Colourful opportunists are characters from the M&A world’s myth of combat. Here, acquisitions – and not only the hostile ones – follow weeks of hand-to-hand skirmishing, first between bullish chief executives and their more cautious boards, then between the company and its investors, and finally between the merging groups. This tale and its romantic corollary, the myth of true love – clashing armies, or blushing brides – are the stories on which the media thrive.
Mark Williams’ piece in the FT arguing that the New York Federal Reserve should not have permitted MF Global to be a primary dealer in US government bonds raises the question of how it happened.
Mr Williams explains why MF Global, headed until last week by Jon Corzine, former chairman and chief executive of Goldman Sachs, was a dubious candidate for this official seal of approval:
Once upon a time, there was an emperor who had been thrown out of the kingdom of New Jersey and was seeking another place to rule. Corzine, for that was his name, opened his wardrobe at home one day and spotted some clothes glimmering at the back.
By Ben Fenton
In an extended Vanity Fair piece that people who know the Murdoch family say is “horrifying in its level of detail” and “strikingly accurate in most respects”, Sarah Ellison has laid out how the phone hacking scandal at one of News Corp’s UK newspapers derailed dynastic plans for the media group.
One element of a long history – the claim that the four eldest Murdoch siblings had discussed the “succession” to their father as chairman and CEO with a “family counsellor” or psychologist – stood out, both for being hard to picture and for what it says about how little other shareholders views appear to enter into the Murdoch family considerations on succession planning. (Rupert Murdoch and the elder four of his six children control 38 per cent of voting shares, but own only 12 per cent of the total equity).
I have two immediate reactions to the shock announcement that António Horta-Osório is temporarily stepping aside as chief executive of Lloyds Banking Group because of stress. One is frivolous, one serious:
1) His predecessor – the eerily impassive Eric Daniels – must have the constitution of an ox, given that he led the big UK bank through the credit crunch, a controversial merger with HBOS and the 2008 government recapitalisation. (Mr Daniels is a smoker, which I suppose may have helped calm his nerves).
2) The rarity with which top executives admit to suffering stress must mean boards are underestimating the occurrence of stress-related illness at the top – with potentially dire consequences.
Ed Crooks’ fascinating piece in the FT today on the prospect of the US achieving energy independence by exploiting its oil and gas reserves in new ways makes me wonder if it will suffer from the “commodity curse”.
The syndrome of oil-rich countries in the Middle East and Africa having fragile political institutions and oligarch-style rule has never appeared to be a problem for the US until now. As the article notes, the US problem has been different – that it depends on those countries for its energy.
A parallel might be “Dutch disease” – the term coined by The Economist for the troubles faced by the Netherlands in the 1970s when it discovered large reserves of offshore natural gas. The rise in its currency made its manufacturing and other export sectors uncompetitive.