5/07 Issue
The Wall Street Journal reports good news from Latin America where Juan Carlos Varela, the anti-corruption underdog, clinched Panama’s presidential election. Strike one for good government. The New York Times, however, strikes one against meddling French officials intent on scuttling G.E.’s acquisition of Alstom’s energy business.
That deal is just one example of booming M&A. According to the Economist, that boom can either be a good sign (businesses are making bold moves in a strengthening economy) or a bad sign (businesses can’t grow organically so they’re merging to create growth, minimizes taxes or cut other costs). Take your pick.
Pfizer is looking to reduce taxes through its proposed acquisition of AstraZeneca, which USA Today asserts provides a warning: “You know something is wrong when major U.S. companies are fleeing to Europe to pay less in taxes.”
The Financial Times notes that globalization is reaching a new stage. No longer is it confined to manufacturing and production. Knowledge intensive flows have now expanded to $12.6 trillion, accounting for half of all cross border flows.
In the U.S., states jockey to attract businesses. Though California recently lost the headquarters for Toyota and Occidental Petroleum to Texas, the Los Angeles Times observes that Golden State continues to create more jobs than almost any other state.
REITs are often thought of as real estate investments providing flexibility and diversification benefits. According to Real Estate Investment Today, they do much more. A recent study has shown that REITs help stabilize the commercial realty market by providing transparency and liquidity.
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To see the media’s takes on these and other developments from around the globe, you can browse Global News highlights below and also at http://www.irken.jp/gn/. Links to the original sources are provided above, but please note these are frequently updated. Links that were valid at publication may later be broken.
New York Times (May 6)
“French officials should not seek to block G.E. simply because it’s based in Connecticut.” The protectionist arguments being used to thwart the sale of Alstom’s energy business “can only discourage non-European businesses from investing in France, further damaging a sluggish economy that already suffers from a 10.4 percent unemployment rate.”
Tags: Alstom, Economy, Energy business, France, G.E., Investing, Officials, Protectionist, Unemployment
The Economist (May 3)
“After years in the doldrums, big mergers and acquisitions (M&A) are making a comeback. Optimists hope this is a sign of bosses daring to be bold because of improving economic prospects. Sceptics wonder if the managers are in fact doing deals to conceal a worrying lack of growth opportunities—or just cutting costs by merging with companies in kinder tax jurisdictions.”
Tags: Bold, Bosses, Comeback, Costs, Doldrums, Economic prospects, Growth, Jurisdictions, M&A, Managers, Opportunities, Tax
USA Today (May 2)
“You know something is wrong when major U.S. companies are fleeing to Europe to pay less in taxes.” If Pfizer succeeds with plans to move its tax domicile, its effective tax rate will drop from 27.5% to 20%. “The U.S. corporate rate of 35%, with an average of 4.1% added by states, is the highest in the world.”
Financial Times (May 2)
“First money and low-cost production jumped across borders, now it is creativity and services.” Knowledge intensive flows “are now worth a heady $12.6tn; to set this in context, this is half of all cross-border flows, and almost four-fifths the size of the US economy.” This new “globalisation does not just threaten western manufacturing jobs, but many service jobs too.”
Tags: Borders, Creativity, Globalisation, Jobs, Knowledge, Low-cost, Manufacturing, Money, Production, Service, Services, U.S.
Los Angeles Times (May 1)
California “continues to attract more manufacturers and create more jobs than almost any other. The numbers don’t lie.” Toyota and Occidental Petroleum both announced plans to move their headquarters from California to Texas. Nevertheless, California’s business environment remains vibrant given the state’s unique “ability to incubate new companies and tech innovators, putting its businesses in the vanguard of new industries.”
Tags: Business, California, Environment, Innovators, Jobs, Manufacturers, Occidental Petroleum, Texas, Toyota, Vanguard
Real Estate Investment Today (April Issue)
“REITs contribute to more resilient real estate markets and a more resilient financial system.” Sub-prime mortgages contributed to the residential property collapse, but REITs helped stabilize the commercial market. A recent study by researchers from the University of Wisconsin and the Bank for International Settlements found that REITs provide markets with much needed transparency and liquidity. It’s “clear that REITs provide real benefits for the broader commercial real estate industry, for investors and for our nation’s economy.”
Tags: BIS, Commercial, Economy, Financial system, Industry, Investors, Liquidity, Markets, Real estate, REITs, Residential property, Resilience, Sub-prime, Transparency, University of Wisconsin
