Week in Review, April 11

A round up of some of the week's most significant corporate events and news stories.

Capital rules to inflame next crisis, warns Dimon

Jamie Dimon, chief executive of JPMorgan Chase, warned this week that the next financial crisis should see "more volatile" markets and a "rapid decline in valuations" because regulators have hamstrung the banks, writes Tom Braithwaite.

In his annual letter to shareholders on Wednesday, Mr Dimon said recent schisms in Treasury and currency markets were a "warning shot across the bow".

He devoted three pages to a "thought exercise" on what might happen in the next crisis, warning that the ability of JPMorgan and other banks to act as shock absorbers had been dramatically hindered by new capital and liquidity rules.

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Mr Dimon has been known as one of the few bank chief executives willing to challenge the regulatory architecture put in place since the 2008 crisis. Some of the individual warnings have been aired before but never woven into a Dimon crisis scenario.

He said that, unlike in 2008 when JPMorgan attracted $100bn of deposits from weaker competitors, it was "unlikely that we would want to accept new deposits the next time around".

He wrote that while investors would traditionally flock to safe-haven securities in a storm, there would be "a greatly reduced supply of Treasuries to go around - in effect, there may be a shortage of all forms of good collateral" because of new liquidity requirements tying up safe assets at banks.

Noting that banks underwrote stock offerings to help shore up other banks during the last crisis, he said they "might be reluctant to do this again".

? Related video: Dimon warns of volatility in next crisis? Related FT Alphaville blog: A simpler JPMorgan

Mylan's $28.9bn offer takes Perrigo board by surprise

One of the world's largest generic drugmakers proposed buying a purveyor of cold remedies and hay fever medicines for $28.9bn, the latest in a string of takeover attempts in a pharmaceuticals industry gripped by deals fever, writes David Crow.

Mylan's unsolicited cash-and-stock proposal valued Perrigo at $205 a share, according to a letter sent on Monday to the chief executive of the Dublin-based company, which makes store-brand versions of paracetamol and decongestants.

Mylan, which has a market capitalisation of $34bn, said it had discussed a combination with Perrigo's management on a number of occasions in recent years, but the timing of its proposal appeared to take the target company by surprise.

Perrigo said its board would meet to discuss the proposal, though few in the industry think Mylan will be able to secure an agreed deal without increasing its offer, pitched at a 25 per cent premium to Perrigo's closing price on Friday.

Some analysts suggested Mylan had moved quickly because it was itself a takeover target, possibly for Israel-based Teva, the world's largest generic drugmaker.

Earlier this month, Mylan introduced a so-called "poison pill", a mechanism that would dilute the ownership of existing shareholders and help it fend off a hostile takeover offer.

The takeover saga is the latest sign of deal activity in the healthcare industry, as companies take advantage of cheap debt to consolidate.

In the first three months of 2015, the total value of healthcare deals reached $95.3bn, a 70 per cent increase on the same period a year ago, according to data from Thomson Reuters.

FedEx moves to wrap up €4.4bn deal for ailing TNT

When UPS launched a €5.2bn bid for the Netherlands' TNT Express in 2012, FedEx, UPS's arch-rival in the express parcel sector, sat by, writes Robert Wright.

Reports suggested it was waiting for the Dutch company to come back on the market at a lower price.

That happened this week. European competition regulators barred the UPS bid because it would have given the combined company such a large market share and TNT continued to struggle, recording a €195m net loss for 2014. FedEx on Tuesday announced it had agreed a €4.4bn takeover of the company.

Antony Burgmans, TNT's chairman, attributed the lower price to the reduced synergies that the FedEx deal is expected to realise compared with the UPS deal. FedEx has only about 5 per cent of the cross-border intra-European express and economy parcels business, against 16 per cent for UPS and 12 per cent for TNT.

The limited synergies mean that FedEx is far more likely to succeed in completing its deal than UPS was in its attempted takeover. The European Commission blocked the UPS deal because it would have substantially weakened the competition to DHL, the European market leader.

For FedEx, meanwhile, the deal will bring significant economies of scale, allowing it to feed far greater volumes of transatlantic express parcels into its vast US network.

The outstanding question is whether the company can manage the integration without plunging the combined network into the kind of chaos that has characterised some past logistics mergers.

? Related Lex note: Deal is a bet on strong recovery

Vivendi pays extra dividend to appease shareholder

Vivendi this week agreed to pay out an additional dividend as the price for making peace with a minority shareholder whic was demanding that the media and content group pay out €9bn to investors this year, writes Adam Thomson.

The Paris-based group said that it would pay €2 per share - to be distributed in two separate payments at the end of this year and the beginning of next - in addition to the €1 per share dividend it had earmarked for each of the next three years.

The decision, which brings promised payouts to €6.75bn, averted what was shaping up to be a head-on fight with US minority shareholder P. Schoenfeld Asset Management (PSAM) at next week's annual general meeting.

As part of the agreement, PSAM said it would vote against another minority shareholder demanding that Vivendi exempt itself from a new French law that would give longer-term shareholders - such as Vivendi chairman Vincent Bollore - twice as many votes as new investors.

All of this relieves the pressure that was building on Mr Bollore to present shareholders with a clear vision for the group following Vivendi's sale of telecoms and other assets over the past two years for more than €35bn.

Mr Bollore, who on Thursday increased his stake in Vivendi for the fourth time in just over a month to 14.5 per cent from 5 per cent earlier, has said that he wants to turn Vivendi into a French-style Bertelsmann, the German media group.

This week, he took one small step in that direction, announcing that Vivendi had entered into exclusive negotiations with French telecoms operator Orange to buy 80 per cent of its Dailymotion video-sharing platform for €217m.

? Related news article: Vivendi eyes 'transformational' deals

And finally ... the lighter side of the news

? With great power comes great responsibility and, one would hope, a decent pay packet. That must be the hope of chief risk officers whose rank and importance in financial institutions has been rising in the years after the crisis. Other potential explanations for being granted keys to the executive washroom, such as being well compensated before being made a scapegoat in future, are surely just paranoia . . . aren't they?

? Charles Darwin never claimed evolution was a speedy process, but even by its tardy standards the gas-guzzling US luxury-car market has been slow to adapt. Now, the winds of change have wafted in and the roaring dinosaur engines of old are being tempered with technology to make them (whisper it) fuel-efficient. Now, if only the more Neanderthal drivers can be coaxed into losing their lead boots, the roads will be better all around.

? Investors pumping funds into Indian ecommerce enterprises with the hope of reaping quick returns could be left disappointed as the frenzy surrounding the Indian Premier League cricket tournament builds. It seems that entrepreneurs, fuelled by venture funding, are scrambling to secure costly sponsorship deals. Backers' patience could face a tougher test than England fans waiting for an all-conquering team.

? The march of technology is inexorable. Inventions that once seemed to be torn from the pages of a sci-fi film script are rapidly becoming just another footnote in history. Solid 3D printing, which once wowed with its possibilities, has been overtaken by Terminator-style liquid creations that could be up to 100 times faster to produce. Look out for Skynet 3D Printing Inc's crowdfunding campaign to build a time machine very soon.

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