France plays to type with unneeded takeover decree 15 May 2014 The extension of the French government’s powers to oppose unwanted takeovers by foreign firms simply codifies current practices, but it won’t enhance the country’s reputation as a place to do business. With growth stalling, Paris has more important economic challenges.
UK pay revolts point to demand for reality checks 15 May 2014 New laws gave investors in UK firms like ITV more say on pay. Shareholder protests have since spiked. Yet bosses are being punished even when pay has moved in line with performance. The message to boards is that they should apply common sense - whatever the pay plan prescribes.
What Lagarde should’ve told Smith College’s grads 14 May 2014 The fund’s boss wimped out of speaking at the women’s college’s commencement after a petition accused the IMF of supporting “patriarchal systems.” That critique is old hat. Lagarde’s IMF has fostered social spending and female rights. Here’s what she ought to have said.
BoE’s low-rates enthusiasm makes sense for now 14 May 2014 Investors think the UK is almost ready for higher rates but Mark Carney disagrees. The BoE governor still sees slack and thinks his Financial Policy Committee can tackle housing excess. He will try to delay a rise as long as he can. It’s a risky call, but probably right.
Pimco outflows are wakeup call for Allianz 14 May 2014 The bond fund saw 22 bln euros of net outflows in Q1. Controversy over the role of founder Bill Gross is arguably a big factor. Allianz, Pimco’s parent, suggests it can take the trials in its stride. But its hands-off approach is becoming increasingly hard to justify.
GSK case no cure for Chinese corruption 14 May 2014 Graft charges against three of the British drugmaker’s senior China executives suggest a top-down culture of bribery. What they really show is a broken healthcare system and a government many foreign groups don’t know how to handle. On both fronts, it’s still business as usual.
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.
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.
Markets better renew flagging faith in Draghi 13 May 2014 Financial markets are more convinced by Mario Draghi’s hint of a June easing after reports the Bundesbank could support the move. Traders who are still ruling out a deposit rate cut may want to reconsider if they don’t want to be caught on the wrong side of the ECB.
Investors underrate ThyssenKrupp’s steel woes 13 May 2014 The German industrialist’s restructuring is gaining ground. Investors have responded with enthusiasm to a stronger balance sheet, rising earnings and a better outlook. But the lacklustre steel unit remains a big drag. There are no quick fixes.
LSE’s tilt at Russell is a long shot 13 May 2014 London Stock Exchange is in talks to buy the Seattle-based compiler of small-cap stock indexes for a reported $3 bln. Pushing deeper into data makes sense. Yet LSE must face down rival bidders and sceptical shareholders. It also needs a plan for Russell’s asset-management arm.
Edward Hadas: AstraZeneca is no one’s property 13 May 2014 Like any big company, the UK drugmaker is a human organisation with many social roles and responsibilities. The property model doesn’t really fit. Investors can lobby for their interests in a proposed $106 bln Pfizer takeover. The board and politicians should listen but not obey.
Barclays vs Deutsche is now a real choice 12 May 2014 A tactical error over pay helped bounce Barclays into radically changing its investment banking strategy. Rival Deutsche has avoided a similar downscaling of fixed income, and could benefit from any cyclical upswing. But its riskier strategy will mean it needs higher returns.
Murdoch’s $14 bln plan is new test for BSkyB board 12 May 2014 There would be logic to BSkyB buying sister outfits in Germany and Italy from part-owner Rupert Murdoch. The UK pay-TV group’s outside directors, who dealt with a buyout bid from the mogul in 2010, need to ensure any deal is fair. And Sky must keep its eye on the ball at home.
Hugo Dixon: Scoxit could lead to Brexit 12 May 2014 If the Scots vote to leave the UK in September, that could trigger a chain reaction which leads to the rest of the UK quitting the EU. This is a threat pro-Europeans need to take seriously given that a Scottish independence vote is quite possible, if still not probable.
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.
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.
UK companies benefit from takeover threat 9 May 2014 If AstraZeneca’s independence was guaranteed, would it have made as many difficult restructuring decisions as it has? The threat of being kicked out motivates management in pharma, much as in any other. Remove it and entrenched leaders will have no reason to improve.
ECB abets risky passion for peripheral debt 9 May 2014 A promise of monetary easing is pushing down Italian, Spanish, Irish, and Portuguese bond yields, some to record lows. A harsh form of market discipline forced these countries to accept bitter medicine in crisis times. The regimen may now be too lax to compel them to get fitter.