Americas

Carlos Slim takes least-worst option at KPN

20 Feb 2013

The Mexican mogul has belatedly agreed to help the Dutch telco raise 4 bln euros of capital. Slim’s near-28 pct stake is way out of the money. But the alternatives to raising the losing bet were even uglier: a quixotic full bid; heavy dilution; or leaving KPN over-levered.

Riposte: Money printing is in fact a barmy idea

20 Feb 2013

The FSA’s chairman Adair Turner and my colleague Edward Hadas have argued that the direct monetisation of public expenditures can sometimes be sensible. While unorthodox thinking is urgently needed in economics, this idea is poisonous. Lock it up and throw away the key.

Heinz deal shows value of ultra-long investing

19 Feb 2013

Berkshire Hathaway and 3G Capital are pouring on financial sauce unpalatable to others. Dividends and debt will eat up much of Heinz’s cash, meaning it could take a decade for the $28 bln deal to produce a decent return. It’s the kind of dish that’s definitely an acquired taste.

Bank firewalls: a guide for the perplexed

19 Feb 2013

The UK, U.S. and Europe have different ideas about partitioning their banks. The Vickers, Volcker and Liikanen plans reflect divergences in the regions’ pre-crisis banking systems, and how badly taxpayers suffered. Breakingviews mulls over whether their lack of agreement matters.

Offices Depot and Max lucky to have each other

19 Feb 2013

Uniting the U.S. purveyors of pens and paper clips is about as obvious as it gets in M&A. The potential $3 bln of synergies could be worth more than the market value of the two companies combined. As the Internet ravishes retail, at least this corner can cling to life by merger.

Long-view investors need to embrace FX appeal

18 Feb 2013

Old-school asset managers often see currencies as good for nothing but cost, risk, and occasional windfalls. But recent yen and euro shifts graphically show that exchange rates can bring handsome returns. If FX is where the action is, that’s where active asset managers should be.

New U.S. TBTF plan is too big to succeed

15 Feb 2013

In theory, a Republican proposal for a new capital cushion at the largest banks could minimize too-big-to-fail and justify desired lighter regulation. But the plan would mean banks issuing $2 trln of junior debt. Other flaws aside, that just doesn’t square with today’s markets.

Herbalife: the ultimate financial plaything

15 Feb 2013

Carl Icahn is joining Bill Ackman and Dan Loeb in the war over the nutritional supplements seller. One idea of his is another Herbalife buyout. The controversial business model and rich cash flow make it easy for Wall Street to keep imprinting fresh narratives on the company.

Central banks are globalisation’s new enemy

15 Feb 2013

Nearly every part of the economy is becoming more global. Trade is already so free that the proposed U.S.-EU Trade and Investment Partnership would produce only modest gains. So why are central banks stuck in a nationalist past? They’re in urgent need of globalised thinking.

M&A advisers get a lot of Valentine’s Day love

14 Feb 2013

Cupid’s two big deals alone, Heinz and American Airlines, required the services of two dozen banks and law firms. Some $36 bln of corporate hugs on Thursday pushed the 2013 global deals tally 17 pct ahead of where it was a year ago. Hearts must be racing across Wall Street.

U.S. justices’ hefty IP docket is patently logical

14 Feb 2013

The Supreme Court is reviewing fewer total cases but more on intellectual property. That makes sense. Patent law is badly muddled - as next week’s hearing about rights to altered soybean seeds is likely to demonstrate. Clearing up such legal quagmires is crucial to the economy.

Heinz deal gives taste of new buyout secret sauce

14 Feb 2013

Private equity firm 3G is swallowing the ketchup maker for $28 bln with Warren Buffett’s help. In the past, such mega-buyouts required multiple LBO firms to work. With club deals all but dead, the Heinz takeover, like Dell’s, shows the new way forward.

U.S. airlines need to fly abroad for better returns

14 Feb 2013

The $11 bln union of US Airways and AMR should boost the industry’s profitability. But earnings won’t gain more altitude until America’s airlines team up with overseas rivals and boost margins by cutting cost. That requires Congress to lift curbs on foreign ownership.

GM’s recovery starts showing some cracks

14 Feb 2013

The automaker reported $900 mln of Q4 profit - pretty decent considering losses in Europe. But unlike at Ford, results in the U.S. disappointed, and GM paid more incentives to buyers. The company is no lemon, but CEO Dan Akerson needs to show the last quarter of 2012 was a blip.

AB InBev moves fast to keep Mexico prize

14 Feb 2013

The world’s top brewer has quickly rejigged the $20 bln takeover of Grupo Modelo. If U.S. regulators now approve, the deal still makes sense for AB InBev, both financially and strategically. It will get bigger in Mexico and can still try to make Corona beer a global smash.

Commodities bear market is a shifty beast

14 Feb 2013

Raw materials underperformed equities last year, denting the appeal of commodity funds. But oil-heavy indices, which mirror actual trade flows, performed better. And prices of many materials remain high. The real bear market is in commodity price volatility.

Biotech deals show how to pluck without killing

13 Feb 2013

Pharma mergers are usually a recipe for destroyed value. Yet big drugs companies need the innovation more prevalent at biotech firms. Sanofi’s increased stake in the $16 bln Regeneron, avoiding full control, is a good way to collect feathers without swallowing the bird.

There is no U.S. credit bubble, just low rates

13 Feb 2013

Looser lending standards and record junk bond issuance are enough to make anyone nervous after the recent credit crisis. But like generals fighting the last war, investors and regulators are too focused on old foes. That gives other threats, like interest rates, room to grow.

Comcast ad-libs on winning NBC Universal script

13 Feb 2013

The U.S. cable operator engineered a multi-step deal with GE in 2009. Now, it smoothly has accelerated and tweaked the acquisition of the rest of NBC Universal for $16.7 bln. With the financial side sorted, Comcast CEO Brian Roberts must now prove he’s the right owner.

Obama’s dreamy math doesn’t add up

13 Feb 2013

In the first State of the Union address of his second term, the U.S. president outlined an economic wish list that equates to a bigger role for Uncle Sam. He would also preserve federal retirement benefits. It won’t work if he insists on shielding the middle class from tax hikes.