Blackstone bets Versace can go up a few sizes 28 Feb 2014 The U.S. group is buying 20 pct of the Italian fashion house. The 1 bln euro, all-equity minority deal shows that buyout firms are lacking classic takeover opportunities. This is also a bet that Versace’s lightweight business can one day match the power of its extra-large brand.
Tesla customizes hot new convertible for hedgies 27 Feb 2014 A $1.6 bln bond that becomes equity is a cheap way for Elon Musk’s electric carmaker to raise cash for its new Gigafactory. Hedge funds love such securities, which provide unique trading opportunities on volatile stocks. And lately they’ve been almost as hard to buy as a Tesla.
Dan Loeb bids against himself at Sotheby’s 27 Feb 2014 The hedge fund activist surprised the auctioneer by nominating three directors, after the firm offered him one uncontested board seat and listened to, and even acted on, some of his gripes. Loeb must have reasons, but it may discourage other targets from engaging with activists.
TXU’s carcass scavenged for tax meat 27 Feb 2014 The Texas utility renamed Energy Future is nearly bust six-plus years after the $45 bln takeover led by KKR and TPG. A flock of buyout firms and hedge funds, including Apollo and Avenue, are clawing at each other for the scraps. This odd beast has juicy bits buried in its books.
PayPal has outgrown eBay’s warm embrace 27 Feb 2014 The online merchant’s ownership provided rich soil for the payments system to thrive. But PayPal is now mature enough to grow faster on its own. Separating the two businesses could send eBay’s stock up 15 percent or more.
Credit Suisse boss gets easy ride in Senate 27 Feb 2014 Brady Dougan was only lightly chastised about his firm helping Americans dodge taxes. Senator Carl Levin was at least as angry with Swiss and U.S. authorities. And investors don’t expect much more pain. To execs at Goldman and elsewhere, it must have looked like a cakewalk.
Investors take note: low inflation isn’t deflation 27 Feb 2014 The theory says that bonds benefit and stocks suffer during deflation. In the real world, disinflation has yet to turn into persistent price declines. Sluggish price rises are no bar to equities doing quite well, as long as there is GDP growth. It’s too early to write off stocks.
Wall Street may have lost its last DC cheerleaders 26 Feb 2014 Democrats delivered bankers a whipping after the financial crisis. More draconian regulation was only kept at bay by Republican pushback. With the GOP now calling for a big bank surcharge and a tax hike on fund bosses, the industry looks even more friendless and vulnerable.
Bursting U.S. gun bubble begins to take victims 26 Feb 2014 Fear of legislation following the Connecticut shooting drove demand for guns to absurd heights. It’s increasingly clear laws won’t be tightened. Sturm Ruger is the first to admit the emotion that fired up the bottom line has run its course. The reckoning will be painful.
Target $1 bln breach rings bell for Luddite bosses 26 Feb 2014 Combine lost Q4 sales and possible future costs, and that could be the U.S. retailer’s minimum tab for the theft of up to 110 mln customer records, Breakingviews estimates. It’s a meaningful sum for any company. There’s no excuse now for CEOs and boards to dally on cybercrime.
More careful aim needed for U.S. insurance bazooka 25 Feb 2014 Congress is considering both flood and terrorism backstops this week. There may be a role for the feds, but not if it usurps private markets. And if lawmakers want to check Uncle Sam’s actuarial ambitions, they could start with the most sweeping: mortgage guarantees.
Spin can win at Supreme Court, but hold the fluff 25 Feb 2014 Smart packaging is often as important as solid legal points. Think campaign contributions dressed as free speech or class actions as business killers. But a U.S. patent suit target may have gone too far in calling its accuser a troll. The justices prefer truth in advertising.
Who bails out bitcoin depositors? 25 Feb 2014 The pseudo-currency’s main exchange has disappeared from cyberspace, leaving customers at least temporarily bereft. Bitcoin’s supposed attraction is being government-free. When things go awry, users learn why conventional finance has expensive regulation and political backstops.
SolarCity needs to get the basics right 25 Feb 2014 Elon Musk’s green energy provider has a flair for pioneering new ways to fund installing solar panels. That’s helped its stock skyrocket sevenfold since its late 2012 IPO. SolarCity’s failure to get its Q4 earnings out on time, though, shows more humdrum tasks need more focus.
Sturdier Fed only so effective as meltdown averter 25 Feb 2014 The central bank’s 2008 records reveal a board honestly debating the worsening crisis, but ultimately acting too late. The Fed now has more powers, like stress-testing banks. These should give more insight earlier on. They will only go so far to overcome doubt and indecision.
Icahn’s eBay rant also targets Silicon Valley club 24 Feb 2014 The activist is taking aim at board conflicts at the online auctioneer as he agitates for a spinoff of PayPal. It’s true that VC honcho Marc Andreessen, for one, is omnipresent in tech and hasn’t proved a great director at HP. But Icahn is taking on a culture bigger than eBay’s.
All-you-can-eat democracy may sicken shareholders 24 Feb 2014 An activist wants investors in $7 bln U.S. restaurant group Darden to be allowed a vote on a spinoff of Red Lobster. It’s a big step from giving all owners a say on governance matters to second-guessing strategic ones. Too much direct intervention could do more harm than good.
Uncle Sam’s bullying slaps costly tax on justice 24 Feb 2014 BDO Seidman’s ex-CEO beat evasion charges but is broke because the accountant stopped footing his legal bills. In trying to recoup costs, he now alleges that the firm cut him off on a pretext under pressure from prosecutors. Enforcement can be tough without ruining targets.
Facebook stock is not so different from bitcoin 24 Feb 2014 Both are currencies that can be used for certain purposes, but not everything. They depend on networks of people but are not backed by a government. And their worth reflects demand, which is based on murky fundamentals. The trick is to monetize them while they still have value.
Exxon CEO’s Nimby-ism threatens his shareholders 24 Feb 2014 Rex Tillerson hands ammunition to anti-frackers by seeking to block a water tower to supply drillers near his opulent home. Buying $31 bln shale explorer XTO was the big bet of his tenure. Exxon may now struggle to convince the public to accept hydro-fracturing’s side effects.