Icahn’s late start blunts Cigna blocking campaign 7 Aug 2018 The activist makes a good case for rejecting the insurer’s $52 bln Express Scripts deal. Yet his argument - Cigna is paying too much for a target threatened by regulation and Amazon - was evident months ago. And the window for enlisting other arbs to his side has already closed.
Kroenke’s Arsenal buyout is a game of two halves 7 Aug 2018 The U.S. mogul is buying out shareholders of the London soccer club, with the help of a $721 mln Deutsche Bank loan. By borrowing the funds himself, Kroenke avoids burdening the underperforming team’s finances. But once he has control, he may still leverage it up to pay dividends.
Sinclair dumbly punched a gift horse in the mouth 7 Aug 2018 The right-wing broadcaster needlessly endangered its $3.9 bln bid for Tribune Media by selling stations to questionable buyers. That put sympathetically inclined Trump regulators in a bind. The Chicago-based TV group is better off pulling the plug and selling to someone else.
Standard Life Aberdeen needs more activist touch 7 Aug 2018 The asset manager formed from last year’s merger of Standard Life and Aberdeen keeps losing funds. Cutting costs and returning capital have failed to close the discount at which the company trades to peers. Selling the India business and ditching a twin-CEO structure might help.
Sterling’s Brexit jitters bigger than they look 7 Aug 2018 The pound’s gyrations in the coming year will be fairly restrained, options prices imply. But the currency is expected to be jumpier than a basket of major exchange rates, rather than less volatile as in pre-EU vote days. That gap is a sort of Brexit risk premium, and will grow.
Ola’s UK ride poses a new threat to Uber 7 Aug 2018 India’s top taxi-app firm is expanding into Britain, months after it sped into Australia. It's the $7 bln group's second intrusion into one of Uber’s global strongholds. With both startups backed by SoftBank, success would raise the pressure on Masayoshi Son to engineer a deal.
UniCredit’s valuation gap looks too wide 7 Aug 2018 Italy’s biggest bank by assets has been a perennial slowcoach compared to Intesa Sanpaolo. But its return on tangible equity warrants a valuation closer to that of its main rival. Especially as a broad European base can offset a slowing Italian economy and jittery markets.
Commerzbank M&A pressure respite is only temporary 7 Aug 2018 The German lender reported a 689 million euro first-half pre-tax profit, compared to a loss in 2017. Higher revenue from smaller businesses should help it reinstate payouts. Still, a modest 6 percent return target means a merger with Deutsche Bank still makes long-term sense.
Chinese peer lending protests set political trap 7 Aug 2018 Beijing police on Monday stopped irate investors converging on the banking regulator and demanding compensation for losses from collapsed peer-to-peer lenders. Officials are partly responsible, yet a rescue would reinforce moral hazard. The risk is that discontent spreads.
Japan Tobacco coughs up for more frontier smokers 7 Aug 2018 The owner of Camel and Silk Cut is paying $1.5 bln – a hefty eight times revenue - for Bangladesh's second-largest cigarette company. Its latest emerging market splurge adds sales, but risks distracting the $50 bln giant from newer alternatives, where rivals are forging ahead.
Elaine Wynn’s deft hand puts house in order 6 Aug 2018 By arranging to install an industry veteran as independent chairman, the Wynn Resorts co-founder has played her cards wisely. The deal protects her stake in the $16 bln casino empire and ends months of management turmoil. Now the company can focus on real challenges, like Macau.
Sale can’t erase mark of 666 from Jared Kushner 6 Aug 2018 Selling the troubled New York skyscraper lifts financial pressure off the family of Donald Trump’s son-in-law but not the stain. The president’s young adviser layered conflict-of-interest concerns on an inflated investment. Buyer Brookfield brings adult supervision to the plot.
What makes Connecticut Water so tantalizing? 6 Aug 2018 SJW is now paying a one-third premium for the staid Nutmeg State utility. It may flush away rival bidder Eversource and stalker California Water. But the investment return will be low. It only makes sense as a way to invest in infrastructure and prepare for a wave of water deals.
Activist puts another bow on a packaging deal 6 Aug 2018 Bemis’ $5.25 bln sale to Australia’s Amcor is at least the third time Starboard Value has helped tie up a deal in the sector. The two companies are natural partners in a consolidating industry. Successful activism doesn’t have to involve starting talks, but ensuring completion.
Nooyi leaves Pepsi wondering what might have been 6 Aug 2018 The $166 bln food-and-drink giant’s CEO is leaving after 12 years. She successfully fended off activists seeking a breakup as returns underperformed Coke. Though Pepsi has had a good run more recently, her successor Ramon Laguarta will need to reconsider the conglomerate.
