BNP’s dollar clearing capability is non-negotiable 6 Jun 2014 The French bank’s impending penalty for alleged U.S. sanctions-breaking could include a temporary ban on clearing payments through New York. Such business appears to be less than 5 pct of revenue. But its value to BNP Paribas’ wider operations and growth strategy is far greater.
SoftBank may as well roll dice on U.S. mobile deal 6 Jun 2014 The Japanese group’s Sprint unit is pushing ahead with a bid for T-Mobile US. The odds are high regulators will block it. But creating a stronger third player could produce $30 bln in synergies. The alternative of a miserable future justifies the risk of paying a big break fee.
Flash boys get a belated dressing down from SEC 5 Jun 2014 The U.S. watchdog’s plan to scrutinize high-frequency dealing lacks detail, but more trader and dark-pool oversight seems a no-brainer. The point is that the markets are set for a major review as investor faith erodes. Making them simpler and more stable would be a worthy goal.
"GM salute" should snap Mary Barra to attention 5 Jun 2014 Employees passed the buck at the U.S. automaker by folding their arms and pointing at each other, according to the new report on faulty ignition switches. It’s one of many embarrassing revelations. Such chronic dysfunction will take a long time for the new boss to exorcise.
Wall Street watchdogs keep barking up wrong trees 5 Jun 2014 Blown trials and an iffy probe of Carl Icahn are coming back to bite U.S. regulators. Fuzzy insider trading laws are one problem, but a weakness for big names and stale cases has also led enforcers astray. They might have more luck chasing down abuses like accounting fraud.
GM chief gives bank bosses a lesson on apologies 5 Jun 2014 Mary Barra got the contrition right about how faulty ignition switches led to at least 13 deaths. The Valukas report on the problems may have left her little choice, but finance CEOs are often more grudging about failure. Changing GM’s culture, though, will take more than words.
Microsoft’s new boss can hang up on Nokia 4 Jun 2014 Buying the Finnish handset maker was Steve Ballmer’s swan song as CEO of the U.S. software giant. If Satya Nadella wants to put his stamp on the company, he could reverse course on the $7.2 bln deal. He’ll have to act fast, though, to pin the folly on his predecessor.
Gannett carve-up is just a matter of Time 4 Jun 2014 The $6.6 bln owner of USA Today isn’t getting credit for its TV transformation. Apply broadcaster valuations, and the newspapers are all but ignored by investors. As Time Warner sets free its publishing arm this week, a Breakingviews analysis suggests Gannett should do the same.
Carl Icahn finally reaches peak of Mount Activism 4 Jun 2014 Having scaled corporate America with his fight against Apple, the billionaire has set his sights even higher: U.S. Congress. Icahn’s new stakes in Fannie and Freddie may pay off if lawmakers can be persuaded to preserve them. Wheedling Washington is probably beyond his reach.
Citi CDO judge suffers best defeat of his career 4 Jun 2014 A U.S. appeals court has ruled that Jed Rakoff overreached in rejecting the bank’s $285 mln settlement with the SEC. But the watchdog and other courts have already adopted his policy of forcing miscreants to admit fault. That looks like a win for investors as well as the judge.
Voracious buyers find the meat on Sara Lee’s bones 4 Jun 2014 The conglomerate broke up into Hillshire and D.E Master Blenders in 2012 after spurning a $12 bln offer. That was a raw deal - until now. Add the latest bid in the war for the sausage maker to the coffee unit’s sale and a special dividend and owners may finally make good.
Japanese insurer pays up for U.S. protection 4 Jun 2014 Dai-ichi Life is spending $5.7 bln in cash on Alabama-based Protective Life. Like many other Japanese acquirers, it’s paying a big premium for minimal synergies. Foreign insurers have struggled in America. But the need to escape a shrinking home market helps justify the risk.
Middle East spending gap may let Big Oil off hook 3 Jun 2014 The region needs to invest 23 pct more a year in its wells, says the IEA. Otherwise, a shortfall in black gold could push the price up by $15 a barrel. These states’ other priorities make such outlays unlikely. That’s good news for Exxon and others under pressure to cut costs.
Apartment boom can only take U.S. housing so far 3 Jun 2014 Multi-residence buildings now account for 40 pct of new construction. That may sound promising. But they’re cheaper to erect than standalone homes and are usually rented out. There’s little here for mortgage lenders, most big builders or the economy to get excited about.
France in risky defence of BNP Paribas 3 Jun 2014 Paris broke its silence on the French bank’s U.S. judicial woes by calling a mooted $10 billion fine “unreasonable.” The fear is that the lender’s operations might suffer as well. The concerns are understandable. But it may not be wise to side too closely with BNP.
Rob Cox: Fed fundamentalists deserve fresh listen 3 Jun 2014 After years of expanding policy and remit, the U.S. central bank risks biting off more than it can chew. Hawkish economists persuasively argue this creates a risk of failure, which could undermine Fed independence. More important, the Fed has to stop giving cover to a lazy Congress.
Fine-tuning can’t silence AT&T and Comcast static 3 Jun 2014 Their respective bids – $67 bln for DirecTV and $45 bln for Time Warner Cable – raise competition concerns. The buyers say concessions like price caps can resolve any issues. History suggests they don’t work well, though. If the risks are real, trustbusters should pull the plug.
IHG is a one-star candidate for M&A activism 3 Jun 2014 Bill Ackman protégé Mick McGuire is targeting the $10 bln hotels group. He wants IHG to sell to a bigger rival. Consolidation makes sense. But IHG is expensive, suitors like Starwood aren’t keen, and the group has fewer weaknesses than the typical activist target.
Kellogg might make Heinz-style Buffett target 2 Jun 2014 The $25 bln cereal giant’s stock is up on M&A talk. Kellogg may be too big for a Hillshire-like takeover battle and has too much debt for an LBO to be palatable. But an equity-rich deal like the Sage of Omaha and Brazil’s 3G cooked up last year for ketchup-maker Heinz might work.
Cheniere pay deal is Coca-Cola with added sugar 2 Jun 2014 The board wants up to 16 pct of the $16 bln energy company’s shares handed to staff over five years. That’s more dilutive than the recent Coke plan that irked Warren Buffett. Charif Souki was also last year’s best paid U.S. CEO, with $142 mln. Shareholders can justifiably worry.