Weekly Snapshot: 07/09/2017

Bailout of Banca Monte dei Paschi di Siena

  • Financial Times: “The green light for the Monte Paschi rescue comes less than a week after the government stepped in to give Intesa Sanpaolo, Italy’s largest and best-capitalised bank, €5bn in cash to buy the good assets of two failing banks in the Veneto region with an emergency decree. The cost to Italian taxpayers of the rescue could go as high as €17bn, the government said.”
  • Bloomberg: “In all, after the planned reimbursements for misselling bonds to retail investors, Monte Paschi will receive 8.1 billion euros of fresh equity. Once the process is complete, Italy will hold 70 percent of the bank.”

QVC acquires HSN

  • CNBC on the effort to combat online shopping: “The merger would result in the third-largest e-commerce site, behind only Amazon and Wal-Mart, while synergies could range anywhere from $70 billion to $110 billion, according to the CEO.”
  • Bloomberg on the deal’s timing: “Malone is known for his timing, and it was crucial in this instance. The terms announced Thursday wouldn’t have been satisfactory just two months ago. Since then, HSN got weaker, while QVC’s stock managed to mostly rebound following better-than-expected operating results for the first quarter. That put QVC in the position to strike.”

Huntsman’s bid for Clariant hits opposition

  • Activist funds Corvex and 40 North seek to block the merger: They contend the Clariant-Huntsman transaction lacks strategic rationale and undercuts Clariant’s strategy of becoming a pure-play specialty chemicals company.”
  • Bloomberg: “The naysayers are mostly on strong ground given the poor logic of the deal. The best that could be said for the merger is that it might smoke out counter-bids for either side. Analysts point to Evonik Industries AG and BASF SE as possible interlopers, assuming they’re not deterred by the small break fee.”

Other stories

  • Vantiv bids on Worldpay: “There are a couple of other niggling concerns. One is why JPMorgan decided not to bid. Another is that Vantiv Chief Executive Charles Drucker and his Worldpay peer, Philip Jansen, will jointly run the company. Such setups can be a recipe for conflicts and muddled visions. However, neither is as worrying as investors’ knee-jerk reaction to the deal.”
  • Volvo to stop making gas only cars by 2019: “Between 2019 and 2021, Volvo plans to roll out a suite of five electric cars – three of which will be Volvos and two others will be high-performance cars from its Polestar wing. The all-electric vehicles will compete directly with Tesla’s existing and future models.”
  • Ray Dalio on the Fed hike: “We are at a) the end of that nine-year era of continuous pressings down on interest rates and pushing out of money that created the liquidity-fueled moves in the economies and markets, and b) the beginning of the late-cycle phase of the business/short-term debt cycle, in which central bankers try to tighten at paces that are exactly right in order to keep growth and inflation neither too hot nor too cold.”
  • Another Bitcoin exchange was hacked: “The incident underscores the fact that it is not just investors and digital-currency enthusiasts who are excited by the current surge of interest in cryptocurrencies — criminals are also eyeing up businesses that hold bitcoin and its sister currencies, and no one can promise absolute security.”

Author: David Shahrestani

"I have the strength of a bear, that has the strength of TWO bears."

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