Bershidsky on Europe: Slim Folds KPN Bid
Here's today's look at some of the top stories on markets and politics in Europe:
Carlos Slim gives up on KPN
Mexican billionaire Carlos Slim admitted he had lost the battle for control of Dutch telecom operator KPN. His $9.7 billion bid failed because the Dutch foundation set up to look after shareholder interests in the formerly state-owned company exercised its right to expand its stake to almost 50 percent. KPN and the foundation believed Slim's offer was too low. Slim still owns slightly less than 30 percent of KPN, and his holding company, America Movil, is deliberating whether to keep or sell the stake. This is Slim's second such defeat in Europe after his unsuccessful bid for Telecom Italia six years ago. The Mexican tycoon has to decide whether trying to gain control of former national telecom operators in Europe is generally a good idea: They are too well-protected against hostile takeovers and agreeing with their own valuations would not leave Slim much of a profit potential.
German parties close to coalition
Angela Merkel's Christian Democrats and their former election rivals, Sigmar Gabriel's Social Democrats, are to reach a preliminary decision on forming a coalition after the third round of their exploratory talks on Oct. 17. If the talks go well, Social Democrat leaders will recommend that their Oct. 20 party convention support a "grand coalition." The parties are expected to compromise on establishing a minimum wage, a demand put forwards by the Social Democrats but shunned by Merkel who believes it might destroy jobs. She believes the proposed $11.5 per hour rate is too high for eastern Germany. Merkel could appease her potential coalition partners by proposing higher subsidies for the German federal states. In any case, Gabriel and other Social Democratic leaders will do their best to keep the deal from falling through: Merkel could still go back to the Greens, who exited coalition talks earlier this week.
Ubisoft shares lose 26 percent over game delay
The French digital game developer, Ubisoft, took a 26 percent plunge on the Paris stock exchange after announcing it would postpone the launch of its new game, Watch Dogs, by six months. One day's trading cost Ubisoft shareholders $400 million, because the delay will drive the company into the red for the financial year ending in March, 2014. Ubisoft management knew this would happen but still chose to give its developers more time to polish the game, intended for new generation gaming consoles from Sony and Microsoft. In the game development business, even established companies' fortunes hang on a single launch: They cannot afford to have a major product fail. As a result, it is one of the few industries where quality is truly the number one concern, well above such things as short-term stock market performance.
Axa sells biggest catastrophe bond
The French insurer Axa has successfully placed the biggest ever euro-denominated "catastrophe bond," $473 million of repackaged major disaster risk. The issue brings the cat bond market closer to surpassing its 2007 record of $8 billion in total placements. Though the instrument is still considered exotic, any institutional investors would clearly rather deal with the risk of a hurricane or a flood that would render their investment worthless than with the irrationality and uncertainty of conventional bond and equity markets.
Russian opposition leader's jail term suspended
In a long-awaited decision, a Russian court suspended the 5-year sentence of Alexei Navalny, a popular opponent to President Vladimir Putin. Navalny received the sentence in July for allegedly organizing the theft of lumber from a state-owned company, although the evidence was notoriously thin. While his lawyers appealed the verdict, Navalny ran for mayor of Moscow, and though he lost to the pro-Putin incumbent, he won 27 percent of the vote – enough to make imprisoning him politically uncomfortable. Though the suspended sentence allows Navalny to stay out of jail, the conviction was allowed to stand, and the opposition leader will not be able to take part in elections for the next five years. The challenge for Navalny now is to build a strong enough party to make gains without him actually running for political office. Putin, meanwhile, has calmed protest against Navalny's conviction while crippling a dangerous opponent.
(Leonid Bershidsky, an editor and novelist, is a Bloomberg View contributor. He can be reached at email@example.com).