On Dow Jones Investment Banker Today: Booz Allen, Coinstar

25th Jun 2010 21:38

LONDON (Dow Jones Investment Banker)--The following columns have been published exclusively on Dow Jones Investment Banker in recent days. Many Dow Jones Investment Banker columns contain spreadsheets, video, PDFs and other supporting material. To arrange access to the best of Dow Jones news and opinion on companies, sectors and deals for investment bankers, please contact [email protected]. To see more, visit: http://www.dowjones.com/banker THE MALL: Coinstar - Time For Change NEW YORK--If Redbox, the purveyor of DVD rentals at neighborhood grocery stores, were an independent business, it would likely trade at a much higher valuation than the paltry 8.5 times at which parent Coinstar Inc. trades. Redbox's soaring popularity and revenues have quickly eclipsed Coinstar Inc.'s (CSTR) stable yet dull legacy coin exchange service business. Time for management to think about separating the two and unlock hidden value. (Includes downloadable Excel spreadsheet: Coinstar sum-of-the-parts analysis.) Contact the columnist: [email protected] THE SHIELD: Breaking Out The Booz NEW YORK--Booz Allen Hamilton Holding Corp. is the oldest, and among the most prestigious, names in consulting. It grew its revenue 17% last year and expanded margins. Its owner, Carlyle Group LP, will luck out if these positives blind the market to the fact that Booz does not deserve a premium valuation. The S-1 Booz filed for its IPO is more than 1,100 pages long, yet it does little to clarify how the McLean, Va.-based company makes its money. "Management and technology consulting to the U.S. government" covers a multitude of activities. Contact the columnists: [email protected]; [email protected] THE MALL: U.S. Retail And Consumer CEOs Remain Cautious NANTUCKET, MASS.--Scenic surroundings and mild, sunny weather notwithstanding, the mood among consumer and retail executives attending the Jefferies & Co. Inc. 2010 Global Consumer Conference remains cautious as they emerge from the deepest recession in recent history. The key word in the CEO lexicon is "liquidity" as opposed to "growth." The takeaway for bankers is that the mandates in the sector will be in equity and debt issuance as opposed to M&A. (Includes supporting graphic.) Contact the columnist: [email protected] TIER ONE: Rabobank's Asian Appetites NEW YORK--Rising incomes in Asia will lead to sharply higher spending on food. That's a key premise behind Rabobank's expansion in the region. When people can afford to eat more, they usually do. But, while the income elasticity of food is only 0.103 in the U.S., it is 0.686 in Indonesia. Thus, while Americans will spend only about a tenth of any increase in their income on food, Indonesians will spend over two-thirds of an income boost on sustenance. The rest of developing Asia isn't much different. A large share of that new wealth will be spent on food. With the goal of becoming the leading agricultural finance bank globally, Netherlands-based, AAA-rated Rabobank is therefore staking out positions not only in the upstream producing countries but also in the most rapidly growing downstream markets. (Includes supporting graphic.) Contact the columnist: [email protected] THE SIGNAL: Think Small - The New Telecom M&A Mantra NEW YORK--There may be little room for more mega-deals within the U.S. telecom sector, but there is plenty of room for smaller, technology-driven mergers, says investment banker Michael Price, head of the Technology and Telecom group at Evercore Partners. In both wireless and wireline, years of consolidation have left few obvious targets, and the Obama administration's more stringent approach to antitrust reviews will make transformative deals more difficult. But interest in smaller deals remains. (Includes video interview with Michael Price.) Contact the columnist: [email protected] TIER ONE: Stress Tests -- Lifting Europe's Fog Of Uncertainty NEW YORK--As European investors and regulators debate the efficacy of the upcoming bank stress tests, supervisors would do well to review the U.S. playbook. The exercise actually worked. Stress tests are even more vital to restoring inter-bank confidence in Europe than they were in the U.S. because there has been less transparency there. Many European banks do not break down their public sector exposure, for example. According to the European Central Bank, Eurozone banks' collective exposure to sovereign debt of the four most troubled nations, Greece, Portugal, Ireland and Spain, was 8% of total assets at the end of April. French and German banks were particularly exposed: a combined $958 billion at the end of 2009. While the methodology of stress tests can be debated, in the U.S. they succeeded in boosting investor confidence. (Includes downloadable PDF: How U.S. Banks Resumed Recovery After Stress Tests.) Contact the columnist: [email protected] HEAVY DUTY: DSM Could Be Next To Seek Defensive Chemicals M&A LONDON--The game is on for M&A in the chemicals sector following BASF SE's (BAS.XE) acquisition Wednesday of Cognis GmbH. The German chemicals maker's move is likely to spur its much smaller Dutch competitor, Royal DSM NV (DSM.AE), to hit the M&A path to diversify its asset base, lessen its exposure to end-market cyclicality and target high-value-added markets--the same rationale that lies behind BASF's deal for Cognis. A possible name for DSM's bankers in the Netherlands to consider is the U.K.'s Croda International PLC (CRDA.LN). Croda is a defensive target that could also prove attractive to Solvay SA (SOLB.BT), a Belgian chemicals producer which should, in turn, train its sights on Symrise AG (SY1.XE). (Includes downloadable Excel spreadsheet: BASF Stretches the Balance Sheet.) Contact the columnists: [email protected]; [email protected] (END) Dow Jones Newswires June 25, 2010 16:38 ET (20:38 GMT)