Month: November 2006

How on earth would NTL finance ITV?

16 Nov 2006

NTL has a history of raising lots of money in difficult circumstances. But financing the takeover of ITV would take the cake. Assuming they max out their debt capacity, NTL would have to plug a £2.2bn hole. That s not easy for an indebted US listed cable company.

Investment banks alienate the exchanges

16 Nov 2006

Their plan to create a rival equity platform has annoyed their exchange clients many of whom are in the middle of bid situations. But are the banks that bothered? Not really. Cheaper dealing fees are more valuable than a few lost advisory mandates.

Are Clear Channel shareholders getting a raw deal?

16 Nov 2006

Bain and TH Lee are liquidating the company s assets. Yet the $26.7bn LBO may represent a 15% discount to the value of its parts. Management is letting private equity skim off this cream. Trouble is, investors probably wouldn t have trusted them to do it themselves.

BNL acquisition keeps BNP in shape

16 Nov 2006

The French bank s US operations are slowing down and the French retail market is saturated. It is relying on Italy s BNL for growth. As US and Western Europe markets are maturing, BNP might have to look for growth elsewhere. That might mean a risky change in strategy.

National Grid pre-empts private equity interest

16 Nov 2006

The regulated UK utility hasn t received a bid, but it s sensibly behaving as though it might. It's demerging noncore operations, and returning $1.9bn of surplus cash to shareholders. That s good for shareholder value. It's also wise.

World’s most influential economist dies

16 Nov 2006

Milton Friedman championed free markets, drug legalisation, school vouchers and General Pinochet. He persuaded central banks to focus on inflation rather than on credit and speculation. That thesis will be tested by the credit bubble.

Investors fight suspiciously cheap ICOS deal

16 Nov 2006

Rebels have a strong case, they argue the biotech has agreed to sell itself for a dirt cheap $1.1bn pricetag to Eli Lilly. The problem is a familiar one in biotech Lilly is the only likely buyer.

Halliburton’s impatience could give IPO investors a bargain

15 Nov 2006

The UK government wants the oil services group to hold off on the IPO of its KBR unit or risk endangering a big chunk of KBR's profits. If Halliburton stubbornly forges ahead, however, KBR may come a lot cheaper than the IPO's current $2.6bn price tag.

Don’t count your headless chickens

15 Nov 2006

Once private equity has recouped its initial investment via a recap, companies could be left for dead, says Alchemy s Jon Moulton. He s got a point. The problem is that the incentives are asymmetrical. Why waste time on an investment that s underwater?

MiFID proves real threat to European exchanges

15 Nov 2006

Seven banks responsible for half of European share trading are setting up their own exchange, as permitted under a new European directive. And Goldman is launching new trading software allowing it to bypass exchanges altogether. Traditional exchanges have a fight on their hands.

Democrats target Big Oil

15 Nov 2006

The Democrats plan to repeal $33bn in tax and royalty relief for big oil looks largely unworkable to Wall Street's relief. But there is good reason to worry. Democrats could launch costly probes into the oil industry or resurrect talk of windfall profit taxes.

Aston Martin best left to the trophy hunters

15 Nov 2006

James Bond s favourite carmaker has reportedly caught the eye of everyone from private equity firms to Russian oligarchs. Aston Martin may be the ultimate boy s toy. But whoever wins the upcoming auction has little chance of driving away with a bargain.

Does Google meet its own goals?

15 Nov 2006

While Google is struggling to meet many of these, it appears to be hitting the ones that matter financially. Internal documents that recently hit the web show Google set an array of corporate ambitions for this year.

Hertz owners’ greed shouldn’t hurt IPO

15 Nov 2006

The private equity firms loaded up the former Ford unit with debt, and have siphoned cash from its tanks less than a year after buying it. But the premier carrental company is back in the black. And it s being valued at a discount to struggling rival Avis Budget.

Sarin should tread carefully on acquisition trail

15 Nov 2006

The Vodafone boss is right to keep an eye on potential purchases such as France's SFR and India's Bharti Telecom. But he shouldn t let his new confidence cloud his judgment. Being tarnished as a deal junkie would quickly put him back in the doghouse.

