Takeover talk buoys Foster's stock (Reuters)
As the copper wars take a breather (at least for a day or so), it looks like the alcohol industry will step up to the stage. Shares of Australia's Foster's ("Australian for...") rose amid speculation that it would be taken out. The company also has major wine operations, though most of its growth is coming from beer. Should the company be taken out, the acquirer will likely smash the company's certificate of stock against its forehead in a show of manliness. Also, in the world of fratty drinkin', major tequila-maker Casa Herradura will be acquired by Brown-Forman, the maker of Jack Daniels and Southern Comfort (and here we thought those two brands were competitors). Will the new company heavily promote mixing whiskey and tequila, in new drinks that take foul to new heights?
Cruise Makes Financing Deal With Investors (LA Times)
The Tom Cruise fiasco has given the world a rare glimpse into the world of Hollywood finance. Few people seem to grasp the nature of the studio system, or recognize that a studio is essentially just a boutique bank, which specializes in film finance. It's also engendered a good discussion about the value (or perceived value) of Hollywood stars. Turns out that the ability of a big star to meaningfully impact a film's box office haul is pretty limited. Most stars have no statistically significant effect on the films they star in. It would seem like there's a major arbitrage opportunity for some real banks -- like the ones we have in New York -- to invest in high-quality films with little spent on big stars. There's no guarantee that they'll be hits, but they should do better, by virtue of a lower cost basis. Also, it's been revealed that John Mark Karr was hoping that Johnny Depp would portray him in a film. Guess he didn't read the New York Times yesterday.
Mining Boom Stirs Wave of Mergers and Talk of a Slump (NYT)
With all of the merger activity in the mining industry, some analysts are expressing concern about undue price optimism and the amounts being paid for assets. Though a lot of people are talking about a 'supercycle', some decade-long (or multi-decade) bull market, historically, these only happen during times of world war. The reversion to the mean is a very real phenomenon. Meanwhile, the Detroit automakers are now anticipating gas to remain in the $3-$4 range for several years, which has to be a pretty big red flag for energy bulls.
Biggest-Ever Emissions Trades: $1 Billion Deal Benefits Beijing (WSJ)
It's been awhile since we've heard much about carbon emissions trading, the brilliant scheme to get companies to buy and sell pollution rights on the market, so as to reduce global warming. Time was, when the concept was first being taken for a spin, some analysts actually expected the market to be larger than the NYMEX crude oil exchange. Of course, that was in the late 90's, back when oil was a third of what it is now, and Clinton was President, so some people thought the Kyoto Protocol might have actually come into force. Of course, the market in burning gas remains much bigger than the market in not burning gas. However, the World Bank has brokered an agreement among 11 Chinese companies to begin trading emission rights, in an exchange expected to be worth $1 billion. However, it's not clear what kind of penalties they'll face, should they choose not to abide.
‘Painter of Light’ Accused of Pulling Wool over Investors’ Eyes (Dealbook)
We're not too big on personal finance here at Dealbreaker; we'll leave that to Suze Orman. But here's a free tip: don't invest your money with people who go by names like the 'Painter of Light'. If you do, you'll probably get fleeced, or at least get a return that's not substantially above risk-free, let alone an S&P 500 index fund. Apparently, this so-called 'Painter of Light' convinced people to invest in and open up art galleries that only sold his own work, while using his Christian faith to bring in the big bucks among the believers. However, as poorly thought out as these investments may be, it's not clear that there's much illegal going on. Of course, the FBI is investigating anyway, because business failure is almost a crime.
Cyber Security Specialist Named to Lead In-Q-Tel (Washington Post)
Perhaps it doesn't make much sense for the CIA to have its own venture capital firm. The company just appointed its latest chief -- it's fourth in less than a year. The new boss Chistopher Darby is an expert in cyber security, so perhaps the group's investments will be along those lines.
The Economy's Fear Factor (BusinessWeek)
BusinessWeek looks at the possible effects that more terrorism would have on the economy, and the likelihood that the GOP will play the fear card in the upcoming election. Apparently, according to surveys of business people, the fear of terrorism remains a top economic concern, something that the Republicans may look to exploit. Of course, as talk of terrorism permeates, that may only increase uncertainty and consternation in the economy. And just from a purely numerical standpoint, to justify certain actions in the name of the war on terror requires one to ignore the staggering -- and very real -- costs of certain actions, such as, say, the war in Iraq. Surely, there's a play on the old "there's nothing to fear except..." as it applies to economices.
China lifts creditors' status in new bankruptcy law (MarketWatch)
In some ways, Communist China is still sort of communist. For example, existing bankruptcy laws give top priority to the firm's employees, in terms of having at the defunct company's assets. The new law, much to the chagrin of those who probably saw the old policy as enlightened, gives priority to creditors, which brings China in line with most of the capitalist world. The law took 12 years to draft, and will go into effect June 1, 2007.