Humpty Dumpty M&A sings song of excess 6 Aug 2015 Bill Ackman has taken a stake in the $75 bln Mondelez, seemingly predicated on the possibility of putting it back together again with Kraft. Meantime there’s talk of successful tech spinoff VMware absorbing its parent EMC. It’s fantasy season for all the Street’s men.
Coca-Cola bottling deal targets irksome tax hiccup 6 Aug 2015 Merging three of the drinks giant’s bottlers could create savings worth around $2.8 billion. The new company may even sell a few more sodas. But an undeniable draw for Coca-Cola Enterprises owners is that after the deal the group will have less need to keep the U.S. taxman sweet.
Fertilizer deal offers investors bountiful harvest 6 Aug 2015 CF Industries’ $6.1 bln bid for most of rival OCI’s businesses comes with $500 mln of cost cuts that over time will virtually pay for the acquisition. The deal should also boost production capacity by 65 pct. Those are some powerful nutrients for shareholders to absorb.
An oligarch and a tycoon clean up Italian mobile 6 Aug 2015 That’s not the setup of a bad joke but a fair summation of a merger that may solve Italy’s ultra-competitive phone sector. Getting Vimpelcom’s Mikhail Fridman and Hutchison Whampoa’s Li Ka-shing to surrender control was a feat in itself. The result looks surprisingly clean.
BoE manages to be transparent yet unpredictable 6 Aug 2015 The UK central bank has for the first time simultaneously released its policy decision, how rate-setters voted, and its inflation report. It’s transparent. But investor shock that only one person voted to hike rates suggests greater openness doesn’t mean greater predictability.
Zurich can justify a swoop on RSA 6 Aug 2015 The Swiss insurer released disappointing results but thinks its UK peer remains a good fit. Zurich’s hurdle rate for investment is around 10 percent. Offering 600p a share for RSA, a 36 pct premium, should allow that without synergy assumptions being too ambitious.
Rio Tinto is winning in dirty ore wars 6 Aug 2015 The Australian miner’s earnings from iron ore more than halved in the first half, yet production is booming. Low costs give Rio and big peers ammo to drive others out of the market as metal prices crater. It’s a brutal demonstration of market forces, and geological good luck.
Metro cashback would spice up slow-mo turnaround 6 Aug 2015 The German retailer needs pep. Growth is lacklustre, margins are thin and Russian woes mean the shares’ underperformance may persist. Metro has offloaded 5 bln euros in assets and lowered its debts. A special dividend would perk up a disappointing valuation.
Malaysia mess puts Goldman Sachs in the hot seat 6 Aug 2015 The Wall Street firm raised lots of money very quickly for state-backed 1MDB. Though the deals earned Goldman outsized fees, a brewing political scandal involving the fund leaves the bank exposed and raises questions about its processes for vetting reputational risk.
Fiat cyber mess is another reason to back Tesla 6 Aug 2015 The Italian-American automaker’s 1.4 mln vehicle recall for software upgrades sends another message about the growing importance of technology to car producers. Vulnerability to hacking is a serious problem, and tech-led players like Tesla have the edge in addressing it.
Singapore’s creaking home prices have solid floor 6 Aug 2015 After a breathless rise, property values have dipped. Interest rates are rising even as the economy slows. But prices are unlikely to fall too much further. Population growth plus liberal public spending on infrastructure will boost long-term value, and the supply glut will fade.
Disney could use Time Warner cord-cutting tips 5 Aug 2015 The entertainment giant insists on selling cable shows in a bundle, despite losses at ESPN attributable to growing viewer preference for buying à la carte. Time Warner is benefiting from the trend, offering HBO separately. A business built on TV’s status quo looks like fantasy.
U.S. CEO pay ratio will pique investor curiosity 5 Aug 2015 The SEC is finalizing a rule requiring companies to disclose the ratio of the leader’s comp to the median employee’s. It won’t be a great yardstick for comparing one business to another. But if it forces boards to explain – and stakeholders to ask questions – it will be worth it.
UniCredit view on capital is too glass half-full 5 Aug 2015 Shares in Italy’s biggest bank jumped after it reported higher capital ratios. A recovering Italian economy and benign markets mean UniCredit may avoid a cash call, yet it lags on capital and profit. CEO Federico Ghizzoni needs to do more to shake off the group’s discount.
StanChart CEO’s bad numbers don’t disappoint 5 Aug 2015 New boss Bill Winters used first-half results to raise the emerging market bank’s bad debt provisions and halve its dividend. A 5 pct return on equity shows the scale of the challenge. After two months in charge, the CEO has quickly got to grips with StanChart’s biggest problems.
