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from Breakingviews:

GE/Alstom deal rumours test French reform drive

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By Pierre Briançon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

In an ideal world where free people would roam across free markets, there would be much to like in a takeover of engineering group Alstom by General Electric. The French turbine and train maker, bailed out by taxpayer money 10 years ago, has been hit hard by the economic slump and Asian competition. Its future as a standalone company is in doubt. It needs cash that its shareholders - including Bouygues, with a 29 percent stake – are loath to fork out. Being folded into much larger GE would help it through bad times while some of its assets would fit nicely into the U.S. group.

Reports that the two were talking takeovers sent Alstom shares soaring 14 percent on April 24 - in spite of, or maybe because of, the French group’s  non-denial denial stating that it had not been “informed of any potential public tender offer” for the company.

But in the real world, any sale of the TGV maker to the U.S. group would face major political hurdles. It would test the French government’s new reform drive just as its business-friendly policies are proving hard to sell - both to public opinion and to the restive, ruling Socialist party.

from Counterparties:

MORNING BID – Microsoft, up from the ashes

Microsoft heads into tonight’s earnings report coming in on a high, having recently breached the $40 threshold for the first time in forever (it’s all Frozen references this week, folks). The company pushed past $40 a share in early April for the first time in nearly 14 years, and spent most of that time ensconced in a tight range between about $22 and $35 a share, depending on what the overall market was doing. It tanked in 2008 with everything else, and then spent the 2010-2012 period putting together a cumulative 13 percent price loss in the midst of a raging bull market, if evidence of its sad-sack status couldn’t be more apparent.

This year, though, the company’s been the beneficiary (along with the other “horsemen,” Cisco, Intel and Oracle) of a shift away from overvalued momentum-driven stocks towards cyclical technology stories. These are the types of companies that produce steady revenues even if they’re not doing anything but collecting on consistent upgrades of stuff that everybody needs and doesn’t really like. And really, the company had a stranglehold over PC operating systems that it defended aggressively, let’s not kid ourselves.

from Global Markets Forum Dashboard:

Facebook’s slice of humble Apple pie

Two tech titans, Facebook and Apple disclosed their Q1 results yesterday, yielding a number of interesting facts in the fast-moving world of social media. Apple reported sales of 43.7 million iPhones in the first quarter, far outpacing the roughly 38 million that Wall Street had predicted. Facebook on the other hand reported a growth of 72 percent in its Q1 revenues, its strongest revenue growth in several years.

Even though Apple beat its sales and earnings forecast for this quarter, the company seems to be in the news for something else. It plans to give back over $130 billion in cash to shareholders and is bumping up dividends to $3.29 per share, bulking up its share repurchase to $90 billion, and announcing a 7-for-1 stock split. Shares of Apple quickly shot up higher on the news, but is this every shareholder’s dream come true? "If I were the CFO, I would have fought tooth and nail to stop the dividend payout," said Vivek Abraham, a GMF regular and a keen U.S. equity watcher, during a Facebook vs. Apple earnings discussion in the forum. Vivek added that "as an investor, that would only signal to me, Apple really doesn't have any other place to invest, no target to acquire, or isn't really thinking of doing so in the near term."

from MacroScope:

Talking the talk

European Central Bank President Mario Draghi delivers a speech in Amsterdam which will fixate the markets following his recent statement that a stronger euro would prompt an easing of monetary policy.

Most notably via his Clint Eastwood-style “whatever it takes” declaration the best part of two years ago, Draghi has proved to be peerless in the art of verbal intervention. But even for him there is a law of diminishing returns which may require words to be backed up with action before long. 

from Breakingviews:

China’s state firm shakeup gets it only half right

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By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Private shareholders could bring discipline to China’s 150,000 or so state owned enterprises. There’s no question the companies, which generate a return on assets about half that of private sector rivals, need the help. Recent shake-ups at CITIC Group and Sinopec have set the ball rolling. But for real efficiency, SOEs need to pay market rates for debt as well as equity.

from The Great Debate:

Why the Obamacare fight never ends

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“I know every American isn't going to agree with this law,” President Barack Obama said about the Affordable Care Act at his April 17 news briefing, “but I think we can agree that it's well past time to move on.”

The Republican response? Same as General Anthony McAuliffe's reply when the German army demanded that U.S. forces surrender at the Battle of the Bulge during World War Two: “Nuts!”

from Martyn Herman:

Soccer-Liverpool seek to land knockout blow on Chelsea

LONDON, April 24 (Reuters) - Liverpool can eliminate one of their two rivals from the Premier League title race by beating Chelsea on Sunday and the way the dice is rolling for them they might even have one hand on the trophy by the end of the weekend.

If Brendan Rodgers's side overcome second-placed Chelsea at Anfield and notch a 12th consecutive league win it would knock Jose Mourinho's side out of the reckoning and should Manchester City then fail to beat Crystal Palace a little later a first title for 24 years would be almost assured.

from Counterparties:

A new wrinkle in activism

Hedge fund managers are getting back in the innovation game — or at least Bill Ackman is. Yesterday, Ackman announced that he and Valeant Pharmaceuticals were making a $50 billion hostile bid for Allergan, the maker of Botox. Ackman also announced that his hedge fund owns a 9.7% stake in Allergan. Allergan quickly did what the targets of hostile takeovers do and adopted a poison pill to keep any unapproved investor from owning more than 10% of its shares.

Steven Davidoff says the bid shows that activist investors are becoming “a ready arsenal of capital that can be used to aid hostile takeovers by corporations”. Valeant itself, Breakingviews’ Robert Cyran and Richard Beales say, “is essentially the creation of an activist hedge fund, ValueAct Capital, which set it on the path of serial deal-making”.

from Breakingviews:

Buffett loses his voice – and maybe some sway

By Jeffrey Goldfarb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Warren Buffett lost his voice and maybe some sway along with it. The Omaha billionaire said on Wednesday he didn’t vote against Coca-Cola’s controversial equity pay plan, even though he disagreed with it. Buffett explained that he feared his opposition might be misinterpreted as a lack of support for Chief Executive Muhtar Kent. That’s an odd message to convey to his legions of investment acolytes. It doesn’t, however, mean Coke shouldn’t hear what its largest owner is saying.

from The Human Impact:

Can a mother truly hate her own son?

One line in Bad Hair, which had its U.S. premiere at this year’s Tribeca Film Festival in New York, has made me uncomfortable for days.

“I don’t love you,” Junior, the nine-year-old protagonist of Venezuelan director Mariana Rondón’s movie, tells his mother in the emotionally charged scene.

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