JPMorgan gives Dimon freedom to outstay welcome 29 Jan 2018 The $400 bln lender’s CEO and his directors have agreed he’ll stay on till 2023, which would mark a 17-year tenure. Given Dimon’s track record, it’s understandable: JPMorgan is stronger and more stable than most. What he gives up is the chance to leave on an unambiguous high.
Chipmaker M&A exhibits increasingly fuzzy logic 29 Jan 2018 Amid a rash of big deals, Japanese firm Renesas may offer close to $20 bln for U.S. rival Maxim, CNBC reported. Combining the two could generate big savings – but Renesas would need to cut 100 pct of Maxim’s operating expenses to justify that price. That’s called overpayment.
Dell has no time for fantasy finance 29 Jan 2018 The U.S. tech giant needs cash to pay taxes, reduce debt and let investors exit. Reversing into its $53 bln subsidiary VMware is too complex, while an IPO would be financially unattractive because of pricey past acquisitions. There are simpler, more logical ways to raise cash.
Mondelez slurps Coke’s returns in Dr Pepper deal 29 Jan 2018 The Ritz cracker maker looks to have doubled its $2 bln investment in coffee maker Keurig, now merging with drinks group Dr Pepper. Mondelez’s gain is largely the result of others’ efforts. Pity Coca-Cola, which sold a stake in Keurig just as things started to get interesting.
Auto industry exposes NAFTA’s blind spot 29 Jan 2018 Canadian negotiators have pointed out that the North American treaty doesn’t capture the value of high-tech equipment in autos, Reuters reported. A rule change to reflect tech advances is due. Complex supply chains call for new ways of measuring trade flows.
WestRock outboxes weak demand with $4.9 bln deal 29 Jan 2018 The U.S. packaging company will close the gap on market leader International Paper by acquiring KapStone. Integration benefits should pay for the deal, and WestRock will gain new West Coast markets. Being bigger offers some insurance against a sluggish market.
JAB takes gulp from 3G with Keurig-Dr Pepper deal 29 Jan 2018 The private group’s coffee-pod company is buying the soda and tea outfit, creating a drinks giant potentially worth over $30 bln. Having bought and then cut costs at Keurig, JAB and its partners can apply themselves to Dr Pepper. It’s reminiscent of the architects of Kraft Heinz.
Fed’s inflation-target rethink dodges big question 29 Jan 2018 Some U.S. rate-setters wonder about their 2 percent goal – both its level and whether it’s more a ceiling or a long-term average. The debate is welcome but could be even more radical. Today’s real issue is whether central bankers can fully explain, let alone control, inflation.
Sanofi’s M&A bloodlust comes at a high price 29 Jan 2018 The French group is buying blood disorder biotech Ablynx for 3.9 bln euros. That’s 50 pct more than rival Novo Nordisk bid, including protections against drug flops. Combined with last week’s $11.6 bln purchase of a haemophilia group, Sanofi’s new acquisitiveness lacks caution.
Italo valuation underpinned by racy growth 29 Jan 2018 Europe’s first private fast-train operator will list next month. The track Italo runs on is owned by Italy’s incumbent rail group, a competitor, and a 1.7 bln euro valuation assumes rapid growth. But low-cost efficiency and EU train liberalization provide a rationale.
Beware the Davos bubble’s dubious emissions 29 Jan 2018 Each January, the Swiss mountain gathering provides a snapshot of elite thinking. Often it proves to be wide of the mark. This year the global economy, Italy’s election, the importance of crypto-currencies and Saudi reform produced what may be the surest examples of groupthink.
Australia’s CBA makes a brazen CEO choice 29 Jan 2018 The country’s top lender picked retail head Matt Comyn as chief, despite a money-laundering scandal in his unit. Investors seem sanguine and CBA’s board argues the bank would be hard for an outsider to master quickly. Even so, the lack of accountability is disappointing.
MbS gains either way from Saudi anti-graft endgame 29 Jan 2018 Prince Alwaleed is free after months of detention. If the billionaire and fellow freed royals have paid up to leave the Ritz-Carlton/jail, it will help Crown Prince Mohammed bin Salman repair his Kingdom’s finances. Even if he has paid nothing, the power play has served a purpose.
Wynn Resorts slide shows house can lose in new era 26 Jan 2018 Boss Steve Wynn says sexual-misconduct accusations leveled at him are “preposterous”. The $2 bln wiped off the company's shares suggests investors nonetheless fear boardroom disruption. It’s a warning to all firms that even alleged misbehavior has become a financial risk.
Boeing needs Embraer deal to fly after tariff crash 26 Jan 2018 A U.S. trade agency surprisingly rejected calls by the aerospace giant and the Trump administration to slap duties on Bombardier’s C Series jet. It shifts the regional-airplane dogfight back to the marketplace, upping the pressure on Boeing to seal a tricky merger with Embraer.
