Medtronic-Covidien deal is marriage of convenience

June 16, 2014

The $42.9 bln takeover includes a near-$10 bln premium that exceeds the estimated value of synergies. Stents and sutures aren’t an obvious fit, and moving from Minneapolis to Dublin won’t cut Medtronic’s tax bill. Freeing up overseas cash is too shallow a reason to tie the knot.

Priceline’s OpenTable buy is costly appetizer

June 13, 2014

The $64 bln online travel outfit is paying a 46 pct premium – $2.6 bln in cash – to snag the restaurant reservation site. Each helps small businesses and customers find each other. But the tariff only makes sense if Priceline can plug many more of both into OpenTable worldwide.

Review: “House of Debt” diagnosis beats remedies

June 13, 2014

Atif Mian and Amir Sufi make a compelling case that excess consumer debt caused the U.S. Great Recession’s severity, but their mortgage bailout proposal would make matters worse. Their shared value mortgages might help, but old-fashioned tight money is a simpler and better way.

Brazil’s companies need soccer team’s global clout

June 12, 2014

Itaú and 3G could lead the attack with AB InBev in midfield and Petrobras in goal. But the world’s most glamorous soccer nation, and seventh-largest economy, has few global corporate stars. In a World Cup for business, Brazil would struggle to get past the group stage.

Harvard could get smarter about its endowment

June 12, 2014

Jane Mendillo, who ran the Ivy League university’s $33 bln portfolio for six years, is leaving. Predecessor Mohamed El-Erian is partly to blame for crisis losses, but Harvard overpaid for mediocre returns. Less of both Yale model investing and Wall Street pay may be in order.

Siemens needs more than Mitsubishi to win Alstom

June 11, 2014

The German engineer has teamed up with Japan’s Mitsubishi Heavy Industries in its potential bid for Alstom. A joint approach lowers antitrust risk and cash outflows for Siemens. But trumping GE’s rival $15.4 bln proposal and job commitments will still be difficult.

China hits bump on road to financial acceptance

June 11, 2014

MSCI has decided not to include mainland shares in its benchmark emerging market index. Recent stock market reforms may help it fare better in the next reshuffle. Yet China’s capital flows remain far from free. That will hinder its efforts to join the global financial community.

Euronext IPO will be a tough sell

June 10, 2014

The European exchanges group reckons it’s worth up to 1.8 bln euros. The pitch relies on a 5 pct revenue growth target. With turnover declining since 2011, that’s optimistic. Anchor investors have a vested interest in backing the float. For other buyers, it’s a leap of faith.

Investors cheer for Brazil World Cup rout

June 10, 2014

Each dip in Dilma Rousseff’s poll numbers bumps the Bovespa. Markets are hoping her experimental economic policies will come to an end at the October ballot. With labor tight and millions lifted from poverty, however, it will take crushing defeat on the pitch for that to happen.

M&A shows symptoms of overheating

June 9, 2014

Global deal volume is up 63 pct this year, and Monday’s mergers hint at toppiness. Merck is justifying a 239 pct premium with optimistic revenue synergies. Tyson Foods is overpaying in its $8.5 bln sausage deal. And investors are still boosting buyers’ shares. They may regret it.