BREAKINGVIEWS

Buyout shoppers can spend more on Morrisons

21 June 2021

The British grocer rejected an $8 bln bid from Clayton, Dubilier & Rice. The 30% premium looks juicy, but the private equity firm will earn a decent return if Morrisons just delivers expected sales and margins. Extra cost savings or property sales would justify a bigger trolley.

Malaysia’s $11 bln telco deal rings a softer tone

21 June 2021

Axiata and Norway’s Telenor are combining their local units after their bigger pan-Asian combo failed on nationalist sentiment. Some of that is still on display but the logic of a smaller tie-up is compelling and synergies ample. Equal ownership creates a fresh complication.

Iran vote makes reopening an even harder sell

21 June 2021

Ebrahim Raisi’s election as president means hardliners will from August control the Islamic Republic. A new deal to unwind some sanctions on the country may be signed before then. But companies that were burnt by the U.S. withdrawal from an earlier accord are unlikely to return.

Carlyle’s botched Indian lender deal is awkward

21 June 2021

The U.S. buyout firm’s quasi-takeover of $1.7 bln PNB Housing was halted by regulators on a technicality. The cosy plan protected state owners and side-lined minorities after fairer options failed. It’s embarrassing for star backers like Aditya Puri too. A rejig will be pricey.

China’s education crackdown flunks economics

21 June 2021

Tougher rules on tutoring services are hammering shares of TAL, Gaotu and others. The country’s manic competition for school admission distorts the labour supply and suppresses the birth rate. It’s a byproduct of a widening wealth gap, however. This approach could make it worse.

Airport security fast-tracker jumps the IPO line

18 June 2021

Clear, the U.S. firm that allows people to cut security lines for $179 a year, wants to go public. With vaccine checks on the horizon and the U.S. government as a new client, it has a promising path to fly as a public company, so long as its valuation stays in the $2 bln range.

U.S. gas tax should be guzzled while it can

18 June 2021

America’s truck obsession is partly due to fuel prices that are among the lowest in the world. Upping the toll could help pay for a $1.2 trln infrastructure plan. Plus combustion engines are becoming obsolete and fuel usage is falling. Lawmakers might as well seize the moment.

Delta variant may make UK less of a virus outlier

18 June 2021

The pandemic hit British GDP more than that of the United States, Germany and France in 2020. An extension of UK restrictions in the face of the so-called Delta variant implies the same could happen this year. But other states are likely to have to impose fresh restrictions too.

Big Tobacco tech offers path to partial redemption

18 June 2021

Philip Morris is tweaking its inhalers for medical drugs, rather than recreational ones. If non-nicotine sales hit their target, the unit could be worth $5 bln. That’s tiny against the Marlboro maker’s $156 bln price tag. As a genuine health benefit, the PR value may be greater.

Green megalomania renews $80 bln Congo hydro dream

18 June 2021

Aussie mining magnate Andrew Forrest is behind a fresh push to turn the African river’s vast power into energy. Dam-building is a fool’s errand, though, and his Fortescue’s plan to produce hydrogen for export may not stack up financially. Less bombastic alternatives are better.

Hong Kong scion cedes hometown IPO premium

18 June 2021

Richard Li, the entrepreneurial son of tycoon Li Ka-shing, plans to list his pan-Asian insurer FWD in New York instead of the city where he’s a familiar face to investors. He is sacrificing both brand recognition and higher valuations. It’s a steep price for keeping more control.

CureVac’s pain may not yet have peaked

17 June 2021

The German drugmaker’s value halved to $10 bln after it said its Covid-19 vaccine may be only 47% effective. Investors’ concern is that its critical mRNA technology may not work as well. Separate trials on its cancer vaccine will be key to CureVac’s future health.

Wall Street’s finest take on the mighty sponge

17 June 2021

The $5 bln IPO of Mister Car Wash has amassed some of finance's most prestigious underwriters. No wonder: It has solid growth, is simple to understand, and shines with profit. The risk is that competition is plentiful - and includes a bucket of water and the neighbor's kid.