Merger Monday deal enthusiasm in rude health 15 Sep 2014 Cognizant may have good reasons for buying healthcare IT provider TriZetto for $2.7 bln. But promises of revenue synergies mixed with jargon should provoke investor skepticism, not an immediate 2 pct pop in the buyer’s shares. It’s a symptom of simmering M&A exuberance.
“Hike huff” could disrupt markets 15 Sep 2014 The prospect of Fed tightening last year provoked a “taper tantrum.” Now investors look ill-prepared for rate increases. They’ll run for shelter whenever the U.S. central bank gives the sign. But money has been flowing to ever more illiquid markets. There could be trouble.
Colombia’s top bank offers Americans a bumpy ride 12 Sep 2014 Grupo Aval wants to raise $1.1 bln on the NYSE. It earns better returns than most U.S. banks and operates in Latin America’s fastest-growing economy. But dual-class shares give its founder near-total control. And the lender’s using the proceeds to boost capital, sapping earnings.
Cuba’s policies worse for GDP than U.S. embargo 11 Sep 2014 The island reckons Washington’s disfavor has cost it $117 bln since 1959. Reinstate last year’s $3.9 bln in lost exports over 25 years and Cuba’s economy might be twice as big. But it would still pale beside, say, Puerto Rico’s. That suggests more of the damage is self-inflicted.
Cyberspace’s heir-tight security gets welcome hack 11 Sep 2014 The likes of Facebook and its peers enforce privacy rules even after account holders die. That can leave e-books, emails and other digital remains beyond loved ones’ reach. Putting passwords in wills helps, but the forgetful deserve protection. A new Delaware law is a start.
Rob Cox: Ecuador economic "miracle" meets maturity 11 Sep 2014 President Rafael Correa’s experiments in modern socialism helped the country cut poverty, grow and prosper. But his investment-led model has run its course. Now he has to soften his defiance of international norms, from the bond market to the World Bank, to keep progress alive.
U.S. retail zombies plod past stumbling RadioShack 11 Sep 2014 The 90-year-old gizmo merchant – and member of the Breakingviews Zombie Retail Index – warned it may file for bankruptcy. Only new investment might save it from the grave. But resilience at Best Buy and Barnes & Noble has helped the overall index top the S&P 500 since June.
Five changes for Ana Botin’s Santander 10 Sep 2014 She takes over a successful bank from her father. But the existing strategy needs a rethink. Capital looks low, the dividend policy is overly generous, and Brazil and America need work. None of these should be sacred cows. Botin’s objectivity will be paramount.
Hostile Dollar General a measure of M&A eagerness 10 Sep 2014 The U.S. discount retailer has gone formal with a $9.1 bln tender offer after Family Dollar rejected its bid. That fits with global appetite for deals, which has hit new records in total and for unsolicited offers. As long as investors reward buyers, hostilities will continue.
AngloGold spinoff faces headwinds 10 Sep 2014 The bullion producer wants to carve out non-South African assets into a London listing. This could attract investors wary of problems in the group’s domestic business. But gold has lost its shine and miners have a reputation for wasting capex. It may be a tough investment story.
Elon Musk teetering on crest of adulation wave 10 Sep 2014 Vanity Fair has named the Tesla boss disrupter of the year. His leading role in autos, solar power, commercial space exploration and the hyperloop idea make it well deserved. Tesla’s stock is overvalued – as he smartly acknowledges. A crash would unfairly tarnish his reputation.
Microsoft’s harbors still mined with Ballmer bombs 10 Sep 2014 Paying $2 bln-plus for Minecraft’s Swedish maker looks like something from the playbook of CEO Satya Nadella’s predecessor. Using cash to attract attention and users to Microsoft’s hardware is so 2006. Better to focus on its leading businesses, not distractive gadgets.
Pinochet profiteers roil Chilean capital markets 10 Sep 2014 Santiago’s securities watchdog levied a $164 mln fine, the largest ever, against the late dictator’s former son-in-law and his cronies. The brouhaha has drawn unhelpful attention to some unresolved Chilean conundrums at a time when the country is struggling to attract investment.
Apple cooks up recipe to empty pockets and wallets 9 Sep 2014 The tech giant combined a fingerprint sensor and an overlooked app into an iPhone payment system that looks secure and easy to use. A new watch lacks obvious appeal but has potential to replace car keys and other pocket detritus. Higher profits should be the cherry on top.
Fed gives U.S. bank investors $50 bln kick in gut 9 Sep 2014 That’s the amount of future dividends and buybacks that may vanish under Wall Street nemesis Daniel Tarullo’s surcharge plan. Their absence will dash hopes for higher returns, and the proposal’s link to short-term funding could boost borrowing costs. But it’s not all bad news.
Home Depot’s leaky tech requires board remodeling 9 Sep 2014 Hackers seem to have cracked into the U.S. home improvement retailer on a huge scale. The Target breach six months earlier provided ample notice to fortify systems. Cyber-risk awareness must start at the top these days, and Home Depot’s departing CEO can set an example.
General Mills may smother pricey organic target 9 Sep 2014 The $33 bln maker of Cheerios is paying $820 mln, a 37 pct premium, for “natural” mac-n-cheese purveyor Annie’s. But big companies often squash growth when they swallow small targets whole. Coca-Cola’s recent stakes in Monster and Green Mountain may offer a better template.
U.S. tax tinkerers miss real engine of inversions 8 Sep 2014 The Treasury wants companies to stop moving overseas and New York Senator Schumer is targeting a specific loophole. The distorting levy on offshore profit is a big factor in domicile-driven M&A. Rather than fudging the issue, Uncle Sam needs to decide if tax is local or global.
Golden age of activism enabling more with less 8 Sep 2014 Jana’s Barry Rosenstein parlayed just a 1 pct stake in Walgreen into as many as three directors at the $60 bln drugstore chain. Success is begetting more support for rabble-rousers. Letting the pendulum of power swing too far toward uppity investors could invite trouble, though.
U.S. billionaires apply own checks and balances 8 Sep 2014 The Koch brothers, Mark Zuckerberg, George Soros and others open their wallets to influence public policy. A new political power index suggests neither party has a clear edge. The rankings are more art than science, but at least the mega-wealthy are keeping tabs on each other.