Stocks and Funds
The world’s second-largest sportswear maker is handing back 1.5 bln euros to shareholders. They may welcome a tighter balance sheet. But the move doesn’t address Adidas’ core profitability challenges. Management is still disappointingly short on ideas where it matters.
The luxury shoemaker is seeking a London float, giving its private equity owners a partial exit. A mooted $1 bln price tag values Choo at a premium to most peers. The justification could be the potential to grow in Asia. But it’s a market that can spring unpleasant surprises.
The beverage giant has backed off its controversial executive compensation scheme. That’s a win for Warren Buffett, investor David Winters and the company’s other shareholders. But the quibbles with Coke don’t end with excessive pay. Costs loom as the next activist target.
Bankers there face fresh limits on investing in stocks, bonds and hedge funds. Goldman knows how easy it is to cross a line when treading close to it. Why Wall Street dealmakers can own individual securities at all is the real mystery that speaks to a culture loath to change.
Bids and Buyouts
The $70 bln online auction company has for years resisted setting free its payments business. Apple and Alibaba created more urgency than Carl Icahn and other investors could. EBay squandered a big early advantage, but independence may yet give PayPal a chance to play catch-up.
The Japanese conglomerate may offer $3.4 bln for movie studio DreamWorks Animation. Softbank’s giant balance sheet can easily absorb the hit-and-miss earnings of film production. But with each big acquisition, it becomes less clear how the group’s parts fit together.
The Canadian driller’s $7 bln acquisition of Athlon Energy cements a commitment to move from gas to shale oil. It’s paying a full price, especially after the recent fall in crude to $94 a barrel. If Encana can get the transition right, though, its valuation will deserve a lift.
The Australian owner of Penfolds ended talks with private equity bidders saying a $3.1 bln offer undervalues the company. A 11 pct share price drop suggests investors aren’t totally convinced. There may be room for buyers to return if the still-new CEO can’t turn things around.
Money and Markets
The central bank seems ready to break its own collateral rules to buy Greek or Cypriot asset-backed debt. That’s a side effect of policy success, not a cause for worry. The ECB needn’t be a slave of rating agencies, and the risks to its balance sheet are manageable.
Sliding revenue at Sainsbury dashes hopes the grocer might circumvent the struggle enveloping UK rivals, including Tesco and Morrisons. A strategic review shows welcome determination to get a grip on Britons’ changing shopping habits. But the falling tide will lower all boats.
Growth may yet survive the deadly epidemic. The last four years’ 28 pct pace isn’t realistic, but controlling the outbreak soon should at least preserve investment. That won’t be easy, given the virus has now spread to the U.S. In saving lives and the economy, every day counts.
The euro zone banking union was meant to start with a robust bank solvency test. Yet national regulators have successfully lobbied the ECB to count deferred tax credits as capital. That restores the state/bank dependency the single banking supervisor is trying to sever.