M&A: A new bottleneck; Dealmaking is growing more complex, with companies needing to win approval from regulators in up to 100 countries

August 27, 2013 8:12 pm

M&A: A new bottleneck

By Anousha Sakoui and David Gelles

Dealmaking is growing more complex, with companies needing to win approval from regulators in up to 100 countries

Hands clasped tightly, Warren Buffett and Wang Yang posed for the classic picture portrait, framed against a backdrop of a Chinese mountain scene. Few foreign dignitaries, let alone businesspeople, make it into the Zhongnanhai leadership compound next to Beijing’s Forbidden City. It is a mark of Mr Buffett’sinternational influence that China’s vice-premier welcomed him there in mid-May. It was only the fourth visit the 82-year-old chairman and chief executive of Berkshire Hathaway had made to Beijing. The conversation with Mr Wang covered not only the billionaire’s view of China but also the future of one of America’s most recognisable brands. One reason for the visit, people familiar with the agenda said, was to help secure China’s support for the $28bn bid for Heinz, the ketchup maker that Mr Buffett had announced he was backing earlier this year. Read more of this post

Kickstarter Lures Startups Seeking Guinea Pigs Over Cash

Kickstarter Lures Startups Seeking Guinea Pigs Over Cash

Most entrepreneurs go to Kickstarter Inc. seeking money to turn an idea into a viable product. Already flush with cash, Alex Gizis looked to the crowdfunding site in search of enthusiastic testers. Gizis’s technology startup, Connectify Inc., raised capital in 2011 from a strategic investor to develop technology that improves wireless-Web connections. Gizis then needed to figure out whether anyone would buy a product that he had based on the breakthrough. That’s where crowdfunding came in.

Read more of this post

Keep clients in the dark at your own peril; Advisers should be warning clients about rising rates

Take Five: Keep clients in the dark at your own peril, Robert Isbitts says

Advisers should be warning clients about rising rates, he contends

By Jeff Benjamin

Aug 27, 2013 @ 12:01 am (Updated 9:36 am) EST

As the Federal Reserve prepares to start dialing down its five-year-long quantitative-easing program, interest rates are fully expected to start climbing, which should be an issue of major focus for financial advisers. But, Robert Isbitts, founder and chief investment strategist at Sungarden Investment Research, thinks that too many in the advice business are ignoring the impact of rising rates, or worse, missing the point entirely. “There is a herd mentality among advisers that the clients don’t care to know the dangers because the adviser has their back, he said. “If that’s the case then why does every portfolio I see from an investor seeking to change advisers have bond funds and individual bonds up and down the monthly statement?” Read more of this post

JPMorgan woes deepen as US demands $6bn penalty

August 27, 2013 7:23 pm

JPMorgan woes deepen as US demands $6bn penalty

By Kara Scannell and Tom Braithwaite in New York

US authorities are demanding JPMorgan Chase pay more than $6bn to settle allegations it mis-sold securities to government-backed mortgage companies in the run-up to the financial crisis, according to people familiar with the discussions. The bank is resisting the payment, which would be its single biggest penalty in a catalogue of expensive run-ins with US authorities and one of the largest post-crisis settlements by any bank, these people said. Read more of this post

High time to abandon the spurious case for a high-speed railway; The UK project is using bogus modelling and sham consultation

August 27, 2013 4:48 pm

High time to abandon the spurious case for a high-speed railway

By John Kay

The UK project is using bogus modelling and sham consultation

More and more people have beenexpressing doubts about Britain’sHigh Speed 2 project, which would build superfast railway links from London to the three largest conurbations in the rest of the UK – Birmingham, Leeds and Manchester – by 2033. I have been struggling through the arguments. They are as follows, in increasing order of strength. First, since other European nations have lots of high-speed connections, Britain should spend £40bn doing the same. This observation does not merit a response. Read more of this post

Geneva Mansions Sell at Discount as Tax Scares Expats

Geneva Mansions Sell at Discount as Tax Scares Expats

Real estate broker Alexander Koch de Gooreynd relayed a difficult message to a client last June: the 39.5 million Swiss-franc ($43 million) asking price for his eight-bedroom lakefront villa in Geneva was too high. The 8,600 square-foot (800 square-meter) home with yacht mooring, wine cellar and kennels in Collonge-Bellerive, where Saudi Arabia’s King Fahd built a summer palace in the 1970s, had been on the market for nine months. The seller took his advice and the house sold for 31.5 million francs in December. Read more of this post

