U.S. Editor, Commentary
Rob's Feed
Nov 23, 2010
via Breakingviews

Investors rightly bypassing C3POs for IPOs

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

Conventional wisdom dictates that investors have poor memories: they can be duped every few years with variations on the same financial trick. Refreshingly, the U.S. market for initial public offerings may be proving an exception. In what’s shaping up as the year of the see-through public offering — or C3PO for short — a record number of companies look set to abort market debuts as investors wise up.

Nov 18, 2010
via Breakingviews

Fed misses a transparency trick with stress tests

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

The newly powerful Federal Reserve may have missed a trick. The U.S. central bank, charged under the Dodd-Frank reform bill with broad oversight of the banking system, is asking the 19 biggest American financial institutions to submit to a series of stress tests. That’s a good thing. The trouble is the regulator plans to keep the results and the criteria used in the tests private.

Nov 12, 2010
via Breakingviews

Print is dead — long live old media

The electronic word represents the financial future of news, whether delivered by email, iPads or whatever platform comes next. But in terms of galvanizing public opinion and setting the broader agenda, nothing yet is replacing the power of old media, spearheaded by the printed word. That’s why deals like the merger of The Daily Beast, a cutting edge website, with old-school magazine Newsweek shouldn’t be dismissed as the work of old fogeys nostalgic for newsprint.

Observers of that deal, announced on Friday, could be forgiven for that misconception. After all, Sidney Harman — the hi-fi magnate who paid $1 for Newsweek — is 92. The Daily Beast’s owner, Barry Diller, was born during World War Two and the site’s founder and editor-in-chief, 56-year-old Tina Brown, long ago reached the pinnacles of U.S. print journalism, heading Vanity Fair and The New Yorker.

Nov 10, 2010
via Breakingviews

When small-time banking pays off big-time

Who wants to be an American community banker? It doesn’t sound like an especially appealing profession these days. After all, scores of local lenders are failing every week — more than 143 so far this year including four last week. Regulatory red tape is on the rise. And all those “too big to fail” institutions bailed out by the government have gotten their mojo back and are gunning for small-bank customers and depositors.

But the success of one executive, John Kanas, may be sufficient to make small-time banking as attractive as the hedge fund business. Kanas is the chief executive, chairman and president of BankUnited, the 70-branch Miami Lakes, Florida, financial institution that he — along with a Who’s Who of private equity hotshots — bought on the cheap from the Federal Deposit Insurance Corp last year.

Nov 4, 2010
via Breakingviews

Canada may have shot itself in the foot on Potash

Canada may have just shot itself in the foot. The Ottawa government said BHP’s $39 billion takeover bid for Potash Corp provided no net benefit to the nation. There’s some basis for this in the specific instance. But what the decision fails to reflect is the long-term damage such a politicized rejection does to Canada’s ability to attract capital.

While BHP still has 30 days to plead its case, the decision by the conservative government of Stephen Harper will be regarded as a major victory in Saskatchewan. The provincial government opposed the takeover of Potash, an asset that it used to own. It clearly marshaled some persuasive arguments for its resistance, though Minister of Industry Tony Clement said he was prohibited from sharing them.

Oct 29, 2010
via Breakingviews

Potash looks like Cadbury, without the chocolate

Not much binds fertilizer and chocolate. But Potash Corp’s battle against mega-miner BHP’s hostile takeover bears a striking resemblance to the one British candy-bar maker Cadbury unsuccessfully waged against Kraft Foods a year ago. The similarities include a lack of competing bids, lots of political Sturm und Drang and antsy shareholders. Potash shareholders would be wise to consider how the Cadbury situation played out.

Like BHP, Kraft took its first offer for Cadbury directly to shareholders. Cadbury rejected the bid and arbitrageurs lifted the shares above the price on the table. The usual M&A defensive dance then kicked off, with Cadbury arguing its performance warranted a higher valuation, while at the same time searching for rival bidders.

Oct 25, 2010
via Breakingviews

BankUnited IPO shouldn’t embarrass Sheila Bair

At first blush, the expected IPO of BankUnited looks designed to leave Sheila Bair red-faced. The chairman of the Federal Deposit Insurance Corp sold the Florida bank, with $13 billion of assets, to a group of private equity investors in May 2009 for a song. Any profit they make will sound indecent next to the FDIC’s projected losses on the deal.

But Bair needn’t be embarrassed. As one of the first big rescue operations of the crisis, the BankUnited deal piqued investor interest for banks. That arguably helped reduce overall losses to the insurance fund, whose ultimate backstop is the American taxpayer.

Oct 11, 2010
via Breakingviews

Drunk, dirty golfer

After a round of golf with his Titleist clubs, a guy pops into the clubhouse for a Maker’s Mark neat before rinsing off under a Moen showerhead. That’s about the closest Fortune Brands comes to synergies. No wonder the conglomerate makes such a tempting target for an activist investor.

Shareholders won’t be alone rooting for Bill Ackman, boss of the Pershing Square Capital Management hedge fund, who revealed an 11 percent stake last week, to break Fortune up. Diageo, the biggest booze business in the world, may one day toast him. The company has long wanted to own a major bourbon brand. Fortune has two: Maker’s Mark and Jim Beam.

Oct 8, 2010
via Breakingviews

TPG’s Russian adventure not as mad as it may look

TPG’s public travails in Russia are enough to scare away other private equity firms from the country entirely. David Bonderman’s shop is embroiled in a nasty battle for control of Saint Petersburg hypermarket chain Lenta. For a $110 million investment, it might seem a case study in why Russia is too much trouble. But the risks may just be worth it.

The fight between TPG and American businessman August Meyer, who owns 41 percent of Lenta, erupted last month when Jan Dunning, the CEO Meyer tried to depose in July, showed up at Lenta headquarters with armed guards to reclaim his office. Fisticuffs broke out and police detained 20 people.

Oct 6, 2010
via Breakingviews

GE shareholders get a little too deal-happy again

General Electric’s shareholders seem curiously overjoyed to see the conglomerate back in shopping mode. They added nearly $4 billion to GE’s market cap on Wednesday, when the company splashed out $3 billion on an energy infrastructure business, confirmed its interest in a British maker of oil pipes, and snapped up a package of some of Citigroup’s more questionable loans. It’s a change from years on the back foot selling assets. But the celebration looks overdone.

GE, under chief executive Jeff Immelt, has overspent on takeovers in the past, and it’s hard to get a handle on whether or not it is bringing newfound discipline to its mergers and acquisitions machine. That should matter to shareholders. The fallout from past missteps, overlaid with the financial crisis, has cost GE’s owners some $250 billion in lost market value over the past three years — almost the exact equivalent of Apple’s entire market cap.

    • About Rob

      "Rob Cox helped establish Breakingviews in 2000 in London. From 2004 he spearheaded the firm's expansion in the United States and edited its American edition, including the daily Breakingviews columns in the New York Times and Wall Street Journal. Rob has worked as a financial journalist in London, Milan, New York, Washington, Chicago and Tokyo. Rob graduated from Columbia University’s Journalism School and the University of Vermont. Follow Rob on Twitter @rob1cox"
    • Follow Rob