Bank regulator’s blunder sums up Europe’s troubles 25 Nov 2015 Lenders’ capital ratios are higher than previously calculated, the European Banking Authority has said. The watchdog’s technocratic remit makes the error galling. Such confusion could deter investment just as the region’s financial institutions are doing more to deserve it.
Europe’s terrible banks look their best in years 25 Nov 2015 Capital levels, profitability and lending rose in the six months to June, the European Banking Authority says. Bad loan ratios are almost double those of U.S. banks, and more EU quantitative easing could be bad for business. Even so, lenders are proving surprisingly healthy.
BHP and Rio look out of touch on China 25 Nov 2015 Low-cost iron ore miners BHP Billiton and Rio Tinto are accomplished experts digging for the ferro-raw material. They are much less good at consumption estimates. With the ore at 10-year lows, the companies’ investment cases depend on them getting ahead of China’s demand curve.
Abengoa’s creditors face certain pain 25 Nov 2015 The heavily indebted engineering firm is seeking creditor protection after a new investor backed out of injecting fresh equity. Abengoa is probably viable, but only with a lot less debt. That makes debt-for-equity swaps and writeoffs the likely next step.
Playground weaklings give Li Ka-shing bloody nose 25 Nov 2015 Hong Kong shareholders rejected the tycoon’s $12.4 bln bid to merge his listed energy and infrastructure units. It’s another sign institutions in the Chinese territory are increasingly willing to exercise their limited powers. Companies can no longer take support for granted.
CalPERS gets what it pays for from private equity 24 Nov 2015 The U.S. pension giant revealed that $24.2 bln of net gains from the asset class over 25 years came at the cost of $3.4 bln in so-called carried interest for fund managers. Private equity is pricey and hitherto opaque, but CalPERS’ analysis so far helps justify the fees.
Icahn Xeroxing the HP breakup playbook for Xerox 24 Nov 2015 The activist took a 7.1 pct stake in the faded technology icon, which appears to be in a state of permanent restructuring. The $10 bln copier maker has some decent assets inside a disappointing whole. Finding buyers for some, and milking others for cash, looks logical.
Delay in Pfizer split is material adverse event 24 Nov 2015 The $160 bln acquisition of Allergan will cut taxes and add solid assets, but it’s also causing Pfizer to defer until 2018 a decision on splitting up. Even though the company’s disposals have added greater value than acquisitions, CEO Ian Read seems more eager to bulk up.
Time for Germany to let EU banking union fly 24 Nov 2015 The European Commission wants a mutualised deposit insurance scheme for banks by 2024. Berlin may be averse to the idea of financing non-German busts. But there are some safeguards, and unpicking the link between banks and states would better avoid trouble in the first place.
Streaming holdout Adele is a business anomaly 24 Nov 2015 The British singer is poised to beat album sales set 15 years ago by withholding her new record ‘25’ on the likes of Spotify. Few stars can make such refusals. Streaming music revenue is expected to surpass sales by 2018. Most artists will be destined to go with the digital flow.
Pfizer-Allergan gets no support from scaredy arbs 24 Nov 2015 The drugmakers’ shares are trading far below the prices implied by Pfizer’s all-stock offer - as if the merger were going to create no value. Arbitrageurs who used to exploit such gaps have little taste for massive deals – especially ones that have politicians on the warpath.
Oil market rests on Saudi-Iranian output deal 24 Nov 2015 Saudi Arabia says it will work with the world’s biggest oil producers to maintain price stability. To be effective, the OPEC kingpin will also have to make room for Iran to add barrels to the flooded market. The geopolitics are fast moving. But logic points to a deal.
Allianz coal ban will change investment climate 24 Nov 2015 The German insurer is to pull $4.3 bln out of investment in coal companies, ditching its scepticism against blanket anti-carbon policies. This rethink suggests big asset managers are taking climate change seriously. Other carbon-heavy industries like oil and cement may be next.
BBVA’s UK buy sees digital banks going mainstream 24 Nov 2015 The Spanish lender has bought 29.5 pct of mobile-only UK player Atom Bank. The 45 mln stg outlay is tiny beside Sabadell’s purchase of TSB. But BBVA joins Woodford Investment, Toscafund and Jon Moulton in backing Atom. Digital banks may find a way to carve out a valuable niche.
Malaysia remains fragile despite China power deal 24 Nov 2015 Troubled sovereign fund 1MDB will sell power assets to China’s CGN for $2.3 bln. To resolve its debt woes, the investor still needs to execute a larger bailout deal with Abu Dhabi. Even then, graft probes will keep up the pressure on Malaysia’s prime minister and the currency.
