BT makes biggest possible call on UK mobile 15 Dec 2014 The telco is nearing a 12.5 bln stg purchase of EE from Orange and Deutsche Telekom. That’s a surprisingly high 7.9 times EBITDA. Still, cost savings will help. And if BT wants to be big in mobile, buying the biggest UK network with the best mobile broadband offering makes sense.
Solar upstarts and utilities head for uneasy truce 15 Dec 2014 The soaring popularity of solar panels in the U.S. cuts carbon emissions but upsets utilities trying to make a return on grid investments. The industry’s attempts to slap fees on solar users sparked uproar in 2014. A new cost-sharing approach may take the heat out of the debate.
BC Partners strains at the leash for PetSmart LBO 15 Dec 2014 The private equity firm has come out on top in an $8.7 bln auction of the biggest U.S. pet-store chain. It’s 2014’s largest buyout. But paying 9.1 times trailing EBITDA looks loose. And while plenty of banks are offering financing, the debt levels could make regulators bristle.
European telecoms will dial up more deals 15 Dec 2014 Investors have brightened as M&A has swept the sector. Thanks to BT, Britain is up next. More mergers could follow in France, Italy and Belgium. What’s not to like? Well, windfalls from big cross-border deals looks distant and valuations already price in most of the good news.
U.S. budget spat puts bankers, lawmakers to shame 12 Dec 2014 Wrangling over a change to Dodd-Frank has delayed a deal to keep the government open. The amendment may only weaken financial reform slightly. But it smells bad that Wall Street wrote and lobbied for it. Allowing it to slow a $1 trln bill is another sign of Congress’s dysfunction.
Goldman updates IPOs for the Candy Crush era 12 Dec 2014 CEOs of firms heading for public markets are hooked on the bank’s app, which enables them to track results of roadshow book-building in real time. With Apple and IBM coding mobile software for big companies, the smartphone economy is swiftly moving from living room to boardroom.
Review: "Forgotten Depression" worth remembering 12 Dec 2014 James Grant’s new book on the U.S. government’s response to the 1921 crash is a timely reminder that our forebears knew of other, apparently more efficacious, remedies to cure financial hangovers than the hair of the dog.
LendingClub’s IPO brands it the Tesla of finance 11 Dec 2014 The loan platform’s shares soared after pricing above the range. Like Elon Musk’s electric carmaker, it’s now a disruptor with a good toehold in its sector and a sky-high valuation. As with Tesla, though, LendingClub’s stock market success rests on sentiment, not financials.
Binding Staples to Office Depot only easy on paper 11 Dec 2014 Activist Starboard may push for a $13 bln merger of the last two big U.S. office supply chains. Cost cuts enable Staples to pay a big premium and still generate good returns. Regulators might object, though, and too much debt is a risk with competition from Amazon and Wal-Mart.
More Porsche than Prada: Why Ferrari’s worth $7bln 11 Dec 2014 Fiat will float the iconic sports car brand in 2015 and wants investors to see it as a luxury goods company rather than a carmaker. That’s a stretch. Building Ferraris takes more capital and R&D than handbags and shoes. Margins - and multiples - are lower for a reason.
Fiat tries to make convertible a mandatory buy 11 Dec 2014 Mandatory convertible bonds – debt securities that become equity – aren’t to everyone’s taste. Fiat has priced its $2.5 bln issue to sell. Investors get a high coupon and access to the carmaker’s Ferrari IPO. That compensates for the bond’s low rating and deferrable interest.
Facebook’s next goal: crack the Socialist network 11 Dec 2014 Founder Mark Zuckerberg’s attempt to charm China’s censorship tsar has earned justified dislikes. It’s no longer unthinkable though that the social network could be allowed back into the People’s Republic. The challenge is to wrest new friends from huge local rivals.
Overreaching enforcers redraw insider trading line 10 Dec 2014 A U.S. court tossed convictions of two hedge fund managers, sharply narrowing the law on improper dealings. Prosecutors should expect more embarrassing reversals. The silver lining is that the ruling gives Wall Street clarity on what’s forbidden and should curb government excesses.
After slaying giants, activists eye a newborn 10 Dec 2014 CDK Global was just spun off from ADP in September. The $6.4 bln software provider’s results look decent so far and yet two uppity shareholders already own almost a 20 pct stake. Their plans aren’t clear. What is, though, is that no company is safe from agitators any more.
Don’t write off Santander buyout of U.S. auto unit 10 Dec 2014 A report that the Spanish bank is considering scooping up the 28 pct of its Santander Consumer unit’s tradable stock has some logic. A new chief and a stock drop add appeal. But the timing is off. A buyout looks bad so soon after the IPO, and the stock is depressed for a reason.
Billy Salomon dies as his trading era returns 10 Dec 2014 In 15 years as boss of his father’s eponymous firm, Salomon, who passed at age 100, made it a bonds powerhouse. Wall Street twisted the model into prop desks that helped seed the financial crisis. U.S. banks are now barred from such trades. What’s left is more Salomon’s style.
Rob Cox: Yellen should gird for activist investors 9 Dec 2014 Uppity shareholders have so far avoided complex banks like Citi and JPMorgan. Regulatory pressure, middling performance and a dearth of large-cap options make them increasingly attractive for shakeup artists. That may put Fed Chair Janet Yellen in a new, uncomfortable position.
Economist aura helps Bloomberg in financial times 9 Dec 2014 Replacing Matt Winkler, the top editor at Mike Bloomberg’s media empire, with the British weekly’s John Micklethwait ends an era. As well as portending the biggest internal shakeup in 25 years, the move could mean there’s a bigger chance of Bloomberg snapping up the pink-hued FT.
Citi boss etches a dangerous line 9 Dec 2014 The mega-bank is taking a surprise $3.5 bln charge mainly for Libor, forex and money laundering legal costs. CEO Michael Corbat says it should mostly put the issues to bed. That’s a bold call, especially given Citi’s approach to reserves. The words may yet come back to haunt him.
Abercrombie CEO joins Society of Ignoble Chairmen 9 Dec 2014 Michael Jeffries is leaving the once hot apparel chain not even a year after the board stripped him of the dual leadership role. While his departure may help Abercrombie & Fitch, it’s the latest instance of good corporate governance being sadly used to punish wayward management.