Mooch returns to place that’ll have him: Wall St 30 Apr 2018 Anthony Scaramucci is heading back to SkyBridge, the investment firm he founded, after HNA dropped its bid. The Chinese conglomerate’s rationale for buying it was more absurd than his chaotic turn as a White House flack. With HNA out and the Mooch back in, order is restored.
Apple may double capital returned to investors 30 Apr 2018 Memories of nearly going bankrupt scared the $840 bln firm into keeping an absurdly conservative balance sheet for two decades. Returning about $50 bln to investors annually shows progress in overcoming the trauma. Eliminating over $160 bln of net cash could be next.
Xerox-Fujifilm prints merger-frenzy warning 30 Apr 2018 This year’s $1.7 trln of announced tie-ups is a record. But withdrawn deals are rising too, not least due to regulators. A U.S. judge temporarily blocking Xerox’s takeover is rare. But it’s a reminder to boards and executives that there’s a cost to pushing M&A boundaries.
Arconic is sorely testing Elliott’s mettle 30 Apr 2018 Investors wiped $2 bln off the parts maker’s value after it slashed its earnings outlook. Activist Elliott helped oust CEO Klaus Kleinfeld last year. But new boss Chip Blankenship faces the same old production snafus and aluminum price hikes. It’s looking like a long campaign.
T-Mobile US avoids risk that gave it new life 30 Apr 2018 The U.S. telco is offering no reverse break fee to Sprint if watchdogs nix its $26 bln deal. Boss John Legere knows better. His success shaking up his rivals came partly thanks to a $6 bln payout from AT&T. Sprint’s willingness to forgo the insurance underlines its weak position.
Aviva’s investor climbdown sets tricky precedent 30 Apr 2018 The UK insurer will compensate preference share owners who lost out by selling their holdings after it threatened to redeem them early. That comes after protests forced Aviva to abandon a buyback that it argued was legal. The fiasco sets a high standard for investor protection.
Marriott Vacations makes pricey time-share buy 30 Apr 2018 The operator of fractional vacation homes is paying $4.7 bln for rival ILG. It helps close the gap with market leader Wyndham. But cost savings cover barely half the premium and debt may exceed four times EBITDA. It underscores the high cost of time-share ownership.
Marathon faces hard slog to justify $23 bln outlay 30 Apr 2018 The Midwestern oil group is paying a 24 pct premium for rival Andeavor. Becoming the largest U.S. refiner has merits. But its target’s stock was already up more than 50 pct in a year. Adding value means nailing cost cuts despite only limited geographical overlap.
Enel and Iberdrola’s Brazil war lacks restraint 30 Apr 2018 The two companies’ rival bids for Eletropaulo have nearly doubled the market value of Brazil’s top utility in a month, to $1.6 billion. The Europeans want to boost their presence in Latin America’s biggest nation. But the deal is too pricey to create much value for the winner.
Sainsbury’s tries to succeed where Walmart flopped 30 Apr 2018 The UK grocer is buying the U.S. giant’s Asda subsidiary for 7.3 billion pounds in cash and stock. Even after passing on some cost savings to shoppers, Sainsbury’s could make a double-digit return on investment. Unless demands from competition authorities eat into the benefits.
Glencore can dig its way out of Kinshasa quagmire 30 Apr 2018 A former partner is threatening to freeze two of the $71 bln commodity giant's operations in Congo, demanding $3 bln. It's the latest in a list of woes in the African country, including a tough new mining code. But the 6 pct drop in the stock over the past week is overblown.
WPP’s post-Sorrell era starts with glimmer of hope 30 Apr 2018 The UK ad group’s sales were broadly stable in the first quarter, allaying fears that the exit of long-time CEO Martin Sorrell would prompt clients to flee. And buyout group CVC may be eyeing WPP’s market-research arm. Together that warrants a smaller valuation discount to peers.
Nigeria’s FX reserve fetish is bad for growth 30 Apr 2018 President Muhammadu Buhari is vaunting a rapid rise in foreign exchange reserves. A decent war chest is worth having in case the naira needs defending. But accumulating a vast pile of dollars will deprive the economy of the hard currency it needs to keep growing and create jobs.
Sprint sale sharpens SoftBank’s vision 30 Apr 2018 Ceding control of the $59 bln U.S. wireless carrier is a U-turn for the Japanese parent company's boss, Masayoshi Son. The deal would nevertheless fix SoftBank’s biggest problem and shore up its balance sheet. It also should put greater emphasis on its extravagant tech fund.
TPG’s Baidu deal plays with Chinese fintech fire 30 Apr 2018 The U.S. buyout shop is leading a $1 bln investment in the search giant's payments, lending and wealth management business. It frees up resources for Baidu and helps it focus. For TPG's group, it's a big gamble on a laggard in a cutthroat industry facing tougher oversight.
