VW can regain trust with sweeping pay reform 22 Feb 2017 The troubled carmaker plans to overhaul its ill-designed executive pay scheme. This is an opportunity to start rebuilding shareholders’ confidence. Essential changes include turning managers into entrepreneurs, introducing pay clawbacks and giving investors more say on pay.
The race is on to be the SABMiller of food 22 Feb 2017 AB InBev bought the UK beer giant in 2016, but only after SABMiller tried to copy its rival's M&A machine. Last week's aborted $143 bln bid for Unilever by Kraft Heinz – like AB InBev, part of 3G Capital's stable – may nudge General Mills, Mondelez et al into similar pursuits.
Aramco golden ticket has risks for Western banks 22 Feb 2017 JPMorgan and Morgan Stanley may have won the contest to be lead underwriters on the Saudi oil giant's $100 bln offering. The mandate could propel them to the top of the league tables, opening doors in the kingdom and elsewhere. But an IPO flop could be fatal for their franchises.
Lloyds’ latest targets look a bridge too far 22 Feb 2017 The UK bank announced statutory pre-tax profit double that of 2015, upped its dividend, and generated excess capital. Its margin and cost targets are an impressive show of strength. Yet fierce mortgage competition and low expenses make it hard to see how they will be hit.
Hong Kong budget is missed chance to spread wealth 22 Feb 2017 The city's new finance chief rolled out new spending and said occasional deficits might be permitted. The shift away from stinginess comes weeks before Hong Kong chooses a new leader. But it's unlikely to placate the protest movement; the massive $120 bln reserve stays untouched.
Korea fraud electrifies case for ABB spinoff 22 Feb 2017 The Swiss group suspects its South Korean treasurer helped steal $100 million. Fraud equivalent to a fifth of 2015 local sales was only uncovered after the executive absconded. This plays into the hands of activist investors who wanted ABB to become less complex.
Air Products’ Chinese bid deserves to fly 22 Feb 2017 The U.S. giant has been stuck in a weird battle for control of Yingde Gases, which it wants to buy for up to $2.8 bln including debt. The target's board finally seems to be seeing sense. Bravo: the suitor is offering a fair EBITDA multiple and a fat premium for shareholders.
Baidu’s AI reboot is overdue and welcome 22 Feb 2017 The scandal-hit search engine is prioritising artificial intelligence. Playing to its core strength is sensible. But after costly diversions into video streaming and food delivery, the Chinese tech group owes investors an explanation of how this new pivot will deliver profit.
Warren Buffett’s elephant chase gains urgency 21 Feb 2017 The decision by Kraft Heinz to abandon Unilever leaves both companies with some soul-searching to do. Berkshire Hathaway, which would have backed the $143 bln takeover, is left to reconsider how to deploy $85 bln of cash, its biggest stockpile ever. Bolt-on deals only go so far.
Uber’s missteps add up to revenue disruption 21 Feb 2017 The car-hailing firm hired a former top U.S. government lawyer to probe claims of sexual harassment. That's potentially serious. It's also another business risk. Already on the back foot with urbanites, CEO Travis Kalanick may need to start asking more questions first.
CNN could find prime-time slot at CBS 21 Feb 2017 Time Warner shareholders just approved AT&T's $85 bln purchase of the HBO owner. But U.S. regulators may still require concessions, perhaps including a sale of CNN. Even with a $9 bln price tag, a deal could make strategic and financial sense for Les Moonves at CBS.
AIG digs out of lengthy Stowe snow-blindness 21 Feb 2017 The insurer is offloading the Vermont resort, built by its founder because he hated waiting in line. For Vail Resorts, the $50 mln deal nearly completes its American ski roll-up. Investors should welcome anything that helps focus management at AIG, which lost $3 bln last quarter.
Activist applies some Italian polish to Tiffany’s 21 Feb 2017 With a long slump threatening to tarnish its brand, the luxury jeweler is embracing new blood. Barry Rosenstein's Jana Partners has teamed up with former Bulgari boss Francesco Trapani to nab a stake and three board seats. They need to move quickly to restore the group's luster.
Le Pen’s French referendum pledge is tall order 21 Feb 2017 The far-right politician’s promise to hold a plebiscite on EU membership and leave the euro is spooking investors. To call such a vote, however, she would have to find constitutional loopholes. That would be an even bigger challenge than winning France’s presidential race.
Post-truth data will come back to bite Uncle Sam 21 Feb 2017 Donald Trump's economic team may tweak trade figures to make deficits look bigger, helping his push for tariffs. Though politicians have always cherry-picked numbers, fiddling with actual statistics threatens confidence. It also raises expectations Trump will struggle to meet.
