Britain heads for Brexit in name only 8 Dec 2017 Theresa May’s deal with the European Union averts a chaotic divorce for now. But a fudge about the Irish border exposes the difficulty of preserving trade while leaving the bloc. A transition phase will create scope for May - or another prime minister - to make new concessions.
BASF’s odd oil deal may create a valuable compound 8 Dec 2017 The 87 bln euro German chemicals firm agreed to merge its oil unit with Russian billionaire Mikhail Fridman’s DEA. It’s a complex transaction, with a messy structure. Yet pooling the business will create savings and may eventually help BASF shed its huge conglomerate discount.
Seoul’s contrarian tax hike makes for good start 8 Dec 2017 President Moon bucked global trends by raising South Korean corporate taxes to 25 pct from 22 pct and lifting the minimum wage. That will help curb the giants stifling competitiveness and fuelling inequality. Next comes tightening antitrust screws and lowering takeover barriers.
Leonardo is a masterpiece of Saudi contradictions 7 Dec 2017 Crown Prince Mohammed bought the $450 mln “Salvator Mundi,” a report says. The heir to an absolute monarchy professes to be a reformer and corruption fighter, yet is spending with unseen extravagance. That may not go down well at home, or with potential investors in Aramco.
China’s new regulator could tighten bank squeeze 7 Dec 2017 The China Banking Regulatory Commission’s new vice chair is a confidant of former anti-corruption czar Wang Qishan. Watchdogs are already clamping down on the financial sector. As people from Wang’s no-nonsense camp join the fray, banks and their investors should brace for more.
Fed forecasts just enough sunshine for stress tests 7 Dec 2017 The central bank wants to provide more information about its models for loan losses and other inputs in the annual exams. That would suit lenders who complain the process is too opaque. But the Fed would retain some mystery, striking a balance that boosts the test’s credibility.
Fossil-fuel slowdown spreads pain at GE and beyond 7 Dec 2017 The conglomerate is laying off 12,000 people in a power division that lights up 30 percent of the world. It blamed overcapacity amid a shift from coal and gas to renewables. Other divisions closely tied to fossil fuels are also ailing. GE’s woes suggest a wider shakeout ahead.
Viewsroom: Executive payouts in rude health 7 Dec 2017 Aetna CEO Mark Bertolini is bagging $500 million from selling the insurance company to drugstore chain CVS – despite only a middling performance as boss. Behind such healthcare mergers: a desire to cut out a surfeit of middlemen.
New bank rules are kind without being weak 7 Dec 2017 Big lenders will need a trifling 27.6 billion euros of fresh equity capital under new Basel regulation. Rules on the use of internal models are no worse than feared, and kick in slowly. This is hardly draconian – but that’s because banks have already done much of what was needed.
Bitcoin looks like speeded-up unicorn hype 7 Dec 2017 A sheen of futurism, fear of missing out, a lack of fundamental value, and an inability of big backers to sell without crashing the market are factors pumping up the digital currency’s price. It’s like accelerated startup funding rounds. The danger is a Theranos-like bloodbath.
Citi’s $20 bln writedown would be just the ticket 7 Dec 2017 That's how much planned U.S. tax cuts may cost the bank. In theory, investors should be up in arms. But being forced to dump tax credits of questionable real-world value should actually boost Citi's returns - eventually.
Orange can squeeze out a higher valuation 7 Dec 2017 The telco’s share price has been held back by high investment, price wars, and the French state’s holding. But the company is ahead of rivals in laying fibre broadband and can pay bigger dividends. That will narrow the 16 percent discount at which it trades to European peers.
GVC plays regulatory roulette with Ladbrokes bid 7 Dec 2017 The Foxy Bingo owner is offering up to 3.9 bln pounds for the UK bookie. That’s despite a government review that may hurt Ladbrokes’ gaming-machine business. Moving quickly makes sense for GVC, and natty financial structuring will improve its odds. The bet could still backfire.
Whitbread can give activist a hospitable welcome 7 Dec 2017 Jitters about UK consumer spending have pushed the Costa Coffee and Premier Inn owner’s valuation to a 10-year low. U.S. fund Sachem Head, which has taken a 3.4 pct stake, sees upside. Selling property or spinning off the coffee unit are among a menu of value-creating options.
UK gender pay data needs rigorous audit 7 Dec 2017 Some British companies have suspiciously reported no gap between the pay of male and female employees, the Financial Times found. The government thought transparency would help close the divide. To be credible, though, the data must be audited – and offenders punished.