Capitalia needs a merger

15 Nov 2006

The Italian bank has been left out of necessary consolidation in the sector because of the apparent objections of Geronzi, its chairman. Members of Capitalia's shareholders' pact should override opposition at today's meeting and kick off the process of getting the best deal.

US Airways makes opportunistic $8bn bid for Delta

15 Nov 2006

More than half disappear if Delta emerges before bankruptcy first. And the merger could create more problems than it would solve. The airline promises its hostile bid would generate synergies worth a massive $8.3bn. But there s a catch.

Americans should admire Japan

15 Nov 2006

The time for US sneering at that hasbeen economy is over. Japan is growing faster and its industrial base is healthier. Japan is better placed for either global boom or recession. And the stock market is only 15% more expensive. Sounds like a good deal.

Bernanke and Trichet both get it wrong

14 Nov 2006

The two central bankers disagree about monetary policy. But they agree that inflation is being managed well. That s not right. Asset price inflation has all the distorting effects of retail inflation. And asset prices certainly aren t under control.

Vodafone’s robust H1 strengthens Sarin’s grip

14 Nov 2006

The mobile operator kept growing in Europe. Its controversial Turkish purchase flew. That should restore some faith in its embattled CEO. And by keeping some firepower for a bumper final dividend, he has given himself scope to stay in investors good books if H2 gets rough.

Will Citi suffer the stadium name curse?

14 Nov 2006

The bank is committing a record $400m to put its logo on a baseball park. This may ultimately be costeffective advertising for Citi. But that s probably what Enron, WorldCom, Conseco and Adelphia also thought when they forked over cash for naming rights.

Alliance Boots looks overvalued

14 Nov 2006

The £8bn merger that created the UK healthcare group is on track. But beneath the makeup, Alliance Boots still looks pretty wrinkly. At 18 times next year's earnings, investors should be focusing less on the merger and more on Alliance Boots' decidedly plain prospects.

Sale would be sensible end to Resolution story

14 Nov 2006

Resolution turned itself into a FTSE company by buying closed life funds from capital strapped insurance firms at a discount to asset value. It was a clever arbitrage that has made lots of money for Resolution investors. But like all arbitrages, it is closing.

Democrats could torpedo drug industry growth

14 Nov 2006

The new US Congressional leadership wants the government to use its purchasing leverage to negotiate discounts from drug makers. The price reductions over the next seven years are potentially large enough to wipe out growth in drug sales worldwide.

What kind of car does 007 drive?

14 Nov 2006

Everyone knows the answer. That s the power of product placement, which is about to get a boost as the EU relaxes its rules. The move is long overdue. The market in the US is growing fast. European broadcasters could use the extra source of revenue.

German CEO ousters necessary by-product of globalisation

14 Nov 2006

Deutsche Telekom s coup follows a similar one at VW. All in all, six of the top 20 German corporate heads are under pressure. The common theme the move from local to global is hard work. Germany is getting there, but the road is bumpy.

Stork’s defiance shouldn’t be end of matter

14 Nov 2006

The Dutch company has astonishingly rejected the overwhelming wishes of shareholders who want the company broken up. A legal fight which may help define Dutch shareholder rights may now be on the cards.

Experian’s standoff with bondholders to end

14 Nov 2006

A disagreement with one group of bondholders over the demerger from GUS appears to be ending with a compromise. The bondholders, which are mostly hedge funds, had hoped to make a tidy profit, but a buyout threat has made an agreement essential.

Is Wall Street research still conflicted?

14 Nov 2006

Rules governing interaction between bankers and analysts are clear but what about the rapport between analysts and fund managers? The issue emerged when Morgan Stanley s investment arm launched a proxy fight against the NY Times as its analyst downgraded the stock.

Russian gas cartel all too plausible

14 Nov 2006

The Kremlin certainly uses gas as a political weapon, as Nato suggests. It squeezed Ukraine and is now trying to get Georgia. But the EU is not at Russia's mercy. Moscow needs its goods and goodwill.