Coca-Cola shakeup should help it preserve the fizz 13 Dec 2013 A reorganization of the $175 bln beverage giant’s North America unit could herald a separation of the bottling business it bought in 2010. Cost-cutting may be on tap, too. That would keep investors sweet on Coke as rival Pepsi nurses strategic plans and contends with an activist.
Animal health carve-ups to come two by two 13 Dec 2013 The business is pharma’s secret cash cow: R&D costs are lower, scrutiny’s gentler and growth faster than human care. Shareholder pressure is forcing firms from Novartis to Merck to explore sales, JVs or IPOs. The risk of seller’s remorse means buyers may have to pay top dollar.
How Deutsche, Barclays can ease U.S. capital pain 13 Dec 2013 The two banks are most at risk if U.S. regulators force foreign lenders to hold more capital. But if Barclays and Deutsche restructured their businesses into subsidiaries, they might be allowed to shift cheaper capital from their HQs. Credit Suisse’s revamp provides a blueprint.
Exxon’s world view looks darn good for Exxon 12 Dec 2013 In its closely watched industry outlook, the $400 bln gorilla sees natural gas usage surging 65 pct by 2040 and a bigger jump in shale oil. If right, that would support Exxon’s costly acquisition of XTO four years ago. Even then, however, the deal might not stack up financially.
Uruguay’s weed spoils could get even higher 12 Dec 2013 The country is first to legalize marijuana trade, with production from co-ops, sales to locals only and prices fixed. Relaxing such restrictions, however, could really spark up the economy. The Dutch did well from cannabis tourism, but agribusiness could be the winner in Uruguay.
Ziggo has ways to put pressure on Liberty 12 Dec 2013 The Dutch cable firm is in bid talks with Liberty Global, already a big shareholder. Liberty is prudent and patient, and could seek creeping control via a low offer. But synergies would suffer. And there is value in moving quickly: brilliant debt markets won’t last forever.
Small cracks in U.S. crude ban aren’t enough 12 Dec 2013 America is granting a record number of oil export licenses, skirting a 100-year moratorium. But with output up 56 pct since 2008, this ensures the U.S. sells only a trickle abroad. That contributes to an $11 per barrel discount that harms drillers and America’s trade balance.
Microsoft lucky to avoid Nokia’s India tax bill 12 Dec 2013 An Indian court has allowed the Finnish company to include its Chennai factory in the sale of its devices business to Microsoft. While the $7.4 billion deal wasn’t at risk, the software giant dodges Nokia’s hard-to-assess tax liability. Vodafone wasn’t so fortunate.
Stan Fischer at Fed a fine complement to Yellen 11 Dec 2013 The ex-Bank of Israel governor would provide a conservative balance to incoming Chair Janet Yellen. He’d also boost the Fed’s global and crisis credibility. Making Fischer vice chair would be a savvy choice by the president. Yellen would be smart to encourage him to come aboard.
Barrick banker-chairman’s advice may not be golden 11 Dec 2013 Former Goldman bigwig John Thornton will soon be sole chairman of the struggling $20 bln gold miner. In theory, an old-school M&A guru could help Barrick’s bosses avoid further bad deals. The worry, though, is that Thornton is already talking about more empire-building.
FirstGroup’s Greyhound activist gets it half-right 11 Dec 2013 Tom Sandell is right that First has cheap stock and a bad track record. It should also take any good offer for Greyhound buses. But his proposed spin-off of other U.S. units looks less useful. The onus is now on First to defend its existing routemap for value creation.
U.S. budget mini-bargain beats no bargain at all 11 Dec 2013 A deal reached between the House and Senate replaces $63 bln in planned cuts and slices another $23 bln from deficits – but it fails to deal with long-term issues. It’s as close as this dysfunctional Congress gets to compromise, just in time for a midterm election year.
Edward Hadas: How not to do healthcare 11 Dec 2013 Prices and rationing are generally effective tools for economic management. Not in healthcare. The U.S. pricing system is chaotic and British rationing has created a bureaucratic monster. But the two contrasting models are both valid – and could be made to work better.
Time Warner Cable could play a little Pac-Man 10 Dec 2013 Being bought by smaller rival Charter would create a debt-laden $100 bln cable giant. Turning the tables would require less borrowing and keep the cost savings. If nothing else, according to a Breakingviews calculator, the idea could point to a higher price for Time Warner Cable.
Watchdogs make Volcker Rule rod for own backs 10 Dec 2013 It bans U.S. banks from outright prop trading and from London Whale-style hedging. But banks have plenty of room to mint coin, including being allowed to bet on government bonds. Wall Street might still complain. But the onus is on regulators to prove if banks step over the line.
GM navigates smart route to CEO succession 10 Dec 2013 New boss Mary Barra has a reputation for both good design and keeping a firm handle on costs. That’s what the automaker, freshly liberated from the U.S. government, needs as it chases more profitable rivals. GM also appointed an independent chairman for good governance measure.
Fading reform hopes take gun shares with them 10 Dec 2013 As the chances of new firearms legislation dissipate a year after the Sandy Hook school shooting, so too should the anxieties that propelled gun sales and the stocks of Smith & Wesson and Sturm, Ruger. Short sellers already have their sights set on a downturn.
Silicon Valley healthcare hubris no match for DC 9 Dec 2013 Google-backed genomics startup 23andMe harnessed the twin philosophies guiding the new economy: technological disruption and regulatory arbitrage. Selling unproven medical tests and ignoring regulators failed to impress the FDA, which essentially shut down the service last week.
Eddie Lampert’s shrinking empire takes another cut 9 Dec 2013 The Sears boss and hedge fund manager is shedding Lands’ End, 11 years after the retailer bought the clothing brand for $1.9 bln. Leaving the division trapped inside Sears was bad portfolio management. Shareholders will be lucky if a spun-off Lands’ End is worth half that.
Food deal shows how investors eat up synergies 9 Dec 2013 Sysco’s $3.5 bln purchase of US Foods received a rapturous reception with the buyer’s stock surging by as much as a quarter, or $5 bln. Hefty cost savings help the merger math. With this sort of reaction to deals, acquirers’ animal spirits won’t remain suppressed for long.