Even flawed UPS trustbusters beat none at all 7 Mar 2017 Brussels has egg on its face after a court overturned its 2013 decision to block the U.S. parcel delivery outfit's merger with TNT. Europe rarely nixes deals, and occasional errors are inevitable. A bigger threat to M&A is protectionism, which requires far less serious analysis.
Markets’ latest distortion: riskless company debt 7 Mar 2017 Some 200 billion euros of corporate bonds are trading below interbank swap rates – usually seen as a floor for credit risk. That renders one measure of companies’ creditworthiness redundant. This distortion comes courtesy of central bank meddling and German parsimony.
Big Oil drills through White House policy crust 7 Mar 2017 Energy industry bosses, including Exxon's, kicked off their annual Houston hootenanny with reassuring words about the environment and free trade. They notably clashed with the new administration's climate-change and border-tax positions. Global market forces will be hard to move.
New U.S. healthcare plan is in critical condition 7 Mar 2017 After deriding Obamacare for years, Republicans have rolled out an alternative afflicted with financial and political problems. It would worsen insurance-exchange woes, raise costs for many Americans and weaken Medicare. The prognosis from Washington and Wall Street is dire.
UK retailers get a spring reality check 7 Mar 2017 Rising food and fuel costs are forcing shoppers to spend less on clothing and other discretionaries. That is bad news for stores that are already having to cut prices to attract business. With their own costs going up, retailers are about to be squeezed on multiple fronts.
Brexit bravado extends to UK challenger banks 7 Mar 2017 UK lender Shawbrook has spurned an 827 mln pound bid from two buyout firms offering a decent premium. That's fine if it hits targets set last May that pledged healthy growth and high returns. But it places a lot of faith in Britain's economy after it leaves the European Union.
Citi dips cautious toe in China bond pool 7 Mar 2017 The U.S. bank will include Chinese bonds in existing emerging market indexes - the first major provider to do so. This is a victory for Beijing, which has struggled to lure foreign investors. It’s a low-risk diplomatic win for Citi, as the sums involved are probably small.
China has leeway to tackle local debt mountain 7 Mar 2017 Authorities say cutting the $2.2 trln local government debt pile is a 2017 priority. Past attempts failed. An improving economy gives Beijing room to address the issue, in part by boosting local tax power. Possible higher interest rates and lower land prices argue for haste.
Jack Ma casts a shadow over JD’s fintech spinoff 7 Mar 2017 Boss Richard Liu is separating the finance business valued at $7 bln out of the e-commerce group and taking a direct stake for himself. It is less controversial than when Alibaba did the same in 2011. But there are enough similarities with this cosy deal to sound an alarm.
Virtual-reality hype fades, 3D printing solidifies 6 Mar 2017 Tepid sales, legal questions, immature technology and a chicken-and-egg problem are putting dreams of immersive digital worlds on the back shelf. Meanwhile, steady progress is burning away disillusionment over digital manufacturing to order, as a Ford initiative makes clear.
Holding: Alphabet-Uber collision dents tech ethos 6 Mar 2017 Silicon Valley broadly, and especially the former Google, thrived more by sharing than suing. A legal brawl between its Waymo outfit and the $70 bln ride-hailing service over driverless-car secrets may signal a sharp turn. Open cultures would fade far in the rearview mirror.
Nationality of Vauxhall’s owner is a red herring 6 Mar 2017 The sale of GM’s European operations to French carmaker PSA Group has caused fresh concern over its plants in the UK. Yet irrespective of the owner, the key risk for automotive jobs in Britain is Brexit. A stronger Peugeot may even have more patience with Vauxhall than GM.
Latam tax amnesties test private banks’ stamina 6 Mar 2017 Latin American countries are finding that tax forgiveness programs can bring billions in hidden assets into the open. UBS and Credit Suisse are discovering that the process can cause chunky asset outflows. Moving onshore could help the Swiss giants retain their share of the pie.
Macron pitches novel way to imperil EU banks 6 Mar 2017 The French presidential favourite wants ministers, not regulators, to set capital rules for banks and insurers. Despite the ECB’s best efforts, oversight remains far from harmonised. Handing the reins to politicians would just add financial stability concerns to the mix.
Standard Life gets weak upper hand in fund merger 6 Mar 2017 The Scottish asset manager is effectively taking over rival Aberdeen without paying a premium. That cushions it from the risk that teams don’t get on and clients snaffle the benefits. Yet embattled Aberdeen boss Martin Gilbert has also done better than might have been expected.
