Month: October 2005

Houlihan Lokey sells out to Japan’s Orix

31 Oct 2005

The significance of the $500m deal is that the US investment bank is a restructuring specialist. The Japanese appear to be positioning themselves for an era of increased corporate morbidity, which may be just around the corner.

Barrick digs deep with $9.5bn Placer bid

31 Oct 2005

The unsolicited deal, if consummated, would create the world s largest gold miner. But it s already producing coal dust for Barrick shareholders, and the fight has barely begun.

Steve Case bolts Time Warner board

31 Oct 2005

The AOL founder and former chairman leaves just in time for Time Warner to do something bold about AOL. Indeed, the timing looks more than a little auspicious and may suggest Time Warner is willing to split AOL in two and dump the dialup arm.

Time to turn off Alitalia’s cash incinerator

31 Oct 2005

The Italian airline has destroyed mountains of capital in the last seven years. The culprits? Italy s politicians. The latest cashraising plans talk of reform. But Rome is unlikely to change. Brussels should say boo to this goose.

Buyout kings converge on Dunkin’ Donuts

31 Oct 2005

The fast food chain, for years owned by unfocused conglomerates, is attracting strong private equity interest. Considering the market for highpriced coffee, the $2bn price tag for the stodgy chain looks like a bargain.

Telefonica pushes boat out for £18bn O2

31 Oct 2005

The Spanish telecoms group has opened the bidding for the UK mobile operator. It is offering a full price. This looks tricky to justify. There are better buyers for O2. Telefonica s shareholders may hope someone comes along and trumps it.

New pension rules could hurt dividends

31 Oct 2005

The UK Pension Regulator wants companies that can afford to do so to plug their FRS17 pension deficits within 10 years. That shouldn t be too a big problem for most listed companies for now. But if market conditions deteriorate, dividends may have to be cut.

Novartis makes $5.1bn offer Chiron can’t refuse

31 Oct 2005

The Swiss drug group s 42% stake in the US vaccine maker gave it unbeatable leverage in takeover negotiations. Chiron s board had little choice but to accept a slightly sweetened second offer. This leaves plenty of honey for Novartis.

Bidding war looms for £3bn P&O

31 Oct 2005

Dubai Port World, which has approached the UKlisted ports operator, is thought to be offering a good price for the business. But P&O has scarce assets in an attractive business. DP World is unlikely to be the only bidder.

Hedge funds succumb to the cult of the salesman

31 Oct 2005

The creation of a new central exchange for equity salesmen s tips is the latest evidence of hedge funds appetite for trading ideas. Investors should ask whether managers are adding value to the information or just cribbing it.

Shares in Boots, Alliance diverge on £7bn merger

30 Oct 2005

Boots is flat, but Alliance has tanked. Normally when this happens, it s a warning to investors that the deal won t go through. But this case is different. Investors aren t worried about the deal failing to close. They just don t see the merit of it.

Anglo American needs bolder strategy

30 Oct 2005

Last week s review did not go far enough. The UKlisted miner needs to sell more noncore units and improve its operational performance. That could add 30% to Anglo s market value. True, it might make the group more vulnerable to a bid, but that would be no bad thing.

Breakups aren’t broken

29 Oct 2005

Cendant, Primedia, Viacom, Sara Lee and others have seen their breakup plans flop. But that shouldn t give comfort to bosses at GE, Citi, Time Warner and elsewhere. The flops are more indicative of companyspecific issues.

New wave of US bank M&A starts on wrong foot

29 Oct 2005

Sovereign s $3.6bn takeover of New York s Independence destroyed value and ran roughshod over shareholders. A flat yield curve will tempt other banks to do deals. But they shouldn t take their cue from Sovereign and overpay.

Jumbo buyout funds offer poor prospects for investors

29 Oct 2005

Buyout funds are getting larger despite the fact that there is an inverse relationship between fund size and investment returns. With interest rates rising and investor appetite for junk bonds waning, Blackstone s record new fund signals the turning for the LBO market.