Erdogan opens Turkish lira to new line of attack 6 Aug 2018 The currency hit a record low against the dollar after the United States said it was reviewing Turkey’s duty-free access to its markets. President Tayyip Erdogan has alienated investors. The tougher he talks to the world’s largest economy, the more they’ll punish Turkish assets.
HSBC’s targets start to look like a low bar 6 Aug 2018 The UK-based bank reported a slight drop in first-half pre-tax profit thanks to higher costs. More important is double-digit revenue growth at its biggest divisions and fatter lending margins. Higher rates should see the lender clear its 11 percent return target.
IWG botched takeover leaves uncertain future 6 Aug 2018 The 2.2 bln pound office provider walked away from suitors having failed to agree a price. Its UK business is struggling with the fallout from Brexit, and the advance of rival WeWork poses a bigger threat. That leaves founder Mark Dixon having to borrow to invest at a risky time.
Oil investors are complacent on climate change 6 Aug 2018 Shareholders in the likes of Shell aren’t holding companies to account on carbon targets. A Breakingviews analysis suggests why: they may suffer only mild losses if oil majors just run down their reserves. But doing nothing may backfire if governments take more radical action.
SoftBank investors grapple with Vision distortions 6 Aug 2018 Earnings at Masayoshi Son’s group jumped tenfold to almost $3 bln in the three months to June, helped by the sale of Indian e-commerce outfit Flipkart. Shifting values in the giant Vision Fund add to the noise. SoftBank’s attempt to tidy up won’t close the stubborn discount.
India’s dated M&A rules let tycoons bet the house 6 Aug 2018 The Shroff family’s chemical group, UPL, is the latest to exploit a statute that lets companies do big overseas acquisitions without shareholder consent. Ring-fencing offshore debt does not protect investors. With Indian buyers at their most active, it's time for a tighter leash.
China’s yuan squeeze sends a bearish signal 6 Aug 2018 The central bank has reinstated a rule that makes it more expensive to short the currency. By turning back to 2016-style measures, Beijing slowed the slide. It also telegraphed where the yuan is heading. That will encourage capital outflows and complicate efforts to boost growth.
Campbell is an indigestible meal for all but Kraft 3 Aug 2018 Dan Loeb is pushing for a sale of the $13 bln soup maker. Campbell’s pretzel deal larded it with debt so an LBO won’t work. The $72 bln food giant with a penchant for cost cuts may be solo at the table. But heirs holding 42 pct of shares won’t roll over without a hearty payout.
Review: The complex causes of the financial crisis 3 Aug 2018 The upheaval that’s unfolded over the past decade had myriad origins. In “Crashed”, Adam Tooze brings a historian’s perspective to the crisis and its aftermath. His ambitious narrative links Wall Street turmoil to euro zone disorder, but is stumped by political ructions in 2016.
SoftBank is the disruptor of technology disruptors 3 Aug 2018 Masayoshi Son’s investment mammoth is wreaking havoc across Silicon Valley and beyond. The $100 bln Vision Fund makes traditional venture-capital funds look puny, gives startups unimagined firepower, and distorts valuations and IPO markets. Tech finance can scarcely keep up.
Only casualties will dissuade Trump on trade war 3 Aug 2018 The White House may increase tariffs on $200 bln of Chinese imports to 25 pct. Big firms like Caterpillar can absorb the cost, but an escalating battle could force smaller businesses to close or fire workers. It may require a heavy toll, though, for the president to call a truce.
RBS takes final step to being a cut-price Lloyds 3 Aug 2018 Royal Bank of Scotland has announced its first dividend since 2007, despite a paltry 1.1 percent return in the second quarter. Excluding one-off fines, the show of strength is credible. Lower core costs and impairments should close the valuation gap with Lloyds Banking Group.
Italian banks face worsening doom loop 3 Aug 2018 Rising sovereign yields since a radical government’s arrival hit capital buffers at Monte dei Paschi and peers. Weaker banks will hurt growth, feeding fears over Italy’s debt. More storms loom as the economy stutters, and the executive’s anti-business attitude spooks investors.
Zimbabwe’s renewal hinges on trio of tricky fixes 3 Aug 2018 Emmerson Mnangagwa has won the presidential elections. His challenge is to devalue the national currency while convincing global institutions to extend credit and tackle a spiralling debt load. That’s a big ask, but the country faces a dark future if he doesn’t at least try.
Luxury investors take benign view on trade wars 3 Aug 2018 A growing spat between China and the U.S. threatens sales in the sector’s two most important markets. A weaker yuan would make overseas shopping pricier for spendthrift Chinese tourists too. With share prices near record highs, investors are exposed to anything but all-out peace.