Exxon and Chevron may soon see European sights 31 Jul 2015 The two U.S. oil giants experienced even bigger drops in profit than were expected, pushing dividend yields closer to those of rivals across the Atlantic. Shell and BP have been more aggressive on capex and job cuts. If oil prices tumble further, Exxon and others could follow.
Olympics committee gets it right with Beijing 2022 31 Jul 2015 The Winter Games won’t boost China’s growth, end repression, or win the country much extra respect. It might help soft power, but then most countries already do whatever China asks. Freed from such false hopes, everyone can sit back, have fun and admire the fake snow.
SoulCycle IPO endorphins inhibit pain potential 31 Jul 2015 The indoor cycling chain is inviting investors to join its “tribe” of athletes, renegades and rockstars. The company is profitable and sales accelerated by more than 50 pct in the first quarter to $35 mln. But management, growth plans and faddishness are weak points in the spin.
Ganja bank makes potent case for U.S. legitimacy 31 Jul 2015 A Colorado credit union is suing for access to national check clearing and money transfer systems. The law may be hazy, but opponents sound as if they’re just blowing smoke. Public safety, revenue and transparency are solid reasons for financial regulators to mellow out.
BNP Paribas’ M&A machine spits out growth and risk 31 Jul 2015 France’s top bank by assets cranked out resurgent second-quarter earnings of 2.6 bln euros. Three takeovers in 2014 are delivering results. Yet dealmaking sprawl has tripped up rivals in the past. It might be a good time for the Belgian state to trim its 10 pct stake.
Carrefour suggests Tesco can retain global goals 31 Jul 2015 The French retailer is performing better in Latin America and Asia than at home, while its similarly sized UK rival might sell foreign assets to relieve balance-sheet strain. But if Tesco can live with the debt, it might be emboldened by Carrefour’s global shopping experience.
IMF’s parental threat may help euro kids grow up 31 Jul 2015 The global lender only got involved in the Greek mess because the euro zone was too young to deal with its own problems. As a third bailout nears, the IMF says it wants out, unless both sides behave sensibly. This call for realism may actually be listened to.
Lloyds’ comely capital surplus has many admirers 31 Jul 2015 The UK bank raised its dividend despite laying aside 1.4 bln pounds to atone for mis-sold products. Lloyds investors hope more of its 2.9 billion pounds of excess capital will come their way. It might, if the taxman, regulators and peeved customers don’t get there first.
Auto rivals carpool in $2.8 bln bid for map assets 31 Jul 2015 Daimler, BMW and Audi are offering 2.6 times revenue for HERE, Nokia’s investment-heavy digital maps unit. The price is high, but the German luxury carmakers’ strategic logic is solid. Map systems are scarce, and a good one will be a competitive advantage for driverless cars.
Numbers add up to HSBC leaving London 31 Jul 2015 The global bank is reviewing its head office location based on 11 criteria such as economic importance, transparency and tax. A ranking based on data compiled by Breakingviews shows Singapore, Hong Kong and even Toronto are more attractive than HSBC’s current home base.
Philip Morris can cut down easily in Jakarta 31 Jul 2015 The tobacco giant must lift the free float of its Indonesian unit. The potential $1.5 billion sell-down comes as an economic slowdown hits cigarette sales. Luckily for the Marlboro man, investors can hardly ignore a share sale by the country’s largest listed group.
Airbnb may force innkeepers into M&A pillow talk 30 Jul 2015 Sheraton owner Starwood is looking for partners. A deal with IHG might help it boost prices and lower costs, but even with synergies, the merged firms would barely match Airbnb’s $25 bln valuation. As the home rental service’s clout grows, hotels will face some sleepless nights.
BuzzFeed investors could be playing Price is Right 30 Jul 2015 The digital publisher and Vox are poised to get fresh capital from NBC. BuzzFeed’s $250 mln share would value it at $1.5 bln. That’s not far off the price of recent media deals. With the promise of millennials and advertisers strong, this begins to look like a reality show.
Rob Cox: Rick Perry is running for the wrong job 30 Jul 2015 The presidential candidate and ex-governor of Texas is a proponent of laissez-faire markets. Yet he has joined a global chorus of politicos and watchdogs pushing policies to break up the big banks. If he’s serious, he’d make a better Wall Street regulator than White House boss.
New seasoning brings out blandness of U.S. growth 30 Jul 2015 First-quarter GDP oddities have been addressed, but the basic message of the 2.3 pct pace of Q2 expansion is steady but unspectacular growth. There’s no excuse for the Fed to wait for more. The stable trend also ought to curb fiscal prognostications from presidential hopefuls.
