Blackstone hotel deal may include early checkout 8 Sep 2015 The buyout firm is paying $6 bln for Strategic Hotels, owner of Four Seasons and Ritz-Carlton properties. The 13 pct premium seems measly given the appetite of foreign buyers for luxury lodging. Maybe Blackstone’s rewarding commercial real estate breakup of 2007 would work again.
Lufthansa has to win dogfight with pilots 8 Sep 2015 The German airline can’t afford to buy peaceful labour relations with endless concessions. By claiming damages from the pilots union for losses incurred at the 2014 strike, Lufthansa boss Carsten Spohr has drawn a line. The carrier’s bloated costs mean victory is required.
Whitbread’s two-pronged approach is a winner 8 Sep 2015 With a new CEO in waiting, breakup ideas may resurface at the 8.5 bln stg group. Whitbread’s coffee shops and budget hotels business make odd bedfellows. But demerger proponents have a problem. Whitbread looks to be valued at more than the sum of its parts.
Li Ka-shing’s power deal is a tidy-up too far 8 Sep 2015 The Hong Kong tycoon wants his CKI unit to buy the rest of $18 bln affiliate Power Assets. Li’s latest restructuring would create a simpler, cash-rich firm with lots of M&A opportunities. But the all-share, no premium tie-up doesn’t look great for Power investors.
Mylan $28 bln offer not good enough for Perrigo 8 Sep 2015 The generic drugmaker’s hostile bid comes with a skimpy premium, and is mostly in its own paper. Perrigo investors shouldn’t want stock in a shareholder-unfriendly company with bad governance and financial risk. An auction could generate a better outcome than selling to Mylan.
Media General’s TV roll-up suffers print noise 8 Sep 2015 The owner of some 71 local U.S. stations is buying Meredith for $3.1 bln. Media General will get 17 more TV properties. But it will also be stuck with a raft of magazines. The modest 12 pct premium and decent synergies provide some buffer against the challenge of selling them.
Mitsui Sumitomo assumes a lot with Amlin swoop 8 Sep 2015 The Japanese insurer is paying 3.5 billion stg for the second-biggest insurer in London’s Lloyd’s market. Paying a big premium for already well-valued overseas assets is becoming a national trend in Japan. Mitsui will need punchy synergies to hit its target’s cost of capital.
Breakdown: Migrant crisis reshapes Europe politics 8 Sep 2015 The number of people flooding into the continent is only a small part of the story. More worrying: old political anxieties are being rekindled. While migration won’t immediately affect economic issues like Greece’s bailout or the euro, it could jeopardise European cohesion.
Renzi turns reform steamroller to Brussels 8 Sep 2015 Italy’s prime minister, dubbed “the scrapper”, is promising tax cuts. It looks like a challenge to Europe’s fiscal rules. Yet lower corporation taxes are needed, and the ECB will probably keep markets calm. The flipside is that Matteo Renzi’s plan requires that mooted spending cuts actually happen.
The real reason to worry about China’s FX reserves 8 Sep 2015 The war chest shrank by $94 bln in August. The central bank has good reasons to prevent its botched devaluation from becoming a self-fulfilling slide. And investors have many sound motives to sell yuan. Yet rapid outflows raise the risk of a liquidity squeeze on Chinese growth.
Woodside’s $8 bln LNG bid needs more gas 8 Sep 2015 The Australian energy group has pitched an all-share takeover to rival Oil Search. Woodside’s strong balance sheet would provide cheaper funds to develop Oil Search’s Papua New Guinea assets. But a 14 pct premium for a target that isn’t in financial distress looks under-powered.
Russia’s internet grip is softer than China’s 7 Sep 2015 A law forcing websites to store Russian users’ information domestically is the latest example of a clampdown on internet freedoms. But Russia’s size, combined with an unwillingness to enforce such rules fully, makes fight better than flight for the likes of Google and Facebook.
Italy rushes through one last flawed bank bailout 7 Sep 2015 Europe is weeks away from a new regime that makes creditors and depositors pay for bank rescues. Yet Rome is still asking Italian banks to pony up 1.4 billion euros to save three small lenders. Bail-ins are unpredictable, but the proposed solution risks leaving the system weaker.
BBC embraces life as a servant of the people 7 Sep 2015 The UK’s world-renowned broadcaster may use its state funding to help local newspaper groups report public-interest news. Dry coverage of municipal minutiae won’t reinvigorate the media sector. But using the state-backed BBC to ease an apparent case of market failure makes sense.
Glencore’s giant cash call puts squeeze on rivals 7 Sep 2015 The Swiss trader’s $10 bln debt reduction plan eases balance sheet jitters by cutting net borrowings by a third. Investors get stability at the expense of their dividend. But the move offers a grim view of commodity prices that undercuts the investment case for the whole sector.
