Spain’s recovery yet to impress Spaniards 6 Feb 2015 The EU lifted its growth forecast for the country to 2.3 pct in 2015, ahead of the region’s average. Low oil prices, the weak euro and tax cuts mean Spain could do even better. But voters are angry about corruption and unemployment - making politics and policy unpredictable.
China developer rescue more grey knight than white 6 Feb 2015 The purchase of 49 percent of defaulted property group Kaisa by rival Sunac gives offshore bondholders hope of getting their money back. For the wider sector, though, it’s only a problem deferred. While Kaisa may have been saved, there are only so many brave buyers to go around.
Review: A cautionary tale for China media moguls 6 Feb 2015 The tragicomic true story of Mark Kitto’s doomed magazine empire may be a blast from the past, but is nonetheless relevant today. China’s wannabe media magnates – both foreign and homegrown – still walk a tightrope between the overbearing state and their commercial aspirations.
DuPont drives wedge between shareholders and Peltz 5 Feb 2015 Adding two turnaround vets to the $70 bln chemical giant’s board may make shareholders think twice about voting a rival slate from Nelson Peltz’s Trian. DuPont says the activist nixed an offer to add one of his picks because he wanted the spot. He may just have been outplayed.
Anthem investors don’t get cyber risks, either 5 Feb 2015 Data breaches at the likes of Target, Home Depot and Sony have put once-complacent managers on notice. But the small impact on the stock of the $37 bln No. 2 U.S. healthcare group after up to 80 mln records were compromised suggests shareholders are still not alert to the danger.
Rob Cox: When CEOs are worth more as former CEOs 5 Feb 2015 Investors this week applauded the abrupt exits of bosses at Ally and Petrobras, whose market value surged by $8 bln. Ousters at McDonald’s recently and Microsoft in 2013 earned similar welcomes. The common thread seems to be relief after a CEO becomes entrenched and inflexible.
Can maker dons tin hat to reveal $6.6 bln approach 5 Feb 2015 Shares in London-listed Rexam jumped 20 pct on news it might sell itself to U.S. rival Ball. A deal isn’t even inked, and the antitrust concerns are substantial. The British company’s decision to publicise the price under discussion looks brave – or designed to force Ball’s hand.
Britain’s $35 bln mobile shake-up risks blowback 5 Feb 2015 BT is buying EE and Hutchison is in talks to buy O2. The firms and their investors hope watchdogs will permit both deals without too many strings. But rivals want tough scrutiny from antitrust bodies. And if BT pushes too boldly onto their turf, Sky and Vodafone may hit back.
Pfizer’s generics injection lifts mood for breakup 5 Feb 2015 The pharmaceutical giant’s $15 billion purchase of Hospira gives it a shot at reversing a history of value-destroying acquisitions. The injectable drug maker’s strength in non-branded medications should fortify Pfizer’s generics unit – and clear the way for spinning it off.
Lazard waits for shareholders to catch up 5 Feb 2015 CEO Ken Jacobs has successfully steered the bank to the target he set in 2012. And there’s room to go further. A decent jump in the stock price shows investors have started to cotton on. But Lazard still trades at an undeserved discount to its advisory and money management peers.
Denmark’s currency peg can avoid Swiss fate 5 Feb 2015 Traders are testing Copenhagen’s determination to keep the crown tethered to the euro. In response, the central bank has cut rates and is amassing reserves. It sounds like Switzerland, which abruptly abandoned its franc cap in January. But history need not repeat itself.
Tesco urgently needs new chairman 5 Feb 2015 It’s nearly four months since the incumbent said he would step down. A new CEO and CFO are making strides to fix Britain’s biggest grocer. But the regulatory investigations are piling up. Strategy, governance and reputation problems all cry out for new board leadership.
ECB’s Greek bank warning stays within reason 5 Feb 2015 The decision to restrict Greek lenders’ liquidity unsubtly hints that Athens should tone down its anti-bailout rhetoric. The ECB may have large discretionary powers – but so far remains within its remit. As previous examples have shown, the meddling could have been worse.
AstraZeneca becomes more reliant on investor trust 5 Feb 2015 The UK pharma group’s 2014 results disappointed. That shows the challenge CEO Pascal Soriot faces reaching the double-digit growth he promised when seeing off Pfizer’s $118 bln bid. AZ’s full valuation, and maybe its independence, are vulnerable if there are more slips.
BNP pays high price for being in the big league 5 Feb 2015 The French bank says industry taxes will cost 900 mln euros in 2016. It’s also spending 250 mln euros on compliance after fines for busting sanctions. BNP’s global reach delivered 3 pct revenue growth in 2014. If that stalls, the cost of being a giant will be hard to justify.
