Johnson-Tyco inversion is insured against politics 25 Jan 2016 U.S. building-controls maker Johnson Controls’ $16 bln purchase of Ireland-domiciled Tyco risks becoming a target for critics of tax-reducing deals. But with an expected $500 mln of yearly savings and a low 11 pct premium for Tyco’s owners, tax savings are gravy, not meat.
Twitter’s permanent revolution invites interlopers 25 Jan 2016 Four top executives have stepped down, according to CEO Jack Dorsey, via a tweet. Management turmoil hasn’t done any favors for the $12 bln media business. With the stock below its IPO price and Dorsey also running Square, a takeover could spare Twitter a fate like Yahoo’s.
Santander’s animal spirits face capital constraint 25 Jan 2016 The Spanish bank is mulling a bid for RBS bank branches in the UK. The deal makes sense, but funding it may be tricky. Boss Ana Botin walked away from the deal in 2012 and her bank is tight on capital. A rights issue could do it, but Botin needs to get the share price up first.
Gold’s prospects are dull 25 Jan 2016 The precious metal isn’t behaving like a safe haven should. The dollar’s rise is weighing on its price, Asian demand is dented, investors don’t need inflation hedges, and past price gyrations have tarnished its defensive allure. Grimmer news is needed to restore gold’s lustre.
Google UK tax truce more significant than it looks 25 Jan 2016 The search engine will pay 200 mln pounds in UK taxes for a decade in which it made 24 bln pounds in revenue. Google could have paid 10 times the tax based on profit margins elsewhere. But this is a sign that, however slowly, international standards are changing cosy habits.
Siemens digital deal sets tone for M&A 2.0 25 Jan 2016 The German engineering giant has a history of value-destroying acquisitions. Yet buying U.S. engineering software maker CD-adapco may buck that unhappy trend. The capital goods market faces a digital revolution. More importantly, it looks like Siemens isn’t massively overpaying.
Sweeter Cairn bid is Vedanta’s least bad option 25 Jan 2016 Anil Agarwal’s Vedanta Resources is edging towards loan covenant limits. Bondholders are losing faith in the mining tycoon’s ability to tap buried cash and repay $8 bln of debt. The stress may force Agarwal to sweeten a deal to merge subsidiaries and simplify the group structure.
Vietnam’s tech feast relies on foreign ingredients 25 Jan 2016 Big overseas investors like Samsung are helping to drag the country into the global technology supply chain. Exports of electronics surged by a third to $48 bln in 2015. But the ultimate test for the country’s export-led model will be developing its own local champions.
Ads put Alphabet within spitting range of Apple 22 Jan 2016 The former Google’s market cap has topped $500 bln and is inching toward the iPhone maker’s. Investors value the search firm’s earnings from fast-growing digital advertising twice as highly as Apple’s from a saturating smartphone market. They may be overlooking serious risks.
Finance wrestles with post-millennial tension 22 Jan 2016 Youngsters dominate the workforce, and the conversation at Davos. Fearful of losing talent, investment banks are giving millennials fewer hours, faster promotion and more leisure. What looks like a new trend is just a reversion to the mean – with some confused thinking thrown in.
Disney aims to repeat luck of Star Wars delay 22 Jan 2016 The seventh movie in the franchise, released last month, was originally planned for mid-2015. With “The Force Awakens” shattering box-office records, it offers a new Hollywood roadmap. Having stumbled upon a magic formula, the Mouse House is delaying episode eight, too.
California gas leak a BP moment for U.S. polluters 22 Jan 2016 A Sempra Energy facility has spewed almost 90,000 tons of methane since October. The environmental harm may rival that of the UK oil giant’s 2010 Macondo well spill. American enforcers fined BP some $19 bln for that fiasco. Homegrown violators deserve equally tough treatment.
Davos presents human display of volatility 22 Jan 2016 As markets swing up and down, so do the fortunes of those parading down the Promenade at the World Economic Forum. Some of last year’s lords of the Alpine dance, like Anshu Jain or Andre Esteves, have exited, making room for debutantes. For some, this will be their last Davos.
Philips’ failed deal puts Chinese bids in the dark 22 Jan 2016 The Dutch firm’s sale of 80 pct of its specialty lighting arm to a Chinese fund has failed on U.S. security fears. Philips’ Lumileds unit has tech smarts and stateside operations, but this looks like regulatory overreach. Pending Chinese bids for hardware now seem less certain.
UniCredit is acid test for EU hybrid bank bonds 22 Jan 2016 Yields on the Italian bank’s AT1 debt have jumped. Given these new instruments allow coupons to be turned off at any time, it’s logical for investors to fret about banks near trigger points. But it will show if banks and regulators are ready to use the weapons at their disposal.
