Posts Tagged ‘consolidation’

All Eyes On McCann

Friday, March 12th, 2010

After an agonizing descent, UBS pins all its brokerage hopes on Robert McCann. But only for so long…

  • Thrust into a toxic environment teeming with huge credit losses and allegations of illicit banking practices, many industry insiders believe that McCann, the man tasked with the job of salvaging UBS’s debased U.S. brokerage unit, has a short amount of time to accomplish the tremendous task at hand.
  • Industry executives believe that the magnitude of the meltdown will force UBS to sell its U.S. brokerage division, while others argue that it should be cut out of UBS and rebranded.
  • McCann, former leader of Merrill Lynch’s renowned “Thundering Herd” of brokers, left Merrill Lynch while Bank of America was in the process of acquiring the firm and is said to be a capable leader and intelligent man.

Facts & Fiugres

  • In 2008 and 2009, UBS revealed an astonishing $52 billion in credit losses, and was forced by regulators to redeem $22 billion in auction-rate securities (cash-like investments that become untradeable when markets seize up).
  • Last summer, U.S. authorities accused UBS bankers of helping rich Americans hide money in Switzerland.
  • UBS customers withdrew 20 billion Swiss francs in 2009, while the bank retained only 737 billion francs in client assets by the end of the year.
  • About 1,100 brokers left the bank in 2009, leaving it with approximately 7,000 brokers on staff.

Best Quote

“The problem is not whether he can do it, but can he do it quickly enough to keep people in Zurich happy.” – Brad Hintz, Analyst at Sanford C. Bernstein

Coke Buys Coke’s North American Bottling Operations.

Tuesday, March 9th, 2010

In an effort to improve its business model and boost efficacy, Coke takes over bottling its beverages.

  • Coca-Cola Co. will now control the operations of its largest North American bottler, Coca Cola Enterprises Inc., helping the company cut costs and increase flexibility in distribution.
  • Apparently, Coke made the purchase in reaction to PepsiCo’s recent purchase of its top bottlers, Pepsi Bottling Group Inc. and PepsiAmericas Inc.
  • Coke’s present business model — selling beverage concentrate and using CCE to bottle and distribute the drinks — has caused tension over the years around issues such as concentrate pricing.

Facts & Figures

  • As a result of the deal, Coke will give up the 34% stake it has in CCE, which is valued at $3.2 billion as of 2/24/2010. Coke will also take on $8.88 billion in CCE debt.
  • PepsiCo spent $7.8 billion in purchasing its bottlers.
  • As of noon on 2/25/2010, CCE shares went up 34% to $25.63, and Coke’s shares rose almost 5% to $52.62.
  • CCE shareholders will receive a one-time payment of $10 a share and will also receive shares of the new Coke Enterprises.

Best Quote

“Our North American business structure has remained essentially the same since CCE was founded in 1986, while the market and industry have changed dramatically.” – Muhtar Kent, CEO of Coca-Cola Co.