SocGen adds caution to racy business mix 5 Aug 2015 A bumper second quarter in equities trading pushed earnings at France’s second-largest listed bank above estimates. But SocGen is also cutting 850 mln euros of costs and boosting capital. It should make investors more relaxed about a heady focus on Russia and investment banking.
Best chapter in Pearson breakup story yet to come 5 Aug 2015 The media group can soon sell its 47 pct stake in publisher Penguin Random House to co-owner Bertelsmann. Including future synergies, the stake could fetch $2.7 billion, twice what Pearson got for the FT. Since the venture could get more valuable still, waiting looks better.
Mediobanca starts to resemble normal bank 5 Aug 2015 The Italian lender reported rising fourth-quarter net profit and loan growth. CEO Alberto Nagel’s bid to turn Italy’s old corporate powerbroker into a profitable lender is paying off. A sensible acquisition and the Italian government’s reform drive are easing the transition.
Yuan entry to global club goes beyond box-ticking 5 Aug 2015 A staff report gives no new reason to keep China’s currency out of the IMF’s reserve basket. But the final decision depends more on intuition than data. The fund needs to be sure Beijing won’t change its mind about promoting the yuan. Recent stock market meddling doesn’t help.
Asia’s sly austerity makes debt challenge worse 5 Aug 2015 The region’s companies and households are nursing a debt hangover. Blame China’s credit binge and cheap Western money. But tight fiscal policies are pushing the region in the wrong direction by worsening an economic slowdown. It’s time for governments to loosen the purse strings.
Shire M&A machine stumbles on $30 bln Baxalta bid 4 Aug 2015 The onetime Irish target for AbbVie is planning a mega-deal of its own. Unlike the previous combination, Shire’s Baxalta purchase has industrial logic as well as tax benefits. Shareholders, though, might have preferred being bought out to assuming all the risks of a takeover.
Alibaba borrows bigger brand to crack U.S. market 4 Aug 2015 Hiring Goldman Sachs former stalwart Michael Evans to grow the business overseas is shrewd. The Canadian rowing champ can open doors previously closed to the Chinese e-commerce group in the West. It’s bad practice, since Evans was an independent director - but good politics.
Donnelley proves an old dog can learn new tricks 4 Aug 2015 The 150-year-old printer is splitting in three, spinning off fast-growing services from stodgier publishing. Investors like the deal and the better value it portends. So much so, the only vexing question is whether the firm keeps giving all employees its classic holiday books.
UK following in Uncle Sam’s punishment missteps 4 Aug 2015 Plea deals for the likes of Barclays may be coming in Britain but have already flopped in America. Promises to clean up, even with fines and monitors, often turn out empty. U.S. enforcers are now pushing JPMorgan and others to admit guilt. Both regimes could stand to toughen up.
Smiths Group gets taste of activist supportivism 4 Aug 2015 U.S.-based fund ValueAct has added a stake in the UK engineering group to a portfolio that includes a chunky position in aero-engine maker Rolls-Royce. Most activists pay lip service to the notion of being supportive shareholders. In these cases, words and deeds might match.
Oil price slide complicates life for central banks 4 Aug 2015 Brent is back down at $50 a barrel. Bond prices show this is eroding investor confidence that inflation will pick up. Central banks usually ignore the temporary impact of commodity price swings, but can’t afford to be complacent with inflation and policy rates already so low.
Credit Agricole gets nasty reminder of ECB’s teeth 4 Aug 2015 The French bank’s shares slumped 9 pct after it cited Frankfurt’s opposition to a planned structural rejig. While peer BPCE enacted a similar overhaul in 2013, that predates the ECB’s new supervisory remit. Credit Agricole could have done with being less presumptuous.
BMW´s profitability slowdown only temporary 4 Aug 2015 The 16 percent drop in carmaking operating profit in the second quarter is an embarrassment for new chief Harald Krueger, and margins have dropped below those of rivals Mercedes and Audi. While China is a concern, Europe is recovering and new models will help build momentum.
China hits the brakes on financial disruption 4 Aug 2015 The central bank is cracking down on the $2 trln online payments market. Proposed transaction limits and stricter security rules would help traditional banks at the expense of online players Alibaba and Tencent. It’s a reminder that, even in China, tech innovation has its limits.
Noble could use new backer for confidence shortcut 4 Aug 2015 Attracting a heavyweight investor would show faith in the commodity trader’s accounts. Better yet if this signals Noble is neither desperate for funds nor fully valued by the market. A convertible bond would achieve those aims while minimising the pain for existing shareholders.