U.S. hospital M&A treats symptom not disease 30 Jul 2013 HMA agreed to sell itself for $3.9 bln at an odd moment. Shareholders are set to vote on whether to oust the board, the CEO is decamping for a Mormon mission and government scrutiny of its practices is growing. The deal looks hasty and may leave money on the operating table.
Alcatel recovery still has a long way to go 30 Jul 2013 The French-U.S. telecom equipment maker reported strong results and a smart R&D deal with Qualcomm. Shares soared. A U.S. spending boom is allowing new boss Michel Combes to bask in a honeymoon of sorts. But it’s very early days for the group’s third turnaround CEO.
"Fab" Tourre verdict can only make SEC look bad 30 Jul 2013 The trial of the ex-Goldman CDO banker is ending. Tourre’s lawyers seem sure the U.S. regulator has blown it. If so, the SEC will seem inept. But even a win would only highlight the failure to bag a high-level boss. Stronger cases are needed to give the Wall Street watchdog bite.
Shale trailblazer leaves a world awash with crude 29 Jul 2013 The fracking technique pioneered by George Mitchell, who died at 94, unleashed a torrent of U.S. oil and gas output and an environmental backlash. Controversy aside, Mitchell’s 17-year struggle to develop fracking offers a lesson in escaping the tyranny of quarterly reporting.
WPP can sit out this bout of adland M&A 29 Jul 2013 A merged Publicis Omnicom would overtake the UK group as the largest advertiser. That must gall WPP boss Martin Sorrell. But he could poach clients, and charge more in a consolidated market. The benefits of gatecrashing this deal, or finding a consolation prize, look dubious.
Elan acquisition contains possible side effect 29 Jul 2013 Over-the-counter drugmaker Perrigo isn’t a natural buyer for the Irish biotech. Elan is largely a shell company with cash and royalty rights to a blockbuster treatment. Tax savings dominate the logic of the $8.6 bln deal. Relying on a practice under growing scrutiny is risky.
"Equality" in Big Ad merger may be hard to sustain 29 Jul 2013 Publicis and Omnicom have formed a neat merger of equals, with co-CEOs, a balanced board, parallel listings and head offices. As a combination of autonomous units, no single culture can dominate. Day one will be fine. There is still a risk that paralysis or conflict comes later.
Piecemeal may be best for JPMorgan commodity sale 29 Jul 2013 The U.S. bank has good reasons to offload its physical electricity-to-metals business, but rival banks also have good reasons not to bulk up. Glencore might be tempted, but Ivan Glasenberg isn’t known as a generous bidder. JPMorgan may choose to sell in bits and pieces.
Alibaba may be worth $100 bln – but not to Yahoo 29 Jul 2013 The U.S. internet group’s 24 pct stake in China’s biggest online retailer may be worth as much as all Yahoo’s booked assets, but investors shouldn’t bank on anything near that. Alibaba’s interests are unlikely to match Yahoo’s, and the Chinese company holds most of the cards.
Ad men’s $35 bln bet: size matters in digital age 28 Jul 2013 Publicis and Omnicom are merging to create the world’s largest advertising group. Cost savings look modest. Some clients could defect. But this is a way to adapt to the digital revolution: the Franco-U.S. duo will be better equipped to stand up to giants like Facebook and Google.
SAC charges challenge hedge fund model 26 Jul 2013 The U.S. government’s indictment suggests recruitment should focus on compliance over money-making ability, turns investment “edge” into a dirty word, and implicitly questions the “mosaic” technique of information-gathering. It’s a worry for Steve Cohen’s industry peers.
UBS $885 mln payout is big win for FHFA’s DeMarco 26 Jul 2013 Among the most reviled regulators inside the beltway, Fannie Mae and Freddie Mac overseer Edward DeMarco merits Washington’s respect. One of the 18 suits filed under his watch against lenders who sold the agencies dodgy mortgages hit pay dirt. And there’s probably more to come.
Vivendi compromises to get shot of Activision 26 Jul 2013 The French conglomerate is selling most of its stake in the video games maker for $8.2 bln. With this and the sale of Maroc Telecom, Vivendi’s promised reinvention is finally underway. But in neither case do its shareholders get the premium that usually comes with ceding control.
Latest US mortgage kickstarter’s clever but costly 25 Jul 2013 Freddie Mac is selling the first agency home-loan bond that offloads some risk from taxpayers to investors. Such innovations are crucial for reducing Uncle Sam’s exposure to the housing market. But at current rates, investors are getting most of the benefits at Freddie’s expense.
SAC staffers take the bullet meant for Cohen 25 Jul 2013 Unable to nail the billionaire hedge fund boss, the U.S. has charged his firm instead. SAC may be culpable, but the allegations largely involve actions years ago by ex-employees. That leaves current staff to suffer the fallout. There’s too much spite mixed in with the justice.
Lazard shows M&A rankings have few clothes 25 Jul 2013 The Wall Street firm ended this year’s first half in ninth place for its share of completed deals, yet it was in the top five for revenue. Business mix explains some discrepancies like this. Others result from rival banks grabbing credit even when they haven’t done much work.
Merkel a collateral victim of U.S. spying scandal 25 Jul 2013 Widespread U.S. spying on German Internet and mobile-phone users is angering voters. Angela Merkel doesn’t seem to take the debate seriously. It’s unclear what she knew about possible German involvement. Her battered credibility could have electoral consequences.
Baidu digs deeper trench in China’s mobile wars 25 Jul 2013 More than 10 pct of the search engine’s revenue now comes from mobile. Google and Facebook show how heavy investments can pay off over time. Yet the cost is high and margins get squeezed. In China, competitive lines are more blurred. Returns may be even longer in coming.
Facebook answers questions rivals can’t 24 Jul 2013 Big tech firms have reported subpar Q2 earnings, with Microsoft the leading victim of the shift to mobile computing. By contrast, Mark Zuckerberg’s social network is thriving on portable gadgets, and Facebook’s revenue growth was the fastest since its IPO. There’s more fuel here.
Banks needn’t always eat their mortgage cooking 24 Jul 2013 Making them retain risk sounds logical. But U.S. lenders had lots of home loan exposure before the crisis, without such rules. Higher standards and the obligation to take back bad loans bring similar incentives. And cautious flexibility from regulators may revive securitization.