Hadas: Corporate do-gooders are due a revival 23 Aug 2017 Paternalistic companies planted the seeds of government welfare programmes. Their ideas now seem out of date. But the rise of the left-behind, and the kind of social rifts shown in Charlottesville, show the need for more active, personal and short-term costly interventions.
WPP underestimates pinch from corporate austerity 23 Aug 2017 The ad group cut its 2017 net sales guidance, blaming lower spending by consumer-goods giants which make up about a third of revenue. Boss Martin Sorrell reckons this will reverse. The danger is that zero-based budgeting and shareholder activism make frugality the new normal.
Italian markets dance anew to Berlusconi discord 23 Aug 2017 Chased out of power in 2011, Silvio Berlusconi is spooking investors with talk of a parallel currency. The ex-PM’s plans look more like posturing than policy. His own finances wouldn’t obviously benefit from Italy leaving the euro. Yet Berlusconi remains too important to ignore.
Tencent’s team has upper hand in Chinese food fight 23 Aug 2017 China’s three web giants are supporting rival food-delivery firms, in a big bet on “online-to-offline” services. The leader, Tencent-backed Meituan-Dianping, is cashed-up and looks unassailable. Even a mooted merger of its rivals could distract them and help bring subsidies down.
Energy landscape is a battle for next Chevron CEO 22 Aug 2017 John Watson is set to step down as leader of the $200 bln energy giant after more than seven years. With oil prices low, a fresh approach may make sense. Yet Chevron has weathered challenges decently. Any new boss, especially if home grown, will struggle with long-term headwinds.
Jeep sale would leave Marchionne nowhere to hide 22 Aug 2017 The Fiat Chrysler CEO advocates using M&A to stop carmakers wasting precious capital. Selling the company's top brand to China's Great Wall - a long shot politically - might raise $23 bln. But it would leave an emaciated rump and set up Marchionne’s last lap to be a dismal one.
Blank M&A checks are getting too easy to write 22 Aug 2017 The NYSE relaxed voting rights and other rules to clear the way for shell companies like recent ones from TPG to list. Rival Nasdaq had been capitalizing on the resurgence of such acquisition vehicles. An otherwise weak IPO market is chipping away at investor protections.
Snap won’t easily pull a Facebook-Google-Alibaba 22 Aug 2017 The messaging app's stock is 20 pct below the IPO price. That's territory its big internet predecessors encountered before roaring back - and beyond. Evan Spiegel's creation could snap back, but it's on weaker footing and losing money.
McDonald’s ain’t loving the local Indian recipe 22 Aug 2017 The U.S. burger chain is taking the nuclear option, shutting 169 stores as a spat with a partner boils over. It's one reason McDonald's has fallen behind rivals in a huge potential market. Partnerships are always vulnerable but India's byzantine legal system raises the stakes.
Murdoch’s Sky bid looks ever less rational 22 Aug 2017 The media mogul’s Fox last year offered 11.7 bln pounds for the 61 pct it doesn’t own of the pay-TV firm. Sky’s subscriber growth has since slowed and a regulatory review has brought political heat. It may not stop him, but Rupert Murdoch will struggle to make the deal pay.
Provident Financial kneecaps cash-greedy investors 22 Aug 2017 The door-to-door lender slashed its profit forecast, ousted its CEO and is under investigation from the UK authorities. Worse still, the dividend yield just fell from 8 percent to zero. Yield-chasing funds had fair warning the company was living beyond its means.
BHP uses commodity rally to fortify position 22 Aug 2017 The Anglo-Australian miner swung to an annual net profit of $5.9 bln. Plans to exit a troubled shale business and hold off on investing in potash chime with demands from Elliott, an activist hedge fund. The compromise, plus more focus on financial strength, looks sensible.
Three steps to an Infosys reboot 22 Aug 2017 The $31 bln Indian IT giant is in a mess after its CEO quit. To restore confidence, it needs fewer bosses and to find a strong outside CEO. Publishing a report into whistleblower claims would also help draw a line under a founder's complaints of mismanagement.
Activists lack salve for hospitals’ financial ills 21 Aug 2017 Hefty debt, rising costs and painful changes to health insurance make the likes of Tenet and Community Health easy patients for pushy shareholders like Glenview. But the usual remedies will achieve little and there are few obvious buyers. Palliative care may end up an option.
Icahn and Trump both look bad in biofuels fight 21 Aug 2017 The investor wanted rules changed to help CVR Energy. The refiner he controls made bets aligned with that push. They backfired and Icahn resigned as the president’s adviser just ahead of a report detailing these alleged conflicts. Trump now seems to say there was no job to quit.