3G chews over next big move with side of nuggets 21 Feb 2017 Fresh from pulling Kraft Heinz's bid for Unilever, the Brazilian investor group's restaurant roll-up pounced on fried-chicken chain Popeyes. With this $1.8 bln appetizer, Burger King's bosses get to apply their cost crunching to fast food while settling on a big new target.
KKR gambles on mobile data with Telefonica towers 21 Feb 2017 The private equity group is paying up to 1.3 bln euros for 40 pct of the Spanish telco's infrastructure business Telxius. It's a similar valuation to the unit's failed IPO last year and KKR won't have control. But higher demand for mobile internet usage offers long-term upside.
Mining giants require more financial medicine 21 Feb 2017 Rising commodity prices and cost-cutting helped BHP Billiton and Anglo American boost earnings and cut debt, but memories of mining's traumatic downturn are still fresh. There's no sign of another investment or borrowing binge, though. Financial convalescence is the priority.
HSBC’s upward march takes a temporary detour 21 Feb 2017 The UK bank's shares are up by two-thirds since the summer, as investors salivate at the benefits of higher interest rates on its revenue. Yet one-off charges and other setbacks dragged it into the red in the fourth quarter. HSBC is on the mend, but the road is bumpy.
Japan’s small banks face merge-or-die moment 21 Feb 2017 SMFG and Resona could combine three regional units. That's a small step in the right direction. With more than 100 lenders, Japan is wildly overbanked for a mature economy with a shrinking population. Negative interest rates could finally prod others into action.
Golden Globes flop could tarnish Chinese bidders 21 Feb 2017 Officials torpedoed Dalian Wanda's $1 bln bid for Golden Globes producer Dick Clark, a Hollywood website says. Reining in Wang Jianlin may be diplomatically astute and economically prudent, but if China's richest man can't get deals done, it's a bad sign for other Chinese buyers.
Hadas: Trump’s FX truthiness misses the big points 20 Feb 2017 The U.S. president’s complaint that cheap overseas currencies hurt U.S. jobs contains a little truth, but his proposed cure is far worse than the disease. The main problem in foreign exchange is excess volatility. Fixing that requires better global coordination – a distant dream.
Unilever exposes holes in UK industrial strategy 20 Feb 2017 A takeover of the Anglo-Dutch consumer giant would have tested the prime minister’s vow to defend sectors and workers from foreign buyers. Even though it’s now off, May lacks the tools to deliver on the pledge. Her party would need to ditch its scorn of French protectionism.
Kraft Heinz is a good fire drill for Unilever 20 Feb 2017 Even before the U.S. group dropped its bid, the Anglo-Dutch company wanted to cut costs by 1 billion euros a year. If Unilever can hit the top end of sales and margin targets, its valuation would rise closer to Kraft's offer. Investors are betting such efforts will be redoubled.
RBS is near clearing one of three dividend hurdles 20 Feb 2017 The UK bank could keep its Williams & Glyn network if EU authorities accept new measures worth around 750 mln pounds. That's a price worth paying for RBS and would leave it with just two remaining barriers to a capital return: stress tests and a settlement with U.S. authorities.
Italy’s decaying left is Europe’s next headache 20 Feb 2017 A leadership battle may split former Prime Minister Matteo Renzi's Democratic Party, in another case of Europe's left-wing woes. Though intrigue and ambition are as much to blame as ideology, a schism would weaken pro-euro forces and make Italian politics even less predictable.
Small-town Laishui is Chinese bubble in a bubble 20 Feb 2017 New apartments in a poor county near Beijing can now cost the average local 15 years' income. There are real reasons places like Laishui might attract development. But amid attempts to cool prices in top cities, smaller towns may be turning into targets for speculators.
Chinese insurers put too many eggs in one basket 20 Feb 2017 Life insurers are betting increasingly large amounts on individual stocks. The risk is that a single default could hit them hard. The local regulator is trying to curb this practice - but doing so could put paid to the industry's penchant for large acquisitions.
Kraft Heinz has to settle for marinating Unilever 19 Feb 2017 The ketchup-and-cheese giant withdrew a $143 bln bid for its Anglo-Dutch rival after an inopportune leak put British politicians' knickers in a twist. But the idea of pairing 3G's ruthless cost management with Unilever's bent for innovation is embedded in shareholders' brains.
Chinese join Qatar in Deutsche Bank bargain club 17 Feb 2017 Aviation conglomerate HNA is following the sheikhdom in acquiring 3 pct of Germany's biggest lender by assets. Other Chinese bidders are eyeing European banks. While the industry's politicisation will restrict outright dealmaking, a pure punt on bombed-out Deutsche makes sense.