Friday’s poor payrolls number battered stocks. The S&P 500 closed down 1.14 per cent at 1,382, while the Dow Jones dropped one per cent and the Nasdaq 1.08 per cent (Reuters).
Facebook bought Instagram for $1bn. The cash-and-shares deal for the photo-sharing app is Facebook’s largest-ever acquisition both in value and number of users, although Mark Zuckerberg said that Instagram will remain an independent operation (Facebook announcement, Bloomberg). Instagram closed a funding round valuing it at $500m only last week (TechCrunch). Facebook may have moved to head off a possible future rival, or stop existing rivals from buying it, although Instagram also offers a way to extract revenue from mobile users (Reuters, GigaOM).
AOL sold $1.1bn of patents to Microsoft. A ‘significant share’ of the sale proceeds will flow back to shareholders, the company said. Starboard Value, an activist investor, had been pushing AOL to realise value from its patents portfolio (Wall Street Journal). AOL shares jumped 40 per cent on the unexpectedly large size of the deal (Reuters). The patents, relating to ‘key functions’ of the internet, include Netscape, the browser that was once an arch-rival to Microsoft. The company will even acquire Netscape, in a deal to allow AOL to recognise tax losses to offset profits from the patents (Financial Times).
Avon has parachuted in a Johnson & Johnson executive as its new CEO. The hiring of Sheri McCoy is part of efforts to resist a takeover bid from Coty, the perfume-maker. Avon’s long-fruitless search for a chief executive had fostered shareholder criticism, which Coty hoped to harness by leaving its offer non-hostile. Avon’s shares fell by 3.4 per cent on Monday as the prospect of a takeover receded (Financial Times).
AT&T struck a $950m deal to sell a stake in the Yellow Pages to private equity. Cerberus Capital will acquire a 53 per cent holding for $750m in cash and $200m in debt. A ‘legacy’ asset weighing on AT&T’s push into wireless business, the Yellow Pages unit brought in $3.3bn of revenue last year, dropping by 30 per cen in two years (Reuters, Wall Street Journal).
Qatar has quietly upped its stake in Xstrata, making it the third-largest shareholder of the miner. Having increased its stake to more than five per cent, Qatar might make it easier for Glencore to get shareholder approval for its proposed takeover of Xstrata. The Gulf state has missed out on recent big commodities deals — including Glencore’s own IPO, last year (Reuters).
The Spanish government made another attempt at shoring up investor nerves, promising €10bn ($13bn) of ‘efficiency savings’ in public spending. Spain is aiming for a 5.3 per cent deficit-to-GDP target this year, having defied demands to meet a 4.4 per cent target set down by its eurozone peers (Financial Times).
Bank of Japan policy decision out… with a bias to easing, judging from most analyst commentary. Background reading from DJ: yen short interest is off its multi-year highs according to CFTC data out on Friday.
Eddie DeMarco, acting FHFA director, will speak at Brookings on the thorny subject of principal reduction.
Job Openings and Labor Turnover data are out from the BLS, at 10am EST.
- The quote machine that is John Mack, in New York magazine.
- Free Exchange, on replacing crushing student debt with… equity.
- Universities, economic growth-makers — in the very long run.
- We can probably chalk up Scott Sumner as a China bull…
- A US property market possibly out of this world, via Wired.
- “Newspapers – unlike sofas, books, records – go out. They bring the browsing experience to you,” says Economic Principals. Is that a business model?