Even imperfect shareholder democracy has value 4 Jun 2016 Facebook’s board is proposing curbs on Mark Zuckerberg’s future power, while investors in Swiss Sika are fighting a sale of control. A Tribune Publishing vote may be a mere protest, but at T. Rowe Price an error is costing hard cash. Corporate ballots are more than lip service.
Ménage à REIT exposes financial-engineering lusts 4 Jun 2016 Two years after NorthStar Realty separated a business to “unlock value,” they’re reuniting and getting into bed with Colony for a three-way merger of equals. Savings and scale could heat up the relationship. Investors might, however, expect such fickle lovers to fall out again.
Peter Thiel is Exhibit A for medieval law revival 4 Jun 2016 The Silicon Valley billionaire’s funding of Hulk Hogan’s case against Gawker might have violated archaic prohibitions on stirring up lawsuits for spite. U.S. courts largely bounced those rules as stifling access to justice. Thiel’s free-speech smackdown could merit a comeback.
Fed can raise rates despite one bad jobs figure 3 Jun 2016 Only 38,000 new U.S. positions were added in May, the worst monthly report in six years. Even so, payrolls have increased by a solid 116,000 jobs on average over three months and hourly wages rose again. The bigger picture demands more serious consideration.
Bayer-Monsanto could be squeezed in hungry world 3 Jun 2016 Population growth and climate change will boost demand for seeds and agrichemicals. Bayer's strategic rationale for a $62 bln Monsanto bid looks sound. But if food shortages really bite, the merged group's pricing power may come under attack. There are precedents in pharma.
Bank stress tests get stressier for shareholders 2 Jun 2016 The largest U.S. lenders are just getting the hang of the Fed’s annual exam. Now regulators are changing the game by adding a capital surcharge to future tests. It will take time to figure out how to pass the new standard. That means further uncertainty for banks and investors.
Cox: Disruption flops will spare old-line targets 2 Jun 2016 Venture capitalists have wagered on plenty of highly valued startups to destroy the established corporate order. But some so-called unicorns, probably including Theranos, will turn out to be mythical. A wave of “gluenicorns” would be good news for public companies under threat.
J&J’s corpulence defense weighs heavy 2 Jun 2016 The bulging healthcare conglomerate is swallowing hair-care firm Vogue for $3.3 bln in defiance of calls to break up. J&J’s $312 bln market value makes it a hard target for activists. Yet its obesity has created ailments from poor M&A digestion to mediocre shareholder returns.
Uber receives ultimate disruptor stamp of approval 1 Jun 2016 The taxi-hailing app has snared a $3.5 bln investment from Saudi Arabia’s Public Investment Fund. It’s not just a hedge against the kingdom’s oil dependency. It also confirms Uber as one of the probable central players in the shift to electric, autonomous vehicles.
Deutsche Bank’s mortgage mess hits new low 1 Jun 2016 The SEC is investigating whether the German lender masked up to $1.5 bln of losses by mispricing mortgage bonds. Now it seems Deutsche’s own risk managers warned of a problem, to little avail. Such post-crisis shenanigans justify Wall Street’s name remaining in the gutter.
Staples makes mockery of ousting CEO 1 Jun 2016 Ron Sargent is leaving weeks after antitrust concerns squelched its bid for Office Depot. The board did, at least, pay lip service to shareholders’ concerns last year about executive comp. But Sargent nets a huge pay day and remains chairman. It’s a lavish reward for failure.
Salesforce fluffs up cloud business at a high cost 1 Jun 2016 The online-software company agreed to pay $2.8 bln for e-commerce specialist Demandware. That may add some zing to slowing growth while boosting a heated rivalry with old-school Oracle. But the price includes a lofty premium of nine times estimated revenue, a sign of fog ahead.
UK regulator gives RBS fresh reason to shrink 26 May 2016 The Bank of England has introduced a new capital requirement for lenders deemed systemically risky in a domestic context. Big banks basically have enough equity to meet it already. But Royal Bank of Scotland’s weighting to the UK means it has most to gain from getting smaller.
Health M&A’s shots of state oversight may be toxic 25 May 2016 Missouri trustbusters plan to oppose Aetna’s $37 bln union with Humana absent changes. That probably won’t kill the deal, but the U.S. insurers must still satisfy regulators in five crucial states and Uncle Sam. No wonder investors’ prognosis for this and similar mergers is grim.
Exxon, Chevron climate obstinacy comes at a price 25 May 2016 Both are rejecting pushes from big investors like CalPERS to beef up disclosure about business risks from global warming. It leaves them trailing peers and may put them at odds with U.S. officials and the G20. Refusing to adapt has serious consequences, now and in the future.
Facebook has new free-speech problem: Peter Thiel 25 May 2016 The venture capitalist has been revealed to be a secret backer of Hulk Hogan’s lawsuit against Gawker. That calls into question his media neutrality just as the social network is under fire for bias. As a director, Thiel’s First Amendment position is at odds with Facebook’s.
Lockheed-Boeing rocket JV feels competitive heat 25 May 2016 Elon Musk’s SpaceX just broke the monopoly on military satellite launches enjoyed by the defense contractors’ alliance. Congress may help the pricey venture by allowing it to buy more sanctions-tainted Russian rocket engines. That’d be a strike against efficiency and innovation.
Meg Whitman sullies good deal with fuzzy math 25 May 2016 The HP Enterprise CEO is merging its services unit with Computer Sciences. It’s a decent way to salvage an awful 2008 acquisition. At best shareholders might manage to get half the $14 bln value implied by the cost and other benefits HPE is touting. But even that’s a stretch.
Snapchat’s $20 bln worth could have staying power 24 May 2016 That’s the figure implied by new funding. Evan Spiegel’s firm has raised cash regularly and avoided some of the bells and whistles that distort the numbers. Unlike its messages and the stratospheric price tags on some other startups, Snapchat’s value may not evaporate.
Monsanto can push Bayer only so far 24 May 2016 The U.S. seed producer rejected a $62 bln offer from the German chemical giant, but said it was open to talks. Bayer’s shareholders reacted poorly to the initial bid while Monsanto investors are skeptical about chances for a deal. Negotiating power is limited on both sides.