Heed New York Times governance risk headlines 21 May 2014 Investors surrendering their rights to founders at Facebook, Google, Alibaba and elsewhere may want to consider the management kerfuffle at the Grey Lady. It’s what can happen when, down the line, the competent leaders they entrusted are gone and their successors entrenched.
Fed bigwigs short of signs on path to higher rates 21 May 2014 New York’s Dudley thinks interest rates should rise slowly, Philly’s Plosser reckons they should go up faster, and Bullard of St. Louis has crunched numbers implying rates should already be at “normal” levels. Veering off the beaten track has left the Fed uncertain how to return.
Astra-Pfizer needs a fresh start later in the year 21 May 2014 Some shareholders want the UK pharma company to talk to its American suitor now. But there is no honest route to a higher bid until August. Talks in the dying days of the bid timetable could actually delay a full move. An amicable cooling off period is the best plan.
Credit Suisse misses chance to show accountability 20 May 2014 Brady Dougan says he did not consider resigning over the bank’s guilty plea for tax evasion. He may not have been involved in the wrongdoing, but as CEO he stands for the firm. A top-level departure would demonstrate Credit Suisse’s ethical standards, and shame other bank bosses.
Retail bricks battle for clicks appreciation 20 May 2014 Williams-Sonoma is a prime example of a common oddity. The cookware-to-furniture merchant generates nearly half its sales over the web with Amazon-like growth and more profitability. Yet investors pay 10 times as much for the e-commerce king’s earnings. That logic has its limits.
Reborn Chesapeake starts to hit its stride 20 May 2014 A year to the day after replacing profligate CEO Aubrey McClendon, the U.S. oil and gas explorer secured a two-notch credit rating upgrade to nearly investment grade. By slashing debt and simplifying Chesapeake, new boss Doug Lawler is winning over stock and bond investors alike.
Long arm of U.S. law doesn’t extend to cyberspace 20 May 2014 Credit Suisse’s guilty plea and $2.5 billion fine for helping tax dodgers shows Uncle Sam’s hold over finance is strong even beyond its borders. Yet hacking accusations against Chinese military personnel have produced only defiance. It’s a sign of the limits to U.S. legal power.
Rob Cox: ITT’s ghost hangs over Silicon Valley 20 May 2014 As Amazon, Facebook, Alibaba and Google have become the new conglomerates, it’s instructive to consider the experience of Harold Geneen, who turned ITT into the original M&A machine. The internet approach may be different, but the driver is the same: a fear of obsolescence.
Valeant’s slashing could trigger FDA lashing 20 May 2014 The Canadian pharma M&A machine buys rivals and strips costs to the bone. It promises to cut Allergan’s R&D spending from $1 bln to $200 mln and still develop drugs. That doesn’t look sustainable. It may not be enough to even finish studies on existing drugs that regulators require.
Loophole offers Pfizer risky way back into AZ deal 20 May 2014 The U.S. pharma group noted that it could technically make a higher offer for Astra if the target first agreed to its “final” $119 bln proposal. After this dodge, Astra could accept the real, higher price. But the UK takeover watchdog would almost certainly reject such cunning.
KKR’s $3.1 bln bid pours pressure on Treasury Wine 20 May 2014 The Australian wine producer has rebuffed an opportunistic offer from the U.S. buyout firm. The former Foster’s unit is a persistent underperformer. Treasury’s new CEO needs to quickly demonstrate his turnaround credentials, or let KKR try to squeeze out some value instead.
Credit Suisse’s guilty-lite plea lacks a point 20 May 2014 U.S. prosecutors secured their first criminal conviction of a bank in years. But they took care to limit the damage to the Swiss institution. Top bankers weren’t charged, either. Doing more than imposing fines is commendable, but the Credit Suisse case may not accomplish much.
Chastened AT&T enlists new team for fresh fight 19 May 2014 None of the three banks that worked on the telecom giant’s botched bid for T-Mobile US is back for the DirecTV deal. Instead, Lazard is sole adviser, aiding AT&T for the first time in 20 years. CEO Randall Stephenson also has more lawyers. Fresh eyes may help see things through.
Ecuador winning bond market forgiveness too easily 19 May 2014 Low inflation, scant supply and an improving economy may be driving appetite for a planned $700 mln offering. But the country defaulted on $3.2 bln of debt only six years ago. While absolution – or amnesia – may be good for deadbeat regimes, it raises global financial risk.
Pfizer spins $100 bln-plus deal as inessential 19 May 2014 Not many companies could back off an aggressive 12-digit shopping spree with credibility intact. But with its offer for AstraZeneca rejected, Pfizer’s shares are roughly back where they started. Its pre-existing plan to eventually break itself up makes the UK deal look optional.
America’s top lawyer needs homegrown bank scalps 19 May 2014 Attorney General Eric Holder is close to getting guilty pleas and mega-fines from BNP Paribas and Credit Suisse. Their crimes don’t threaten the financial system, raising fears he’s shaking down foreign banks. Criminal penalties against U.S. lenders would quell such suspicions.
AstraZeneca gets a summer reprieve 19 May 2014 The UK pharma group rejected Pfizer’s latest $117 bln approach, but indicated the U.S. suitor’s price was almost acceptable. Strong cancer trial data in June could protect Astra’s independence. Even if the target’s resistance weakens, Pfizer has boxed itself in until August.
Pfizer’s new AZ pitch is as unfriendly as it gets 19 May 2014 The U.S. drugmaker says it won’t go hostile for AstraZeneca, but has upped its non-binding takeover proposal to $117 bln, declared it “final” and slammed the board. The UK group is under real pressure to show it’s worth more. Yet Pfizer’s aggression is also an obstacle to talks.
AT&T puts shareholders on hold for DirecTV 19 May 2014 Its $67 bln offer to buy the satellite TV operator comes with an unexpectedly robust $1.6 bln of cost savings. Even so, these don’t quite cover the 30 pct premium AT&T is paying and will be spent on rural broadband service anyway. Customers and regulators get the first call.
Take hedge fund exuberance with grain of SALT 16 May 2014 Amid moans about conference fatigue, a near-unanimous confidence emerged at SkyBridge’s annual Las Vegas confab. Long-awaited opportunities in M&A, bargains in Europe and collapsing correlations have finally arrived all at once. The consensus itself, however, is reason for pause.