Now Dan Loeb, Sotheby’s director, has work cut out 14 May 2014 Christie’s just threw down the gauntlet with a $745 mln contemporary art sale, beating its own record. It’s one area where Loeb has criticized Sotheby’s, which holds its rival auction on Wednesday. Now he’s on the board, he can apply his smarts – and maybe his Rolodex – to help.
FCC needs thick skin to weather its moment in sun 14 May 2014 The U.S. telecom watchdog is tackling flashy issues on mergers, net neutrality and wireless spectrum. Resolving them won’t be easy, given the agency’s mandate to spark competition while also promoting efficiency and consumer choice. Current commissioners seem up to the task.
QE forces investors to applaud M&A 14 May 2014 Nowadays, bidders’ shares rise on news of a deal. The reverse used to be true. Equity market enthusiasm reflects relief that cash piles are finally being used. But unless M&A has become less risky, weaker balance sheets and value-destructive bids augur ill for credit quality.
Hedge fund customers’ yachts washing further away 13 May 2014 The flood of money – now $2.7 trln – in hedge funds has squashed returns below public stock markets. Private equity doesn’t seem to be doing much better. Both investing styles intuitively offer finite opportunity, yet fees encourage managers to hoard assets. Investors beware.
AT&T will struggle to justify $70 bln DirecTV bid 13 May 2014 Expanding into satellite TV requires heroic assumptions to be financially viable. Just to cover its cost of capital, AT&T would need to find over $2 bln of synergies. That’s more than even Comcast pledges to squeeze from Time Warner Cable. The deal has a whiff of desperation.
Fannie, Freddie overlord sets back mortgage reform 13 May 2014 New housing finance watchdog Mel Watt is reversing his predecessor’s plans to shrink the U.S. government giants. That means Uncle Sam will probably stay on the hook for 90 pct of new home loans. Profits will remain high as a result, complicating Congress’ efforts for reform.
AstraZeneca saga reverts to UK takeover playbook 13 May 2014 Pfizer’s bosses were cast as villains in a grilling by lawmakers, while Astra’s played unpretentious scientists. Public antipathy raises the risks for the U.S. group of going hostile. With Astra’s CEO outlining the form of acceptable bid, Pfizer knows where it needs to convince.
Rob Cox: The worry now is a brewing M&A bubble 13 May 2014 The corporate urge to merge has gone into global hyper-drive. Activity has surged as investors egg companies on and bid up the shares of acquirers well beyond mathematical prudence. When new metrics to justify the irrational are trotted out, it’s time to exercise caution.
RBS may get punished by its U.S. Citizens 13 May 2014 The UK lender has filed for an IPO of its stateside arm. Even excluding a writedown, Citizens Financial’s performance looks dire. An ROE of just 3 percent suggests it’s worth less than half its $19 billion book value. That’s a lot less than RBS needs to fund its capital plan.
Review: A crisis-like evaluation of "Stress Test" 12 May 2014 To judge the merits of Tim Geithner’s reflections, six Breakingviews columnists digested different pieces in a short amount of time. Like the regulators who often lacked broader context, the assessments vary. Yet there’s also consensus it’s a useful tome for the financial library.
AT&T deal dialing emits a shaky signal 12 May 2014 First, it wanted T-Mobile US for more domestic subscribers. After regulators nixed the idea and Verizon cleaned up its wireless JV, AT&T pursued Vodafone for European growth. Now, DirecTV or Dish beckons at home. The rationale is questionable and the broader strategy wayward.
Top U.S. patent court stuck in own tech bubble 12 May 2014 The tribunal’s focus on minutiae and IP owners can lead to head-scratchers like a copyright ruling for Oracle over Google. The Supreme Court may confuse iCloud with Dropbox, but its broader view allows it to get tech cases right. Even in law, expertise can’t replace common sense.
Investors unduly cold on sweet-savory food combo 12 May 2014 Sausage-focused Hillshire Brands’ shares fell after it unveiled a $6.6 bln deal for syrup-to-frozen peas maker Pinnacle Foods. Back-of-the-napkin math suggests the union should create value, but the debt Hillshire is taking on to fund the tie-up appears to be leaving a bad taste.
Interpreting Apple/Beats using Andreessenomics 12 May 2014 Venture capitalist Marc Andreessen partly justifies high tech valuations with the idea that huge companies can “attach” the products of smaller ones, rendering traditional analysis pointless. The idea can resonate - perhaps for Apple with Beats headphones - but it’s flawed.
Apple shows another symptom of mid-life crisis 9 May 2014 It hasn’t got a tattoo or hooked up with a Pilates instructor. But its interest in trendy headphone maker Beats may be a sign the $500 bln iPhone inventor feels the need to splash out $3 bln to keep up with the cool kids. The risk is that fast cars and other pricier toys follow.
Review: A semi-skilled guide to inhuman progress 9 May 2014 William Easterly has the fervour of the convert. “The Tyranny of Experts” is the former World Bank economist’s latest attack on that institution’s approach to aid and modernisation. The complaints about “blank slate” thinking are persuasive, the praise of individualism less so.
Guest view: Fed set to limit inequality it fueled 9 May 2014 By propelling stocks in particular, quantitative easing inadvertently increased the U.S. wealth gap, argues Alexander Friedman, global chief investment officer at UBS Wealth Management. Tapering should help narrow it again. That’s one reason to welcome tighter monetary policy.
Deal failure intensifies Publicis’ succession woes 9 May 2014 The end of the merger between the French advertising company and its U.S. rival Omnicom leaves Publicis without a plan for replacing 72-year-old CEO Maurice Levy. That is a long-standing issue that the board repeatedly failed to address. It has just taken on a new urgency.
Big Ad merger sorely misjudged its audience 9 May 2014 The failed $35 bln tie-up of Publicis and Omnicom was a triumph of financial logic that failed to account for human behaviour. Merging two rivals of near-identical size looked elegant on paper. But that doesn’t mean much if clients, employees and regulators don’t buy the concept.
No one left to bail out Lehman Brothers 8 May 2014 While not as cataclysmic as the failure it faced in 2008, the investment bank is being squeezed hard at Barclays. Original rescuers Bob Diamond and Skip McGee are both gone. The new U.S. leadership will have to redouble efforts to avoid the legacy of a sprawling diaspora.