Comcast deal may be headed for a Sprint moment 14 Feb 2014 A rival could help trustbusters squelch the $45 bln purchase of Time Warner Cable, just as the U.S. telco undercut AT&T’s bid for T-Mobile US. Showing harm to content sellers, not just customers, may be the key. There are no volunteers yet, but regulators seem open to persuasion.
America’s dumb elites risk fomenting a revolution 14 Feb 2014 The plutocrats at Davos seemed to agree that widespread social unrest is a big tail risk from the West’s rising financial inequality. So One Percenters like VC Tom Perkins, AOL boss Tim Armstrong and realty mogul Sam Zell should be wary of picking fights with the little guy.
Jos. A. Bank’s daft deal knits owners in a bind 14 Feb 2014 To avoid being acquired, or perhaps to fetch a higher price from rival Men’s Wearhouse, the suits retailer is issuing stock to buy Eddie Bauer at $56, only to buy it back at $65. If the $875 mln transaction isn’t unraveled, shareholders will find themselves painfully stitched up.
Argentina takes painful stab at economic reality 14 Feb 2014 The government has unveiled a new consumer price index more reliable than its predecessor. At 3.7 pct, it still has January inflation lower than private estimates. But it’s a good start that may please the IMF and international markets. It’ll make wage talks tougher, though.
Guest view: Europe risks wasting gene therapy advance 14 Feb 2014 Europe lags the U.S. in providing promising companies with the investment needed to get to market. Without better financing solutions, it won’t share in the industrial future of gene therapy, says the CEO of Syncona, the Wellcome Trust’s life-sciences investment company.
VW’s U.S. union critics are damaging own interests 13 Feb 2014 Tennessee Republicans like Senator Bob Corker are warning of pain if the automaker’s workers there vote to join the UAW. The anti-union gripes reflect old ideology, not the new reality. VW isn’t bothered by unions and has $7 bln to invest elsewhere if lawmakers make it unwelcome.
U.S. swaps watchdog can afford to take a breather 13 Feb 2014 The CFTC is delaying cross-border derivatives rules, a relief for the industry. But other rulemaking deadlines loom. With 90 pct of interest-rate swaps now centrally cleared, regulators have made great strides. They should finish the job, but allowing some leeway now makes sense.
Comcast deal machine spits out a value destroyer 13 Feb 2014 The return on investment from the $70 bln purchase of Time Warner Cable looks to be 1 percentage point lower than the buyer’s cost of capital. That’s crummy but not criminal. It’s also not too surprising. The Roberts family uses medieval governance to oversee the Comcast fiefdom.
Pepsi cash fountain won’t quench skeptics’ thirst 13 Feb 2014 The soft-drink giant’s promise to boost payouts by 35 pct could put fizz in investors’ step. But a decision to rule out big changes in struggling North American beverages leaves the company playing catch-up with Coke. Activists like Nelson Peltz will probably be looking for more.
Comcast gives deal junkies lots to watch on cable 13 Feb 2014 The biggest U.S. operator has agreed to buy rival Time Warner Cable for $45 bln in stock, interrupting a hostile takeover by smaller Charter. The target got the price it wanted but not the terms. Regulatory risks are high. And all eyes will still be on the crafty John Malone.
Dan Loeb finds Dow looking more Sony than Yahoo 12 Feb 2014 The chemicals giant has rebuffed the activist’s idea to split in two. With shares up since Loeb’s pitch, making a financial case for a breakup is harder. That may leave Loeb waging a less aggressive campaign, as he has at Sony, rather than suiting up for a Yahoo-style proxy war.
Easy answer to Icahn’s director beef 12 Feb 2014 The investor is railing at boards that exclude candidates who are paid extra by activists. He’s right. But the workaround is for individual owners not to pay nominees. That way Icahn et al keep intact their main claim for broad support: that all shareholders are in the same boat.
Watchdog’s nip won’t fix flawed investor justice 12 Feb 2014 A U.S. regulator’s plan to stop Wall Street veterans from hearing customer-broker disputes may limit bias. But a truly fair process would allow investors to go to court as well as industry-run arbitration. Congress gave regulators power to offer that choice. If only they’d use it.
Cross-border arbitrage is expansive Bimbo’s yeast 12 Feb 2014 The acquisitive Mexican breadmaker Grupo Bimbo is paying $1.8 bln to buy Canada Bread. Paying 20 times earnings to move into a mature market may seem questionable. But Bimbo’s earnings fetch an even higher multiple at home – and the deal should lower its average cost of capital.
Markets may flare again without Fed and ECB hoses 12 Feb 2014 After being burned by emerging-market fires in January, investors reacted complacently to Janet Yellen’s debut. But the new Fed chair wants to keep cutting asset purchases, and hopes for more liquidity from the ECB may be vain. The risk of further market fires is high.
Yellen picks and chooses from Fed’s dual mandate 11 Feb 2014 In her first congressional appearance as chairman, she sounded keen to see inflation rise toward her predecessor’s 2 pct target. But as well as full employment, the U.S. central bank is supposed to seek “stable” prices. Yellen’s interpretation highlights a big Fed vulnerability.
Markets can take succor from GOP’s moderate tack 11 Feb 2014 U.S. House Speaker John Boehner is poised to help pass a clean debt limit hike. This would reverse a policy of hijacking America’s creditworthiness for questionable political aims. Taken with the 2014 budget, Congress may finally be playing nice - if only for the election year.
United Tech activist defenses look mostly robust 11 Feb 2014 Talk of the $100 bln conglomerate selling chopper-maker Sikorsky raises questions about whether a breakup could unlock value. A Breakingviews analysis suggests the pieces are worth just 8 pct more than the whole. But a performance slip could weaken the ramparts to an attack.
Hamm is latest case study in U.S. oil sector murk 11 Feb 2014 The Continental boss has overseen a sevenfold rise in its shares since 2007. But like some less successful energy patch CEOs, he has done oil deals on the side. A shareholder lawsuit isn’t really the point. It’s inviting trouble for Hamm to trade with the firm he runs.
Conti takes smart road west in $2 bln Veyance deal 11 Feb 2014 The German automotive group is buying the U.S. rubber and plastics firm from private-equity owner Carlyle. Investors may be disappointed Conti is doing M&A rather than returning cash. But the price looks undemanding and there’s strategic logic in diversifying away from Europe.