Credit Suisse CEO payout is undeserved 24 Mar 2017 The Swiss bank is awarding boss Tidjane Thiam $12 mln for 2016, despite its $2.7 bln loss and a potentially dilutive capital raise. Thiam has done well on costs and solvency. But whatever the board says, he initially mangled the bank's strategy and thus its reputation.
PPG bid for Akzo fails narrative and maths tests 24 Mar 2017 The U.S. paint and coatings maker says cost savings and the benefits of scale justify a $24 bln offer for its Dutch rival. It’s hard to tell a more visionary tale in a low-growth sector where consolidation is the way to stay ahead. But PPG’s synergy targets don’t add up either.
Markets would miss Japan’s reformer-in-chief 24 Mar 2017 Investors are relaxed about a scandal involving Premier Shinzo Abe's wife. But the episode underscores a vulnerability. Abe's grand economic overhaul has broad support - but it is called "Abenomics" for a reason. A weaker leader would struggle to keep up the momentum.
China’s offshore bond revival could be brief 24 Mar 2017 Companies are rushing to sell dollar bonds overseas, aided by a new ability to issue onshore guarantees. Yield-hungry foreign investors are keen. But as liquidity tightens and rates rise, expect more defaults. Those pledges could prove unreliable if things go wrong.
Eton Park pegs hedge-fund cycle at 13 years 23 Mar 2017 Eric Mindich set a possible record raising over $3 bln to launch his fund in 2004. After a dismal 2016 cut the firm’s assets to $7 bln, the ex-Goldman star is following other big names who could no longer make the high-fee model work and closing down. Good luck to lesser mortals.
Google boycotts expose flaws of digital ads 23 Mar 2017 Verizon and AT&T joined other advertisers in pulling spending from Google over questionable content. A bigger issue is the opacity of the search giant and its fellow online duopolist, Facebook. By withholding money, companies are voicing doubts about digital ads’ effectiveness.
Wall Street insider risks further polarizing SEC 23 Mar 2017 Attorney Jay Clayton, Trump’s pick to lead the agency, will have to sit out decisions on Goldman Sachs and other clients. That increases the prospect of tie votes that can block or diminish enforcement. Deadlock also promises to exacerbate the agency’s politicization.
Viewsroom: Google, Facebook under the gun 23 Mar 2017 The ad kings have faced criticism over questionable content. Now Google is in the hot seat as brands like L’Oreal pull their digital spending. Also, Lyft finds an opening as Uber hits roadblocks. Plus: Not all is copacetic between Goldman Sachs alumni in Washington.
Amazon’s Souq buy is cheap, curious trinket 23 Mar 2017 The online retailing giant is paying less than $1 bln for the Middle Eastern e-commerce upstart. Amazon gets a low-cost toehold in a region full of anti-competitive barriers. Yet overseas buyers have a history of regretting purchases of shiny objects in this labyrinthine market.
Gershon Kekst built an M&A legacy beyond his firm 23 Mar 2017 The spin doctor, dead at 82, advised corporate giants including Chrysler, Martin Marietta and KKR. Kekst is credited with getting public relations a seat at the boardroom table next to bankers and lawyers. The industry he created has spawned fierce competition for his own shop.
Citi’s Saudi comeback hangs on friendly oil prices 23 Mar 2017 The American lender wants a new licence to do deals in a kingdom it mostly exited over a decade ago. Economic reforms and the sale of state assets like Aramco could be rich pickings. A big variable is oil. The lower its price, the more juicy mandates banks can expect.
Investors too blasé about grim reaper’s scythe 23 Mar 2017 An activist bet the farm on 72-year-old Hunter Harrison turning around $43 bln railroad CSX in four years. Actuarial tables suggest a real danger he might not. CEOs are becoming grayer, meaning shareholders have become more willing to bear the risk of impromptu corporate changes.
Unilever’s spreads sale plan contains adequate fat 23 Mar 2017 After Kraft’s aborted bid, the Marmite maker needs a self-help plan. Selling its spreads business would be risky as weak growth prospects may mean a low price. But on modest assumptions a private equity buyer could get a decent return – and kick-start Unilever’s reinvention.
Co-op bail-in would set bank creditors on edge 23 Mar 2017 The Co-operative Bank needs capital again, and markets are fretting over the risk of a resolution. Given Co-op’s ongoing losses, the Bank of England could justify one. The risk is investors think that even banks with respectable capital ratios aren’t safe from regulators.
Next takes fashion tips from financial world 23 Mar 2017 The retailer has subjected itself to a stress test – previously the stuff of banks. The result: if a store’s sales fall 6 pct a year for a decade, its net profit margin will halve. Openness about problems is welcome. But this voluntary exam may gloss over some other risks.
