Wall Street is finally getting clarity on the law 8 Dec 2015 A U.S. court reversed an ex-Jefferies trader’s fraud conviction, saying his fibs may not have swayed investors. The same court has smacked enforcers for stretching fuzzy rules to nail insider traders and a Goldman programmer. Brighter legal lines should help deter misconduct.
The Uber or Airbnb of finance will prove elusive 8 Dec 2015 In 2015 more than $15 bln has poured into so-called fintech startups embracing blockchain, peer lending, payments and the like. While each can disrupt an element of the status quo, their scale will be hindered by the deep moat that protects the banking industry: regulation.
Anglo American is facing a crisis of confidence 8 Dec 2015 Collapsing commodity prices led the coal, copper and diamonds miner to suspend its dividend on Dec. 8. It’s also slashing jobs and investment. Big London-listed miners including Anglo American have lost 47 percent of their market value this year. Yet things could still get worse.
Contortions make rail deal tough sell for Ackman 8 Dec 2015 A revised offer from Canadian Pacific for Norfolk Southern, together worth nearly $50 bln, included an interim trust, less cash and finger-in-the-air merger math. The activist contributed 23 pages of slides. NS was too quick to rebuff it. Investors, though, may just be confused.
Valeant poised to cause much collateral damage 7 Dec 2015 The acquisitive drugmaker’s travails have vaporized fortunes, damaged reputations and dusted the sector with political radioactivity. Indirect effects could be even larger. Valeant will take its toll on so-called platform companies, “adjusted” accounting and hedge funds broadly.
"Zero and 100" model might just work for BlueCrest 7 Dec 2015 The $8 bln hedge fund is closing to outsiders. Michael Platt’s firm will need to do more with far less capital to offset the loss of hefty “2 and 20” external fees. A Breakingviews analysis shows higher leverage is the key. Platt may be OK taking extra risk others wouldn’t.
Late cycle M&A runs afoul of U.S. trustbusters 7 Dec 2015 Enforcers stopped GE’s sale of its ovens business to Electrolux, put the lid on a canned tuna union and may yet erase Office Depot’s sale to Staples. Some health insurance mergers may be at risk, too. In a record year for acquisitions, it’s becoming hard to find clean ones.
New type of dealmaker gives Keurig $14 bln respite 7 Dec 2015 The single-serve coffee group is selling to the family-backed JAB. The 78 pct premium is surely a welcome exit for investors in the struggling company. The novelty, though, is JAB’s caffeine-themed consolidation play, reminiscent of Brazilian 3G’s effort with Heinz and Kraft.
Electrolux’s GE failure leaves only faint stains 7 Dec 2015 The Swedish group will be deprived of extra growth after a U.S. acquisition was scotched by trustbusters, who felt that owning GE’s appliance unit would give Electrolux overmighty pricing power. The $1 bln fall in Electrolux’s value suggests investors never held such hopes.
Jobs and wages mean rate hikes are go! 4 Dec 2015 Barring market meltdown at home or abroad, American job creation in November looks strong enough to allow Janet Yellen’s Fed to lift interest rates this month after seven years near zero. The shift in stance is overdue, but unexciting growth will keep the central bank wary.
Rail deal’s logic loses steam under legal scrutiny 4 Dec 2015 Norfolk Southern rejected a $28 bln bid from Canadian Pacific, which could probably afford up to $33 bln. Regulatory approval is a bigger issue, though. The bar is high for railroad mergers, and this one likely falls short. It may be one deal that shouldn’t have left the station.
Avon colors new activist-buyout battle lines 4 Dec 2015 The makeup company is under fire from a pushy investor and may call on private equity firm Cerberus to help. Motorola and NCR similarly just sold minority stakes to Silver Lake and Blackstone. This growing white-knight role suggests the targets aren’t the only ones with troubles.
Anglo American dividend cut just the beginning 4 Dec 2015 Confidence in the mining giant is at rock bottom. Cost savings are paling beside the slide in commodities prices. Anglo American can save the equivalent of one-eighth of its market cap by scrapping the dividend. Shuttering production, and firesales, may now be necessary evils.
Global taxi app alliance will test faith in Uber 4 Dec 2015 Car-hailing firms in India, China, Southeast Asia and the United States will link their apps. It’s not clear how many people will use it or how revenue will be shared. The anti-Uber coalition’s main impact may be on the Silicon Valley darling’s ability to keep raising funds.
Yahoo sale would carry a warning from print 3 Dec 2015 The internet company may be putting itself on the block. Private equity is interested – and perhaps in L.A. Times parent Tribune, too. Both are plagued by a long-term decline in advertising revenue. LBO shops fell victim to that disease with newspapers a decade ago.
Congress punts gas tax hike in favor of bank raid 3 Dec 2015 A $305 bln transport spending plan may soon be law. Rather than raise the absurdly low U.S. fuel levy, though, lawmakers are plugging a $70 bln shortfall by swiping the Fed’s rainy-day funds and dividends it pays lenders. Creative, perhaps – but it’s no long-term solution.
Diageo drinks to Silicon Valley-style disruption 3 Dec 2015 As AB InBev brews mega-beer, the $74 bln distiller of Johnnie Walker and Smirnoff wants for potent takeover targets. Instead of waiting for big brands like Jack Daniel’s and Bacardi, Diageo is seeding booze entrepreneurs who are building new ones. Doing so quietly is the twist.
Unlikely activist rides against inbred energy deal 2 Dec 2015 David Tepper usually sticks to distressed debt. But the mass of potential conflicts behind SunEdison offshoot TerraForm’s bid for Vivint Solar assets has spurred the boss of hedge fund Appaloosa to change horses and take a 9 pct stake. It may augur greater scrutiny for the sector.
Zuckerberg’s supervoting shares prove double-edged 2 Dec 2015 Investors may one day regret the founder’s grip on Facebook. For now, though, it allows him to retain control while starting a long process of giving away 99 pct of his $45 bln of stock. The beneficiaries of Zuckerberg’s charity will see the silver lining to the governance flaw.
Yahoo CEO has run out of time for a turnaround 2 Dec 2015 After three years, it’s clear neither Marissa Mayer – nor maybe any top executive – can save the flailing internet company. The board’s job now should be to determine the best way to tidy up the firm’s affairs. Mayer’s best legacy may be that she got a good price for the core business.