China’s Ping An peacocks for its tech feathers 30 Apr 2018 The finance giant has raised over $1 bln in an IPO of its medical arm, says IFR, and three more spinoffs are in the works. Ping An wants to be seen as a tech titan, not a lumbering insurer. That’s a stretch but showing off its new economy divisions is a smart and valuable move.
T-Mobile and Sprint pitch America First 5G deal 29 Apr 2018 The Nos. 3 and 4 mobile operators agreed to an audacious $146 bln merger. Antitrust concerns stymied earlier talks, but T-Mobile US boss John Legere said the deal would create rural jobs and keep the country ahead of China. That’s likely to appeal to Donald Trump’s regulators.
Sainsbury’s and Walmart test UK merger taboo 28 Apr 2018 Britain’s second- and third-largest grocers plan to merge, with Asda’s U.S. parent as the junior partner. Joining forces is a logical response to the threat from Amazon and rival Tesco’s tie-up with wholesaler Booker. Still, it’s an audacious challenge to competition authorities.
The Exchange: China’s one-man revolution 27 Apr 2018 President Xi Jinping wants to make China great again – but his “third revolution” has brought censorship, protectionism and military standoffs. China scholar Elizabeth Economy’s new book explains Xi’s muscular new approach, and offers suggestions on how the West should respond.
Deripaska’s sanctions sale may have silver lining 27 Apr 2018 The Russian oligarch plans to reduce his stake in power and aluminium group En+ below 50 pct, after heat from U.S. sanctions. That risks locking in losses on shares that have halved since April 5. Still, if restrictions are eased, his remaining holding should recover.
Impact investing will brush off Trumpian scorn 27 Apr 2018 The U.S. Department of Labor wants pension funds to downplay environmental, social and governance issues that don’t demonstrably improve investment performance. That will provide cover for some holdouts, but should also prompt the $23 trln ESG industry to up its game.
Puerto Rico budget ignores the human element 27 Apr 2018 The bankrupt island’s federal oversight board certified plans that include cuts to pensions and other austerity measures. Some are in line with what Puerto Rico’s governor proposed. But they don’t adequately address the risk of yet more working-age people jumping ship.
Spotify price hikes are dubious profitability plan 27 Apr 2018 The loss-making music service will soon charge Norwegians 10 pct more to listen to its vast song library. That will test if users value it enough to pay a premium over rival Apple. Spotify’s thin margins mean little benefit to investors even from a similar worldwide hike.
Exxon’s strategy has yet to deliver returns 27 Apr 2018 Higher prices aren’t solving the woes of the world’s largest listed oil company. It missed earnings expectations in the first quarter as production declined. Exxon’s focus on long-term projects may yet pay off. But investors seem less confident and competitors are passing it by.
Kim Jong Un’s hollow promises better than nothing 27 Apr 2018 The North Korean leader met South Korea’s president, vowing to work towards a formal peace treaty and a nuclear-free peninsula. The latter seems unlikely. But even a diplomatic thaw is good for South Korean business – and will reduce the tail risk of a catastrophic conflict.
Once-bitten merger arbitrageurs are twice Shire 27 Apr 2018 The $62 bln Takeda bid should in theory be an attractive hedge-fund plaything. A yawning gap between the offer value and the target's share price suggests otherwise. Multiple currencies and time zones act as deterrents. So too do the scars from Shire's deal with AbbVie.
Steinhoff payout may test South Africa reform zeal 27 Apr 2018 Hedge funds piled into 1.6 bln euros of the failed retailer’s bonds betting that its healthy South African unit will honour them. The fallout from Steinhoff’s collapse may make a payout politically tricky, and challenge new President Cyril Ramaphosa’s market-friendly credentials.
RBS’s healthier returns could yet get better 27 Apr 2018 Lower costs saw the UK bank deliver a 9.3 percent return in the first quarter, its highest in two years. The obvious cloud is a still unclear U.S. fine for mortgage misselling. But the more this cuts RBS’s excess capital to its target level, the better returns will look.
Mark Carney can delay UK rate rise with impunity 27 Apr 2018 A sharp slowdown in UK growth is enough reason for the Bank of England boss to defer monetary tightening. He has further grounds to hesitate since euro zone activity has slackened, with French growth more than halving in the first quarter. Discretion is the better part of valour.
Sony offers an increasingly entertaining story 27 Apr 2018 The Japanese group made a record annual operating profit of nearly $7 bln, helped by a rebound in music sales and continued success in games. Yet Sony’s sprawl, including hardware, means it is stuck with an unglamorous valuation despite a global race to acquire content.