Energizer split leaves biggest problem intact 30 Apr 2014 The struggling $7 bln batteries-to-tampons group plans to separate into household and personal care companies. That may improve focus, but it’s hard to see how it addresses Energizer’s main challenge: mustering more resources to take on industry gorilla Procter & Gamble.
GE in hard-to-beat 11.4 bln euro bid for Alstom 30 Apr 2014 The U.S. conglomerate’s offer for the French group’s power assets is at the upper end of a reasonable price range. Germany’s Siemens will find it hard to improve on a fair offer favoured by Alstom’s board - and it would probably bring less cash to the table.
BNP is latest pawn in U.S. too-big-to-jail saga 30 Apr 2014 Post-HSBC, U.S. regulators are keen to bin the idea that big banks can’t be found guilty on stability grounds. BNP’s breaches of foreign sanctions may not be worse than peers’. But at best it looks to be facing a big fine; at worst, a serious threat to its Stateside business.
Twitter’s slow user growth is an ill canary 29 Apr 2014 Sure, first-quarter revenue doubled. But Twitter is finding it increasingly difficult to sign up new users or tempt existing ones to tweet more. That’s a bad combination for the microblogging service that’s losing money yet valued at 18 times projected 2014 sales.
Heirs to $40 bln TXU flop inherit same old risks 29 Apr 2014 The Texas utility now called Energy Future Holdings is finally going bankrupt. Its plan to emerge will still leave it with more debt than rivals and vulnerable to a fall in energy prices, just like after its record 2007 LBO. And that’s only after a fight with junior creditors.
Apple’s new debt is more iBond 1S than iBond 2 29 Apr 2014 The iPhone maker is venturing into bond markets for the second year, even though it has $151 bln of cash. Investors who snapped up last year’s $17 bln offering are nursing losses thanks to Apple’s good timing. The 2014-model debt issue’s main improvement is its smaller size.
U.S. bank watchdogs need more Washington love 29 Apr 2014 Regulators came out of the financial crisis shamed, but also with more power - and more work. Yet lawmakers are forcing more belt-tightening on them. Meanwhile, the Fed and the top swaps supervisor suffer from a dearth of leaders. Regulators need more resources, not fewer.
U.S. banks wasting Fed’s $2.7 trln of stimulus 29 Apr 2014 QE-generated excess reserves just sit there earning 0.25 pct while loans have increased less than nominal GDP. Only consumer debt and yield curve games have grown. No wonder America has little growth or inflation. If the Fed wants more lending, it should charge for reserves.
Pfizer tax arbitrage will hasten more deals 29 Apr 2014 The biggest charm of the U.S. drug giant’s $99 bln offer for the UK’s AstraZeneca lies in switching to a lower-tax domicile. The latest and largest such deal raises the odds Congress will tighten rules. Until then, Pfizer’s validation of the tactic will encourage copycats.
Sotheby’s case for poison pill tough to swallow 28 Apr 2014 The auction firm has blocked uppity investors like Dan Loeb from owning 10 pct or more of its stock. The hedge fund boss has sued for being singled out and portrayed as a takeover threat. Legal precedent supports the company, but may stifle activism that benefits shareholders.
Silicon Valley exceptionalism only travels so far 28 Apr 2014 Airbnb has been sassing its way around New York, whose attorney general suspects the residence-sharing site’s users are breaking the law. A better lodging mousetrap and $10 bln valuation may resonate in the Valley, but it doesn’t mean nearly as much beyond the tech echo chamber.
Record U.S. oil stocks show need for policy shift 28 Apr 2014 There’s more crude on hand than at any time in the last 30-plus years – perhaps since 1931. That reflects booming production. Drillers are getting less for their oil than global market rivals. The gap will tend to widen unless lawmakers rethink a long-running ban on exports.
Uncle Sam’s Putin sting also threatens investors 28 Apr 2014 Sanctions can cut both ways. The U.S. is targeting Rosneft boss Igor Sechin. Will Russia retaliate against BP, which owns 20 pct of the oil giant? Probably not, thanks to the British company’s approach. But all foreign business partners are subject to Putin’s wrath.
BofA reclaims banking dunce cap with $4 bln flub 28 Apr 2014 The Fed has told the U.S. mega-bank to suspend its dividend hike and buybacks after the bank found an error in its capital calculations. The discrepancy is small. But it dents any returning faith in banks’ risk management and puts boss Brian Moynihan back on the defensive.
Pfizer needs to do more to win AstraZeneca 28 Apr 2014 The U.S. pharma group is pressuring Astra to engage by revealing fleeting past discussions about a $99 bln cash-and-stock approach. Pfizer will want to see this through. To extract more value, Astra CEO Pascal Soriot can rubbish Pfizer’s bid currency and talk up other deals.
Siemens’ Alstom proposal attractive but risky 28 Apr 2014 The German engineer has offered to swap assets with its French rival after a possible GE/Alstom deal ran into government opposition. Exchanging trains for turbines could create two strong players, and generate larger synergies. But antitrust obstacles may be tough to overcome.
Abe’s small hits weightier than big trade miss 28 Apr 2014 The Japanese prime minister’s failure to cut farm tariffs has delayed a key U.S. trade pact. But that doesn’t mean he is unable to open up Japan’s economy. Easier land and labour laws, greater tolerance of foreign workers and lower medical costs add up to a strong reform push.
"Ford tough" takes on whole new meaning 25 Apr 2014 The U.S. automaker’s earnings dropped more than was expected in large part because of vehicle repairs. It’s the latest sign of how the industry is struggling to keep cars reliable as models get fancier and product cycles shorten. A complexity discount may be appropriate.
Suppose Brazilian CEOs saw light on pay secrecy 25 Apr 2014 Bosses of Vale, Ambev and other companies are fighting in court to keep their compensation under wraps. Concerns over privacy and kidnapping loom large. Yet there’s evidence that transparency could make them richer. Breakingviews imagines a closed-door meeting on the subject.
New gross output stat shows merit of Fed stimulus 25 Apr 2014 The measure, included in a new U.S. report on GDP by industry, focuses on what’s being made, not on consumption. It underlines how suddenly economic activity plunged from 2008 to 2009, and suggests monetary stimulus worked better than the too little, too late fiscal response.