Daimler could spin its trucks into Ferraris 4 Feb 2016 Margins and market share are improving, but the German carmaker’s valuation gives little credit for its big truck business. Boss Dieter Zetsche might unlock value by listing that separately, as Fiat did with prize brand Ferrari. Truckmakers like Volvo fetch far higher valuations.
Vodafone’s Dutch Petri dish worth watching closely 4 Feb 2016 The UK mobile giant reported six straight quarters of growth, with Europe improving. Yet more significant is the scope for an elusive deal with cable company Liberty. A possible joint venture in the Netherlands sounds small, but could reveal potential for collaborating further.
Sharp surprise sends hopeful signal about Japan 4 Feb 2016 The ailing electronics firm is leaning towards a deal with Taiwan’s Foxconn over a domestic bailout. Sharp’s current shareholders may yet suffer. But at least the board seems to be taking its duties to them seriously - just as should happen in the new investor-friendly Japan.
AstraZeneca pay contortions get ever more tangled 4 Feb 2016 The UK pharma group may miss the earnings targets Chief Executive Pascal Soriot must meet to get his bonus. But it may adjust Soriot’s goal to reduce the effect of “dilutive” acquisitions. There’s logic to that, but Astra’s accounting gymnastics undermine its rigour on pay.
ChemChina can reap rewards of new stance on GMOs 4 Feb 2016 Buying Syngenta will thaw China’s hostility towards genetically modified organisms. Nationalist fears about food safety will ring hollow once the seeds are in Chinese hands. The buyer will be able to push into a huge new market – but so, in time, will rivals like Monsanto.
Thai telco’s cash call rings True for China 4 Feb 2016 Thailand’s True Corp is raising $1.7 bln in its second share issue in as many years. That will help pay for spectrum and trim debt as competition heats up. But True shares are expensive. Without Chinese backing, investors might be wary of tycoon Dhanin Chearavanont’s moves.
CBS board changes herald Viacom game of thrones 3 Feb 2016 Sumner Redstone is out as chairman of half his $40 bln empire, with the job going to the CEO. That swaps one kind of poor governance for another but at least Les Moonves has done well for shareholders. A double grip on power at Viacom may not come so easily to Philippe Dauman.
Amazon seeks brick hedges for click shipping costs 3 Feb 2016 Delivery subsidies cost $5 bln last year, and they are rising. A mall owner says Jeff Bezos’ internet-retailing giant may open hundreds of bookstores. If so, it will encourage customers to become their own “last-mile” service. The gains for Amazon would be biggest in cities.
Last thing Brazil’s economy needs is Zika panic 3 Feb 2016 The toll the virus may take on unborn babies is tragic, but it isn’t as infectious as Ebola or SARS. A bigger worry for tourists and Olympic athletes is dengue fever. Direct Zika costs also should be negligible. The danger is that headlines fracture already fragile confidence.
Syngenta up against element of regulatory surprise 3 Feb 2016 The Swiss seed maker says its $43 bln sale to ChemChina shouldn’t raise U.S. national security fears, despite hot-button facets like chemicals, food and China. Yet Philips’ blocked lighting-unit deal shows Uncle Sam can veto without explanation. That’s reason enough to be wary.
GM will struggle to take recovery up another gear 3 Feb 2016 The Chevy maker rode booming U.S. car sales to record full-year profit, hitting a 10 pct North America full-year margin goal 12 months early. GM thinks it can boost earnings, profitability and cash flow in 2016. Peaking U.S. demand means the climb will get harder from here.
Glaxo self-help looks better than surgeon’s knife 3 Feb 2016 The UK pharma group has come under pressure to split itself up after weak performance. Latest results show Glaxo is coming to terms with its challenges. A breakup wouldn’t create much value, absent a premium bid. That gives Chief Executive Andrew Witty breathing space.
EU curbs on free data flows are basically useful 3 Feb 2016 Europeans may get rights to stop indiscriminate U.S. data-snooping if national agencies agree to a new political pact called Privacy Shield. Multinationals won’t know how it works until April at the earliest. But this is the basis for a welcome check on Big Tech’s power.
Lowe’s makes an offer even Canada can’t refuse 3 Feb 2016 The U.S. home-retailing chain has won over Rona with a 104 pct premium valuing its northern counterpart at C$3.2 bln. Protectionism helped thwart a bid from Lowe’s in 2012. A strong dollar made a knockout bid easier now. And it turns out the color of money suits any flag.
Comcast proves it doesn’t need Time Warner Cable 3 Feb 2016 Not even a year has passed since Brian Roberts’ $45 bln bid for his cable rival blew up. With a 9 pct increase in quarterly revenue and a surprising glimpse of cord-cutting defiance with 89,000 new customers for video, Comcast’s pace is picking up despite industry consolidation.
