Monday, December 28, 2009
Monday, December 21, 2009
LSE buys Turquoise
The London Stock Exchange (LSE) announced this morning that it will take control of rival trading platform Turquoise.
The LSE will merge the platform with its own Baikal operation, to create "a new pan-European trading venture".
The merged entity will be 60 per cent owned by LSE and 40 per cent by existing Turquoise shareholders and will continue to trade under the Turquoise name.
Xavier Rolet, chief executive of the LSE, said: "Turquoise's existing pan-European footprint is a strong proposition and together with the introduction of new trading technology and a neutral structure, we believe it is now well positioned to be an agent of change and to capture a healthy slice of the market's growth potential."
The exchange will incur exceptional costs of up to £20m in the current financial year, comprising the write-off of legacy technology costs, and other restructuring and integration costs, including contract exit costs.
Turquoise was set up by a consortium of investment banks following deregulation, and was an attempt to force traditional exchanges such as the LSE to lower trading fees. It began operating around 18 months ago.
But the banks were no longer willing to fund the unprofitable platform after being hit hard by the recession. The deal this week is being seen by some in the City as a political move by the LSE to make peace with the banks.
Christopher Morris, director of consultancy Aequitas Associates, told the Financial Times: “It is rebuilding goodwill with the banking community that will be the most valuable asset.”
The LSE will fully fund the cash needs of the new venture for the first two years and says it wants to bring the business to sustainable profitability.
David Lester, the LSE's head of IT, has been tipped as the head of the new joint venture, which is expected to be run as an independent operation.
The LSE will merge the platform with its own Baikal operation, to create "a new pan-European trading venture".
The merged entity will be 60 per cent owned by LSE and 40 per cent by existing Turquoise shareholders and will continue to trade under the Turquoise name.
Xavier Rolet, chief executive of the LSE, said: "Turquoise's existing pan-European footprint is a strong proposition and together with the introduction of new trading technology and a neutral structure, we believe it is now well positioned to be an agent of change and to capture a healthy slice of the market's growth potential."
The exchange will incur exceptional costs of up to £20m in the current financial year, comprising the write-off of legacy technology costs, and other restructuring and integration costs, including contract exit costs.
Turquoise was set up by a consortium of investment banks following deregulation, and was an attempt to force traditional exchanges such as the LSE to lower trading fees. It began operating around 18 months ago.
But the banks were no longer willing to fund the unprofitable platform after being hit hard by the recession. The deal this week is being seen by some in the City as a political move by the LSE to make peace with the banks.
Christopher Morris, director of consultancy Aequitas Associates, told the Financial Times: “It is rebuilding goodwill with the banking community that will be the most valuable asset.”
The LSE will fully fund the cash needs of the new venture for the first two years and says it wants to bring the business to sustainable profitability.
David Lester, the LSE's head of IT, has been tipped as the head of the new joint venture, which is expected to be run as an independent operation.
Tuesday, December 15, 2009
Buffett: My Best Deals Are Ones I Didn't Make
Investment icon Warren Buffett says his firm Berkshire Hathaway may not have made out like a bandit during the financial crisis, but it did OK.
"I bought my first stock in 1942, and this roller coaster surpassed anything that I've seen," he told The Wall Street Journal.
"We didn't do all the smartest things. We didn't do anything really dumb."
Buffett says his smartest decisions during the crisis may have been the deals he turned down. Those included opportunities to invest in Bear Stearns, Lehman Brothers, AIG, Freddie Mac and Wachovia.
All those firms failed or received government bailouts.
"I don't think Buffett gets enough credit for all the pitches he doesn't swing at," Paul Howard, an analyst at Janney Montgomery Scott, told The Journal. "And he gets a lot of pitches."
The two main deals Buffett did make, investing $5 billion in Goldman Sachs and $3 billion in General Electric, were made on terms very favorable to Berkshire.
He does regret making all his investments before early March when the stock market bottomed. "I didn't maximize the opportunities offered by the chaos. But in the end, it worked out OK," Buffett said.
Many analysts are bullish about Berkshire’s latest deal – to buy Burlington Northern Santa Fe for $34 billion.
"(Buffett is) buying at the trough; things aren't going to get much worse. He's getting in at a good time," Art Hatfield, an analyst at Morgan Keegan, told the Associated Press.
"I bought my first stock in 1942, and this roller coaster surpassed anything that I've seen," he told The Wall Street Journal.
"We didn't do all the smartest things. We didn't do anything really dumb."
Buffett says his smartest decisions during the crisis may have been the deals he turned down. Those included opportunities to invest in Bear Stearns, Lehman Brothers, AIG, Freddie Mac and Wachovia.
All those firms failed or received government bailouts.
"I don't think Buffett gets enough credit for all the pitches he doesn't swing at," Paul Howard, an analyst at Janney Montgomery Scott, told The Journal. "And he gets a lot of pitches."
The two main deals Buffett did make, investing $5 billion in Goldman Sachs and $3 billion in General Electric, were made on terms very favorable to Berkshire.
He does regret making all his investments before early March when the stock market bottomed. "I didn't maximize the opportunities offered by the chaos. But in the end, it worked out OK," Buffett said.
Many analysts are bullish about Berkshire’s latest deal – to buy Burlington Northern Santa Fe for $34 billion.
"(Buffett is) buying at the trough; things aren't going to get much worse. He's getting in at a good time," Art Hatfield, an analyst at Morgan Keegan, told the Associated Press.
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