Cantillon: Just another manic Monday at Ardagh

Coulson awaits US Federal Trade Commission breakthrough on Verallia takeover

It looks like being a busy weekend for Paul Coulson and his fellow Ardagh executives. As of last night there did not appear to be any breakthrough in efforts to reach a deal with the Federal Trade Commission over the takeover of St Gobain's US unit Verallia.

The deal, which was announced a year ago, was blocked in July by the FTC over concerns about the merged group’s dominance in certain aspects of the US packaging market. Ardagh offered to dispose of four plants but this did not cut it with the FTC. There appeared to be a breakthrough just before Christmas when Ardagh upped its offer to six plants and the FTC agreed to kick the deadline out until March.

Unfortunately for Ardagh if a deal can’t be done by Monday then its funding becomes a headache. The group raised some $1.5 billion in euro and dollar denominated debt last year to fund the deal and if the union is not consummated by Monday, the money has to be returned to the lenders, with interest presumably.

Quite how big a headache this will be for Ardagh is hard to quantify. In theory they should have no great difficulty raising fresh finance, although its current lenders refused to extend the Monday deadline for a fee. The US economy is in a stronger state than a year ago and energy prices – a key cost for Ardagh – are going the right way. On top of that the execution risks around the deal would be significantly reduced with FTC approval in Ardagh’s back pocket.

On the flip side, the group's metal packaging – tin can – business in Europe has underperformed and Moody's downgraded the group on the back of a negative implication for cash flow. This, in theory, will mean Ardagh paying a higher price for debt next time. In additional Ardagh is also scheduled to raise an additional €675 million shortly to repay €300 million of existing debt.

If a deal cannot be reached over the weekend – with the FTC or the bond holders – then Ardagh will no doubt hope that the good and bad consequences of the year's delay will even themselves out. It should be interesting one way or another.

Baby step towards investment fairness
New York's attorney general Eric T Schneiderman did his bit to enhance fairness in the world of asset management this week, securing an agreement from the industry's largest and most important player – BlackRock – to stop doing something very simple but potentially very significant.

Since 2003, the US-based company had been conducting rather benign-sounding “surveys” of Wall Street analysts, who followed companies in which it might have an interest.

This, it was argued in settlement documents relating to the agreement with the attorney general, allowed BlackRock to obtain information that could point to future changes to analysts’ views.

As any investor will know, an analyst’s position on a stock (buy, hold, sell and so on) and changes to that position can influence how the stock performs. Finding out about changes before they happen could present lucrative opportunities.

In the settlement, Mr Schneiderman concluded that BlackRock helped to boost industry rankings for analysts who completed the surveys.

The New York Times, whose work inspired the investigation, has reported that survey questions would refer to areas such as takeover potential and sales forecasts. Mr Schneiderman will now look at other companies that might use similar surveys.

BlackRock’s New York settlement did not involve any admission or denial of the allegations, nor did the company pay any penalty. It did however pay $400,000 to cover the attorney general’s costs in the matter and it promised to discontinue the survey practice which, it noted, was initiated by Barclays Global Investors before BlackRock took over the company.

For now, Mr Schneiderman has heralded a “major step forward in restoring fairness in our financial markets and ensuring a level playing field for all investors”.

It's a fine thought, even if those controlling small, personal stakes in companies could be forgiven to think there is still a long way to go before they can play fairly with the big boys.

Oneview takes long view of Gulf business
Follow the money, goes the maxim, and Irish companies were surely doing that on the high-profile trade mission to the Gulf led by Taoiseach Enda Kenny this week.

Eighty-seven businesses travelled in the hope of sealing deals or at least laying the groundwork for the future. Minister for Enterprise Richard Bruton, who also travelled, said the Government was looking to more than double its trade with the region to about €1 billion from the current level of €400 million, something which, he said, could deliver 4,000 jobs.

Actual outcomes from the trade mission were more modest, with 65 companies signing deals worth a total of €65 million and promising the prospect of almost 100 new jobs – but they were far from insignificant for all that.

Not least the announcement from Oneview Healthcare that it had reached agreement in principle with Dubai’s two Mediclinic hospitals to fit them out with its specialist software which works with hospital IT systems to deliver interactive patient care services, treatment education and entertainment to bedside terminals, tablet computers, smartphones and televisions. The announcement marks the company’s first commercial deployment in the Middle East and working with Mediclinic, one of the top 10 listed private hospital groups in the world, will do its prospects no harm.

The fast-growing Oneview – headed by Dublin businessman Mark McCloskey and Australian banker James Fitter – has also signed contracts in Australia and the US in the past year.

The company recently announced plans to create 20 jobs this year, on top of the 12 posts in 2013, when it also expanded its Dublin office space. The company raised €10 million in two rounds of fundraising last year, the second of which allowed it open two new offices in the important US market as well as expanding its presence in Sydney and Dubai.

Mr Fitter said Oneview had been working with Mediclinic for nine months preparing the ground for this week’s agreement. Oneview expects the forthcoming partnership to “significantly impact” its position in a fast-growing software market and lead to more jobs within the group both in the Middle East and in Ireland.