M&A shops try jumping on activism’s new coattails 21 Dec 2018 Moelis and PJT are the latest to ramp up shareholder advisory efforts. The rising influence of passive funds mixed with deeper-pocketed investors targeting bigger firms means Corporate America needs more help. Offering defensive advice now can bag lucrative fees down the road.
Jeff Bezos starts to resemble Sam Walton 21 Dec 2018 Amazon is selling shelf space, opening stores and launching catalogs. Old-school Walmart’s acquisitions of Jet.com and Flipkart are helping it challenge its rival’s online dominance. As the two retailers increasingly resemble each other, so too will their valuations.
Mattis exit leaves world facing Trump unchained 21 Dec 2018 The U.S. defense secretary is resigning, citing differences with the president over support for allies and his attitude toward China and Russia. Trusted by friends and foes, the ex-general also curbed Trump’s impulses. More military risk is the last thing rattled investors need.
Viewsroom: Dealing in high anxiety 20 Dec 2018 Equity valuations are in the stratosphere and geopolitical risk is running hot. Breakingviews columnists predict how that’ll affect markets in 2019, from trade-war fallout to Indian privatizations, a Deutsche Bank rally and mining M&A. They also assess last year’s prognostications.
Doomsday just another opportunity to create alpha 20 Dec 2018 From grid hacking to financial meltdown, new fears about a systemic disaster are generating ideas about fortifying for the worst. Demand for gym memberships, canned soup, and gold will all rise. Here’s how to indulge in the nervousness.
U.S. cyber allegations risk bigger rift with China 20 Dec 2018 The United States indicted Chinese hackers while its allies condemned cyber thefts. The moves, like the recent detention of Huawei’s CFO, are ostensibly separate from trade talks, but Beijing won’t see it that way. The Trump administration may have to choose its priority target.
Altria’s $12.8 bln vaping punt tastes funky 20 Dec 2018 The Marlboro maker is paying a whopping multiple for 35 pct of Juul Labs - and cutting jobs and up to $600 mln of expenses just to cover interest costs. Meanwhile Juul is handing much of the cash to current owners and staff. It’s a risky bet that rapid growth won’t start to drag.
U.S. Oleg Deripaska deal tougher than it looks 20 Dec 2018 Washington’s decision to lift sanctions on En+ and allow the Russian oligarch to keep a 45 pct stake sounds lenient. Yet it looks difficult for Deripaska to sell his stake for cash or exercise decisive influence. After a messy beginning, the U.S. raid seems a qualified success.
Facebook headed for Big Tobacco-style backlash 20 Dec 2018 A number of U.S. states may follow the District of Columbia in suing the $380 bln social network for misusing customer data. It’d be reminiscent of the 1990s fight against cigarette makers. A similar outcome would leave Facebook paying huge fines and bound by tighter rules.
Japan Post’s Aflac stake is M&A ugly duckling 20 Dec 2018 The state-owned postal group will buy 7 pct of $34 bln U.S. insurer Aflac. It will get no direct say in the business, though, no board seat, and only limited voting rights. The dubious idea that minority stakes buy commitment to mutual gain, common in Asia, has reached its limit.
Fed hike leaves Powell exposed in multiple ways 19 Dec 2018 The U.S. central bank raised rates despite criticism from President Trump. Slowing growth and bearish markets will only complicate its task going forward. The chairman will give more public talks in 2019 just as it gets harder to offer guidance. It could be a bumpy ride.
Scooters will soon find city-friendly sweet spot 19 Dec 2018 They're tech toys that clog up streets and sidewalks. Yet they are also a clean, low-cost bridge between cars or mass transit and walking. The Bird CEO talks about sharing the cost of infrastructure. That could be a way forward, as long as the business model can stand it.
How low can private equity returns go? 19 Dec 2018 Buyout shops target a 15 percent return, but 5 percent could be the new normal. Here's how a five-year deal could measure up.
Renault-Nissan: Only merging makes financial sense 19 Dec 2018 The French and Japanese carmakers' lopsided stakes in each other are a poor use of capital. A full-blown marriage could boost their value by about 30 percent. That’s less likely after Carlos Ghosn’s ouster as Nissan chairman; the auto alliance is driving in the wrong direction.
Private equity returns will drop a digit 19 Dec 2018 Buyouts have tended to target – and achieve – an annualized harvest of at least 15 percent. It’s hard to see recent deals, with high valuations and creative treatment of earnings, matching that. Assume a modest drop in the market and mild slowdown, and 15 looks more like five.
GSK takes M&A steroids for strategic ailment 19 Dec 2018 The UK drugmaker will mesh its consumer health unit with Pfizer’s, gear it up and spin it off. That should leave more firepower for GSK’s weaker pharmaceutical division. Both businesses should be better off, if boss Emma Walmsley can invest wisely. That’s still to be seen.
Shinzo Abe will strike accord with Donald Trump 19 Dec 2018 With some 5 mln autoworkers to protect from tariff pain, Japan’s prime minister will have little choice but to sign a bilateral U.S. trade deal. Expect the new NAFTA’s anti-China clause to feature. Seeking warmer relations with Tokyo, Beijing is apt to look the other way.
Mnuchin pins market volatility on wrong president 18 Dec 2018 The Treasury secretary partly blames the Obama-era Volcker Rule for big swings in stocks. But prices aren’t as choppy as 2009, before the prop-trading ban was adopted. And the rule barely affected equities trading. It’s the policies of Mnuchin’s volatile boss fanning the flames.
The 2019 stock market reversal: how it happened 18 Dec 2018 Few people would have disagreed at the beginning of the year that the nine-year-long bull market was reaching its end phase. That didn’t diminish the shock when stocks began to plunge in earnest. Breakingviews lays out a fictional account of how the good times came to an end.
Goldman Sachs will spend 2019 in velvet handcuffs 18 Dec 2018 New boss David Solomon starts the year with a mission to grow, lots of ambition and a crosstown rival that has steadily upped its game. A big deal – say, buying an asset manager – could help Solomon vault ahead of Morgan Stanley. That’s if the 1MDB scandal doesn’t bind his hands.