Wu-Tang Clan’s sales method is mostly madness 11 Dec 2015 The hip-hop collective auctioned a one-copy album in what seemed like a cool experiment after Prince gave one away, Radiohead tried a name-your-price model and Adele bypassed streaming. The exclusivity attracted an unpopular buyer, however. Wu-Tang’s experiment may end up unique.
Review: A bitter guffaw as Wall Street falls apart 11 Dec 2015 The 2008 financial crisis was too complex for any one medium to tell it all. Journalists and protagonists have penned books. Hollywood has tried terse drama. There have been documentaries and radio shows. The film “The Big Short” goes for dark humor that barely masks disgust.
DowDuPont tests limits of ambitious M&A 11 Dec 2015 A $130 bln union of the U.S. chemical titans is really four deals in one, given a planned three-way breakup to follow. The $30 bln of estimated value creation from cost savings is aggressive. Mergers of equals often become strained. At least the strategic rationale makes sense.
Goldman and Morgan Stanley cement M&A oligopoly 11 Dec 2015 Both banks landed advisory roles on either side of the $130 bln DowDuPont merger, extending their league-table leads in a record year of dealmaking. They also held the one and two spots during the 2007 and 2000 peaks. Cracking the top tier can be done, but it’s exceedingly rare.
LBO-style debt adds zing to Yum Brands break-up 11 Dec 2015 Kentucky Fried Chicken will stuff shareholders with $6.2 billion before spinning off its China arm. The remaining Yum will carry debt of 5 times EBITDA. That’s not too extreme for the fast food industry- but it does look a lot like a self-administered leveraged buyout.
From Caterpillar an activist butterfly may hatch 10 Dec 2015 The $39 bln earth-moving machinery conglomerate is in a pickle. Deals struck at the peak of the commodities and Chinese investment booms trashed the stock and hurt management’s credibility. An investor seeking changes, even a breakup, could play well in Peoria and on Wall Street.
Oil’s reckoning invites a U.S. mega-deal 10 Dec 2015 Conoco, Chevron, Kinder Morgan and the state of Alaska are modifying capital strategies amid another lurch down in crude prices. If these conditions persist, something like Shell’s $70 bln takeover of BG should look appealing. Occidental and Anadarko could make tempting targets.
John Thain’s tin ear survives to the bitter end 10 Dec 2015 CIT, the mid-market lender he runs, just changed how it defines retirement. The new rules neatly suit Thain’s age and length of service, allowing him to keep stock he’d otherwise lose. It’s a predictable bow for a man who once spent $1.2 mln gilding his office at Merrill Lynch.
Dow-DuPont reaction could produce $20 bln in value 9 Dec 2015 Combining the chemical giants, each worth nearly $60 bln on Tuesday, would be complicated. A three-way split thereafter might not unlock much value, but would bring focus. Asset rejiggering could allow cost cuts worth almost twice as much as Wednesday’s 10 pct share-price gains.
Savoy and Plaza sale means trophies for all 9 Dec 2015 Accor is buying the owner of the luxury London and New York hotels for $2.9 bln from its Saudi and Qatari investors. Adding higher-end lodging may help the French group make its online booking system more competitive. The price, however, looks too high to create much value.
Trump’s Muslim tirade fails basic capitalist test 9 Dec 2015 The GOP candidate’s call to ban Muslim visitors ignores the openness on which the system that made him rich relies. U.S. deficits, banks and property have all benefitted from Arab money. Closing doors to people could do the same to capital, which a president can ill afford.
Yahoo a good bet for Barry Diller’s menagerie 9 Dec 2015 The flailing internet firm scrapped plans to spin off its Alibaba stake and may split its search and advertising unit instead. The media mogul’s assorted online businesses could be a logical home, as might Verizon, owner of AOL. In truth, almost any deal would be a win for Yahoo.
Alternative lenders facing first major disruption 9 Dec 2015 Lending Club, OnDeck and others in the competitive market will probably experience rising interest rates for the first time next year. That’ll test their performance, funding and credibility. Prosper’s loan to one of the San Bernardino shooters may speed regulatory scrutiny, too.
Dow-DuPont an activist coup on Corporate America 9 Dec 2015 The $60 bln chemical giants are in merger talks, according to reports, a testament to the persistence of pushy investors Dan Loeb and Nelson Peltz. If the companies pull off a deal and a rumored three-way split, it could be this generation’s version of barbarians at the gate.
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.