Monday Morning: The Urge to Merge
In my eyes, indisposed
In disguises no one knows
Hides the face, lies the snake
The sun in my disgrace— excerpt, Black Hole Sun by Soundgarden
Looks like this week is all about mergers. Enjoy this simulation on replay several times while listening to Soundgarden’s Black Hole Sun while we dig in.
Roll Call
- Yahoo’s vulnerability brings all the nasty suitors to the yard (MarketWatch) — If Daily Mail wins, Yahoo will be one massive tabloid, and Tumblr will become a cesspool. Bidding’s open until next Monday; what other potential buyers may emerge this week?
- Big names in hotels to join after shareholders approve Marriott offer for Starwood Hotels (UPI) — The vote came last Friday after Chinese insurance holding group Anbang withdrew from bidding.
- Merger of beer producers SABMiller and A-B InBev still in holding pattern (Milwaukee Business Journal) — The deal is languishing for approval by South Africa’s Competition Commission. Part of SABMiller was once South African Brewing.
- UK balks at Hutchins and Telefonica tie up (Reuters) — Cousins across the pond better watch out; this proposed merger, even if shot down by regulators, portends another telecom marriage ahead. With UK’s Competition and Markets Authority recommending a spin-off of either Three Mobile or O2 mobile network business in order to approve the deal, a divestment of one of these may happen anyhow.
The Yahoo and Hutchins-Telefonica deals bear scrutiny for their potential for mass surveillance depending on how the proposals play out. Yahoo could end up operating under UK laws, and some part(s) of either Hutchins or Telefonica could end up with a non-UK or non-EU partner.
All of these proposed mergers were in the works before the Panama Papers were released; none them appear to be motivated solely by tax reduction, but instead by economies of scale and weak market conditions. It’d be nice if executives of all companies raking in profits realized that failing to pay their hourly workers well has a direct impact on overall market demand. Their businesses could retain autonomy instead of spending time and money on M&A they could spend on employees’ wages.
Speaking of Panama Papers: revelations still shaping policy and politics
- U.S. Treasury still working on tax rules to reduce tax avoidance and evasion by offshoring (Bloomberg) — Many large holding company structures use intra-group loans to move money out of the U.S. The new rules which may limit these moves may affect not only U.S. corporations but foreign corporations with subsidiaries in the U.S.
- UK’s PM David Cameron facing heat about tax avoidance strategies used by his family (Scotsman) — Strategies included a tax-free gift of 200,000 pounds to Cameron from his mother. He is supposed to appear before Parliament for questioning.
- Mossack Fonseca still getting hacked due to poor security response (The Register) — At what point do we ask if MossFon is really just a honeypot, given continued insufficient security?
Just for fun: Rockets!
If you didn’t watch SpaceX’s Falcon 9 launch on Friday, you really ought to make some time to do so for entertainment purposes. The first stage of the rocket returned successfully for reused, nailing a landing on a drone ship — a DRONE SHIP AT SEA. I missed the fact the landing pad was a drone vessel when I watched the first attempts. It’s a really narrow thing, landing on a speck of a pad in the ocean which is pushed around a bit by ocean currents in spite of the drone ship’s programming and/or remote control. (I would love to know who named the drone ship, ‘Of Course I Still Love You’ and why…)
What’s similarly remarkable is the SpaceX team — their excitement is off the map, rather like watching a K-12 FIRST LEGO robotics competition than an aeronautics business at work. Note in the video the team’s reaction just seconds (about 27:30) to the first stage return landing; it’s as if they KNEW they had it nailed before it happened. Wouldn’t you love to know just how they knew?
Also for grins: compare SpaceX’s landing on Friday (start at 23:48 into video) to competitor Blue Origin’s recent rocket return. Blue Origin is owned by Amazon’s Jeff Bezos; the return is so smooth and slick, but it’s in the west Texas desert where potential disruption of the landing has been minimized. Important to keep in mind that SpaceX actually delivered a payload after reaching orbit, where Blue Origin is still limited to sub-orbit elevation.
With that our week’s been launched — let’s go!
I think Cameron’s tax-avoidance strategy, as to the inheritance, was a good idea. He received £200K from his mother. The payments will only become liable to inheritance tax of up to 40% if his mother dies within seven years of handing over the money. There is no suggestion that they have broken any rules. Nothing wrong with that; the law has a seven-year look-back period (I think the US period is only three years, so in that regard UK law is stricter). If you don’t need the money, why not give it to your kids now, instead of doling it out a bit here and there like they are still untrustworthy children?
Don’t forget the Alaska/Virgin America merger.
And don’t forget the Clare Randall/Fraser — Jamie Fraser merger in Outlander, which seems to have worked better for her than her first tie-up, with Frank Randall. Those were the days when you had minimal information on which to make decisions, you went ahead and made them anyway, and things just played out for you. Simpler–and can we say worse? In these days of rockets and smartphones and robotics, people don’t seem to do much better with themselves.
If Yahoo were to simply disappear, would the world be a lesser place? (Other than the loss of xxx thousands of jobs, of course.) I mean, who needs it? (I know, I know, they say that about me, too.)
Re: “Of Course I Still Love You”, Elon Musk is naming his drone ships after ships from Iain Banks’s Culture series – http://www.tor.com/2015/01/23/elon-musk-iain-m-banks-just-read-the-instructions/ See Wikipedia for a great list of them: https://en.wikipedia.org/wiki/List_of_spacecraft_in_the_Culture_series
As far as the team knowing that they were gonna stick the landing: as just an armchair space enthusiast, I also had a feeling it was going to be successful right before the stage landed. It just looked like more of a lock compared to the previous attempts.
Bardi (11:30) — Thanks, but I had to stop somewhere. There were several more. I may yet tackle the hospital merger(s) because of risk management issues.
bloopie2 (11:28) — wrt Cameron: he can’t have it both ways. He can’t denounce tax shelters while failing to disclose he benefits from them while he obstructs policy and legislation against them. This is simple corruption. I don’t even give a rat’s whisker if the tax shelters are legal; he’s corrupt if he’s misrepresenting his position on them.
wrt Claire/Jamie: so last season, that merger. LOL You need to catch up and watch for the next merger, the one that sets Frank’s future existence in motion.
Congenital Optimist (12:48) — Thanks for that background, very informative. Phew…was worried it was about Musk’s soon-to-be-ex-wife. * awkward *