Carlos Slim can pay more for KPN 11 Sep 2013 Absent a friendly deal, a poison pill is likely to stop Slim’s America Movil buying the rest of KPN. That would hurt the tycoon’s existing investment in the Dutch telco and slow his push into Europe. Slim’s 7.2 bln euro offer is cheap. He can justify upping it by 13 pct, at least.
Verizon herds investing sheep in grand fashion 11 Sep 2013 Bond buyers are piling into the telco’s record $49 bln debt sale. A 10-year yield above 5 pct and an investment-grade rating make it appealing. A big part of the lure, though, is the creation of a supersized, super-liquid benchmark. It’s an offer that just can’t be refused.
Italy deserves the markets’ Spanish treatment 11 Sep 2013 The political chaos created by Silvio Berlusconi has pushed Italian bond yields above Spain’s for the first time in over a year. But that’s only part of the problem. Italy is losing ground on reforms and competitiveness. Without a strong government, it will keep declining.
UK needs to live with a rising pound 11 Sep 2013 Sterling is on the march, reflecting better UK growth, lower unemployment and a lack of quantitative easing from new Bank of England head Mark Carney. The worry is that this comes before the UK economy has rebalanced towards exports. But it’s hard to see what policymakers can do.
Big Oil’s growth addiction is counterproductive 11 Sep 2013 The industry pours billions into projects with marginal returns to keep production rising. Yet the oil majors’ huge size means big new finds barely move the needle. Oil bosses should ditch their fixation with growing output. The sector’s best option may be to shrink.
European autos’ recovery faces investment drag 11 Sep 2013 Bosses at the Frankfurt motor show agree that a slow recovery is coming. The optimism is largely justified. The difficulty is that the uptick in demand coincides with a technological inflexion point. Hefty investment spending is required, and the winners aren’t easy to predict.
Vodafone rightly defies hedge funds in cable tangle 10 Sep 2013 The mobile giant says it won’t tweak its $10 bln Kabel Deutschland bid, even as Elliott Management builds a possible blocking stake. That’s sensible. Deal failure would hurt the combative hedge fund too. Instead, a fight looms over the value of the rump of the company.
Europe’s Tobin tax is down, not out 10 Sep 2013 The bruised financial transaction tax now has Brussels’ own lawyers sticking the boot in, with well-founded objections that the levy is unfair and ignores national sovereignty. A further watering down of the tax is likely and might save it. Binning it would be better.
Glencore digs deeper for huge Xstrata cost savings 10 Sep 2013 The miner-trader expects $2 bln of cost savings next year from its takeover of Xstrata - four times an initial synergy target. That goal was clearly undercooked. The new figure also reflects boss Ivan Glasenberg’s purge of former Xstrata staff and mines.
Sabadell capital hike puts heat on Spanish peers 10 Sep 2013 The lender is raising up to 1.4 billion euros to bolster its balance sheet ahead of tighter regulatory demands. Sabadell looked especially weak, but other Spanish banks face similar questions about the quality of their capital. They should act while investors have the appetite.
Suntory pays up to quench thirst for Japan escape 10 Sep 2013 The Japanese firm is spending $2.1 bln on British soft drink brands Ribena and Lucozade. The multiple of almost 14 times EBITDA looks an expensive way to cut exposure to a tough domestic market. But Suntory’s overseas M&A track record should give it the benefit of the doubt.
Yield curve shifts look less lucrative for banks 10 Sep 2013 A steepening government bond yield curve is usually a money spinner for banks by allowing them to lend at much higher rates than they borrow. The phenomenon may be less profitable this time. Regulation has changed the rules of the game and the economic environment is different.
Beware the Italian risk in German elections 9 Sep 2013 Germany’s election is more open than it looks. Merkel’s current coalition might lose its majority. The Social Democrats are loath to enter another alliance with her conservative party. Protracted negotiations may make Berlin look like Rome, paralysing Europe for weeks.
Kazakh deal shows China’s enduring thirst for oil 9 Sep 2013 Buying into the Kashagan oilfield gives China’s national oil producer access to one of the world’s last great finds. The $5 bln cost of the stake - plus $3 bln to help Kazakhstan fund a tricky expansion - shows that, for China, resources are still scarcer than capital.
Brussels partly detoxifies Monte dei Paschi rescue 9 Sep 2013 The European Commission is forcing Italy’s third-largest lender to raise over twice the 1 bln euros it had anticipated. MPS’s initial shareholder-friendly bailout sat oddly with Brussels’ new bail-in regime. Now the disparity is less glaring, and nationalisation is more likely.
ECB needs to sort out euro banks’ bad debt mess 9 Sep 2013 Euro zone lenders will be stress-tested in 2014 by EU regulators. But working out each country’s bank capital shortfall will be pointless if the exercise isn’t based on a common method for assessing bad loans. It’s imperative that the European Central Bank devises one.
Vivendi gets its Bollore comeuppance 9 Sep 2013 The French financier wants to become CEO of Vivendi, of which he owns 5 percent, in place of the chairman’s nominee. Vincent Bollore’s vision for Vivendi is unclear, but the French group is in for some serious cage-rattling. It can’t complain: it invited Bollore in to begin with.
Hugo Dixon: EU should refine its welfare policy 9 Sep 2013 Free movement of people in the EU is hugely valuable, but it is under attack from those who accuse immigrants of “welfare tourism”. Though this isn’t widespread, it is a hot issue - especially in the UK, where it could fuel Brexit. The benefit rules should be tightened.
Spanish property market is back from the dead 6 Sep 2013 Madrid is crawling with private equity funds looking for bargains and a few are clinching deals. But don’t expect the floodgates to open - buyers won’t return in earnest until job creation resumes and banks recognise more property losses.
Bank upstarts’ rapid growth needs careful policing 6 Sep 2013 Peer-to-peer lending is a rare example of genuine financial innovation. Internet lenders are faster, more transparent and less systemically risky. Still, the sector’s new UK regulator should watch for signs that the lenders are starting to look, and act, too much like banks.