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.
RBS puts lipstick on Citizens for $14 bln IPO 8 Sep 2014 The Scottish bank reckons cost cuts, rising interest rates, capital returns and more business will boost its poorly performing U.S. unit. Granted, all this might create decent enough returns to justify the price. But RBS is painting too pretty a picture of Citizens’ independence.
Electrolux on better side of $3.5 bln GE deal 8 Sep 2014 The Swedish firm is buying GE’s U.S.-focused appliances unit in an all-cash purchase part-funded by a rights issue. It’s a win for Electrolux. The U.S. market for ovens, fridges and dishwashers is more attractive than Europe’s, and scale helps offset raw material cost pressures.
Calculator: Squaring Alibaba’s $155 bln valuation 8 Sep 2014 That’s the mid-point of the price range for the Chinese e-commerce giant’s upcoming IPO. The figure is bang in line with Breakingviews’ own estimate. Our interactive calculator spells out the key assumptions – and lets you flex the numbers to arrive at your own assessment.
Both jobs and policy culprits in U.S. inequality 5 Sep 2014 Slow employment gains and static wages don’t bode well for ordinary people’s pocketbooks, and a triennial Fed survey shows median incomes declined through 2013 while the rich got richer. A sluggish economy and poor fiscal and monetary choices are among the entwined causes.
Anarchical Vice Media makes orthodoxy a virtue 5 Sep 2014 The bad boy of news and entertainment is now worth $2.5 bln. Unlike some Silicon Valley upstarts, though, Vice sold more than a sliver of itself and raised real money: $500 mln. Disney, Hearst and Fox are among its backers. For all the iconoclasm, there are old-school traits.
Blowout BP oil-spill ruling brings sliver of hope 4 Sep 2014 The UK energy giant could pay $18 bln in penalties after a U.S. judge found it reckless in handling the Macondo well disaster. But punitive damages may be off the table, and the final tally could well be lower. Investors, at least, are showing they can stand the pain for now.
Guest view: Andersen’s ghost to haunt clients again 4 Sep 2014 Former partners are resurrecting the name in a display of hubris. It perpetuates a fiction that a few bad apples spoiled the firm and that Enron was an isolated event, says former practitioner Francine McKenna. Though Andersen’s conviction was overturned, the brand is tainted.
Google finally learns from healthcare hiccups 4 Sep 2014 Costly run-ins with U.S. regulators have taught the internet giant that drugs and biotech can be more complicated than search. Now it’s partnering with pharma firms and others that know the legal terrain. That allows Google to disrupt while avoiding bureaucratic minefields.
LendingClub IPO mixes disruption with confusion 4 Sep 2014 The peer-to-peer lender is growing fast, with fans ranging from John Mack to Larry Summers to Google. But it’s struggling to turn a profit, lacks some advantages of traditional banks and has yet to be tested by an economic slump. Investors need to know whether it’s fish or fowl.
E-book: Alibaba and the twelve digits 3 Sep 2014 China’s e-commerce colossus is hitting the road for a $100-billion-plus IPO. But a spectacular growth story comes with quirks, including bizarre governance and founder Jack Ma’s penchant for offbeat deals. Breakingviews offers a punchy primer on the risks and rewards.
McDonald’s needs some time on Burger King’s grill 3 Sep 2014 The $91 bln giant isn’t growing. And the stock lags its rival’s. Winning burger lovers alienated by BK’s planned move to Canada would add little special sauce to McDonald’s sales. But a serving from the smaller company’s fat-trimming menu would please shareholders more.
Home Depot hack scarier than Hollywood breach 3 Sep 2014 Maybe Apple et al can make the cloud more secure, but celebrities like Jennifer Lawrence also probably need to be extra careful. Violations that expose millions of people to financial loss are in a different league. Investors should punish companies that skimp on security.
Blackstone solar IPO to test Elon Musk star power 3 Sep 2014 The buyout firm’s Vivint Solar has filed to go public. That will provide a listed rival for richly valued SolarCity, chaired by Musk. Vivint is growing faster and has favored access to new customers. How the two trade will shed light on the Silicon Valley whiz-kid’s worth.
Wall Street’s canary sings another off-key tune 3 Sep 2014 Strong investment banking helped Jefferies to an $82 mln third-quarter profit. That business has mostly slowed of late so the firm may have gained most in June, which bigger rivals already booked. Even so, an RoE under 10 pct shows that a decent quarter still isn’t good enough.