ABB’s growth targets are group’s biggest challenge 5 Feb 2015 The Swiss engineer underperformed in the fourth quarter, sending shares down 2 pct. But profitability is not ABB’s main problem. Underlying margins are up and restructuring is on track. The goal of 4 to 7 pct annual revenue growth until 2020 will be harder to reach.
China on defensive in battle of monetary signals 5 Feb 2015 The central bank has freed up around $100 billion of lending power and could do more if needed. Warning signs like a sharply weakening yuan, rising foreign-currency debts and capital outflows suggest it may have to. China’s policymakers are struggling to keep up.
World’s swelling debt calls for radical surgery 5 Feb 2015 Despite promises to deleverage, global borrowing has increased by $57 trillion since 2007, according to McKinsey. It’s hard to see economies growing their way back to prudence. Shrinking the pile will require borrowers to seek relief – and some creditors to cancel their claims.
General Motors-Ally spat clears the air for both 4 Feb 2015 The automaker is competing harder with its former finance unit. And six-year Ally boss Michael Carpenter, who criticized GM’s rivalry, has now gone. Both shifts have been in the works for a while. Now, the recovering car manufacturer and Ally can finally go their separate ways.
Sky’s next goal: dodge a soccer knockout 4 Feb 2015 The pay-TV group’s first results since it bought European sister outfits were strong, with pro-forma operating profit up 16 pct at 675 mln stg. Now a 4 bln stg soccer rights battle with BT looms. But that might be easier than feared - especially after referee Ofcom intervened.
Edward Hadas: The redundant fictions of Greek debt 4 Feb 2015 The new Athens government wants a deal with its reluctant creditors. The debate is poisoned by false claims about writedowns and moral obligation. Everyone twists the truth about how debt works and how economic pain is shared. Such fictions were helpful once – but no more.
Brazil must cast wider, global net for Petrobras 4 Feb 2015 The exit of CEO Maria das Graças Foster and other top bosses offers a chance to rebuild the $50 bln oil giant, and salvage Brazil’s reputation. Tapping internationally credible oil execs with a clear mandate would be the best way to start over – assuming anyone wants the job.
Prisoner’s dilemma costs Gilead investors $15 bln 4 Feb 2015 Its hep C drug helped the $145 bln biotech quadruple fourth-quarter earnings and plan for a big buyback. Gilead’s stock sank 10 pct, though, because it’s going to discount the treatment sharply this year. Cures fuel price wars because there’s no repeat business to worry about.
Staples-Office Depot can pass antitrust checkout 4 Feb 2015 Crunching together the two U.S. office supply chains is a financial winner: the value of the synergies alone pays for the $6.3 bln deal. Though trustbusters may squawk, even they acknowledge that with internet and big box stores thriving, the competitive landscape has changed.
Smucker deal may keep activists in Kibbles ‘n Bits 4 Feb 2015 The jam maker is gobbling Big Heart Pet Brands for $5.8 bln. Mixing coffee with dog food could create bargaining heft with stores but more likely will leave uppity investors hungry for a breakup. There’s a reason the one-time Nabisco division is caught in a cycle of spinoffs.
Heathrow upstarts have London’s best airport plan 4 Feb 2015 A new runway may be finally built near the UK capital at a cost of up to $28 billion. The three rival proposals all seem to be financially viable, but the independently conceived scheme that would double the length of one of Heathrow’s existing runways looks best placed.
Vuitton revamp helps LVMH face Asian gloom 4 Feb 2015 The French luxury group’s 64 pct net profit jump last year sent shares up 5.5 pct. But strip out the windfall from December’s Hermes stake disposal and the view is less rosy. Asia sales fell in Q4, but a resurgent U.S. and the Louis Vuitton renaissance are brighter spots.
Watch the small print in Qualcomm’s China fight 4 Feb 2015 Antitrust regulators are putting together a case against the U.S. chipmaker. If it’s found guilty, a big fine would grab the headlines. But forcing Qualcomm to lower patent fees, or banning the company from linking royalties to chip sales, could do greater financial damage.
China index: Trouble at home 4 Feb 2015 Breakingviews’ monthly index shows the economy suffering, and residential property plays a big role. Housing investment fell nearly 3 percent in December – the first drop in more than a decade. That was despite key indicators like exports and lending holding up well last quarter.
Shell oils gears for climate-activist investors 3 Feb 2015 The Anglo-Dutch major is backing a shareholder resolution for more disclosure about how climate change might affect its business. The demands are hardly taxing, so a refusal might look defensive. But the episode highlights the growing power of environmentally focused investors.