GM's Allison Hits a Financing Snag (WSJ)
So, like, money really isn't cheap anymore. Yet another plan, this time the pending LBO of GM's Allison Transmission unit, has hid a snag, as the buyer has been delayed in getting financing. At the moment, the deal is just delayed, and it's expected that it will go through without too much of a delay. But it's yet another sign that it's no longer so easy to just walk into the Money Store, er, money store, and walk out with a fat loan. And people wonder why shares of Blackstone aren't doing so hot.
Expedia slashes buyback plan over debt concerns (Bloomberg)
And in more news, the cost of debt matters to buybacks too. Yesterday, online travel site Expedia announced that it would suspend share buyback plans, citing the rising cost of debt, which it had been using to fund the buybacks. Seeing as buybacks have been a driver of at least some of this bull market, this might be taken as bad news. There's a plus side though -- buybacks aren't always a good thing. In fact, buybacks near the top of a bull market are a total waste of money. So if we're anywhere near the market's highs, then the debt market is sending an important signal to slow down.
UAW talks start with GM, Ford (AP)
Finally, the union and the automakers are set to bury the hatchet. After years and years of a contentious relationship, which has seen both sides accuse the other of undermining, the parties are finally set to break bread, speak honestly and resolve their differences. It's about time. The US automakers have enough to be worried without having to think about labor issues.
Oil prices slide on Opec remarks (BBC)
Oil buyers will receive a temporary, moderate reprieve, as an OPEC minister has indicated that the cartel may be inclined to increase production, if only by a smidgen. But, when your thirsty a smidgen is better than nothing. Heck, even if the extra oil were a mirage or an illusion, it might be temporarily satisfactory. The minister is quotes as saying that a fair price for a barrel might be between $60-$65, although he added that current supplies should be adequate.
American Standard to sell bath, kitchen lines (MarketWatch)
Ah, the fall of another iconic brand into the clutches of private equity. American Standard, which is just about the only brand name associated with toilets, will be selling its bath and kitchen lines to private equity firm Bain. Following the sale, it will reduce its debt, buy back stock and concentrate on its Trane division, which does air conditioning. Probably only a matter of time before that gets taken out as well.
Expand, contract, repeat (Oligopoly Watch)
As with the aforementioned American Standard, it would seem that we're heading into "pare back" mode. Instead of looking to add units, products and SKUs, there are more stories about companies looking to shed non-performing units, focusing on "core competencies", stuff like that. There are exceptions though. There's tons of M&A in software right now, as tech companies look to be able to offer everything under the sun. And the major beverage makers are still on their quest to find the ultimate non-carbonated beverage, even though it's non-sugar beverages that will be the real killer. So, perhaps to early to make broad generalizations.
News-DJ: Major Bancroft Member Opposes Offer; Decision By Friday; Sales Team Likes It (PaidContent)
So yeah, those jerks the Bancrofts are going to make us wait until the end of the week until we get a decision. It would still seem that the deal is a go, but there are some cracks. There are "key members" who oppose the deal still, and with a few more turncoats, nothing is certain. Meanwhile, those in charge of Dow Jones sales are said to be bullish on the deal, as they believe Murdoch will do a fresh push to bring in more business, perhaps related to some sort of Fox Business tie-in.
Demand Grows for All-Business-Class Flights (NYT)
Supposedly, there's increasing demand for all-business-class flights, i.e. no coach. Both established firms and startup airlines are catering to this market, and they claim that bookings are strong. Our prediction; it ain't gonna last. Sure, in theory, they can offer a slightly cheaper price than a typical business ticket and this may attract some fliers. But isn't part of the thrill of business class or first class getting to sit down first and watching all of the plebes file past you with looks of jealousy? After all, if everyone's business class, isn't that just saying that everyone is flying coach?