Praxair’s Linde generosity is a win-win 20 Dec 2016 The German industrial gases group has a smaller market cap and is less profitable. It will still get a 50 pct stake in the merged company. Yet despite the adverse exchange ratio, the tie-up can generate up to $13 bln in additional value for Praxair. It can afford to be generous.
Lloyds’ MBNA swoop works – unless Brexit bites 20 Dec 2016 The British lender is to pay Bank of America 1.9 bln pounds for its UK credit cards arm. Assuming cost savings materialise, Lloyds is bulking up cheaply. Absent hits from a market probe, or a surge in unemployment when the UK quits the EU, dividends should be largely unaffected.
Mega-merger market set for last gasp 20 Dec 2016 Cheap debt and falling hurdle rates will keep bosses on the hunt. Border-spanning acquisitions are harder to square with trustbusters, however, and big targets less affordable as an M&A cycle ends. That makes space for smaller deals, which in any case tend to create more value.
U.S.-China currency war will be symbolic at best 20 Dec 2016 Donald Trump has promised to declare the People’s Republic a currency manipulator. The label means little, though, and the yuan is probably overvalued. The best case is that the U.S. president-elect declares victory and moves on. The risk is that hardliners in Beijing react.
Hot Platinum returns turn into alleged fool’s gold 19 Dec 2016 U.S. prosecutors arrested top executives of Platinum Partners on fraud charges. The $1.7 bln hedge-fund firm posted years of outsized gains on illiquid investments before seeking bankruptcy protection for two funds in October. Like Madoff, the case screams caveat emptor.
Yahoo boss has squandered her second chance 19 Dec 2016 Marissa Mayer took on a challenge in 2012. Failure shouldn't have spelled career disaster. But an ineffective turnaround, wasted deals, indecision over Alibaba and now two massive hacks change that. Like Chuck Prince or Carly Fiorina, Mayer will probably not get another CEO gig.
Trump governance carries Chinese characteristics 19 Dec 2016 The U.S. President and his counterpart in Beijing have a surprising amount in common. Like Xi Jinping, the tycoon is eager to pump up growth, disdains free speech and wants to restore his nation to former glory. Here are some other parallels to watch for in Trump's first year.
Japan and Abe can profit from the Donald Trump era 19 Dec 2016 The quixotic behavior of the president-elect is worrying for a country reliant on globalisation and America's regional policeman role. But it could also boost the Japanese leader's political standing. A stronger global economy and weaker yen will enrich Japan Inc's prospects too.
Ackman and Chipotle are suited like rice and beans 16 Dec 2016 The activist and the burrito chain have both suffered reputational damage and given investors indigestion in the past year or so. Now Chipotle is taking Ackman's advice to shake up its board and management. It's no fast fix, but any success would make each more palatable again.
CalPERS return cut would be small but notable step 16 Dec 2016 The $300 bln U.S. public-pension manager is weighing a reduction in the 7.5 pct annual gain it assumes it will make on investments. The move would squeeze public budgets and employees but help secure funding for retirees. If CalPERS can get a bit more real, others will follow.
Energy Dept choice pits Trump against bureaucracy 16 Dec 2016 Rick Perry ran for the White House promising to dismantle the federal energy agency. Now the president-elect wants him to run it. The DOE is already resisting a Trump request to list staffers working on climate change. Animosity from the "deep state" could slow-roll his agenda.
Breakdown: Dodd-Frank, Trumped 15 Dec 2016 The U.S. president-elect wants to unwind some post-crisis financial rules. Given their slim Senate margin and regulators' support for key reforms, Republicans may have to pick their battles. Tougher capital requirements would be tough to roll back, but the Volcker Rule may go.
A teachable moment in for-profit education 15 Dec 2016 DeVry is paying $100 mln to settle fraud accusations under a crackdown by the Obama administration. For-profit colleges can expect looser oversight when the founder of Trump U. takes office. DeVry's post-election stock surge suggests investors are discounting regulatory risk.
Fed rate hike foretells end of credit-market boom 15 Dec 2016 U.S. corporations have gone on a borrowing binge in recent years to fund stock buybacks and juice reported earnings. The central bank's long-awaited move, and the prospect of more to come, alters the calculus. Real growth rather than financial engineering will be the new game.
3G will take another bite of Corporate America 15 Dec 2016 The Brazilian investors behind AB InBev and Kraft Heinz look poised for another mega-deal in 2017. After a failed bid for Hershey, Mondelez makes for a hefty, attractive $66 bln target. Kellogg and General Mills could also be tempting if the Oreo maker proves too big to digest.
KKR gets shot in arm from bumper Capsugel exit 15 Dec 2016 Selling the drug capsule group for $5.5 bln means the U.S. buyout group has tripled its money since buying from Pfizer in 2011. It has also done so without savaging Capsugel’s R&D budget. Acquirer Lonza gets vertical integration but will struggle to get the same kind of return.
Sky shareholders are close to maximum altitude 15 Dec 2016 Some of the pay-TV operator’s investors grumble that independent directors were too eager to accept an 11 bln pound bid from Rupert Murdoch’s Fox. But Sky’s share price wasn’t obviously beaten up, and the premium is generous. A small bump is the best they can hope for.
Verizon-Yahoo union faces death by a billion hacks 14 Dec 2016 The telecom giant's $4.8 bln deal to buy the internet outfit's core business was already in question after it revealed 500 mln user accounts may have been breached. Now Yahoo has flagged another intrusion, twice as large. It's increasingly easy – and smart – for Verizon to walk.
New president may force hawkishness on 2017 Fed 14 Dec 2016 The central bank nudged interest rates up again after a year's pause. Janet Yellen and colleagues previously sounded cautious but that was before the Trump bump. If bond yields, inflation and stock prices continue to rise, the Fed will be under pressure to make quicker increases.
New Hertz CEO faces tough drive out of ditch 14 Dec 2016 Kathryn Marinello has a great résumé. The problem is that she's the $2 bln rental-car outfit's third boss in two years, and activist investor Carl Icahn looms in the back seat. Earnings just took a hit, leverage is high, and the sharing economy is undermining Hertz's model.