Skip to main content

Opening Bell: 11.15.06

Sponsored by
US Airways says has made merger proposal to Delta Air Lines (AFX)
For years and years and years and years now, we've been reading stories about the coming consolidation in the civil aviation sector. We never bought it. Not only did none of the speculation ever come true, but it always seemed like the handiwork of lazy journalists and analysts that always see consolidation ahead in any industry they look at, particularly one with as many weak links as the airlines. But merging airlines is no easy task. There's a reason why it's rarely done. Integrating these complex systems is a challenge; another problem is dealing with pilot seniority, which can create a lot of headaches. Still, we might finally get one as US Airways had made a proposal to buy Delta once it comes out of Bankruptcy. Recognizing that Delta is a superior brand, the new company would be called Delta. Now, how many stories are we going to read over the coming days talking about how many more of these deals are likely to be in the works?
Mining group buys platinum producer (The Guardian)
Much more important than any merger in the domestic aviation market is a merger in the mining space! And not just any mining space, but the platinum mining space. The good stuff. South Africa's Lonmin will acquire AfriOre for $441m. AfriOre sits on some rich deposits, though its operations aren't currently active. And it looks like the platinum wars are just getting started. Lonmin itself has been the source of much takeover talk, and it's possible that this deal will only make it more lucrative, allowing a suitor to get a big chunk of the market in one fell swoop. Will it be another platinum miner, or will some international metals minor (perhaps some of the copper miners that had such a flurry of activity this summer) get into the act?
Deutsche Börse drops €9bn Euronext bid (Times Online)
It looks like the NYSE may be in the driver's seat now in its bid to acquire Euronext. The Deutsche Börse has dropped its offer for the exchange, citing the actions of Euronext's CEO and the share price, which has risen. In other words, they wanted to get it cheap, but they were outbid. Of course, NYSE is still going to have its hands full with European regulators, who would've liked to see a "European solution". Another interesting development is that several of London's largest banks are promising to launch their own exchange, to rival the LSE. It really doesn't look like the barriers to entry, to create a stock exchange, are all that high in Europe, which should give companies pause that are paying so much for established ones.
Halliburton's KBR Delays IPO After U.K. Shipyard Warning (WSJ)
It's the most anticipated IPO event of the season. The spinning of of Halliburton unit Kellog, Brown & Root. These are the guys who did the work in Iraq that will certainly be under investigation once the Dems take the committee chairs. And these are the guys who are listed as a defendant in just about every asbestos class-action lawsuit that we've seen, related to work done 20 years ago. So it's totally understandable why there'd be so much enthusiasm about this one. It's being delayed, but only by a day, due to what it's saying was a mix-up between it and the UK government over management to of a shipyard.

Execs meet with Bush (The Kancas City Star)
Auto industry leaders had their little meet & greet with President Bush yesterday, and everyone just assumed that they went to him looking for bailouts, a la Lee Iacoca. For shame, however did we get that idea? They insist they did not want bailout, but rather were just interested in having a dialogue on key issues of the day, like energy independence, the environment and rising healthcare costs. Quote of the day goes to Peter Morcici, an economics professor at the University of Maryland, who said, "The Big Three going to Washington with hat in hand is like a smoker complaining he has a cough. Quit smoking. GM, Ford and Chrysler need to make relevant products people want to buy and make them efficiently." Well put.
G.O.P. House Leaders Withdraw Vietnam Trade Bill (NYT)
We sort of thought that the big debates about free trade had ended back when Al Gore mopped the floor with Ross Perot during their appearance on Larry King. It was probably the only time that Al Gore mopped the floor with anyone, and since then, Republicans and Democrats alike have generally been singing the free trade gospel. Apparently there's some lingering concern about the fleecing of the middle class, or something like that. In the lame duck session of Congress, the House failed to approve a free trade bill with Vietnam; there were both Republicans and Democrats standing athwart the bill, with both parties accusing the other of deep-sixing it.
Microsoft ready to battle Google's Web domination (Reuters)
It used to be the other way around. Companies would try to assail the Microsoft fortress throwing everything it they could. Now it's Microsoft vs. the world, with the company hoping to gin up some momentum against dominant competitors. Yesterday, the company released its Zune, which ostensibly is competition for the iPod. We're not seeing it though, nor are any of the reviewers, who by and large have dismissed it. And once again, it's going after Google. We hear this every six months, that the company is finally ready to do battle against the search giant. Back in 2004, it launched its experimental advanced search engine, which, by our experience, seemed to have a hard time with understanding English. Expect no better.
Major Vonage holders holding off on step that would free them to sell shares (AP)
Has it been that long already? It seems like yesterday Vonage came public, and everyday there was another morsel of information confirming that the company was indeed screwed on crack. Now, here we are talking about the lockup expiration. But, looks like nobody's going to be dumping their stock anytime soon. The institutions with big Vonage holdings "swear to god" that they're not going to sell on the open market, and that they'll steel their resolve. They're trying to couch the move as a demonstration of confidence, that the stock has been unfairly battered. But it seems more likely that they know that without such an agreement, the selling would be too fast too furious.