BREAKINGVIEWS

Hollywood superagents demand investor tolerance

24 May 2019

Endeavor, the owner of William Morris, IMG and UFC mixed martial arts, is going public with a complex structure. In a town built on relationships there are benefits to keeping those with the best contacts close. But governance and an industry in flux confuse the IPO script.

Water can flow around U.S. infrastructure blockage

24 May 2019

The $1 trln needed to fix the nation’s aging pipes and other H2O infrastructure isn’t coming any time soon – as a new delay to a U.S. funding plan makes clear. The industry still has room for improvement, though, starting with better use of technology, data and capital.

May’s replacement will face same Brexit dilemma

24 May 2019

The British prime minister’s resignation was inevitable. But the Conservative party’s next leader will have no chance of negotiating a better Brexit deal, and faces the same parliamentary opposition. That leaves a risky election as one of the few remaining options.

Parent’s bankruptcy loosens its grip on Casino

24 May 2019

The French grocery giant’s debt-riddled controlling shareholder, Rallye, sought protection from its creditors. For now, Casino will keep sacrificing growth to pay large dividends to owner Jean-Charles Naouri. But a debt restructuring might eventually free the 3.5 bln euro group.

Popular Modi puts Indian resistance to the test

24 May 2019

Prime Minister Narendra Modi has been re-elected despite concerns he strong-arms the central bank, judiciary, and media. Voters seem unfussed about checks and balances - a global trend. But if he pushes them too hard, India’s democratic institutions will struggle to hold up.

Isolated Huawei may be shoved into Beijing’s arms

24 May 2019

Important suppliers such as Arm and Intel are abandoning the Chinese telecom titan after the United States blacklisted it. That puts $50 bln in overseas revenue at risk. Huawei has cash to cope for now, but a breakup or state intrusion can’t be dismissed as potential endgames.

Chinese booze behemoth distills a sobering reality

24 May 2019

Kweichow Moutai’s state-owned parent may be planning to sell liquor directly through a separate unit. It could help usurp some $6 bln of value from shareholders, Breakingviews estimates. For new and growing MSCI index investors, it’s a stark reminder of China’s governance risks.

Tech firms can be citizens as well as piggy banks

23 May 2019

San Francisco is mulling a so-called IPO tax to help fund affordable housing. Money isn’t really the issue, though: useful projects get snared in local opposition. Facebook and its ilk would do more good getting staff to be engaged citizens, and even incentivizing them to do so.

Closing diversity gaps involves no mystery

23 May 2019

Many global asset managers think improving diversity compromises returns. Meanwhile JPMorgan persuaded most shareholders that disclosing its gender pay gap was too onerous. These are excuses. The solution is simple: show the gaps, close them, or expect lawmakers to step in.

Brazil’s Natura is Avon’s logical final house call

23 May 2019

An equity value around $2 billion is an ignominious end for the famous cosmetics brand. But the Sao Paulo-based buyer, which also owns Body Shop and Aesop, is probably the right one, strategically and geographically. Synergies worth more than 3 times the premium attest to that.

Theme park LBO would be a low-thrills ride

23 May 2019

Activist ValueAct wants $4.3 bln Legoland-operator Merlin to sell itself to private equity. A new owner would need to splash out on fresh attractions and wait years before selling. The modest returns on offer suggest buyout groups won’t be queuing up to get on this rollercoaster.

Meituan Dianping delivers sweet-and-sour to Uber

23 May 2019

Getting bigger enabled the $40 bln Chinese company to cut its operating loss by charging restaurants for ads and fees to tote meals. Intensifying competition with Alibaba, however, will eat into cash. Uber can expect similar trouble as it squares off with Amazon-backed Deliveroo.

TransferWise valuation relies on heroic growth

23 May 2019

The UK-based money transfer startup’s latest fundraising values it at $3.5 bln. Justifying the price tag implies the volume of foreign exchange it handles has to grow roughly fourfold to 200 bln pounds by 2023. It’s a huge market, but competition from banks will only intensify.