November 23, 2009 Issue Posted November 11, 2009, 5:35PM EST

Executive Summary

null

Outside a Cadbury plant: The company keeps resisting kraft

null

Deal Mania in the Air

More evidence that the smart money senses a global economy on the mend: Takeover activity is humming. The big-daddy deal at present, of course, is Kraft Food's (KFT) Nov. 9, $16.4 billion hostile bid for Cadbury (CBY). The British sweets purveyor made a sour face, so Kraft has a month to win over shareholders. On the same day, Google (GOOG) said it was buying AdMob, a provider of mobile ad technologies, for $750 million in stock. Other action: French insurance giant AXA (AXA) and a partner offered $10.2 billion for all of AXA Asia Pacific, a partly-owned Australian unit—which promptly rejected the proposal. On Nov. 11, Hewlett-Packard (HPQ) said it's planning to buy networking-equipment maker 3Com (COMS) for $2.7 billion, including debt. The Wall Street Journal reported that Reynolds American (RAI) is near a deal to buy Niconovum, a Swedish maker of products to help smokers quit, and that Motorola (MOT) may sell its set-top-box unit. And all this may be just the beginning. Deutsche Bank (DB) analysts reckon next year could see a major M&A wave. Their reasoning? Capital markets are back on track, confidence is rising, and valuations remain way below pre-credit crunch levels.

—Edited by Harry Maurer & Cristina Linblad

An About-Face on E-Cars

While other automakers are stressing electric cars and hybrids, Chrysler is backing away. When the company was owned by Cerberus Capital Management, run by Robert Nardelli, and begging for bailout cash from the feds—it eventually got $12.5 billion—it pledged to build an array of electric vehicles and put 500,000 of them on the road by 2013. Then along came bankruptcy and a deal under which Fiat (FIATY) got 20% ownership in return for contributing small cars and clean diesel engines. On Nov. 4, when Fiat CEO Sergio Marchionne outlined plans to spend $23 billion on new models, electric cars were throttled back to a tiny portion of Chrysler's future sales as the company decided to put its cash behind cars that will sell in bigger numbers. In other auto news, General Motors Chairman Ed Whitacre contradicted his own management—and the Treasury Dept.—by saying that GM may not be ready for an IPO in 2010. GM also sent Nick Reilly, its international operations boss, to run its Opel unit until a permanent CEO can be found.

—Edited by Harry Maurer & Cristina Linblad

Priceline Flies High

Forget staycations—consumers are hitting the road again. They're just doing it on the cheap, which is fine with Priceline.com (PCLN). The online travel agency on Nov. 9 posted a tripling of third-quarter profits and a sunny outlook for the rest of the year; the next day its shares soared by 18% to a nine-year high. Despite the recession, a marketing campaign featuring William Shatner and the name-your-own-price service led to boffo bookings this summer.

—Edited by Harry Maurer & Cristina Linblad

Comcast's Conquest?

The cable goliath and General Electric (GE) appear to be nearing the finish line: A Comcast (CMCSA) deal for NBC Universal may be announced in coming days. Comcast and NBC owner GE have worked out a formula that values the network, its cable channels, Universal studio, and theme parks at $30 billion. Under the accord, Comcast would merge its own channels with NBC, owning 51% of the new company and kicking in as much as $6 billion. GE would hold the remaining 49% but would still need to acquire the 20% stake that French conglomerate Vivendi owns. Vivendi is thought to be ready to sell at the right price.

—Edited by Harry Maurer & Cristina Linblad

Dodd's Reform Plan

Senator Christopher Dodd (D-Conn.), head of the Banking Committee, staked out a tough position on Nov. 10 when he unveiled his 1,136-page financial reform package. It would combine banking regulation into a single new agency, stripping the Fed of some powers and handing oversight of "systemically risky" institutions to a panel of regulators. Other ideas, including derivatives reform and a consumer protection agency, resemble those in pending House legislation. The plan drew potshots from banks but little sniping from the GOP, suggesting cross-aisle palaver had preceded going public. Still, much is likely to change before the full Senate votes, as Dodd and his backers all but acknowledged.

See "Senator Dodd Unveils Bank-Reform Bill"

—Edited by Harry Maurer & Cristina Linblad

The Rally Continues

The dollar may be diving like a blue whale, but investors keep piling into U.S. stocks. The S&P 500 climbed 2.7% in the three days ended on Nov. 11, notching a 13-month high and raising its 2009 gain to 21.6%. Among the reasons: dandy profits at American companies and reassurances from Group of 20 finance ministers and central bankers that they'll keep the stimulus spigot open until the recovery is secured. Some 80% of S&P 500 companies that have released earnings this quarter topped expectations—a record since at least 1993, according to Bloomberg. On top of that, nonfarm productivity jumped by an annualized 9.5% in the third quarter, while unit labor costs fell 5.2%. Then there's the downside: U.S. joblessness hit 10.2% in October. And the dollar continued its descent, sliding since March by 15.7% vs. a basket of other major currencies.

—Edited by Harry Maurer & Cristina Linblad

Reader Discussion

 

BW Mall - Sponsored Links

Buy a link now!