Germany’s star economist leaves mixed legacy 22 Jan 2016 Hans-Werner Sinn, the most publicly visible German economist of his time, is retiring. A talent to simplify complex issues went overboard long before the euro crisis. His career shows the importance of economists communicating beyond campus – and the pitfalls.
Jamie Dimon’s big raise amazingly hits right note 22 Jan 2016 Lifting the JPMorgan CEO’s compensation 35 pct to $27 mln may seem tin-eared with shares down some 12 pct last year and staff pay flat. But most of the award is tied to future results, a concession to investors that brings the bank in line with peers. Call it a raise with teeth.
Foxconn is better off without Sharp 22 Jan 2016 The Taiwanese giant wants to gatecrash a state-backed rescue with its own $5 bln-plus offer. The Japanese group’s display technology would make Foxconn even more indispensable to Apple. But fixing this basket case will be hard. And Sharp’s other businesses are a poor fit.
Time Warner breakup has gone far enough 21 Jan 2016 Boss Jeff Bewkes has dismantled the media conglomerate, spinning off AOL, Time Warner Cable and Time Inc. Shrinking further by, say, separating HBO lacks a compelling financial rationale. The real question is when Time Warner will again attract a suitor.
Peru could use legal tip from Brazil or Argentina 21 Jan 2016 The Andean nation beats neighbors economically but may lag on the legal front. A court scandal over land-reform bonds has hedge fund Gramercy and others crying foul. Rio and Buenos Aires are learning market confidence comes easier with independent judges and a wish to negotiate.
Chancellor: Best cure for low oil is low prices 21 Jan 2016 Having invested heavily, both mining and energy firms are struggling with oversupply and weak prices. New mining production from BHP and others will continue to weigh on commodities for years. But oil investment cuts set the stage for the next bull market in the black stuff.
UK business faces its own In-Out dilemma on Europe 21 Jan 2016 The British prime minister wants companies not to “hold back” on Britain’s future in Europe. Such a call must be heeded with caution. If the pro-EU debate hinges on what’s good for business – or even worse, the City – it may backfire.
Draghi’s words speak louder than his actions 21 Jan 2016 European Central Bank President Mario Draghi has driven euro and regional bond yields down by dangling the prospect of policy easing in March. But as with the bond-buying he unveiled a year ago, markets may be less impressed when the actual policy details emerge.
Italy nears bullet-biting time on bad debt mess 21 Jan 2016 Rome hopes to get the nod from Brussels for a bad bank to sort its lenders’ toxic debt. The snag: lenders may have to sell at even bigger discounts than Ireland’s did. After years of trying to avoid robust state action, Italy is realising that only brusque treatment will work.
How Symantec let bad math lead to a shaky deal 21 Jan 2016 Carlyle’s buyout of the software company’s Veritas unit was never actually worth the $8 bln headline figure. Excessive leverage was dressed up to make it look workable. Even the new 8 pct price cut is misleading. Boards and investors can help themselves by getting M&A sums right.
Pearson buys some time with latest shakeup 21 Jan 2016 The educational publisher’s shares gained 10 pct on the back of a big restructuring plan despite a warning that earnings would suffer this year before stabilising at the end of 2017. The post-FT reality check is welcome, but it’s far from clear Pearson can return to growth.
New index puts long-term investors to useful test 21 Jan 2016 Fund heavyweights, including Canada’s CPP and GIC of Singapore, are committing $2 bln to round up some 250 stocks that meet higher standards of corporate governance and profitability. Alphabet and Facebook, worth $760 bln combined, miss the cut. That makes it a bold experiment.
Saudi oil kingpin could fall with oil price 21 Jan 2016 Ali al-Naimi staked his credibility on a high-risk strategy to knock out the kingdom’s rivals. A harsh tumble in crude below $30 a barrel, however, is now too painful for OPEC members, including Saudi, to bear. It puts the octogenarian minister’s job, and oil policy, at risk.
Germany’s listed landlords better off detached 21 Jan 2016 Deutsche Wohnen investors have until Jan. 26 to decide on rival Vonovia’s 14 bln euro hostile bid. Yet synergies are disputed, and a 14 pct fall in the bidder’s shares makes a stingy offer even less compelling. Wohnen can grow on its own, and its shareholders should say No.
Malaysia’s strongman faces a challenge to impress 21 Jan 2016 Prime Minister Najib Razak has survived a political scandal over dubious payments he received. He has also managed to tame debt at the sovereign fund he championed. Though his position looks secure, low oil prices and racial divisions will test efforts to repair his legacy.