Ericsson has solid targets but odd repair man 29 Mar 2017 Boss Borje Ekholm has new objectives to sort out the Swedish telecom-kit maker, whose stock has halved in value since mid-2015. Lifting depressed margins would be a challenge even for an outsider. It will be especially tricky given he sat on Ericsson’s board as it misfired.
Market’s vision of Brexit is too rosy 29 Mar 2017 As Britain triggers the process for leaving the EU, investors are more phlegmatic than they were six months ago, a Breakingviews index based on asset prices shows. There is plenty of scope for that to change if hard bargaining coincides with slowing growth.
Fosun may hit M&A trail again after CEO leaves 29 Mar 2017 The co-founder of Club Med’s Chinese owner suddenly quit, citing health reasons. He had helped improve the insurance-to-leisure giant's finances. Power is now concentrated with acquisitive chairman Guo Guangchang. A new deal binge could unsettle both creditors and shareholders.
The sober case for China’s national spirit 29 Mar 2017 Kweichow Moutai's market value has soared to a heady $70 bln, putting the liquor firm almost on par with Britain’s Diageo. Investors are toasting the baijiu distiller for riding out China's anti-corruption drive. High valuations are offset by fast growth and fat margins.
Tencent drifts off course with Tesla 29 Mar 2017 The Chinese tech giant can easily afford a near-$2 bln stake in Tesla. But Elon Musk's electric cars are not a great fit with its cash-cow businesses, social media and mobile games. Making a huge, venture capital-style bet like this is a worrying sign of indiscipline.
Darden owners get too gluttonous over cheesy deal 28 Mar 2017 Shares of Olive Garden's parent had their best day in nine years after snagging rival casual-dining chain Cheddar’s for $780 mln. It's a decent enough deal, and scale helps improve margins in the restaurant trade. But it hardly merits a rally equal to the price paid.
GM is better off avoiding David Einhorn’s detour 28 Mar 2017 The hedge-fund boss wants the automaker to split its shares into one class that collects dividends and another reliant on growth. The plan, which he once pitched to Apple, underestimates GM's cyclical and tech challenges. With bailout memories vivid, it's wise to steer clear.
Utilities to pay price of Westinghouse bankruptcy 28 Mar 2017 A Chapter 11 filing would jolt the company’s key clients, Scana and Southern. Continuing with their nuclear plants could leave the utilities exposed to further cost overruns, while pulling the plug won’t end liabilities. Either way, the firms’ earning power will be cut.
Saudi finds cheap way to be generous to Aramco 28 Mar 2017 The kingdom has slashed its oil major’s tax rate to juice up a potential IPO. That could theoretically triple the company’s market value to well over $1 trillion. Yet because Saudi will keep a 95 pct stake, the state can recoup almost all of what it appears be giving away.
Climate ship has sailed despite Trump’s sea-change 28 Mar 2017 The president says man-made global warming is a hoax and he's set to reduce its role in U.S. energy policy. Scientists, consumers, his military and, increasingly, investors disagree. They're well armed to do battle with fresh polar-ice data and advancements in renewable power.
American Airlines buys China upgrade, earns points 28 Mar 2017 The carrier is joining forces with China Southern, and taking a sub-3 pct stake for $200 mln. AA ought to end up with more Chinese passengers and fewer empty seats. Ideally it wouldn’t have to buy a stake to do so. Consider it one of the irksome hidden costs of air travel.
Tesco has three issues, but only one matters 28 Mar 2017 Some investors think the UK grocer's merger with wholesaler Booker is distracting and expensive. Regulators are punishing it for an old accounting scandal. And customers just want ever-lower prices. This last challenge is the only one with the potential to knock Tesco off course.
South Africa’s real problem: credibility downgrade 28 Mar 2017 President Jacob Zuma's abrupt recalling of his respected finance minister hit domestic assets. The latest spat could speed a downgrade of the state's sovereign debt, although much of that appears priced in. The greater damage would be to South Africa’s institutional solidity.
China’s growing corporate-bank nexus is toxic mix 28 Mar 2017 Shares in a Chinese rural bank tanked amid troubles at its dairy-making shareholder. The woes highlight the dangers of banks receiving capital injections from corporate borrowers. The interdependence can marry shaky banks to weak firms, leading to more bad debt.
China’s soccer dreams lead to strange bedfellows 28 Mar 2017 Elliott is saving a Chinese takeover of Italian club AC Milan with 300 mln euros of funding, Reuters says. The U.S. hedge fund must be driving a hard bargain. But the buyers may have been boxed in by Chinese curbs on moving capital and the prospect of losing a hefty down-payment.
