SoftBank’s $8 bln Alibaba sale is late but prudent 1 Jun 2016 Masayoshi Son's tech and telecom conglomerate is offloading 4.2 pct of the Chinese e-commerce giant to pay down debt. The hugely successful investment is now more burden than blessing. As SoftBank takes a more disciplined approach to its portfolio, further disposals may follow.
Dell loss vindicates M&A price suits, bugs and all 31 May 2016 A Delaware judge says the PC-firm founder’s $25 bln buyout brought investors 22 pct less than fair value. Cases involving dissenters’ so-called appraisal rights are flawed, but they help keep merging companies honest. Lawmakers mulling new limits on them should tread carefully.
Brazil government’s original sin may slow reform 31 May 2016 Naming a “transparency minister” was a risk for interim President Temer, given the threat a huge graft probe poses to his pro-business administration and the unedifying way he came to power. The minister’s embarrassing exit weakens the credibility Temer needs to fix the economy.
U.S. $12 bln utility coupling lacks spark 31 May 2016 Great Plains Energy’s deal for larger neighbor Westar has the modest premium and coy savings target typical in deals between regulated firms. Even if synergies come in higher than hinted, customers may get any surplus. Investors may be right to worry that the buyer is overpaying.
OPEC’s second coming can only start at the top 31 May 2016 Oil prices could get a boost if bickering members of the cartel can put aside their differences and select a new secretary general. Nigerian Mohammed Barkindo looks like the candidate most capable of getting OPEC functioning, and restoring its image among non-members like Russia.
Goldman’s DONG windfall leaves gains for Danes 31 May 2016 The Wall Street bank will have doubled its money in two and a half years when Danish state-owned utility DONG lists. The country’s socialists quit the ruling coalition in protest at Goldman’s $1.2 bln investment. But its cash sped a pivot to green energy at just the right time.
Spanish politicians leave demographic bomb ticking 31 May 2016 While economic activity has picked up, the Spanish population is ageing faster than the EU average. Consensus and long-term planning are needed to tackle the burden this will place on the welfare system and growth prospects. The current polarisation in politics stands in the way.
JPMorgan Caz still iceberg of UK corporate broking 31 May 2016 Bank of America Merrill holds the most FTSE 100 mandates - the first time JPMorgan Cazenove has come second in 10 years. But a wider market view shows fewer shifts elsewhere. The glacial shifts of offering free advice to corporate clients are as British as awful summer weather.
VW travels in two directions, both bad 31 May 2016 The stricken carmaker is making fewer vehicles than a year ago. Yet it hired more people in the first quarter. Investment and distribution costs grew too. Chief Matthias Mueller may be busy with a still-unresolved emissions scandal, but there’s little sign of needed cost-cutting.
China’s HNA buys frenemies at Virgin Australia 31 May 2016 The Chinese behemoth may be able to improve its foothold in a key market by buying 13 pct of its peer Down Under. Virgin is a struggling carrier, however, in need of a huge capital injection and it already has three other big airline investors. That caps HNA’s potential returns.
China’s sports deals hit the hogwash jackpot 30 May 2016 Mainland money is pouring into Western teams, rights, agents, and competitions. Bold M&A often comes with empty talk and hyperbole. The world of sport is not much better. Throw in the grand designs of China’s political leaders and you have a near-unbeatable trifecta of nonsense.
Pakistan deserves more investor love 30 May 2016 The country could return to the influential MSCI emerging market index. Pakistan’s stock market is the best performing in Asia this year and is still cheap. The economy is also not in bad shape. For investors who can stomach the political risks, Pakistan looks enticing.
Wanda’s $4.4 bln buyout bid is just good enough 30 May 2016 Wang Jianlin is offering his property firm’s Hong Kong investors a stingy 10 pct premium to the IPO price 17 months ago. The Chinese tycoon will pocket better returns if it relists on the mainland. Yet while minority investors have reason to hold out, doing so would be risky.
Philippine telco tie-up a blow to Asian upstarts 30 May 2016 The country’s mobile phone duopoly will jointly pay $1.5 bln for San Miguel’s telecom assets after the conglomerate’s effort to set up a new operator failed. From Thailand to India, new entrants are trying to take on big players. Access to capital and knowhow decides who wins.
Noble CEO exit signals reduced ambitions 30 May 2016 Yusuf Alireza is leaving the embattled commodity trader after four years in charge. Though Noble has avoided an immediate liquidity crisis, investors still question its long-term viability. Flogging its U.S. energy arm will raise cash at the expense of further shrinkage.