Syngenta deal has two big winners, 1.4 bln losers 3 Feb 2016 ChemChina’s $43 bln cash takeover of the Swiss seed maker won’t involve job cuts, management sackings or cheeky tax reduction. Great for Syngenta shareholders and employees; not so for the buyer. Fortunately, the cost is spread widely – among China’s unwitting savers.
Time for European bank weirdos to simplify 3 Feb 2016 Austria’s Raiffeisen Bank International would give its regional-banking parent a capital bump if the pair merged, its boss reckons. Streamlining the ownership of France’s Credit Agricole also would improve its balance sheet. Neither has made a good case for convoluted structures.
BBVA finds no easy answer to returns riddle 3 Feb 2016 The Spanish bank ended 2015 on a decent note thanks to shrinking provisions, with net profit up in the fourth quarter. Bad loans should continue to fall. The catch: returns are still too low, capital looks light and GDP growth is slowing in Mexico and Spain.
Troubles in China add to Lenovo’s growth worries 3 Feb 2016 The Chinese tech group’s revenue fell 8 pct to $13 bln in the three months to December as demand for PCs and smartphones slowed. Lenovo also faces fierce competition at home from the likes of Huawei and Xiaomi. Even though it is slashing costs, margins will remain under pressure.
LVMH shows there is life after China 3 Feb 2016 Sales at the French luxury giant grew a smart 6 percent in 2015. Jewellery and perfume were standouts. The Dior owner’s shares have taken a sharp tumble since China stock market jitters roiled the sector in August. These results suggest the discount is overdone.
ChemChina megadeal will need FrankenFinancing 3 Feb 2016 A near-$44 bln takeover of Swiss agribusiness Syngenta would be one of the biggest deals ever struck by an unlisted buyer. That calls for a monstrous funding package. The target could probably shoulder $16 bln or so of new debt. Big Chinese banks will also need to step up.
Yahoo keeping all of its bad options open 3 Feb 2016 The internet firm topped a $4.5 bln Q4 writedown with plans to pursue “strategic proposals” for its search and ad operations. CEO Marissa Mayer also mentioned cutting staff, closing offices and jettisoning products. Selling the core business is still the best of lousy choices.
Chinese investors get limited moral hazard lesson 3 Feb 2016 Almost a million people lost $7.6 bln in a Ponzi scheme run by peer-to-peer lender Ezubao. The episode sends an overdue message about the perils of risky investments. But it’s at odds with official support for dodgy products issued by banks - and for stock market investors.
Fed stress-tests idea of negative interest rates 2 Feb 2016 That’s part of the “severely adverse” scenario that big U.S. banks have to run this year to satisfy regulators. The ECB and now the Bank of Japan are giving it a try. The Fed has started pushing rates upward – but going negative is becoming a very plausible downturn assumption.
Marco Rubio must walk a fine line with donors 2 Feb 2016 The Republican U.S. senator’s third-place finish in Iowa’s presidential caucus could be enough to lure financiers fed up with his extreme rivals. Voters are wary, though, of candidates closely tied to Wall Street. His challenge will be to avoid biting the hands that feed him.
Ferrari fiasco earns Marchionne demerit points 2 Feb 2016 Just a month after spinning out of Fiat, the Italian supercar marque has projected weak growth, sending the stock down 13 percent. Ferrari is still a great brand, but investors were wrong to buy boss Sergio Marchionne’s luxury spin. Even after falling, the shares look expensive.
ChemChina’s Syngenta bid is prickly for Monsanto 2 Feb 2016 The state-owned group is nearing a $42 bln deal for the Swiss seeds and pesticides group. The cash and friendly nature make it better than a similarly valued offer from Monsanto. The U.S. company could improve its bid or turn its attention to BASF. Neither M&A option looks easy.
Russia oil diplomacy a better bet than stake sales 2 Feb 2016 Low oil prices mean Moscow either has to cut public spending, raise commodity taxes or accept a high budget deficit. Flogging minority stakes in state companies would be one way out. But new hints of a possible deal with OPEC to cut production offer a cleaner solution.
Exxon’s cutbacks pose a dilemma for oil bulls 2 Feb 2016 The U.S. energy titan axed 2016 capex plans by more than expected and halted share buybacks, even as Q4 profit beat forecasts. It suggests Exxon is girding for a prolonged slump. The more the industry slashes, however, the greater the odds of an eventual rally in crude prices.
Lazard M&A bankers go big or go home 2 Feb 2016 The advice shop and asset manager run by Ken Jacobs reported a 29 pct fall in quarterly profit. One reason was that despite working on six of last year’s 10 largest deals, only one closed. Increasingly complex merger plans give white knuckles to all involved.