Year: 2009

Chemical union may not be so easily dissolved

26 Jan 2009

Dow won t close its $19bn acquisition of Rohm and Haas at least not yet. Having now got cold feet, Dow may be trying a few private equitylike moves. But with different legal and market circumstances, Rohm and Haas may have more options than the typical jilted buyout target.

Schaeffler’s Conti deal proves too clever by half

26 Jan 2009

The familyowned German firm borrowed E6bn to sneak control of carparts maker Conti last year. Now the value of both groups is plunging, and it s not clear how Schaeffler will meet its borrowings. It should have stuck to what it knew.

Pfizer’s $68bn Wyeth deal shows irony of Fed bailout

26 Jan 2009

The takeover is being greased by $22.5bn in loans from a bank consortium that looks like a Who s Who of Tarp recipients. Using taxpayer money to fund Pfizer s corporate bloodletting will raise uncomfortable questions in Washington.

The euro will almost certainly hold

23 Jan 2009

It's easy to see why there's increasing chitchat about the single currency being blown apart by the economic crisis. Spain, Ireland, Italy, Portugal and Greece are really hurting. But quitting the euro would probably lead to an even worse fate: bankruptcy.

Spanish savings banks should be privatised

23 Jan 2009

That may go against the trend to increasing state involvement in the banking sector. But the squabbling over Caja Madrid is a reminder of why political involvement in banks is to be avoided. Calls for politicians to reduce their holdings in the Spanish lender deserve backing.

Shareholders are getting GE Capital for free

23 Jan 2009

The finance arm has dragged down the industrial conglomerate's stock so precipitously that the market values this asset with $53bn of shareholders equity at zero. Chief Jeff Immelt should get cracking on a separation of the core business from GE Capital.

US-China war of words could leave both sides losers

23 Jan 2009

After Treasury secretary Geithner branded China a currency manipulator , premier Wen Jiabao used his Davos platform to hit back at the West s excessive consumption and lax regulation. Both are right but admitting their own mistakes would be a better solution than namecalling.

Obama must fight to keep muscle in flabby stimulus

23 Jan 2009

The health conscious new US president is watching Democratic legislators lard the package with fat. But it still retains some muscle introduced in part to please Republicans who have since snubbed it. He should use his influence to retain that while limiting fiscal junk food.

Recessionary M&A stages its comeback

23 Jan 2009

A Pfizer deal with Wyeth would illustrate the merits of merging when economies are slowing or shrinking. A deal done mostly in stock, slicing out padding in costs and R&D, would benefit both sets of shareholders. This looks like a taste of deals to come.

State aid for industrials shouldn’t flow freely

23 Jan 2009

Ideally, governments would let the recession and the banks decide which companies survive. But with lending still constrained, troubled companies are going straight to the trough for official support. They should be fed, but only carefully and with stringent conditions.

Santander should pay off its Madoff victims

23 Jan 2009

The Spanish bank s clients could lose E2.3bn from the fraud. Some are clubbing together to sue Santander for getting them into the scheme. Compensation could be expensive. But it may be less costly than toughing it out in a public, drawnout legal battle.

Jaguar and Land Rover don’t merit state loans

23 Jan 2009

Tata, the owner of the auto brands, says they don t need a bailout , just loans from the UK government. But Tata should be the first port of call for cash. The UK s responsibility is to ensure that JLR gets funding from the nation s banks, rather than directly from taxpayers.

Google/Starbucks: unlikely exemplars for option resets

23 Jan 2009

Both are rescuing underwater workers. Starbucks plan is more palatable to shareholders. Google s is better for employees. Both seem surprisingly sensible given West Coast companies shoddy history with the issue.

Barclays’ Gulf deal could get worse for minorities

22 Jan 2009

The UK bank sparked fury when it got Middle East investors to fund a dilutive £7.15bn capital hike in October. An antidilution clause could further hit traditional shareholders if Barclays has to raise equity from the UK government.

Microsoft is no longer an unstoppable force

22 Jan 2009

The software maker surprised the market with results below expectations. And it s laying off 5,000 employees the first mass cuts in its history. The miss underlines its vulnerabilities. CEO Ballmer needs to stop playing video games and focus on his core business.