France takes aggressive gamble on EDF price range

28 Oct 2005

The E8bn privatisation is structurally unappealing and dogged by political risk. But the price range is hardly cautious. At the midpoint, the utility is being offered at no discount to European peers.

Eutelsat pulls IPO despite price cut

28 Oct 2005

The satellite group s private equity owners weren t just put off by weak markets. Investors have no appetite for Frenchlisted tech stocks. This IPO flop may not be a harbinger of others to come.

Governance is key in splitting up Parmalat

28 Oct 2005

It makes sense to split the dairy group s operating activities from the lawsuits it has filed against its banks. But there are conflicts because these banks are also big shareholders. These need to be managed.

Deutsche delivers sparkling trading result in Q3

28 Oct 2005

The bank s consistently excellent proprietary trading results belie fears about its exposure to this potentially volatile earnings stream. Deutsche should hit its 25% pretax ROE target this year. The risk is that it has curbed longterm investment in the franchise to get there.

Short-sellers take unfair rap

28 Oct 2005

Lawsuits against shortsellers and research firms threaten to chill independent voices who serve the markets well. In the latest case, Overstock.com s charges against a research firm that issued negative reports sound like sour grapes.

Supreme Court nominee withdrawal weakens Bush

27 Oct 2005

Bush is a wounded president with no clear successor. And he faces reaching lame duck status earlier than secondterm presidents usually do. Add in all the other turmoil at the White House, and this does not bode well for the next big item on the domestic agenda tax reform.

Blackberries may go black

27 Oct 2005

The US Supreme Court dropped a bomb on the investment banking fraternity with its refusal to hear Research in Motion s copyright appeal. But not to worry. Before thumbs stop tapping on Wall Street it s likely a settlement will be reached, though RIM investors may not like it.

Shell shouldn’t build a warchest

27 Oct 2005

The oil giant has recovered its poise after the Watts affair. But investors worry it may address its reserves problem by doing a huge deal. The company is stoking these worries by building a huge warchest. If it wants to win trust, it should hand back more cash to investors.

Smith & Nephew shares look cheap

27 Oct 2005

The UK orthopaedic group s shares have sunk to a twoyear low over concern that implant prices will stagnate. This is overblown. The market should see 15% sales growth for years, as an older and obese population needs more joints replaced.

Hedge funds need conclusion to trading probe

27 Oct 2005

Regulators have spent over a year examining whether hedge funds wrongly used information provided in the premarketing of convertibles. The market needs guidance on this issue. Regulators need to pursue these investigations faster.

France Telecom bitten by internet switch

27 Oct 2005

The telecoms operator blames internet technology for a drop in sales. It is offering cheap deals to retain its customers. At least group ebitda is holding up for now. But with competition growing elsewhere, it may be squeezed in future.

Italy should open its bond markets

27 Oct 2005

Icap, the UK broker, is moving closer to establishing a market for Italian sovereign debt to rival local exchange MTS. After the Antonveneta debacle, Italy has a second chance to show it will treat foreign entrants into its financial services markets fairly.

Wal-Mart worries workers linger too long

27 Oct 2005

The retailer could cut healthcare costs by raising its employee turnover rate. This would boost the bottom line. But unless it is careful, WalMart could end up sapping staff morale and escalating its public relations woes.

Germany may sell iconic Autobahn

26 Oct 2005

The finance minister designate says the government may sell off the motorways. It's easy to see why, given possible proceeds of over E80bn. But buyers should keep an eye on repair bills. Many routes are in need of an upgrade.

Prudential’s new strategy is a tough sell

26 Oct 2005

The UK insurer s new CEO Mark Tucker plans to use its Egg banking unit to sell insurance. He also wants to move beyond life and pensions. But bancassurance is a tough nut to crack. And greater focus would be preferable to diversification.