US tax hikes should target deductions, not income 13 Jul 2009 Democrats proposed 13% surtax on the rich may not yield enough revenue to fund healthcare reform. Instead, they should try to limit deductions on mortgage interest and charitable contributions. Such changes would be harder to evade and have fewer adverse economic effects.
Boomtime services glut behind consultants’ merger 29 Jun 2009 Towers Perrin and Watson Wyatt rode the credit wave, advising companies on hiring and integrating staff and justifying boardroom pay. Advice on regulatory compliance and pensions is still in demand. But the $3.5bn deal is about cutting costs in recessionhit service areas.
Epidemics aren’t profitable enough for drugmakers 29 Apr 2009 Roche s Tamiflu is the remedy of choice for swine flu. Yet the Swiss group s experience suggests the financial rewards for producing drugs to treat deadly diseases that can spread to epidemic proportions aren t sufficient to spur companies to develop new treatments.
Flu scare sets scene for anxiety through the autumn 27 Apr 2009 The chance of containing swine flu is essentially zero. The question now is how virulent it will be especially as the virus will mutate quickly over the next several months. Expect multiple waves of market panic in the runup to flu season.
US drugs deal shows benefit of going horizontal 13 Apr 2009 Express Scripts lost out to CVS in the battle for Caremark. But two years down the road the drugs benefits group's avoidance of vertical integration has been rewarded by better performance, crowned with a $4.7bn deal to acquire WellPoint s benefits business.
Private equity not the solution for Irish banks 25 Nov 2008 The Irish banks need to raise capital to peergroup levels to regain investor confidence. But unlike UK banks, they aren t going bust right now. That makes government intervention harder to justify. But allowing private equity to take pricey stakes isn t the way forward.
CVS Caremark acquisition adds more to overloaded plate 13 Aug 2008 The drugstore chain has outperformed rivals since it bought benefits company Caremark for a song. But it hasn t definitively proven the merits of the combination. Buying rival Longs Drugs could delay this.
Sharp private equity value write-ups can sour fast 25 Mar 2008 Some of HCA s investors are marking up their stakes in the hospital operator. A small increase in ebitda has translated into a big paper gain due to the magic of leverage. But rising bad debt and government health care reforms could turn this virtuous circle vicious.
US health insurers swamped by rising costs 11 Mar 2008 They enjoyed a shortlived reputation as a safe haven from economic storms. Wellpoint s warning of increased competition and healthcare inflation looks like the first break in the dike. Investors are bailing.
Philips pays breathtaking $5.1bn for Respironics 21 Dec 2007 The Dutch conglomerate has made its biggest acquisition ever. The concept is fine, but the price is a hefty four times sales. To add value Philips will have to meet some fairly stiff synergy targets.
Alaska’s $1.8bn lawsuit against Mercer will hurt retirement funds 7 Dec 2007 Alaska is suing its retirement fund actuary, Mercer Consulting, for far more than what Mercer earned for its advice. If it wins, advisory fees may soar hurting retirement funds across the country. Alaska must learn to pay for its own incompetence.
Are some turnarounds too risky for public groups? 13 Jul 2007 Companies put on the block often are covered in warts look at troubled contact lens group Bausch & Lomb. It makes an attractive target for rival Advanced Medical. But big shareholder ValueAct says private equity should spiff B&L up first.
Tender offers make triumphal US return 7 Jun 2007 For years, confusion over the best price rule kept this fast and efficient takeover tool virtually off limits. SEC reforms changed that. As the $11.4bn Biomet deal shows, this can expedite deals and get round pesky proxy advisors. So is this good or bad for investors?
Biomet shareholders should hold out for more 30 May 2007 Blackstone won the auction for the orthopaedic firm with a $10.9bn bid. While fair at the time, that now looks cheap. The sector rallied, and Biomet is fixing its problems. It will probably trade back in line with competitors eroding the takeover premium.
Bausch & Lomb’s $4.5bn buyout is opportunistic 16 May 2007 The US contact lens group has certainly been a dog. Its fleas include improper accounting, product recalls and liability lawsuits. But Bausch & Lomb is rapidly sorting out these problems. Shareholders should demand more than Warburg Pincus is offering.
Caremark battle set to end with whimper 12 Mar 2007 Express Scripts won t raise its $26bn hostile bid. That should guarantee CVS s merger gets approved at Friday s shareholder vote. But Express has a consolation gift it forced its rival to pony up another $3.2bn. Moreover, it may also have put itself in play.
Caremark holders’ choice: take-under or war? 8 Mar 2007 Even with a third bump, the $26bn company s investors are faced with a CVS takeover offer that s below the current stock price. But the alternative doesn t look good. It s not just that Express s bid has holes Caremark s management will go nuclear to frustrate it.
Caremark battle enters war of words phase 8 Feb 2007 CVS and Express Scripts $26bn contest over Caremark has settled into a dubious advertising campaign from both sides. Neither sheds much light on which deal will create more value. With more than $130m in fees at stake, however, Wall Street can t complain.
Hedge fund macro bets threaten gambler’s ruin 5 Feb 2007 Global imbalances must eventually resolve. But macro hedge fund managers betting on them have investors who want quick results. That s one reason why former Bank of England ratesetter Sushil Wadhwani has closed down his macro fund.
Bush’s health plan scrambles incentives further 25 Jan 2007 The president s proposed tax deduction will lead the young and healthy to buy cheap insurance, leaving the middle aged and sick vulnerable. It won t be cheap, and it doesn t solve the crazed incentives of American health care.