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Express Scripts Tops CVS With $26 Billion Caremark Bid (Dealbook)
Prescription drug benefits manager Express Scripts has launched a rival bid for Caremark, toping CVS' proposition. Between cash and stock, the offer clocks in at 15% higher than what CVS was offering. Caremark is twice as big as Express Scripts, so the deal, as you might imagine is highly leveraged. Regardless of who turns out to be the big loser in this war, Express or CVS, we can only imagine that there will be more consolidation in the space, particularly as Wal-Mart singlehandedly seeks to reduce margins for the whole lot.
Study Finds Outside Directors Also Got Backdated Options (NYT)
We're not surprised one iota that outside directors also received backdated options. According to the Harvard professor who performed the study, the findings don't have a big financial impact, but they are important from a governance perspective. Maybe. Probably the most important thing we can say -- and we could've said it already -- is that those who worship at the altar of outside directors, as if their mere presence were some sort of panacea, can cut it out with the genuflecting.
Stock Strategists Raise Alarms With Unanimous Call for Rally (Bloomberg)
It's official, optimism is the new black, and pessimism is the new mauve. Everywhere you look, people are calling for a 2007 rally. That includes newsletter writers, chief strategists, and even an options-based index, that measures investor sentiment. Of course, as hurricane forecasters know well, unanimity and recent results don't guarantee anything going forward. And the pessimists -- what few there are left -- are equally sure that this is a an easy contrarian call, so down we go. According to the piece, the last time Wall St. strategists were this much in agreement was at the start of 2001, which was, well, not a good year.
Tate & Lyle sees higher margins, but shares dip (Reuters)
With all the enthusiasm over Tate & Lyle, over the last few years, you'd think they had invented some sort of alcohol-free alcohol. But no, it's only the leader in sugar-free sugar, aka Splenda. Those tiny packs of yellow stuff, that now go in the dish that Sweet & Low used to occupy have been a major boon for the English company; it's apparently convinced heavy Americans to try it in their coffee, and stuffy Brits to put it in their tea. The company sees continued good times for itself, though the stock's corrected on some over-optimism.
BHP Says Court Ruling on Ore Rail Threatens Growth (Bloomberg)
In Australia, the phrase 'net neutrality' means something a little different. Here it has to do with telecom companies keeping their lines open to services from third parties, like Vonage. In Australia, it's not about communications, it's about railways. Does iron ore giant BHP Billiton have to open up its own railway lines (in Western Australia) to rival producers? An initial court has rules that it does, that shutting its rival out constitutes an unlawful practice. Appeals are expected.
Tax Leads Americans Abroad to Renounce U.S. (NYT)
Increasingly, Americans abroad are renouncing their US citizenship, allowing them to avoid paying taxes in the US. This may seem like a dramatic gesture, but really, what good is citizenship? You can vote? Big deal, one vote. It matters more if you're young and coming to the US to start your career, but if you're old, and taxes are eating into your capital gains, and going to take a slice out of your estate, handing in the passport seems like a good investment.
Retailers Mark Down, But Keep Hopes Up For Christmas Lift (WSJ)
We're now in the third quarter of the Christmas shopping season. After an initial flurry of activity, the consumers is now holding on the ball more, walking slowly past half court, and doing a lot more passing before finally taking a shot. In other words, the consumer has stopped spending as much. This will only lead to more price cuts, so expect holiday sales to be marred by weak volumes and low prices, not exactly the retailer's preferred combo. Plus, from what we hear anecdotally, plenty of people are waiting until after the holidays to buy their stuff, a strategy that seems to be growing in popularity, and social acceptability. Hopefully, they'll be able to make up any shortfall in resales by making some hefty change on unredeemed gift cards.
Wal-Mart Workers in China Set Up Communist Party Branch (WSJ)
Wal-Mart will fight tooth and nail to keep unions out of its US shops, but in China, the company has less, um, self determination. It's already been forced to admit allow workers to organize as a union, and now employees at Wal-Mart are setting up branches of the communist party. We can't imagine that Sam Walton ever imagined a day like this, though we doubt he would've minded much, as long as it didn't interfere with business. Someone really needs to make a T-shirt though, combining Wal-Mart with some Chinese communist party imagery.