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Nov 8, 2011
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Citi risk measurement scheme warrants closer look

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

Walter Wriston, the vaunted former chairman of Citibank, famously said risk is a four-letter word. Vikram Pandit, chief executive of the larger successor organization, Citigroup, reckons it has nine letters: benchmark.

Nov 3, 2011
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P&G deal partner probe proves shorts aren’t nuts

By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.Skeptical investors who went nuts over Diamond Foods may not be so crazy after all. More than a third of the snack food company’s shares were out on loan in late September in anticipation of the company’s planned December purchase of the Pringles brand from Procter & Gamble. That’s indicative of interest from short sellers, who questioned Diamond’s accounting. Now, the company is undertaking an internal investigation, putting the $2.6 billion deal on hold.

Diamond’s expansion plans excited shareholders. Its soaring stock price, which hit an all-time high of over $92 six weeks ago, reflected a heady enterprise value of more than 14 times pro forma EBITDA, including Pringles, for the 12 months to July 31. But the odd timing of certain payments made to suppliers – big enough amounts of money to potentially make the company’s results look materially different – piqued the interest of the shorts and other observers, including Breakingviews.

Oct 25, 2011
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Rupert Murdoch’s sham governance on full display

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

Rupert Murdoch still gets a kick out of the “fair and balanced” slogan used by his Fox News channel. He had a good laugh about it only last week at News Corp’s annual shareholder meeting. The results of a vote conducted at that gathering, released Monday, show that everyone’s now equally in on the joke about the company’s shameful corporate governance as they are the conservative bias of his TV news operation.

Oct 6, 2011
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Del Monte settlement quantifies cost of conflicts

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

Wall Street just got a bill for its conflicts of interest problem — and Barclays is picking up the tab. The UK bank will surrender a big slug of the fees it earned in the $5.3 billion buyout of Del Monte as part of a legal settlement with the food company’s shareholders. M&A practitioners seem to have read the writing on the wall after a Delaware judge earlier condemned the practice of advising a seller while also financing the buyer. But when banks get spanked on the bottom line, the message resonates louder and clearer.

Sep 27, 2011
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P&G’s Pringles partner warrants careful taste test

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

What could be wrong with combining chips and nuts? Maybe a few things, in the case of Procter & Gamble’s complex $2.4 billion deal to offload its Pringles chips brand to snack purveyor Diamond Foods. As part of the tax-efficient transaction, the consumer giant wants investors to swap some of their stock for shares in Diamond. This might seem like a no-brainer given Diamond’s recent sparkle. Its share price has climbed more than fourfold since it went public in 2005, compared with the modest 12 percent gain for P&G over the same span.

Sep 19, 2011
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Wall Street’s merger math

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

The numbers just aren’t adding up on Wall Street. To support the M&A ambitions of their clients, investment bankers routinely claim the sum of a deal will be greater than its parts. Yet in the three years or so since JPMorgan, Bank of America and Barclays bought Bear Stearns, Merrill Lynch and the U.S. arm of Lehman Brothers, respectively, each has shed, not gained, market share. These results undermine Wall Street’s deal math.

Sep 17, 2011

Masters of synergies create few for themselves

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

By Jeffrey Goldfarb

NEW YORK (Reuters Breakingviews) – The numbers just aren’t adding up on Wall Street. To support the M&A ambitions of their clients, investment bankers routinely claim the sum of a deal will be greater than its parts.

Sep 6, 2011
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Rubenstein won’t easily snatch Schwarzman’s crown

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

It won’t be easy for David Rubenstein to snatch Steve Schwarzman’s private equity crown. Rubenstein’s firm, Carlyle Group, manages about $150 billion of assets, roughly the same as Blackstone. But Carlyle reaps considerably less of the steady fee income that comforts investors. That means its valuation when it goes public is likely to wind up well short of Blackstone’s.

Sep 1, 2011

U.S. bank boss ouster undermines cult of CEO

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

By Jeffrey Goldfarb

NEW YORK (Reuters Breakingviews) – Surprise changes at the top of a company don’t typically go down well in the market. Even worse are ones accompanied by mealy-mouthed excuses. Yet following the unexpected ouster of Bank of New York Mellon boss Robert Kelly, the bank became about $1 billion more valuable. So much for the cult of the chief executive.

Aug 25, 2011
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Bloomberg LP spares no expense on first big deal

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

Bloomberg LP is sparing no expense for its first big deal. New York Mayor Michael Bloomberg’s financial information company — a rival to Thomson Reuters, the parent company of Breakingviews — agreed to buy niche publisher BNA for about $1 billion cash. At 36 times last year’s earnings, no public company could reasonably compete. But the price reflects Bloomberg’s ardor to expand its influence and build a cushion against Wall Street.