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Nov 1, 2011

Special Report: In Japan, a foreigner speaks out

LONDON (Reuters) – Michael Woodford makes an unlikely fighter.

As he tucks his tie into his shirt and digs into a plate of Dover sole in a London restaurant, it’s hard to imagine that this down-to-earth 51-year-old Englishman is at war with one of Japan’s biggest corporations.

Woodford is taking on the leaders of Olympus Corp., one of Japan’s most venerable camera makers. He was made CEO of the company in early October. But two weeks later, on October 14, the board sacked him for what chairman Tsuyoshi Kikukawa said was Woodford’s failure to understand the company’s management style and Japanese culture.

Nov 1, 2011

In Japan, a foreigner speaks out

LONDON, Nov 1 (Reuters) – Michael Woodford makes an unlikely
fighter.

As he tucks his tie into his shirt and digs into a plate of
Dover sole in a London restaurant, it’s hard to imagine that
this down-to-earth 51-year-old Englishman is at war with one of
Japan’s biggest corporations.

Woodford is taking on the leaders of Olympus Corp., one of
Japan’s most venerable camera makers. He was made CEO of the
company in early October. But two weeks later, on Oct. 14, the
board sacked him for what chairman Tsuyoshi Kikukawa said was
Woodford’s failure to understand the company’s management style
and Japanese culture.

Oct 19, 2011

Olympus ex-CEO calls for Japan probe into fees

LONDON (Reuters) – The sacked chief executive of Olympus Corp (7733.T: Quote, Profile, Research, Stock Buzz) has written to Japan’s securities industry watchdog calling for an investigation into an “extraordinary” $687 million fee the company paid to advisers for an acquisition.

Michael Woodford told Reuters on Wednesday he had written to Japan’s Securities and Exchange Surveillance Commission (SESC) detailing his concerns over payments linked to the $2 billion purchase of UK medical equipment maker Gyrus Group.

Aug 12, 2010
via Breakingviews

Vedanta’s Indian oil interest is hard to fathom

Vedanta Resources’ Indian oil interest is hard to fathom. No doubt Cairn Energy will have plenty of ideas for any cash it may raise by selling a stake in the UK oil explorer’s Indian subsidiary. But it’s harder to see what Anil Agarwal’s mining group has to gain from dipping its toe into the oil business.

Vedanta’s interest is in Cairn India, which pumps oil in the Rajasthan desert and has had a separate listing since January 2007. A full takeover would be a stretch. Cairn Energy’s 62 percent stake is worth $8.5 billion at current market prices. Add in a control premium, and a possible offer to minority shareholders, and a deal could easily cost twice that amount.

Jun 12, 2010
via Breakingviews

Paying the penalty for World Cup fever

Spain, Portugal and Greece could all do with a good World Cup run. Economists reckon that the further a team progresses in the tournament, the greater the boost to its national economy. For all the hype, however, any benefit outside host South Africa will be short-lived. Some of the golden ball’s shine may rub off on the victors. But, with 32 teams competing, there will be many more losers.

ING economist Charles Kalshoven says that the further the Dutch team advances, the better it will be for the Netherlands economy, because retailers and restaurants will earn a better return on investments they have made to capture the benefits of the tournament. Improved consumer confidence will also lead to higher spending.

Mar 4, 2010
via Breakingviews

No chemistry for Reliance at LyondellBasell

There’s no sign of chemistry between Reliance Industries and LyondellBasell. The Indian oil and petrochemicals group has already increased its offer for the bankrupt U.S. chemicals group. It could afford to go higher.
Some creditors would be tempted by a $15.5 billion offer. But there’s no certainty despite the high price. Reliance, which is known for not over-paying, should take its experiment elsewhere.

At the current offer price of $14.5 billion, Reliance — controlled by Mukesh Ambani — is already valuing Lyondell at a hefty 10 times 2010 forecast EBITDA. Dow Chemical, one of few reasonable benchmarks, trades on a multiple of just over eight times. Admittedly Lyondell’s earnings are at the bottom of the cycle, but a multiple of between 5.5 and six times would be more normal.

Jan 11, 2010
via Breakingviews

Heineken squares circle with FEMSA beer deal

Dutch brewer Heineken has managed a delicate balancing act in clinching the auction for the beer business of Mexico’s FEMSA. Despite outbidding SABMiller, the deal is in line with prices paid for growing Latin American markets. Meanwhile, Heineken’s all-share offer keeps debt under control while leaving its founding family in charge.

Heineken wanted the additional emerging market exposure offered by FEMSA. But because it’s still paying down debt from previous deals, it wasn’t in a position to offer cash. Investors feared Heineken would turn to them for fresh capital. But the FEMSA deal side-steps the issue.