Li Ka-shing sails through choppy global seas 23 Mar 2017 The Hong Kong tycoon’s CK Hutchison saw net profit rise 6 pct in the full year. That is impressive given stuttering growth at home and Brexit pains. Globally, the allure of conglomerates is fading. But the results vindicate the East-West strategy of Asia's "superman".
Life is looking up for China’s insurance giants 23 Mar 2017 Low interest rates and stricter capital rules made 2016 hard for mainland life insurers like Ping An and China Life. Now, the tide is turning as bond yields rise. For major players, a crackdown on high-return investment products should also help them regain market share.
Trump’s immigration policies may put Canada first 22 Mar 2017 The U.S. president praised his neighbor’s merit-based entry system for foreigners. But administration restrictions on H-1B visas may deter high-skilled workers and their employers. That could send tech and engineering talent north to friendlier hosts, hurting American firms.
Scuba instructors teach a private-equity lesson 22 Mar 2017 With their $2.5 trln of assets, buyout shops have been struggling to find promising new targets. Instead, they increasingly pass companies among themselves. A deal for scuba service PADI by families and endowments shows how some investors are cutting out the middlemen.
Paint by numbers 22 Mar 2017 PPG's sweetened $24 bln takeover bid for Dutch coatings rival Akzo Nobel has been rejected. How much more could PPG pay and what kind of cost savings would it have to find to justify the deal? Use the Breakingviews calculator to run the math.
Sears endgame and Lampert’s may diverge 22 Mar 2017 The troubled U.S. retailer warned it could be headed for bankruptcy after a 12 pct decline in sales and more losses. The hedge-fund boss's long quest – and drip feed of credit – to turn Sears around looks destined to fail, but along the way he has hedged some of his bets.
Hadas: The stakeholder revolution has been delayed 22 Mar 2017 Robust takeover rebuttals by Unilever and Akzo Nobel suggest that explicitly ethical stakeholder capitalism can overturn the idol of short-term shareholder value. That mostly makes economic sense. But the pressure for quick financial results is increasing. Compromise, please.
Oil giant Petrobras leads Brazil out of the mire 22 Mar 2017 A rotting-meat scandal is the latest corruption mess to stink up Brazil’s reputation. But an earnings revival at the country’s state oil firm, whose kickback woes helped create the stench, shows reforms are bearing fruit. Sweeter smells of recovery should follow.
Tencent’s new high score enables M&A attack mode 22 Mar 2017 The Chinese web giant’s revenue surged 44 pct to $6 bln in the fourth quarter, powered by games and advertising. Fast-growing payments and cloud computing units also contributed. To sustain growth and keep rivals at bay, Tencent's acquisition machine will have to go up a level.
Akzo shareholders, beware the double-Dutch defence 22 Mar 2017 The maker of Dulux paint says a sweetened $24 bln approach by U.S. rival PPG is bad not just for shareholders but the community, customers and employees. It’s hard for a suitor to counter those claims. If such defences become the norm, expect fewer takeovers and lower valuations.
Banks could do more in money laundering battle 22 Mar 2017 ING faces probes over links to a years-old graft case in central Asia, while UK lenders face questions over illicit Russian funds. The common theme is the difficulty of compliance in a world of faceless shell companies. The key is for banks to lobby harder for transparency.
Deutsche Bank bonus payout is bigger than it seems 22 Mar 2017 The German lender said its 2016 variable compensation was almost 80 pct less than in 2015. But factor in 1.1 billion euros of “retention awards” and the cut looks less extreme. The need to avoid an exodus of key staff helps explain the gap between rhetoric and reality.
Big brokerage IPO requires faith in Chinese reform 22 Mar 2017 Guotai Junan Securities is poised to raise $2 bln in Hong Kong. The sector is crowded, margins are thin, and regulators are fickle. But Guotai's scale and breadth position it well to benefit from more liberalisation and better enforcement.
SoftBank and Alibaba have Indian tangle to unpick 22 Mar 2017 A potential merger between Snapdeal and Paytm would take Masayoshi Son and Jack Ma off the warpath in India, where their flagship companies, SoftBank and Alibaba, have invested in the rival e-commerce unicorns. Such a truce would save investors money in the long run.
Spectrum auction end will commence another in M&A 21 Mar 2017 The sale of U.S. government bandwidth is nearing a close soon, lifting the quiet period for wireless operators like T-Mobile US and Dish. Add growing confidence of lighter regulation to the rapid convergence of the media and the conditions point to frenzied dealmaking.