US housing starts plunge has a silver lining

22 Jan 2009

New home construction dropped to a 50year low. That's not as bad as it sounds if it means housing inventory will be worked off, allowing prices to find a floor. Both processes may be nearing completion by yearend, which will stabilise mortgage values and end the banking crisis.

Ken Lewis’s problems not over yet

22 Jan 2009

The BofA boss has offered shareholders John Thain as the sacrificial lamb for the increasingly disastrouslooking Merrill takeover. But that doesn t exonerate Lewis of his own mistakes. And the exodus from the investment bank may yet continue.

Insider buying by bankers only half bullish sign

22 Jan 2009

Bosses Jamie Dimon and Ken Lewis snaffled up millions of dollars of shares in JPMorgan and BofA respectively. It s great that they see value. But bankers have historically timed the dumping of stock better than predicting the upturn.

Modest Morrisons takes on classy rivals and wins

22 Jan 2009

The supercheap UK grocer is taking no prisoners in the downturn, gobbling market share from all the big players at Christmas even premium food merchants like M&S and Waitrose. As Morrisons advances from its regional heartlands, the competitive threat it poses will intensify.

Wall Street snookers another commercial bank

22 Jan 2009

Financial history is littered with the disastrous consequences of commercial banks acquiring investment banks. In good times the talent sells high and waves goodbye think Credit Suisse/DLJ. Merrill s suckering of BofA shows it s no different in bad times.

Fiat’s outlook highlights need for speed in consolidation

22 Jan 2009

The Italian automaker taking a stake in Chrysler slashed its profit outlook by a third while debt ballooned. The only way forward is to reduce capacity in the industry, perhaps by merging with PSA. Fiat boss Marchionne is best placed to make this happen.

UK needs plan to bring finances back in balance

22 Jan 2009

Measures to stimulate the economy and bail out banks are being viewed as profligate. To counter that impression and avoid the risk that investors may stop buying gilts the government must come up with a credible mediumterm plan to balance its books.

Merrill’s bonus caper adds to the stench for BofA

22 Jan 2009

The Herd thundered off with bonuses just days before the bank s rescue takeover closed and news of a $15bn fourthquarter loss emerged. Worse, Merrill pay fell by a mere 6% in spite of a disastrous 2008. BofA shareholders and staff should be livid with both banks bosses.

China’s 6.8% growth isn’t as good as it seems

22 Jan 2009

While the reported fourthquarter figure looks respectable, underlying growth was probably zero. What s more, attempts to boost growth this year may only give the country a temporary fillip.

BT shows no signs of healing

22 Jan 2009

The UK telecoms group has issued a second profit warning, this time involving a £340m charge relating to its ailing Global Services Unit. Newish chief executive Ian Livingston says there could be more bad news to come. It bodes ill for BT s hefty dividend.

Microsoft and Google should gear up for yard sales

21 Jan 2009

Both onetrick ponies have used prodigious cash flows to fund outside projects with little success. A trying environment should change this. Google recently axed its print ad project and Microsoft sold its longheld stake in Comcast. A host of other distractions could be next.

Jobs leaves Apple with plenty of money spinners

21 Jan 2009

The hip gadget maker s earnings smashed expectations. They were largely driven by biggerthanexpected iPod sales and its resurgent Mac computer line. If Steve Jobs doesn t return to the helm, Apple s next chief will at least have several strong products to offer breathing room.

Red faces all round over Lloyds fiasco

21 Jan 2009

Lloyds takeover of HBOS is proving a disaster. A fairly healthy bank has been infected with a virus, where the cure could be nationalisation. The three main culprits are: Gordon Brown, who pushed for the deal; the board of Lloyds; and shareholders, who voted it through.

Geithner apologises but misses chances at clarity

21 Jan 2009

The US Treasury bossdesignate was understandably cagey about how the Obama team will pursue bank bailouts, since they re still devising their plan. But he could have been more open with senators about the rationale for past decisions if he really believes in policy transparency.

France prematurely launches bank bailout II

21 Jan 2009

President Sarkozy is keen to show his determination to keep France's banks lending. He is making a further E10.5bn available to the sector. But like the UK s second bailout, the crucial details have yet to emerge. French banks will welcome it with gritted teeth.