Reuters blog archive

from Breakingviews:

Woolworths pays too-steep ransom in Aussie battle

By Una Galani

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

Woolworths is paying too steep a ransom in its retail battle. The South African group is buying billionaire Solomon Lew’s stake in an Australian unit in an attempt to secure the billionaire’s support in its A$2.1 billion ($2 billion) takeover of upmarket department store chain David Jones. The side deal raises the effective takeover premium – and piles pressure on Woolworths to realise synergies.

The South African group is offering A$213 million for the 12.12 percent of Australian clothing retailer Country Road that it doesn’t already own. Lew has held most of those shares since the late 1990s, effectively blocking Woolworths from taking full control of the unit. The South African group’s offer is conditional on the success of its larger takeover of David Jones, in which Lew recently acquired a near-10 percent stake. Though the billionaire hasn’t declared his hand, Woolworths’ move seems designed to persuade him to support the David Jones deal.

Lew’s victory over his old foe is stunning. Woolworths’ offer – for a business it already controls – values Country Road at 2.5 times its mid-January shares price. Before that, the stock had barely moved in over a decade. The lack of liquidity may distort Country Road’s true value, and there may be some extra benefit to Woolworths from taking full control. But even then it’s hard to justify the offer on a standalone basis.

from Breakingviews:

Australia’s mistimed austerity could boomerang

By Andy Mukherjee 

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

Australians are bracing themselves for what is being billed as the toughest government budget in 20 years. But untimely austerity could boomerang on the country’s shaky economy.

from Breakingviews:

Macquarie shows Wall St rivals a mirror image

By Peter Thal Larsen

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

Attention, Wall Street investment banks. One of your rivals has just reported a 49 percent jump in full-year earnings, fuelled by unfashionable businesses like trading commodities and asset finance. It earns a double-digit return on equity with lower-than-average leverage. Oh, and its shares are up 50 percent in the past twelve months.

from MacroScope:

A glimmer of hope in Kiev

A glimmer of hope in Ukraine?

Let’s not count our chickens after 75 people were killed over the past two days but President Viktor Yanukovich’s people are saying an agreement on resolving the crisis has been reached at all-night talks involving the president, opposition leaders and three visiting European Union ministers.
A deal is due to be signed at 1000 GMT apparently although no details are as yet forthcoming. There has been no word from the EU ministers or the opposition so far.

Even if the violence subsides and some sort of political agreement is reached (a huge if), there is potential financial chaos to deal with despite Russia’s only partially delivered pledge of $15 billion to bail its neighbour out.

from Photographers' Blog:

From the White House to the Mad House

Bali, Indonesia

By Jason Reed

Just a couple of months ago I was swirling in a perpetual bubble, a privileged circle of photographers whose job it is to photograph one man – the President of the United States.

I did it for ten years and mostly enjoyed every minute. Over that period of time there comes a predictable familiarity to the role, in which you can pre-write all your captions hours and sometimes days in advance and plan your coverage down to the last detail. It is a safe and cosy existence. Due to the nature of the subject, it needs to be.

from Breakingviews:

Privatisations a bright spot for gloomy Aussie M&A

By Una Galani

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

Privatisation is a bright spot in what looks to be an otherwise dreary year for Australian dealmakers. The country is set for a flurry of activity as cash-constrained local governments prepare to flog existing infrastructure assets in order to fund new projects and create jobs.

from Left field:

England cricket selectors have got it all wrong in the Ashes

It’s not only the on-field performances that let England down in the Ashes. The selectors too got it wrong starting from the initial announcement of the squad to the playing XI that was chosen for the third Test. The team management must also share the blame for going 3-0 down and losing the urn.

They made their first mistake in denying paceman Graham Onions a place in the touring party, a move that then came under harsh criticism in the English media. He has long been considered the second best swing bowler in England after James Anderson and his omission especially after a good season with Durham was baffling if not downright foolish. Instead, Onions is now in South Africa, playing for the Dolphins.

from Global Investing:

Watanabes shop for Brazilian real, Mexican peso

Are Mr and Mrs Watanabe preparing to return to emerging markets in a big way?

Mom and pop Japanese investors, collectively been dubbed the Watanabes, last month snapped up a large volume of uridashi bonds (bonds in foreign currencies marketed to small-time Japanese investors),  and sales of Brazilian real uridashi rose last month to the highest since July 2010, Barclays analysts say, citing official data.

Just to remind ourselves, the Watanabes have made a name for themselves as canny players of the interest rate arbitrage between the yen and various high-yield currencies. The real was a red-hot favourite and their frantic uridashi purchases in 2007 and 2009-2011 was partly behind Brazil's decision to slap curbs on incoming capital. Their ardour has cooled in the past two years but the trade is far from dead.

from Breakingviews:

Qantas needs help to escape financial nosedive

By Una Galani

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

Qantas needs help to escape from its financial nosedive. The Australia carrier’s shares plunged 11 percent after it warned that it will report a pre-tax loss of up to A$300 million ($225 million) in the first six months of the year. Part of the problem is that the airline is a political hybrid, restricted from raising foreign capital but without the support openly state-backed rivals enjoy.

from Breakingviews:

Westfield shops for premium with $28 bln carve-up

By Una Galani

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

Westfield is shopping for a premium with its A$30.3 billion ($28 billion) carve-up. Just three years after its last big reshuffle, the shopping mall giant is separating assets in Australia and New Zealand from outlets in the United States and Europe. The cleaner structure may allow Westfield to command a higher valuation.