Sempra $9.5 bln Oncor fine print bears close read 21 Aug 2017 The $29 bln energy company has bested Warren Buffett’s bid for the bankrupt utility and given pushy hedge fund Elliott a sweeter deal. But the transaction looks rushed and leaves Sempra with undisclosed partners and limited control. Such terms may give shareholders a nasty shock.
Holding: The law rides shotgun on Uber obfuscation 21 Aug 2017 Whether the ride-hailing app fixed prices may remain a secret after a court sent a case to arbitration. It’s the same deal on whether drivers were stiffed on expenses or female workers sexually harassed. It’s tough to make Uber fess up when it's allowed to operate in the shadows.
Total gives Maersk a crude $7.5 bln exit from oil 21 Aug 2017 The Danish conglomerate will get a 3.8 pct stake in French energy major Total in return for its oil assets. While the price looks good, Total’s stock has underperformed Maersk’s. At least Maersk investors may retain exposure to the rich synergies Total is predicting.
O2 – and Britain – are losers in 5G spectrum fight 21 Aug 2017 Telecom operators BT and CK Hutchison’s Three are threatening legal action over planned auctions of mobile spectrum. The rules are sturdy enough to promote competition and a court fight could delay the rollout of superfast 5G internet. Rival O2 and Britons have the most to lose.
Fiat Chrysler would rev up China’s Great Wall 21 Aug 2017 The $19 bln Italian group has bid interest from the Chinese carmaker. Just as Geely’s takeover of Volvo helped it revamp designs, Great Wall could benefit from Fiat’s knowhow, especially at Jeep. But this could seriously stretch the buyer’s finances and management capacity.
Hyundai is easy target for South Korea’s reformers 21 Aug 2017 South Korea's antitrust chief has called out the autos-to-steel conglomerate's complexity and corporate governance. Hyundai's size and resistance to change made it vulnerable. With investors already anticipating an overhaul, this could yield a quick victory for the regulator.
Trading floors send hopeful signs on disruption 21 Aug 2017 Hong Kong’s bourse is closing its trading floor, the latest big exchange to do so. Globally, brokers in bright jackets have had a good run, given how little sense “open outcry” trading makes today. Nostalgia can protect some jobs from automation for a surprisingly long time.
China’s M&A controls trap firms in a warped market 21 Aug 2017 Officials have formalized guidelines curbing "irrational" purchases of foreign hotels, soccer clubs, film studios and so on. However, M&A is a small factor in China’s debt problem. Nor does this fix the margin-destroying distortions that encourage companies to venture overseas.
Economic nationalists still linger in White House 18 Aug 2017 Steve Bannon, who advocated protectionist, "America first" policies, is out. That's a plus for the economy. But other foes of trade and immigration continue to influence Donald Trump. The centrists’ fight waged by Gary Cohn and others will get easier but it’s not over.
Calpine $5.6 bln buyout puts chips on gas hegemony 18 Aug 2017 A consortium is taking the heavily indebted electricity company private at a 51 pct premium. It’s a bet natural gas will dominate the nation’s power grid. Problems with other sources justify that for now. Longer term, stagnant electricity prices and usage makes it a big risk.
Short-selling fee bastion will be hard to topple 18 Aug 2017 Wall Street makes $9 bln helping pension funds lend stocks to fuel hedge-fund bets. Now three public retirement plans are accusing Goldman, JPMorgan and others of collusion. It’s a business ripe for disintermediation. But it’s too lucrative for banks to concede without a fight.
P&G’s best defense shouldn’t be a takeover offense 18 Aug 2017 As the consumer giant faces a proxy fight with activist Nelson Peltz, one idea doing the rounds is to consider an acquisition. The trick is to find a target as alluring as Gillette once was. The more obvious candidates - Colgate, Clorox and Kimberly-Clark - don't really stack up.
Unilever can butter up price for margarine unit 18 Aug 2017 Private equity consortiums are reported to be circling the Anglo-Dutch giant’s spreads business. A bidding war and the rich price paid for Reckitt’s food brands may help Unilever pocket more money. But unappetising returns await any buyer who pays more than 7 billion pounds.
Barcelona attack targets Spain’s strongest spot 18 Aug 2017 Tourism is a pillar of the recovering Spanish economy, making the deadly assault on Las Ramblas a strike on prosperity as well as people. But previous attacks elsewhere in Europe show confidence bounces back, and the domestic economy is more resilient than it has been for years.
Bondholders can play hardball with Portugal’s Novo 18 Aug 2017 Bailed-out lender Novo Banco wants creditors to take a haircut, to smooth a sale to Lone Star. But creditors have numbers to block the swap, and could recapitalise the bank themselves. Novo has a history of scrapping with bondholders. This time creditors may have the upper hand.