Year: 2009

TPG patches together $5.2bn post-crisis buyout

5 Nov 2009

The private equity firm is leading a buyout of drugs market research company IMS. But oldstyle LBO financing is missing. The buyers are putting in a whopping 40% as equity. The rest is coming courtesy of Goldman and mostly from funds it manages, not its own balance sheet.

Cable & Wireless fluffs a sensible demerger

5 Nov 2009

The once troubled UK telco has transformed itself into two profitable, geographically distinct businesses. A demerger announcement has come at the right time. But management has messed up by accompanying it with a profit warning instead of detail on how the split will work.

For sale: weak stake in strong investment bank

5 Nov 2009

Morgan Stanley is selling its stake in Chinese securities firm CICC because the Wall Street bank couldn t advance its strategic ambitions without control. The compensation could be annualised returns of 30%. The new owner should see this as a purely financial play.

Disney comes under China’s economic spell

5 Nov 2009

Vast domestic tourism and new infrastructure make a Disney resort in Shanghai worth the investment risk. It s a smart way for the House of Mickey Mouse to build the brand in a market where media is tightly controlled. But Disney must learn from past financial mistakes.

Yankees prove they’re the Goldman Sachs of baseball

5 Nov 2009

The team, which clinched its 27th World Series, is the sport s most valuable franchise, top moneymaker and pays more than anyone else for talent. And like the investment bank across the river from the Bronx, its success inspires either deep admiration or intense scorn.

Market softens up CVS Caremark for US regulators

5 Nov 2009

The Federal Trade Commission fancies the drugs group as an antitrust target. Investors, meanwhile, gave its stock a beating after the company lost contracts worth billions in the latest quarter. The market is helping overworked officials by putting CVS Caremark on the back foot.

UK, world’s biggest money printer, gets nervous

5 Nov 2009

The Bank of England s decision to print another £25bn smacks of compromise. Some policymakers may have wanted more. Others may have feared that quantitative easing has already gone too far. The money printing will have to stop one day. For now, the UK continues on its risky road.

Cisco’s issues more than a good quarter deep

5 Nov 2009

The US networking giant sold more gear than expected and cut costs during its latest quarter. It also upped the amount of cash it promises to return to shareholders by $10bn. But Cisco s longterm strategic challenges remain to be tackled.

BNP Paribas emerges stronger from crisis

5 Nov 2009

The eurozone's largest bank by deposits posted a 45% jump in Q3 net profit thanks in part to its Fortis acquisition. BNP continues to draw strength from its nononsense universal banking model. With a rights issue having boosted capital, BNP mustn't become too conservative.

Telefónica puts the screws on Vivendi in Brazil

4 Nov 2009

The Spanish operator had already topped the French media group s offer for Brazilian telecom upstart GVT. Telefónica has now raised its bid by 5% more to $3.8bn. As a result of Brazilian takeover laws, that leaves Vivendi even further in the dust.

Unitymedia opens private-equity cable harvest

4 Nov 2009

The IPO of Germany s number two cable operator could be the first of several from the sector. But while cable has weathered the recession well, valuations are still recovering. Unitymedia s owners, BC Partners and Apollo, would be well advised not to try selling down too much.

GM can get to work on Opel restructuring

4 Nov 2009

The US carmaker has scrapped the sale of its European division to Canada s Magna after Brussels questioned German state support for the deal. Angela Merkel will be irked. But GM can now aggressively restructure the struggling subsidiary with less political meddling.

Kraft’s humdrum results highlight Cadbury charm

4 Nov 2009

The Oreomaker beat profit estimates for the third quarter, but cut its sales forecast for the year. That makes fastergrowing Cadbury even more attractive. Yet Kraft would still struggle to justify raising its offer for the UK confectioner much more.

Rewarding bosses for going shopping is daft

4 Nov 2009

Pfizer awarded CFO Frank D Amelio a $1.2m bonus for his role in buying rival Wyeth. Executives may need incentives to sell it often means they ll lose their job. Paying for purchases, on the other hand, encourages empire building.

Lloyds/RBS earnings hits to weigh for years

4 Nov 2009

Shareholders in the UK s two bailedout banks haven t been wiped out. But their returns are being savaged by forced disposals plus mammoth, expensive and dilutive capital increases. Lloyds will recover faster. But even by 2012, RBS may be earning barely a few pence a share.

