Breakingviews

Is everything sacred in Canada?

By Robert Cyran

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

Is everything sacred in Canada? At first it was a hole in the ground. Then it was the stock exchange and a DIY chain. This week, regulators blocked two more big deals, including a $5.2 billion bid for Progress Energy by Petronas of Malaysia. Taken as a whole, these actions signal the market for corporate control in Canada – especially when it comes to foreign buyers – is effectively closed.

Softbank-Sprint tie-up gets bad signal from market

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

By John Foley

Softbank chief executive Masayoshi Son has received a strong signal from investors. They wiped $6.2 billion in value off the Japanese telecoms operator’s market value on Oct. 12 after it confirmed it was in talks with U.S. rival Sprint Nextel. That’s three times more than U.S. investors added to Sprint’s worth the previous day. No wonder: a takeover would be a financial stretch for Softbank, and could preclude other deals closer to home.

Buyout risks laid bare by old strippers

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

Naked facts about leveraged buyouts have been laid bare by some old strippers. Cerberus and Sun Capital are part of a bigger group that has agreed to pay $166 million to settle creditor claims that they pillaged and ruined Mervyn’s, a retailer they acquired from Target in 2004 for $1.25 billion. It’s a reminder of the buyout industry’s asset-stripping reputation and shows why investors can’t afford to let their guards down.

Wal-Mart’s banking twist curls through many cracks

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

Wal-Mart and American Express have teamed up for a useful kind of financial innovation. The Bluebird card they unveiled on Monday targets Americans lacking access to many banking services. It may also tempt other customers with a model that’s neither credit nor typical debit. But with deposits uninsured, regulators will have to watch closely.

France’s silly stake obsession could kill BAE-EADS

By Pierre Briançon

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

When EADS and BAE went to the French government with their merger project back in July, they were greeted “as if by a Parisian waiter smoking on the pavement, who makes sure patrons understand they’re not welcomed”, says one investment banker involved in the talks. Not that Paris was opposed to the deal. But it made for an unexpectedly important decision to take at a time when the new socialist government’s energy was focused elsewhere.

FT sale would defy today’s financial times

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

A sale of the FT would surely defy the financial times the newspaper documents. The impending departure of Marjorie Scardino as chief executive of Pearson, parent company of the Financial Times, makes a change of ownership more likely. Her replacement said on Wednesday the publication is a “highly valued” asset. But the paper’s status could make it more valuable to someone else.

The FT is a sexier business than history textbooks. Even so, the newspaper and related parts of the FT Group, including Mergermarket and a half stake in the publisher of the Economist, accounted for only 6 percent of Pearson’s adjusted operating profit last year. That makes it dispensable.

Nixing China’s oil bid may create Canada discount

By Christopher Swann

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

Canada is at risk of slapping a national discount on its resources sector. Investors reckon there’s a roughly one-in-four chance that the country’s politicians will block a $15.1 billion offer by China’s CNOOC for local energy company Nexen. Takeovers by state-owned companies raise tricky questions. But hoisting the national flag over a company of little strategic importance risks further alienating outside investors.

Franco-German politics first hurdle for BAE/EADS

By Pierre Briançon

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

France and Germany must clear the air before the merger between BAE and EADS can proceed. Their uneasy alliance over the Airbus maker’s shareholding and governance cannot continue as is – its end is even a prerequisite for the merger. But Paris and Berlin remain obsessed by “parity”, the sacrosanct notion that their position in the company should be identical. Franco-German parity could be preserved in a larger group, as long as political passions are kept under control.

BSkyB should start to build in new bid premium

By Chris Hughes

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

BSkyB shares should start to reflect the chance of a second bid from News Corp. Ofcom, the UK media watchdog, has confirmed that Rupert Murdoch’s media group is a suitable lead shareholder in the satellite broadcaster despite the phone-hacking scandal in News Corp’s UK newspaper business. The clarification removes a potential obstacle to it taking full control of the business.

Key ingredient missing for M&A revival

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

Cheap money. Tick. Stable equity markets. Tick. Revenue pressure. Tick. Ideal conditions for a boom in mergers and acquisitions, surely? Spirits seem to be stirring in Europe, of all places, with BAE’s attempted union with defence peer EADS and Glencore’s heated pursuit of fellow miner Xstrata, while August generated a handful of multi-billion dollar U.S. deals. But not all the ingredients are in place to cook up a deal feast.

Financial conditions are certainly propitious for companies to take on debt and buy equity. Real policy interest rates are negative and shares are cheap enough that many companies offer cashflow yields higher than the interest rate on debt financing. As yet, though, the equity of choice for companies has been their own. Buybacks are buoyant, while global M&A volumes are down 17 percent year-to-date, including falls of 28 percent in the United States and 15 percent in Europe, according to Thomson Reuters data.