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Blog Profile / Reuters Breakingviews Blog


URL :http://blogs.reuters.com/columns
Filed Under:News
Posts on Regator:2923
Posts / Week:17.1
Archived Since:June 19, 2011

Blog Post Archive

A French revolution could disrupt U.S. mobile

Xavier Niel’s Iliad is the Ryanair or Aldi of telecoms – lean and clever. Winning control of T-Mobile U.S. could allow the French billionaire to repeat some of his tricks Stateside. That might guillotine market share and margins at AT&T and Verizon.

Japan’s GDP sacrifice is price well paid

The 6.8 pct drop in second-quarter output was a direct consequence of the country’s April sales tax increase. But for Prime Minister Shinzo Abe, taking a temporary hit on private demand was an acceptable cost of mending public finances. Besides, a recovery may have already begun.

Aussie bid battle questions wine’s standalone case

Two buyout groups have submitted rival $3.1 bln offers for the world’s only big listed wine producer. Australia’s Treasury Wine could benefit from better management. But a fragmented market and low brand loyalty also suggests the business is not suitable for the stock market.

German stocks price in sanctions tail-risk

Tension with Russia may slow growth in Europe’s powerhouse. But Germany’s domestic momentum should offset the drop in bilateral trade. Still, the DAX’s underperformance makes some sense. The economy would really suffer if Moscow cut back on gas exports.

Aircraft leasing flies back into vogue in Asia

Western financial groups bailed out of the business after the crisis. Now China’s sovereign fund and Li Ka-shing may be getting on board. Strong forecast demand for aircraft orders explains the appeal. Even so, access to cheap and reliable sources of finance will be crucial.

Kinder Morgan’s large-number solution: get bigger

Energy boss Richard Kinder’s master class in financial engineering is back in session with $71 bln of deals to unite his sprawling pipeline empire. Various partnerships had reached a scale that was limiting returns. The new structure should benefit everyone but Uncle Sam.

Pure politics can’t revive Italy’s coma economy

Prime Minister Matteo Renzi offers promises and constitutional change, but has delayed tough reforms. Europe’s fourth-biggest economy is stuck in perma-recession. To awake from its deep sleep, Italy needs far more radical changes than are on offer.

China’s e-commerce secret weapon: the delivery guy

Fast, cheap delivery has fuelled online shopping, and the growth of companies like Alibaba and JD.com. Thank a plentiful workforce of low-cost couriers that U.S. rivals can only dream of. While that can last for a few more years, unhelpful demographic change is in the post.

Behold the unversion: an inversion in all but name

U.S.-based data protection firm SafeNet may slash its tax rate as part of a cross-border deal. Instead of doing so by acquiring overseas, though, it is simply selling itself to Dutch digital security company Gemalto. It shows the limitations of a possible ban on inversions.

BlackRock is right: European IPOs need more work

The giant investor is griping again about new issues. In structure and deal volume, the market is far healthier than when BlackRock spoke out in 2011. Performance is OK, barring a few duds. But there are still too many banks per deal and buyers are still rushed into decisions.

Malaysia throws airline investors a parachute

The state investment fund is paying $436 million to buy out the remaining shares of Malaysia Airlines. The offer gives investors a price they last saw in February, before the already-troubled carrier was struck by two disasters. Taxpayers and employees may not be so fortunate.

Private equity discord is best collusion defense

Blackstone, KKR and TPG are paying $325 mln to resolve allegations that they conspired to limit buyout prices. Three other firms previously settled for less. Carlyle is holding out for now. Legally, there’s safety in numbers. Yet they can’t even agree on how to resolve the case.

Euro zone’s biggest problem is debt, not slow growth

Growth is stumbling in Italy, Germany and elsewhere. That in itself would not be a huge problem – except that the sovereign debt mountain has kept growing even in “austere” years. This means states cannot spend their way out of trouble, and another crisis remains a real risk.

China index: Beijing cleans up skies, not its act

Air in the capital is the cleanest it has been since 2011, data shows. Dirty industrials are leaving town or even shutting down amid a weak economy, but that’s no real fix. Clean, sustainable growth across China needs robust institutions with persuasive carrots and sticks.

Walgreen encounters uncommon inversion boundary

The drugstore chain will keep flying the U.S. flag even after buying the rest of Swiss-based Alliance Boots for $15 bln. A backlash against corporate emigration may have affected Walgreen’s decision, but harder numbers probably mattered more. Expect more tax arbitrage deals.

Murdoch miscalculation points to Time Warner value

The media mogul abruptly yanked an $80 bln offer after failing to anticipate his quarry’s resolve and price demands of investors. Fox shares rallied while Time Warner’s retreated toward their pre-bid level. That leaves refusenik boss Jeff Bewkes with something more to prove.

Dollar set to take pound’s strong currency title

Sterling became the FX market strongman during the past year as investors started to believe the UK would be the first big economy to raise rates. They may be right. Even so, shifting market expectations of when U.S. rates will be hiked now look set to boost the dollar.

SoftBank’s U.S. mobile retreat is least bad option

The Japanese group has bowed to hostile regulators and scrapped its Sprint unit’s $32 bln takeover of T-Mobile US. Withdrawing avoids months of antitrust limbo and leaves open the option of a future deal. For now, SoftBank’s ambitions in American mobile will be more modest.

Gannett split puts digital on wrong side of divide

The media company is spinning off newspapers, including USA Today, to unburden its TV arm. Cars.com, which Gannett is buying at a $2.5 bln valuation, would have buffered the weaker half in a similar way to Rupert Murdoch’s News Corp carve-up. Instead, print must stand on its own.

BES bail-in leaves CDS traders struck out

Banco Espirito Santo’s bail-in meant a killing for any traders that bought the bank’s senior debt and shorted its subordinated bonds. But not all arbs will be celebrating. A technicality means those who shorted credit default swaps on BES’s junior debt have lost out.

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