The Big Board could soon get a lot bigger. On May 22, after months of talks, the NYSE unveiled a $10.2 billion offer for Euronext, which runs the Paris, Amsterdam, Brussels, and Lisbon stock markets. A union would create a transatlantic giant with combined listings of $27 trillion and would land a lively futures and options trading biz for the NYSE (NYX), a longtime goal of Chief Executive John Thain.
A rival suitor, Frankfurt-based Deutsche B?rse, countered with a bid it says is worth $11 billion. But Euronext management leans to the New Yorkers, and on May 23, shareholders snubbed a proposal to give preference to the German plan. Among the attractions of the NYSE deal: The combined exchange would keep its European HQ in Paris, while the Germans would move it to Frankfurt. Deutsche B?rse, however, isn't sounding the retreat. Meanwhile the Big Board's archrival, NASDAQ, has bought up 25.1% of the London Stock Exchange, which means it can stop a takeover by anyone else.
See "The Battle for the Bourses"
Has the emerging-markets bull come up lame? After a three-year romp, it has been stumbling in May and took a bad fall on May 22. The Korean KOSPI lost 2.5%, Hong Kong's Hang Seng more than 3%, Jakarta's Composite 6%, while Brazil's and Mexico's markets shed 3% and 4%, respectively. India's Sensex sank 10% during the day, forcing a trading halt, then recovered to a 4.2% loss, but it's down 17% since May 11. In all, MSCI's Emerging Markets Index has tumbled 17% from its May 8 high. Jitters about rising U.S. interest rates and falling commodity prices drove the sell-off. Still, it looked more like a correction than a bull in mortal agony.
See "Emerging Markets' Quick Retreat"
Well, the feds certainly didn't mince words. On May 23 the Office of Federal Housing Oversight released a report that lambasted Fannie Mae (FNM) and its top brass for "deliberately and intentionally" cooking the books to inflate their pay. Fannie agreed to pay $400 million to settle the charges. Companies that did business with the mortgage goliath shouldn't rest easy: SEC Chairman Christopher Cox says the people and "entities whose actions and inactions" played a role in the scheme will be "vigorously pursued."
An act of defiance has thrown the king of shareholder class actions into a possibly devastating legal battle. On May 18 the Justice Dept. charged Milberg Weiss Bershad & Schulman with 20 counts of bribery, conspiracy, fraud, obstructing justice, and perjury. Prosecutors say the firm paid people in return for their service as plaintiffs. Settlement talks collapsed over prosecutors' insistence that the firm turn over confidential communications with its lawyers. Milberg refused.
Steel magnate Lakshmi Mittal may finally melt Arcelor. His Mittal Steel, No. 1 in the industry, offered $33 billion on May 19 for the Luxembourg-based No. 2, sweetening an earlier bid. Besides boosting his cash-and-shares offer by about one-third, Mittal made concessions on governance, agreeing to shrink his family's stake in the combined company to less than 50%. Most analysts predict Arcelor will find the deal irresistible.
There may be 57 varieties of investor, but Nelson Peltz is definitely the heartburn-inducing kind. Having bent Wendy's (WEN) to his will in March, he's turning up the heat under Heinz (HNZ), in which he and his allies hold a 5.4% stake. On May 23, they demanded that the Pittsburgh food purveyor cut costs, buy back shares, hike the dividend, and zero in on core brands. And he wants his boys on the board. Heinz said thanks, but no thanks.
Does this IPO scream "bubble"? That was the question after the hotly debated issue of Internet phone company Vonage (VG) took place on May 23. The $17 share price valued Vonage at about $3 billion, despite its having lost $261 million in 2005 on $269 million in revenue. Shares dropped to 14.49 before closing at 14.85 on May 24. Analysts who figure Net phone prices are bound to fall think investors should treat Vonage like a telemarketer at dinner time.
See "Vonage's Lackluster IPO"
At last, an offer they couldn't refuse: $9.7 billion. On May 22, Dutch media giant VNU, owner of Nielsen Media Research, The Hollywood Reporter, and Billboard, revealed that shareholders had voted to drop their bitter opposition to a takeover by a private equity consortium that includes Blackstone, Carlyle Group, and KKR. What changed? The group anted up more money for the second time, bidding $37.76 a share. The contest grabbed attention last year when 70% of shareholders said no to managers who advised taking the original offer of $35.84.
Once upon a time, Dell (DELL) loved Intel (INTC) and Intel only. But on May 18, while reporting pallid earnings (down 18% from the year-ago quarter), the world's ace computer seller said it has a new flame: It's going to sell high-end servers built on chips from AMD (AMD). Although Dell said the "vast majority" of its chips will still come from Intel, industry observers said the AMD pact may open the door to its wares finding their way into more Dell products, including laptops and desktops. The company is also trying another novelty, opening two stores to take orders.
See "From Servers to Service: Dell's Makeover"
More examples of the Middle Kingdom's growing heft: In one of the biggest global IPOs in years, mainland behemoth Bank of China on May 23 raised $9.7 billion from investors ahead of its listing in Hong Kong. A day later, China Mobile (CHL) said it may buy NASDAQ-listed Millicom International Cellular (MICC), which has a huge subscriber footprint across Latin America, Africa, and Asia. The $5.3 billion deal would set the record for an overseas takeover by a Chinese company.
How quickly options have morphed from nifty incentive to corporate nightmare. A slew of new companies were named this week as under scrutiny for backdating options to help top executives cash in big. The most prominent previously named target, UnitedHealth Group (UNH), the nation's largest health benefits outfit, saw its credit rating outlook marked down to negative by Moody's Investors Service (MCO) on May 22. CEO William McGuire held options worth $1.6 billion at yearend. Moody's said it is wary of disruptions if senior officers have to leave because of the probes. The company said on May 17 that it had received a subpoena from the U.S. Attorney for the Southern District of New York for documents going back to 1999. The SEC and an outside law firm are also investigating. Ten execs or directors have already fallen at four smaller companies. UnitedHealth on May 24 traded at a 52-week low, down 33% this year.
See "Backdated Options, Future Rules"