SocGen’s healing can’t mask crisis scars

4 Nov 2009

The French lender s profit more than doubled as the investment bank got back in the black. Stock and bond trading provided another lift but their contribution is shrinking. And credit losses and accounting writedowns persist. Small wonder SocGen sees lower profitability to come.

Fed’s latest inaction creates more bubble risk

4 Nov 2009

By not even signalling an end to easy money the US central bank runs the risk of further inflating asset and commodity prices and sinking the dollar. Its mandate is to keep inflation and employment stable. Avoiding bubbles ought to be central to this mission.

Buffett changes habits for railway deal

4 Nov 2009

To buy Burlington Northern, he is paying a full price, issuing precious Berkshire Hathaway stock, and splitting each of the company s baby B shares into 50 pieces, taking their price down from $3,000plus into the doubledigit realm of normal stocks. Whatever next a dividend?

RBS and Lloyds see their fortunes diverge

3 Nov 2009

In February, the UK banks seemed as bad as each other both were staring at state insurance and higher government ownership. This fate has indeed now befallen RBS, which has received a further smack from Brussels for good measure. But for Lloyds, the future looks brighter.

Buffett’s $34bn buy is barely a bargain

3 Nov 2009

The US value investor has a name for buying dollar bills for 50 cents. His deal to buy the Burlington Northern railway group doesn t appear to fall into that category. True, Buffett is going big in a company and industry he likes. But it is a bet on growth rather than on value.

Republican surge may reopen economic debate

3 Nov 2009

Offyear US election results favouring Republicans bring no national change. But a bipartisan economic consensus since 2007 has favoured state spending and bailouts. The results suggest a distrust of both that may force policy modifications nearterm.

BofA succession soap opera gets new twists

3 Nov 2009

It s bad enough that Ken Lewis resignation under fire left directors scrambling to find a replacement. Now they re reportedly having a hard time finding a candidate who ll move to Charlotte while an investor claims they still haven t contacted the most obvious contenders.

Blackstone may be big beneficiary of attrition

3 Nov 2009

Steve Schwarzman's alternative asset manager may not raise another record LBO fund like its $21.7bn 2007 leviathan. But relative growth does look achievable in a shrinking industry.

Grübel’s gloom wasn’t overstated – or heeded

3 Nov 2009

When the revered Swiss banker took over at UBS earlier this year, his grim outlook was partly dismissed as mere expectations management. But a weak Q3 bears him out. Even UBS strongholds wealth management and equities suffered. The shares don t reflect Grübel s continued caution.

J&J finds merger-sized savings – in itself

3 Nov 2009

The US healthcare conglomerate will slash up to 8,000 jobs. Unfortunately, the benefits are likely to be as fleeting as the cuts accompanying giant pharma mergers. That's because it's increasingly tough finding new drugs to replace lost revenue as sales of old products run down.

UK only half undoes Lloyds/HBOS mess

3 Nov 2009

The government is pretending that disposals by Lloyds and RBS will create more competition in high street banking. But this was European not UK policy and the banking sector is still less competitive than before the government blessed Lloyds disastrous acquisition of HBOS.

EU should heed Putin’s call for help on Ukraine

3 Nov 2009

The Russian president is meddling in Ukrainian politics by hinting that a new gas row is looming, and that Europe should help Kiev pay its bills. But he has a point. The EU hasn t done enough to assert its influence and help Ukraine sort out its industrial and political mess.

What does Buffett see in railways?

3 Nov 2009

He s paying a big premium to swallow Burlington Northern Santa Fe, a US railroad operator. It s not necessarily a signal to buy the sector in a hurry. But the Berkshire Hathaway chairman does seem to think rail transport could be building a bit of a head of steam.

Ryanair should take its foot off the gas

2 Nov 2009

The budget airline says it may abandon its aggressive growth strategy from 2012 and start paying dividends. This may be a tactic to scare Boeing into sweetening terms on a massive order for planes. Either way, the discipline of dividends could support Ryanair s drifting shares.

Global banks should be federalists – or pay up

2 Nov 2009

Regulators want to avoid the collapse of another international giant like Lehman. Turning all crossborder wholesale banks into capital federalists like HSBC is probably a nonstarter. But Lord Turner s alternative that refuseniks should hold more capital is worth exploring.