Europe’s Single Bank Rule Book Falls Apart as North Races Ahead

Europe’s Single Bank Rule Book Falls Apart as North Races Ahead

The goal of a single rule book for Europe’s banks is splintering even before it’s implemented as northern countries move ahead with tougher requirements to ward off the next boom-to-bust cycle. Sweden’s too-big-to-fail banks, which already face stricter capital rules than their competitors elsewhere, may be told to hold even larger reserves, Financial Markets Minister Peter Norman said yesterday. In Denmark, Business Minister Henrik Sass Larsen said he can’t wait for southern Europe to regulate its systemically important financial institutions. He backs the swift passage of national capital laws to curb bank risks. Read more of this post

EMs suffer the unintended consequences of QE; Hot money flows made it easy to put off structural reforms

August 27, 2013 2:56 pm

EMs suffer the unintended consequences of QE

By John Plender

Hot money flows made it easy to put off structural reforms

Turmoil in the emerging markets prompts an uncomfortable thought. Has the Federal Reserve’s quantitative easing programme done more to damage emerging markets than to boost the US recovery? It would be ironic indeed if the chief impact of the Fed’s unconventional measures turned out in hindsight to have been outside the US. Maybe the implication is a little harsh. We cannot be certain where the US economy would be if the Fed’s asset purchasing programmes had not taken place, but I suspect the recovery would have been more feeble or non-existent without this central bank activism, even if the impact of more recent purchases has been minimal. Its chief effect was to offset deleveraging that would otherwise have caused deflation. What we know for sure, though, is that interest rate repression in the US was designed to increase risk appetite and in this the Fed has been outstandingly successful. A notable consequence was a huge flow of hot money from the US into emerging markets. Read more of this post

Currency Spikes at 4 P.M. in London Provide Rigging Clues

Currency Spikes at 4 P.M. in London Provide Rigging Clues

In the space of 20 minutes on the last Friday in June, the value of the U.S. dollar jumped 0.57 percent against its Canadian counterpart, the biggest move in a month. Within an hour, two-thirds of that gain had melted away. The same pattern — a sudden surge minutes before 4 p.m. in London on the last trading day of the month, followed by a quick reversal — occurred 31 percent of the time across 14 currency pairs over two years, according to data compiled by Bloomberg. For the most frequently traded pairs, such as euro-dollar, it happened about half the time, the data show. Read more of this post

Central bankers have given up on fixing global finance

August 27, 2013 8:55 pm

Central bankers have given up on fixing global finance

By Robin Harding

We desperately need to regain our appetite for a new kind of financial system, says Robin Harding

The world is doomed to an endless cycle of bubble, financial crisis and currency collapse. Get used to it. At least, that is what the world’s central bankers – who gathered in all their wonky majesty last week for the Federal Reserve Bank of Kansas City’s annual conference in Jackson Hole, Wyoming – seem to expect. All their discussion of the international financial system was marked by a fatalist acceptance of the status quo. Despite the success of unconventional monetary policy and recent big upgrades to financial regulation, we still have no way to tackle imbalances in the global economy, and that means new crises in the future. Read more of this post

Bank CEO Admits To Using Bailout Money To Buy A Luxury Condo In Florida

Bank CEO Admits To Using Bailout Money To Buy A Luxury Condo In Florida

JULIA LA ROCHE AUG. 27, 2013, 3:19 PM 14,030 25

Darryl Layne Woods, the former CEO of a Missouri bank, admitted in court yesterday to using financial crisis bailout funds to purchase a luxury waterfront condo in Florida, Dealbook’s Peter Lattman reports. In November 2008, Woods, 48, who was the head of Mainstreet Bank and the bank’s holding company Calvert Financial Corporation, applied for TARP money on behalf of his bank, a press release states. Read more of this post

Activist investment is no mere niche; All shareholders and managers need to act as stewards

August 27, 2013 7:08 pm

Activist investment is no mere niche

All shareholders and managers need to act as stewards

The listed company is one of the great inventions of the 19th century. When James Cash Penney floated his department stores business on the New York Stock Exchange in 1927, he joined a generation of entrepreneurs whose grand visions might never have been realised had the public markets not existed to provide capital on a matching scale. The fortunes of the company he left behind are not all that is at stake in the struggle now unfolding inside its boardroom. It is being seen as a test of whether activist investors, who take stakes in public companies and expect a say in how they are run, can breathe new life into what some say has become a moribund corporate form. Read more of this post