Alibaba throws a wrench in web fundraising wars 24 Nov 2015 The e-commerce giant is offloading its stake in Meituan Dianping at the same time as the Chinese startup raises up to $3 bln in new funds. The parallel sales will test investor demand for “online-to-offline” services. Alibaba’s exit will offer a clearer picture of valuations too.
Pfizer-Allergan helps both small and big advisers 23 Nov 2015 As many boutique M&A firms as bulge-bracket players are working on the $160 bln pharma mega-merger. That’s a more even mix than the average this year. But the tax-driven deal’s roster includes Goldman, Morgan Stanley and JPMorgan, extending their league-table lead over rivals.
Petco needs grooming to please new masters 23 Nov 2015 CVC and a Canadian pension fund have won the auction for the No. 2 U.S. pet chain, paying $4.6 bln all-in. TPG and Leonard Green, which bought Petco for $1.8 bln in 2006, are set to exit with a 24 pct IRR. The new owners will need spruced-up growth to fetch anything near that.
Pfizer barely washes face in $160 bln Allergan deal 23 Nov 2015 The biggest inversion ever will bring hefty tax and cost savings worth slightly more than the $30 bln premium on offer. Snag is, the structure will upset U.S. authorities. And slamming two drug giants together often creates dis-synergies in the labs.
Argentina’s vote for Macri may show Brazil the way 23 Nov 2015 The pro-business mayor of Buenos Aires has won the presidential runoff after promising to break with the unsustainable populism of outgoing leader Cristina Fernandez. He plans to push through reform in Latin America’s third-largest economy. It’s a process Brazil can learn from.
Betting against copper is a dangerous game 23 Nov 2015 Shares of Anglo American, BHP Billiton and Glencore fell on Nov. 23 as copper dropped below $4,500 a tonne. Once tipped as the metal of the future, copper is now a symbol of global miners’ past misjudgments. The red metal price seems destined to sink further.
Italy’s zero-cost bailout is too good to be true 23 Nov 2015 The Italian bank resolution fund will cough up 3.6 billion euros to restructure four failing lenders. Officially, public funds won’t be used, but the burden will hit a sector already struggling with low rates and weak demand. Rome could find itself on the hook too.
Transatlantic ATM merger unlocks fortress Germany 23 Nov 2015 U.S. cash dispenser maker Diebold is buying Germany’s Wincor Nixdorf for $1.8 bln. It’s the first deal of its kind done for a target without an anchor shareholder. Nixdorf was initially sceptical. Its acceptance suggests German boards no longer see independence as sacrosanct.
Playtech’s failed M&A makes gambling a bigger risk 23 Nov 2015 Regulators have forced Israeli billionaire Teddy Sagi’s company to drop its half-billion pound bid for UK currency trader Plus500. A related Irish deal could now fail too. With betting-industry customers consolidating, Playtech may have to pursue other finance-sector targets.
Dixon: How the EU could woo the UK 23 Nov 2015 The British prime minister wants to rework the UK’s relationship with Europe. Once complete, other EU leaders could launch a charm offensive to persuade Britain it is valued and influential, and to vote to stay in the union. Here’s what Merkel, Hollande, Renzi, et al could say.
Pfizer-Allergan to throw down tax-reform gauntlet 23 Nov 2015 The drug firms are shrugging off Uncle Sam’s latest attempt to prevent mergers predicated on relocating to low-tax jurisdictions. The largest-ever inversion, at some $150 bln, ought to raise pressure on lawmakers to find more comprehensive fixes to the great M&A tax dodge.
Asian online giveaways echo past internet follies 23 Nov 2015 Chinese and Indian web groups are helping subsidise the cost of everything from manicures to mobile phones to attract users. It’s reminiscent of previous frenzies that put growth ahead of profitability. Customer loyalty may prove scarce when the money runs out.
Argentina faces choice between magic and realism 20 Nov 2015 Voters look likely to choose uncharismatic, pro-market Mauricio Macri as their next president in Sunday’s runoff election. Latin America’s No. 3 economy needs a dose of orthodox management after years of Kirchnerist magical thinking. But he could become unpopular very fast.
C&W deal exposes John Malone’s paper-thin trackers 20 Nov 2015 The Latam and Caribbean cable operator’s $8 bln sale to the media mogul’s Liberty Global presents shareholders with three forms of payment. The C&W board is recommending the one without a tracking stock. That partly undercuts the reason for creating such shadow shares.
A Panglossian guide to valuing Telecom Italia 20 Nov 2015 Telecom Italia’s tough home market and high debt might struggle to elicit a buy from even Voltaire’s eternal optimist. Purchases from French billionaires Vincent Bollore and Xavier Niel have driven up the price. The shares could be worth more, but only with heroic assumptions.