BUSINESS NEWS
02 Jul 08. Capital Group, a Los Angeles-based global investment manager which shuns publicity, has more than doubled its stake in Finmeccanica, the Italian defence and aeronautics group, to become the largest non-state shareholder. Finmeccanica said yesterday it had been informed by Consob, the Italian stock market regulator, that Capital Research and Management, part of the Capital Group, had increased its stake to more than 5 per cent from 2.1 per cent. The Italian state holds just under 34 per cent in Finmeccanica, which has a market capitalisation of about €7bn ($11bn). Finmeccanica shares closed 1.67 per cent down at €16.39 yesterday, in line with the Milan market. Finmeccanica shares have fallen from more than €21 since it announced in May its intention to acquire DRS Technologies, a US defence electronics contractor, for $5.2bn. “We don’t discuss our holdings,” Capital Group said when asked to comment on the purchase. The investment manager, founded in 1931, manages $1,250bn in assets as well as $250bn for global institutions, including pension funds and government agencies. Capital Group has earned the tag “secretive” because it does not advertise, but sells its funds through advisers. It says it bases its investment decisions on bottom-up research and believes in a long-term approach. Portfolio managers do not know what their colleagues are buying in the same fund, leading to diverse portfolios. Finmeccanica is gaining recognition in the US as supplier of the presidential helicopter, a military cargo plane, and the carbon-composite shell of Boeing’s 787 Dreamliner. Its acquisition of DRS Technologies is awaiting congressional approval. Finmeccanica has said that following a proposed €1.4bn rights issue to help fund the DRS purchase the Italian state would retain a stake of at least 30 per cent. Analysts have expressed concern that Finmeccanica is paying too much for DRS. The stake-building by the Capital Group could be seen by the market as a long-term vote of confidence in the Italian company which is also expanding in Russia and the Middle East. (Source: FT.com)
30 Jun 08. Sweden reacted with relief to the news that France Telecom had walked away from its bid for TeliaSonera – the offer had been seen as insultingly low and had been rebuffed. But there was also an uncomfortable realisation that a willing buyer for the telecoms group had been shown the door. The government’s proposed sale of its stake in TeliaSonera has been conducted in the shadow of the initial public offering of shares in the company in 2000, and Monday’s relief can be traced to this troubled past. The shares were sold at SEK85 each and about 1m Swedes out of a population of 9m participated. The shares then crashed when the tech bubble burst, prompting the criticism that the government had cashed in at the public’s expense. With this hanging over his head, Mats Odell, minister for financial markets, negotiated with France Telecom knowing that agreeing to a low price risked serious consequences for the flagging popularity of Sweden’s alliance government ahead of elections in 2010. But Swedes are deeply pragmatic in matters of business and there was deep mystification that a willing buyer for an asset that was for sale had been allowed to walk out of the showroom. (Source: FT.com)
30 Jun 08. Groucho Marx would have quipped that investors should never buy a stock someone else is trying to sell. This is especially true when families put their businesses on the block. Four months ago, Sweden’s Wallenberg family sold VW its 31 per cent block of voting shares in truck producer Scania. The German carmaker paid SKr200 per share – equivalent to a torquey 18 times next year’s earnings. With Scania now trading at SKr84, the Wallenbergs timed their exit to perfection. The share prices of compatriot Volvo and Germany’s MAN, also 29 per cent owned by VW, have also hit the skids in recent months. It was not meant to happen like this. The th