mar 2015 The country’s patchy record of funding big projects at home and abroad hasn’t deterred Western countries from rushing to join its new Asian infrastructure bank. To lure private capital, the body will have to be commercial and transparent. Early signs suggest it will be neither.
Wall Street’s über-lawyer hits bum regulatory note 19 Mar 2015 Rodgin Cohen thinks watchdogs have gone overboard to prove they’re not captured by banks. That resonates with many in Congress, but the 2008 crisis exposed the necessity of more robust oversight. Still, room remains to soften examiners’ ferocity even if banks overstate the pain.
Drugmaker IPO should ease any TPG anxiety 19 Mar 2015 The buyout firm may quadruple its investment – at least on paper – in Par Pharmaceutical, a generics maker it bought for $1.9 bln less than three years ago. The return delivers a useful lift as TPG raises a new $10 bln fund. It’s also good therapy for a dispiriting lawsuit.
Wall Street owners finally get breakup bona fides 19 Mar 2015 The SEC is allowing BofA shareholders to vote on whether to spin off Merrill Lynch. The watchdog previously muzzled similar requests at JPMorgan and elsewhere. Banks won’t like the scrutiny, but it’s a worthwhile debate to air publicly, as they’re running the numbers internally.