Tighter regulations on undue cross-affiliate deals to ignite backlash in Korea

2013.08.28 11:32:51

The South Korean government decided to regulate unjust transactions among units of conglomerates that benefit families who own them. The Fair Trade Commission (FTC) is mulling targeting subsidiaries where conglomerates’ owner or his/her families have a 20 percent or more stake. The percentage is lower than the previously known 30 percent, suggesting more companies will be put under scrutiny. Consequently, it is expected to trigger backlash from businesses. A revision to the “monopoly and fair trade act,” which has incorporated such regulation, was approved during a regular session of the National Assembly on July 2, and the government will soon have a public feedback period, said senior government officials Tuesday. The revised legislation added a new provision which prohibits providing fraudulent profits to conglomerate owner or his/her families. Under the current law, companies can be punished for intra-subsidiary transactions only when the deals involve trading goods or services at a price or in quantity far more favorable than market conditions, or an act of ‘competition restriction.’  But the revised law bypasses the requirement to prove the “competition restriction” in penalizing any intra-subsidiary transaction from which conglomerate owners’ families earned unfair gains at the expense of hurting companies or shareholders.

Tepco Faces 132 Olympic Pools Worth of Radioactive Water

Tepco Faces 132 Olympic Pools Worth of Radioactive Water

Tokyo Electric Power Co. (9501) has accumulated the largest pool of radioactive water in the history of nuclear accidents. The utility must now decide what to do with it: dump in the ocean, evaporate into the air, or both. The more than 330,000 metric tons of water with varying levels of toxicity is stored in pits, basements and hundreds of tanks at the wrecked Fukushima nuclear plant. The government said this week it will take a bigger role in staunching the toxic outflow that’s grown to 40 times the volume accumulated in the atomic disaster at Three Mile Island in the U.S. Read more of this post

Indonesia’s Investment Stature Under Siege, Further Pain Seen; Rupiah slide hits Indonesian manufacturers at worst possible time

Indonesia’s Investment Stature Under Siege, Further Pain Seen

By Rieka Rahadiana on 9:05 am August 28, 2013.
From a tumbling currency to a crippling current-account shortfall, slowing economic growth, high inflation and retreating investors, Indonesia’s stature as emerging-market superstar is under siege. The immediate prospects look forbidding. Measures imposed by the government and central bank on Friday are no panacea for a near-record current-account deficit that has torpedoed the rupiah currency and spooked foreign investors who own nearly a third of its government debt. Read more of this post

50 Tempe Producers Halt Production in Bogor as Soybean Price Hikes Take Toll

50 Tempe Producers Halt Production in Bogor as Soybean Price Hikes Take Toll

By Vento Saudale on 6:26 pm August 27, 2013.
A man slices bars of tempe in a kiosk selling fried tempe in Bandung in this May 20, 2013 file photo. Soaring soybean prices in Indonesia have forced at least 50 tempe and tofu factories in Bogor to cease production. (JG Photo/Rezza Estily)

Bogor, West Java. Soaring domestic prices have taken a toll on the local soybean industry, with at least 50 tempe and tofu factories in the West Java town of Bogor alone recently forced to put their businesses on hold. Kasmono, 45, a tempe producer from Kedungbadak village in Bogor, said soybean prices had increased from around Rp 7,000 (64 cents) per kilograms two weeks ago to Rp 9,100 per kilogram on Tuesday. “Demand for tempe in the market hasn’t changed, both in terms of quality and prices. But soybean prices have been continually up,” Kasmono said. “I’m confused [as to what to do].” Read more of this post

Rupee collapse confounds India Inc

Updated: Wednesday August 28, 2013 MYT 12:41:05 PM

Rupee collapse confounds India Inc

MUMBAI: Indian companies such as Whirlpool of India Ltd say they can’t plan more than a couple of months out as a fast-falling rupee currency drives up the cost of imports, forcing them to raise prices even as consumer spending crumbles. The timing is particularly tough for consumer companies that were counting on India’s September-to-December holiday season to spur sales. Read more of this post

Record Gold in India Seen Hurting Jewelry Demand as Rupee Slumps

Record Gold in India Seen Hurting Jewelry Demand as Rupee Slumps

Gold advanced to a record in India after the nation’s currency extended a plunge to an all-time low, threatening jewelry demand during the main festival season in the world’s largest consumer. The contract for delivery in October surged as much as 3.3 percent to 32,933 rupees per 10 grams ($1,555.96 an ounce) on the Multi Commodity Exchange of India Ltd. (MCX) in Mumbai today. Futures have rallied 33 percent since reaching a two-year low in June as the rupee tumbled about 10 percent, more than the 14 percent gain in bullion priced in dollars. Read more of this post