Walgreens gets in early on healthy growth in China 7 Dec 2017 The U.S. chain is paying $416 mln for 40 pct of peer GuoDa. A sensible shake-up of drug distribution and sales by Beijing is spurring consolidation and giving pharmacies a stronger hand. This deal gives Walgreens market insight and could be a springboard for more investment.
China’s aspiring Glencore will drill deep 7 Dec 2017 Beijing wants a seat at the oil trading table. State firms like Chinaoil are no lightweights, but private CEFC could become the first independent player to challenge the likes of Vitol. Its supply deals, political ties and financial backing make it a rival to contend with.
The Force could be with Disney-Fox deal 6 Dec 2017 The Magic Kingdom is eyeing parts of Rupert Murdoch’s $60 bln empire. Disney would add to its clout with global outlets and film and cable content. The Murdochs, meanwhile, may fancy shares in a bigger group. A tie-up could help with succession problems at both companies, too.
U.S. coal country’s best hope is gas, not coal 6 Dec 2017 The EIA says natural gas output from shale in the Appalachian region – traditionally America’s coal heartland – far outgrew other areas. Efficiency gains will further cut gas costs. Dirtier miners may lobby for Washington handouts, but the shift is already well under way.
Healthcare goliaths cut out the middleman 6 Dec 2017 The U.S. healthcare system is full of intermediaries chasing after a share of the industry’s profit, often by gaming each other. UnitedHealth Group’s $4.9 bln purchase of a physicians group from DaVita is the latest example of trying to cut costs by eliminating links.
Trump and Warren make odd antitrust bedfellows 6 Dec 2017 The liberal senator says mega-deals like Aetna’s $77 bln sale to CVS kill competition. She backs the DOJ fighting AT&T-Time Warner and has concerns about past merger remedies. It puts her in the same camp as the president. Such an alliance of convenience puts pressure on big M&A.
Hadas: The mystery of lost competition 6 Dec 2017 The U.S. tax cut is expected to boost corporate earnings but not lower prices or raise wages. That implies there’s too much tacit collusion for basic economic theory to work as designed. Limited price competition is great for shareholder value, but bad for the economy.
France and Germany look too alike to bond market 6 Dec 2017 The gap between French and German bond yields this week hit its lowest since 2009. Plans to revamp the way the euro zone works may spur investors to overlook differences between countries’ public finances. But a lack of discrimination is premature, and stores up fresh problems.
Steinhoff meltdown shows market fallibility 6 Dec 2017 The furniture retailer shed more than half its market value after a probe was launched into accounting irregularities and its CEO stepped down. Investors who had ignored red flags such as a 2015 investigation and oddly low tax rates are paying the price of being too trusting.
Hammerson finds cheeky cure for retail sickness 6 Dec 2017 The UK shopping centre landlord is buying smaller rival Intu for 3.4 billion pounds. The deal offers scale at a time when rents are under pressure from internet shopping and consumer demand. Intu’s lowly valuation also helps. Given the sector’s challenges, more deals are likely.
Elliott’s usual playbook is unsuited to Uniper 6 Dec 2017 Paul Singer’s activist fund has a 5.3 percent stake in the German energy group that is being targeted by Finland’s Fortum. Unusually, the buyer may be willing to live with less than full ownership for a while. That could reduce the scope for Elliott to hold the bidder to ransom.
Wanda’s asset shuffle buys brief Beijing reprieve 5 Dec 2017 The indebted Chinese conglomerate is shuffling assets around, including a $470 million cash injection from its founder, as officials pressure firms to deleverage. The cash will help pay down $1.7 bln in offshore loans, but it will take more to escape the government penalty box.
A $50 bln Xiaomi comeback is hard to figure 6 Dec 2017 After its fall from grace, the Chinese handset maker may be mulling an IPO again. Sales are on the rise, thanks to markets like India and other items including air purifiers. Even so, only optimistic assumptions and Hong Kong's tech fever can justify the eye-popping valuation.
Nestlé tackles growth deficiencies with Atrium bid 5 Dec 2017 Buying the diet-supplement group for $2.3 billion gives the KitKat maker a tonic for sluggish sales. An entrepreneurial management team will stick around to run it. A 16.4 times EBITDA multiple brings lively returns to seller Permira, but without Nestlé overdoing the dosage.
Hedge fund species merit careful classification 5 Dec 2017 Most peg the industry as managing more than $3 trln of assets. But as Winton Capital notes, it’s a broad spectrum, and hedge funds are hard to define. On narrower criteria like fees or the use of leverage they manage far less. The distinctions matter for investors and regulators.