Dec 23, 2009
via Breakingviews

2010 won’t be the real deal for mergers

Ask an investment banker about mergers and acquisitions in 2010, and the optimism is infectious. Except that it seems that few corporate bosses have caught the fever.

The bankers think they could do with a break. Global M&A hit a five-year low of $1.97 trillion in 2009 — 53 percent below the 2007 high. But now that financing is not as squeezed, confidence is supposedly returning and business conditions are apparently improving.

Nov 30, 2009
via Breakingviews

Cash not culture to decide Cadbury fate

Cadbury Chief Executive Todd Stitzer says the company has shared cultural values with Hershey. This may encourage the U.S. confectionery group. But it is will be hard pressed to match, let alone trump, Kraft’s hostile bid. For all the talk, shareholder value will decide Cadbury’s fate.Stitzer’s comments show he is open to a Hershey offer. But this probably has little if anything to do with culture. By positively encouraging a white knight counter-offer to Kraft’s cash and share bid, Stitzer and his advisers are working on the premise that this is the best way of squeezing a higher price out of Kraft.Cadbury shares, which had remained stubbornly below 8 pounds following Kraft’s bid, are now trading at 8.07 pounds. This values Cadbury at more than 11 billion pounds, thanks largely to Hershey and Italian chocolatier Ferrero confirming their interest. Compare that with a current value of 7.18 pounds per share for Kraft’s cash-and-shares bid and it’s clear why Stitzer has warmed to Hershey.The trouble is that despite a report of JPMorgan and Bank of America being willing to lend Hershey some $7 billion to finance a bid, Hershey will be stretching itself to the limit to buy its larger rival. And for a bid to go ahead, Hershey’s management needs to show it would be in the interests of its major shareholder, The Hershey Trust.For Hershey to successfully take on Kraft, it will need to team up with either Italian family-owned group Ferrero or Nestle. That would lessen the financial impact on Hershey, but would also dilute the very virtues which Stitzer extols.Nobody is disputing the cultural similarities. Indeed, Hershey already manufactures Cadbury chocolate bars in the U.S. But unless Hershey can come up with a compelling financial argument for taking over the purple-wrapped British chocolate company, culture will remain a sideshow.

Nov 26, 2009
via The Great Debate

Dubai will pay for Abu Dhabi aid

Photo

– Alexander Smith is a Reuters columnist. The opinions expressed are his own — Abu Dhabi is not going to crow publicly over Dubai’s troubles. But it will use the opportunity to assert control over its upstart neighbor. The price for Abu Dhabi’s help could be prize assets like airline Emirates. Dubai has little choice but to do what it is told.Dubai is unable to service the $80 billion debt it has amassed during its meteoric rise to wannabe global financial hub. Oil-rich Abu Dhabi holds the political and financial trump cards. Not only is it the capital of the United Arab Emirates, its ruler is head of the UAE’s seven desert states — squeezed between Saudi Arabia and Oman.Dubai’s success threatened the balance of power between the two emirates. Abu Dhabi has developed quickly, but not at the speed of Dubai, where until a year ago new skyscrapers popped out of the desert every few days.A property market crash and the end of free-flowing credit have taken their toll. Abu Dhabi has already lent Dubai at least $10 billion and another $5 billion indirectly via two of its banks. That won’t be the end of it. Dubai has nowhere else to turn, particularly now it has alienated the international capital markets by admitting it can’t meet the debts of flagship holding company Dubai World. Abu Dhabi can afford to bail out Dubai, but it has not been immune to losses itself and won’t be signing blank checks.Abu Dhabi won’t want to see its neighbor sink — after all they belong to the same country. But it will feel Dubai needs to be taught a lesson.One particularly painful punishment would be to force Dubai to hand over control of its prized Emirates Airline through a merger with Abu Dhabi carrier Etihad Airways. Global ports operator DP World is another asset Abu Dhabi should think about laying its hands on. Indeed, ownership of such assets may already have changed hands without anyone other than the royal families knowing about it.Other changes will be more subtle. Dubai has attracted overseas financial services companies with tax breaks and the relative freedom to do business in the way they are used to in Western countries.Curbing some of the excesses which have accompanied this influx of people and money will also be on the agenda.With the two cities an hour or so apart along the coast of the Persian Gulf, greater cooperation and coordination on development and direction should ultimately be beneficial to them both. Dubai’s moment in the sun has passed, now is Abu Dhabi’s chance to move out of its shadow.

    • About Alexander

      "I am a Reuters columnist specialising in financial services -- particularly investment banking, M&A and corporate finance. I am based in London, but have lived and worked in Spain and South America. I have been a journalist and editor for almost 19 years and before moving into commentary at the beginning of 2009 I was the editor responsible for Reuters coverage of company news in Europe, Middle East and Africa."
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