Tesco sells Seoul for a decent price 7 Sep 2015 The UK grocer is offloading its South Korean unit for $6 bln-plus in Asia’s largest-ever buyout. That’s a solid result given wider market wobbles and falling margins at Homeplus. South Korea’s burgeoning private equity market and a paucity of big deals in the region helped.
Brussels may offer loophole for bank capital hit 7 Sep 2015 New accounting rules on how much lenders must put aside to cover future bad loans are sensible, but risk knocking holes in banks’ precious solvency ratios. The European Commission has a way to stop this happening. For once, red tape may be the banks’ friend.
G20’s promise to avoid currency wars is feeble 7 Sep 2015 Finance ministers and central bankers from large countries did not ask the United States to delay raising interest rates. They have no other plan to stop capital fleeing China and other emerging economies. That makes their pledge to resist “competitive devaluations” ring hollow.
Streamlining could help Toshiba regain lost value 7 Sep 2015 The scandal-hit Japanese electronics group reported a $318 mln net loss for 2014, and restated years of results. Reliable numbers and revamped corporate governance are a start in regaining investors’ trust. Shedding troublesome units like PCs would be a useful next step.
U.S. workers make Fed’s job easier 4 Sep 2015 The unemployment rate fell to 5.1 pct in August, putting half the central bank’s dashboard right on target. When joblessness last dropped so low in 2005, interest rates were raised to 3.25 pct. With the inflation outlook also stable, moving past zero shouldn’t be heavy lifting.
American Express may face its Microsoft moment 4 Sep 2015 The $75 bln credit-card firm led by Ken Chenault is ValueAct’s latest target. It’s not clear how breaking up or returning capital will remedy Amex’s subpar growth and lagging stock. Going after the long-serving boss, ValueAct’s successful strategy at the software giant, might.
Tesco’s global hopes can survive Korea sale 4 Sep 2015 Britain’s biggest grocer is close to selling its supermarkets in South Korea, reports say. The mooted 4.3 bln stg proceeds would cut net debt in half and relieve operational headaches. Yet an exit need not be the end of Tesco’s international ambitions.
Europe’s fuzzy capital markets union takes shape 4 Sep 2015 The European Commission is mulling a directive to harmonise member states’ various insolvency regimes. If common principles can be nailed down, bankruptcy will get smoother. And the Juncker commission’s goal of better integrated capital markets would have a hope of success.
Catalan vote a sideshow to national election 4 Sep 2015 Secessionist parties want to kick-start the road to independence in the Spanish region if they win the election on Sept. 27. But even if they prevail, the hurdles to full-blown independence look high. Investors should fret about Spain’s general election in December instead.
Chinese plane-hire deal survives market turbulence 4 Sep 2015 Bohai Leasing’s $2.6 bln bid for Dublin-based Avolon confirms China’s desire to grow in aircraft rental. The $31-a-share offer is slightly below Bohai’s indicative bid a month ago. But rising interest rates and the falling yuan could have been reasons to drive a harder bargain.
Rob Cox: Wall Street’s rave party feels the drop 3 Sep 2015 Robert Sillerman’s attempt to roll up the electronic dance music business is collapsing not long after UBS, Barclays and Jefferies helped his SFX Entertainment go public. Live Nation may once again turn out to be the buyer of a Sillerman creation, but this time will be different.
Volkswagen gets new chairman decision half-right 3 Sep 2015 Naming CFO Hans Dieter Poetsch as its new chair should give the German carmaker a better balance between cost discipline and engineering perfection. But a strong external candidate would have made more sense. As it is, Poetsch will start off needing to prove his independence.
Troubled U.S. firms get the Argentina treatment 3 Sep 2015 A court says they can’t force holdout creditors to accept less security against loans. A similar ruling led to a standoff between Buenos Aires and hedge fund Elliott. Unlike countries, companies can declare bankruptcy as a fallback. But restructuring is getting tougher for both.
Yoox glee at Net-a-Porter exit may wear thin 3 Sep 2015 Shares in the upmarket online retailer popped 5 pct as Net’s founder cashed out of the merger agreed in March. Terms of the severance deal with Natalie Massenet confirm that Yoox bought its rival at a bargain price. But it is losing know-how at an important time.
IMF misses chance to help global policymakers 3 Sep 2015 The lender’s warning on global economic risks lacks what policymakers need: insight into what’s happening to China and why market ructions have been so severe. G20 finance officials heading for Turkey need meatier, more challenging views than the IMF seems prepared to give.