White House struggling to learn arcane D.C. math 27 Mar 2017 After failing to repeal Obamacare, Republicans are turning to tax reform. It's an even more complex endeavor. Like healthcare, tax policy is constrained by an obscure law that limits the effect on the U.S. deficit. Trump may loathe Washington process, but the numbers have to add up.
M&A lawyers confronted with ETE’s convenient truth 27 Mar 2017 Delaware's top court ruled that the U.S. pipeline operator, having failed to secure an important tax opinion, had a right to end its unwanted deal with Williams. In a dissent that may resonate, however, Chief Justice Leo Strine raised his eyebrow about pressure on outside advisers.
Dubai mall owner throws sand in Amazon’s face 27 Mar 2017 Emaar Malls has challenged the U.S. retailer with an $800 mln counterbid for Souq.com. Amazon has technical expertise and deep pockets. But the owner of Dubai’s largest retail park has local knowledge, powerful allies and, most importantly, an existing business model to defend.
Kushner brings conflicts not aptitude to new role 27 Mar 2017 Donald Trump wants his son-in-law to harness business nous to make Washington work better. Jared Kushner was AWOL during last week’s healthcare fiasco and his family may be seeking Chinese cash to bail out its property business. His record offers little that government needs.
Return on equity is fair game for bank regulators 27 Mar 2017 The Bank of England's next stress test will assess if lenders’ earnings exceed their cost of equity. That might sound like statist meddling, or doing investors’ job for them. But as a way to stop banks taking silly risks to offset low rates, it makes sense.
Lowball bank pay targets are lesser of two evils 27 Mar 2017 Barclays and Standard Chartered's bosses will get bonuses even if their banks don't earn back their cost of equity. Unstretching targets, though, reflect the fact neither lender has said when it will start making an economic profit. Paying less won't bring that moment closer.
German voters deal early blow to upstart Schulz 27 Mar 2017 The small state of Saarland backed Chancellor Angela Merkel’s CDU, while the SPD, led by the charismatic Martin Schulz, did less well than expected. Voters may tire of Merkel after 12 years, but seem inclined to prefer her stable, predictable government over the alternative.
Disney gives Paris investors a Scrooge McDuck exit 27 Mar 2017 The maker of "Mickey's Christmas Carol" wants to buy out shareholders in its Paris theme park at a premium. Yet the price downplays Euro Disney’s profitability and real estate. This is poor compensation for a rollercoaster investment with more down than up.
Hong Kong’s first female chief starts from behind 27 Mar 2017 Unloved new leader Carrie Lam faces a steep climb. Growth is slow; social divides are deep. Loosening the purse strings might win a few hearts. Her real test will be preserving the rule of law, but she's unlikely to stand up to the pro-Beijing faction she owes her job to.
Chinese broker offers investors a fair IPO trade 27 Mar 2017 Guotai Junan Securities is selling Hong Kong stock at a 25 pct markdown versus its mainland shares. That should be enough to entice buyers to the $2.1 bln offer. Investors would purchase one of China's strongest brokers, and at a bigger discount than the wider sector.
Air Products finds China M&A has unstable element 27 Mar 2017 The U.S. firm is giving up on a $1.5 bln play for Yingde Gases. A profit warning from the target provides cover for a retreat but Air Products underestimated a messy boardroom spat, and its months-long trauma highlights the difficulties faced by foreign suitors in China.
Trump’s dealmaking falls sick – for now 24 Mar 2017 Republicans in Congress wouldn’t support an alternative, so Obamacare will live on. Efforts to undermine it will continue. Meanwhile, medical costs still outpace inflation. Unless that changes, the choice between squeezing costs and rationing care will remain on lawmakers’ minds.
Guest view: The $1 trln trade deal anyone can love 24 Mar 2017 Even as NAFTA, TPP and other global accords come under siege, one WTO agreement was quietly just put into force. It'll help countries and companies big and small save money by getting goods across borders quicker, says Andrew Wilson, who runs a Chamber of Commerce affiliate.
Newspaper publisher scoops its own shareholders 24 Mar 2017 Los Angeles Times owner Tronc agreed to buy out investor Oaktree at the same premium price at which it rejected a takeover bid. It also cleared the way for Chairman Michael Ferro to grow his stake. His battle for control with a director puts other investors below the fold.
Enough with Hong Kong market’s dark alleys 24 Mar 2017 Hong Kong is plagued by puzzling share gyrations. On Friday a $5 bln stock crashed 90 pct in minutes. HKEX boss Charles Li reportedly says his market is no casino, even if a few "gangsters" lurk in dark corners. Such complacency will do nothing to reassure investors.