Deutsche Bank gives itself a chance of revival 6 Mar 2017 The German lender is to raise 10 bln euros, chiefly via a rights issue and a part-IPO of its funds arm. Assuming slimmed-down revenue can then grow, there’s a path to hit a 10 pct return goal in the medium term. But the fragile investment bank will need to do the heavy lifting.
BT’s Champions League win could be an own goal 6 Mar 2017 The UK telco’s 1.2 bln pound bid beat rival Sky to retain rights to Europe’s elite soccer tournament. It’ll help BT’s TV push. But justifying the 32 pct price rise requires heroic assumptions about the boost to subscribers elsewhere in the business.
Peugeot’s Opel deal shows shrewd engineering 6 Mar 2017 At a price of 1.8 bln euros, the French carmaker should get a good return from GM’s European business. The U.S. auto group lacked sufficient size to run Opel and Vauxhall efficiently. By taking PSA warrants, GM also gets insurance against appearing to have sold too cheaply.
Slower China growth plan begs for labour reform 6 Mar 2017 Beijing has set a GDP growth target for 2017 of 6.5 pct as it seeks to revive stalled reforms and cut industrial overcapacity. Yet the leadership still wants unemployment below 4.5 pct. This aggressive goal, alongside an inflexible labour policy, could create new problems.
India becomes front in global e-commerce proxy war 5 Mar 2017 Alibaba is leading a $200 mln investment into Paytm’s marketplace, creating a new Indian unicorn. That confirms the Chinese juggernaut's decision to take on Amazon, which is investing $5 bln in India. As homegrown rivals flail, tech's big boys will duke it out. Only one will win.
Scot asset managers try marriage of inconvenience 5 Mar 2017 Merging Standard Life and Aberdeen will create an 11 billion pound fund giant able to rip out costs and fight back against competition. Leaving both chief executives in charge is an unseemly fudge, though. Hopefully the clunky governance will be temporary.
Deutsche $8.5 bln equity hike would be partial fix 4 Mar 2017 The German bank may raise funds while markets look kind. The infusion would boost creditworthiness and thus Deutsche Bank's key trading and corporate lending arms. That's fine unless investment banking falters, or Deutsche turns out to have underestimated its capital needs again.
Northern Ireland vote sends Brexit warning shot 4 Mar 2017 Nationalist party Sinn Fein made surprise gains in snap elections, buoyed by discontent with the ruling unionist DUP. That puts the duo, who must govern together, on a more equal but confrontational footing. The result may be a bumpier path for Britain’s EU exit negotiations.
Luxury mall fight is small sign of what’s in store 3 Mar 2017 An aggressive investor wants to add new directors at $4.2 bln shopping-center operator Taubman. U.S. malls are in for a world of hurt as tenants collapse financially. Even upscale owners like Taubman need a push, but there are more vulnerable targets. And the fixes aren't easy.
Snap deal is latest in NBC’s Ponce de León series 3 Mar 2017 The U.S. TV network plunked $500 mln into the hyped IPO after some promising experiments with the messaging app. Comcast-owned NBC also has made big investments in BuzzFeed, Vox and other millennial-hunting firms. Beware older generations on epic quests for the fountain of youth.
Review: Libor revealed dark underbelly of trading 3 Mar 2017 Two new books show how the benchmark interest rate underpinning many of the world's financial products was rigged. Jailed trader Tom Hayes leads a cast of deceitful or inept bankers, brokers and regulators. Yet both tomes might have said more about how to stop future malfeasance.
Saudi Arabia’s Asian pivot looks defensive 3 Mar 2017 A rare royal visit to the region shows the oil-rich kingdom’s vulnerability. Declining U.S. demand and competition from Iran and Iraq make Eastern customers more important. Saudi can offer something rivals can’t - splashy investments and the IPO of its state oil producer, Aramco.
Drugmakers pose Brexit Britain withdrawal risk 3 Mar 2017 Pharma groups aren’t publicly threatening to pull staff out of the UK. But they could. Britain is a laggard in healthcare investment, and Brexit gives them negotiating power - especially after Prime Minister Theresa May’s gushing endorsement of the industry.
WPP growth machine creaks 3 Mar 2017 The advertising group, despite being in more than 100 countries, expects revenue to increase less than global GDP in 2017. Losing a couple of big accounts like AT&T and VW help explain it. But the media business faces structural threats, and WPP’s margin growth has a ceiling.
Toshiba meter sale may ease chip selloff pressure 3 Mar 2017 The stricken Japanese group is mulling a sale of its power meter subsidiary for $2 bln. The proceeds are unlikely to shore up finances much. But disposing of a non-core, underperforming unit is sensible, and it may help Toshiba hold on to more of its prized chip unit.