Bayer’s Monsanto bid yields poor financial harvest 27 May 2016 The German chemicals group’s rejected $62 bln offer for the seed maker already appeared to violate one of its key principles: stick to projects whose returns beat the cost of capital. Upping the price to win over Monsanto would take heroic sales-growth assumptions to stack up.
Thermo Fisher’s FEI deal holds up under microscope 27 May 2016 But that’s only if the healthcare M&A machine can boost sales at its $4.2 bln quarry. Reducing taxes and cutting costs at the maker of electron microscopes only gets Thermo partway to justifying the price tag. Thermo’s track record gives investors some comfort it can do this.
Review: Craft-beer memoir goes down easy 27 May 2016 Jim Koch’s tale of brewing Samuel Adams is refreshingly candid about battles with Budweiser, a controversial IPO and other troubles. Unlike many stale business books, “Quench Your Own Thirst” reads like a pub chat. Only Koch’s pride in bad governance leaves a bitter aftertaste.
Qatar’s debt bonanza stores up problems for future 27 May 2016 Too much of a good thing could be bad for the Gulf state. It has just raised a whopping $9 billion in the bond market thanks to investors’ hunger for yield. Loading up on debt will help Qatar cope with lower energy prices, but just dodges its biggest problem: lavish spending.
AstraZeneca glitch cements M&A discount 27 May 2016 A blockbuster drug the UK group bought in a $2.7 bln deal has been delayed. The production glitch could mean just a few months holdup, but highlights why Astra trades at a lower valuation than peers. Buying and selling businesses is a risky way to manage a looming patent cliff.
Zoomlion deals fresh blow to China M&A credibility 27 May 2016 The Chinese machinery-maker has walked away from a bid for U.S. rival Terex. After other high-profile failed deals, this further dents the prospects for other mainland bidders eyeing Western targets. At least Zoomlion’s own finances will be a bit more robust.
German discounters open new front in trolley wars 27 May 2016 Lidl is investing 6.5 billion euros to soup up its stores, half of that outside Germany; peer Aldi is upgrading too. That will advance their attack on the middle market. If they can do it without raising prices, big rivals like UK grocers Tesco and Sainsbury will be in trouble.
G7 pact offers minimal cover for Abenomics reset 27 May 2016 Shinzo Abe’s plan to revitalise Japan needs a boost. The PM didn’t get as much backing as he might have liked from hosting the club of rich nations. But he may just about be able to spin the summit statement as an endorsement of fiscal stimulus and a tax standstill.
A truly international yuan is a long way off 27 May 2016 New data shows use of the Chinese currency for global payments is declining and has fallen behind the Canadian dollar. China’s plans to internationalise the yuan are at odds with capital controls. Pressure on the yuan makes this a tricky time to liberalise the currency regime.
Time for Lenovo to get a grip in mobile 27 May 2016 The tech giant is a trailblazer for Chinese firms going global by doing deals overseas and adopting Western governance. The ill-judged takeover of Motorola’s old mobile business is testing that reputation. Absent a quick turnaround, Lenovo’s credibility will take a real dent.
U.S. mortgage agency misses Wall Street lesson 26 May 2016 The Federal Home Loan Banks, which fund private-sector banks’ housing lending, now rely on short-term borrowing for over half their debt. That may boost the profitability of their nearly $1 trln of assets. But as the 2008 crisis taught regular banks, it also increases risk.
Activist pushes on U.S. retailer’s open door 26 May 2016 Hedge fund Barington wants two board seats and costs slashed at struggling Chico’s. It owns just a 1.4 pct stake at the $1.5 bln seller of women’s clothing. The company also is already shaking things up with its own new qualified directors. This investor aggression is overdone.
Apple may find it harder saying “no” to bad ideas 26 May 2016 An executive at the tech giant reportedly proposed a bid for Time Warner. That seems contrary to founder Steve Jobs’ recipe for success: reject “1,000 ideas” and focus only on the few good ones. But an aging iPhone, a tepid stock price and a cash pile risk making the mediocre tempting.
UK regulator gives RBS fresh reason to shrink 26 May 2016 The Bank of England has introduced a new capital requirement for lenders deemed systemically risky in a domestic context. Big banks basically have enough equity to meet it already. But Royal Bank of Scotland’s weighting to the UK means it has most to gain from getting smaller.
Spotify’s next investors may face the music 26 May 2016 The streaming service increased revenue by 80 pct last year to $2.1 bln. More than 80 cents of each dollar pay for songs, however. Even assuming generous growth and operating leverage, Spotify will need to do still more to merit a higher valuation than its latest of $8.5 bln.