Viacom-CBS are better back together 26 Jan 2018 The Redstone family is mulling a $37 bln merger of the two media firms after scrapping plans in 2016. Walt Disney’s acquisition of bits of Fox is likely to be a consideration. And this time around, the larger CBS can give its sister a 30 pct premium and still create value.
U.S. economic health falls short of stock optimism 26 Jan 2018 GDP growth clocked in at 2.6 percent in the fourth quarter. That's decent but it fell short of expectations despite a strong 6 percent gain in the S&P 500 for the period. It’s a reminder that Donald Trump's favorite performance metric at best loosely reflects the broader economy.
Bull market lets activists see virtue in passivity 26 Jan 2018 Bill Ackman, who lost his fight with ADP, has taken a stake in Nike but isn’t pushing for change. Dan Loeb sat back as Honeywell’s new boss ignored his advice and beat his targets anyway. Even pushy hedge funds can be tempted to simply ride the waves when a rally lifts all boats.
Blackstone takes calculated risk on Nordic oil 26 Jan 2018 The private equity giant is backing a $1 bln venture to buy fields in Norway. Unpredictable demand for the black stuff means it’s a risky bet. But Blackstone is no stranger to the North Sea, and there’s logic in picking up profitable assets discarded by capital-hungry oil groups.
Trump reworks “America First” for the global elite 26 Jan 2018 For the finale of the World Economic Forum, the U.S. president laid out in unexpectedly statesmanlike fashion how favouring the interests of his citizens could benefit the rest of the world. The demand for reciprocity remains, but the inclusive-sounding vision is an improvement.
Hohn’s LSE/U.S. mashup is tantalising but tricky 26 Jan 2018 After a failed boardroom coup, hedgie Chris Hohn reckons the $20 bln London Stock Exchange could be bought by a U.S. rival, according to Sky. A deal with, say, ICE, would create savings and scale in derivatives clearing. But the latter could prompt the UK government to object.
China’s finance watchdogs best off in same kennel 26 Jan 2018 A mooted merger of the troubled insurance commission and its banking counterpart would reduce risk. Similar unions work well elsewhere. This could help pave the way for a “super-regulator”, perhaps led by bank tsar Guo Shuqing. Further judicious consolidation would be healthy.
Italy’s flat-tax talk rests on shaky ground 26 Jan 2018 Silvio Berlusconi and his centre-right allies want to replace progressive income taxation with a flat levy. Italy’s fiscal code needs a revamp: it’s unjust and complex. But the idea won’t fly without budget cuts. A serious pledge to fight tax cheats is also missing from the debate.
Super-voting stock returns a split-ticket 26 Jan 2018 Senior officials from Credit Suisse, BlackRock, Bain Capital and PCCW Media squared off about Hong Kong moving to open the door to dual-class share structures. It'll invite more listings, they told a Breakingviews Predictions event, but the implications are many and varied.
Review: Shaking up Singapore’s ivory tower elites 26 Jan 2018 The city-state has fostered prosperity and stability. Yet as the fourth generation of leaders prepares to choose a new prime minister, a timely book from academic Cherian George presents a helpful to-do list. Broadening the political talent pool should be right at the very top.
The Exchange: Dual-class dueling 25 Jan 2018 Hong Kong’s plan to welcome super-voting stock weakens corporate governance, but its appeal to Chinese tech companies also may be exaggerated. Officials from Credit Suisse, BlackRock, PCCW Media and Bain Capital debated the upcoming changes at a recent Breakingviews event.
Newell reaches limit of its brand rollup model 25 Jan 2018 Shares in the maker of Rubbermaid goods and Sharpie pens plunged 20 pct, wiping $3 bln off its value, after it said it would offload nearly a quarter of its businesses, some bought only recently. A tighter focus is overdue, but struggling retailers could make the cleanup harder.
U.S. flu-shot savings are nothing to sneeze at 25 Jan 2018 A harsh influenza strain is knocking more Americans flat this winter. The tab for medical care should exceed $10 bln, while lost work days will take an even larger toll on companies. Offering free shots for all would be a cost-effective way for society to reduce the burden.
Viewsroom: Trump solar tax is more burn than balm 25 Jan 2018 The U.S. president seems to be trying to right past trade wrongs. But business has long since moved on, meaning tariffs on washing machines and solar panels will do more harm than good. Also, Merkel and Modi disappoint in snow-ravaged Davos. Plus: Spotify’s Wall Street snub.
Mario Draghi is ill-equipped for currency wars 25 Jan 2018 The European Central Bank chief took a potshot at the United States for flouting an international agreement not to manipulate currencies. The rate-setter has limited policy room to resist a strong euro. European politicians who take up the cudgels risk escalating the fight.