Breakingviews

Congratulations Google, you’re now a conglomerate

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.Congratulations Google, you’re now a conglomerate. U.S. and EU antitrust authorities have cleared the search firm’s $12.5 billion purchase of Motorola. Its foray into manufacturing phones and tablets might open new markets – or simply amount to a vital means of defending its core advertising business. Whatever the case, on Wall Street, diversification like this usually merits a valuation discount.

Sure, the purchase of Motorola helps protect Google’s intellectual property. The cellphone maker’s several thousand patents shore up the walls protecting Google’s Android operating system from software and hardware rivals alike. But the company has made it clear from the start that its purchase wasn’t only about intellectual property – it was also about making gadgets.

Kellogg rescues P&G from over-cleverness

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

“Half the cleverness, none of the risk” makes an apt cereal-box slogan for Procter & Gamble’s sale of Pringles to Corn Flakes-to-Froot Loops giant Kellogg. By offloading the chips business for $2.7 billion in cash, P&G swaps a complex structure that, while it would have saved on payments to the tax man, put the consumer giant’s corporate finance competencies to a severe test.

And what may be P&G’s loss looks like Kellogg’s gain. While the cereals group is plunking down 15 percent more in cash than Diamond Foods had originally agreed to pay in new stock, the accompanying cost savings more than justify the premium. In a nutshell, this is a reasonable outcome, not least because P&G emerges with a valuable lesson the rest of Corporate America would be wise to observe.

Alibaba and Yahoo could live unhappily ever after

By Wei Gu

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

Talks on Alibaba buying back Yahoo’s stake in the Chinese e-commerce giant seem to have faltered. Valuation, structure and financing appear to be the key roadblocks. With more strain added to the unhappy relationship, Yahoo and Alibaba need to rebuild trust before heading back to the negotiation table.

Steve Wynn comes up unlucky in business love, too

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

Steve Wynn is coming up unlucky in love again. This time it’s business, not personal. The casino magnate has already divorced the same woman twice, the second time coughing up a $1 billion stake in Wynn Resorts. Now, his decade-long financial union with pachinko king Kazuo Okada is also on the rocks.

Dreamworks’ China deal won’t be access all areas

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

Dreamworks may soon get an exclusive ticket to China’s closely guarded film industry. The U.S. studio is likely to announce a joint venture with China-based investors during Vice President Xi Jinping’s visit to California on Feb. 17, a person familiar with the situation has told Breakingviews. It should be a good deal for the creators of “Kung Fu Panda”, but does little to lower the Great Wall around film distribution in the People’s Republic.

Complexity caps allure of Yahoo’s Alibaba solution

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

Yahoo sounds closer to finding a solution for its long-running Alibaba problem. A mostly cash split-off promises a tax-efficient way for the troubled U.S. Internet firm to slash its stake in its Chinese rival. But the deal is getting so elaborate, it could dilute the benefits for Yahoo shareholders.

New Petrobras CEO needs to flex political muscle

By Kevin Allison and Christopher Swann

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

So much for the honeymoon in Rio. Maria das Graças Foster’s confirmation as the new chief executive of Brazil’s Petrobras on Thursday was followed almost immediately by a dismal set of fourth-quarter results. Foster, a company veteran, has her work cut out to get the state-controlled energy behemoth back on track. Petrobras’ biggest problems are more political than operational, and her engineering skills alone won’t solve them.

Pennsylvania sells out cheaply in fracking fight

By Christopher Swann

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

Pennsylvania is selling out cheaply in the fight against fracking. The Keystone State, the nucleus of national opposition to the deep-drilling technique, is poised to levy a gas tax, ostensibly to cover drilling damages. The charge may soften the hostility. But the levy is less than half that of other states, suggesting the industry still has the upper hand.

Thermostat spat puts old heat on new cool

By Reynolds Holding

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

A patent spat over thermostats is putting old heat on new cool. Honeywell this week accused Nest Labs of stealing its ideas – though some seem obvious. Whether that proves to be the case or not, the upstart outdid the old-line firm by making a temperature controller of Apple-like elegance.

Romney tax row may bite European private equity

By Quentin Webb

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

Mitt Romney’s low-tax private equity payouts caused a storm stateside. European buyout bosses are unlikely to run for high office. But, like the former Bain Capital boss fighting to clinch the Republican presidential nomination, they also cash in on “carried interest” schemes which usually avoid income tax. The system is due a re-think on both sides of the Atlantic.