Italy’s corporate grandees ditch concrete boots 30 Jul 2015 HeidelbergCement’s acquisition of cement maker Italcementi marks the end of an era in Italian corporate finance. The Pesenti family’s empire was a part of the salotto buono of cross-shareholdings created by Mediobanca’s Enrico Cuccia. Its sale shows Italy is open, and healthier.
Delphi deal crudely hitches to connected-car hype 30 Jul 2015 The auto supplier is paying $1.7 bln for a UK maker of “bundle management solutions.” HellermannTyton may be a solid company whose cable ties and such are integral components, but there’s a whiff of dot-com fever in the rhetoric. That’s not enough to justify the 45 pct premium.
Deutsche Bank smart on growth, shabby on costs 30 Jul 2015 Germany’s biggest bank grew capital buffers and revenue briskly in the second quarter. But expenses devoured 85 pct of the top line – the same as a year ago. New co-CEO John Cryan needs to pull Deutsche out of some of the 60-plus countries it aims to be in, and cut headcount.
Shell finally hunkers down for soft oil prices 30 Jul 2015 The Anglo-Dutch major’s shares have underperformed peers since it announced the $70 bln BG takeover, which seemed to need expensive oil to work out. Cheaper crude is hurting profit, but the company is cutting costs and capex sharply. Debt is low and the dividend looks safe.
RBS moves closer to still-distant goalposts 30 Jul 2015 The state-controlled UK bank is building capital, shrinking assets and expunging historical nasties. The second quarter’s 11 percent operating profit growth reassures. Yet non-state investors’ greatest desires – dividends and an end to government meddling – are not yet in sight.
Euro zone economic bright spots conceal a malaise 30 Jul 2015 The region’s recovery continues, with extra sunshine in Spain. However, inflation remains disturbingly weak, and monetary union is failing at its most basic task, economic convergence. A new ECB study shows that differences between members’ real GDP per person have grown.
Centrica’s new strategy is stuck in the middle 30 Jul 2015 The UK utility’s revamp is half-hearted. CEO Iain Conn is right to focus the 14 bln stg giant on trying to please customers. The cost cuts are suitably ambitious. But the plans envisage divesting only half the capital-heavy oil and gas units. Centrica could have been bolder.
AB InBev and Diageo may have to drink alone 30 Jul 2015 Two of the world’s largest drinks companies – together worth $275 bln - posted OK-ish results on July 30. Investors might hope for transformational deals, perhaps a mega-merger of the two. Though it is harder to build standalone investment cases, they may be necessary.
Malaysian crisis could do lasting financial damage 30 Jul 2015 Prime Minister Najib Razak’s sacking of his deputy opens the door to a protracted power struggle. The economy can ill-afford it. Fading consumer and investor confidence and a slumping currency could mean a long period of high interest rates, anaemic growth and soured loans.
Jailed Chinese tycoon’s deal deserves a hard time 30 Jul 2015 Huang Guangyu wants to sell $1.45 bln of stores to GOME, the Chinese electrical chain he founded. The complex, pricey-looking, and as yet poorly explained deal would give him majority control. Outside investors, who get a say, must ask if this is really the best they can get.
At least Facebook has firepower to buy growth 29 Jul 2015 Costs, notably R&D, rocketed 82 pct in Q2, twice the rate of top-line growth. The likes of Twitter and Yelp are also spending heavily for future revenue. With $4 bln in quarterly sales, plenty of cash and a record of savvy deals, Mark Zuckerberg has the clout to succeed.
Buyout firms are sitting on dry powder keg 29 Jul 2015 Carlyle and Apollo found more to sell than buy in the second quarter, a pattern becoming hard to break. Along with Blackstone, KKR and others, global LBO shops have almost $500 bln to invest. As corporate buyers keep winning deals, private equity’s fuse may get short.
S&P warning portends grim road ahead for Brazil 29 Jul 2015 Many of Dilma Rousseff’s compatriots want the president impeached. S&P hasn’t gone that far but warns corruption and political turmoil may cost the $2 trln economy its investment-grade rating, which is another kind of indictment. Her second term will pay the price of her first.
Novartis spinoff is neat cure for Big Pharma ills 29 Jul 2015 The $275 bln Swiss pharma group is injecting three drugs-in-development into a new entity backed by UK investors. Venture capital markets can be better at valuing and nurturing small drugs than Big Pharma shareholders. With biotech markets hot, there’s room for copycat deals.
Edward Hadas: Nikkei joins demographic denial cult 29 Jul 2015 Nikkei is the latest Japanese company to look for growth outside the shrinking domestic market. Its Financial Times purchase may work out, but the approach is flawed. Few companies can profitably escape their demographic destiny. It may be better to accept steady decline.