Fiat car-parts sale needs private equity mechanics 3 Oct 2018 The carmaker may spin off or sell its Magneti Marelli unit. Handing it to shareholders would let them keep any upside. But the outlook for parts makers is mixed, and valuations low. Selling to the likes of KKR makes more sense, even if CEO Mike Manley has to accept a price cut.
China’s Big Brother drafted into trade war 3 Oct 2018 Washington is mulling export controls and sanctions on companies whose technology helps Beijing crack down on Muslim minorities. The unexpected U.S. attention may hit suppliers such as Intel and foreign-investor zeal for the likes of $39 bln Chinese surveillance titan Hikvision.
Bitmain mines for a more precious currency 3 Oct 2018 The world's top crypto equipment maker collected a third of its $2.5 bln in sales last year in bitcoin and its ilk. Converting some of it into cash has helped fund the profitable business. As prices of virtual money fall, though, raising $3 bln in an IPO would be a sweet trade.
There’s something off-key in Tencent Music’s IPO 2 Oct 2018 The Chinese web giant’s music service claims 800 million users, and super-fast revenue growth. It’s bigger than Sweden’s Spotify, and profitable too. But there are many gaps, like how it makes money, who those users actually are and what they’re prepared to pay for.
GE investors have been here before 2 Oct 2018 The conglomerate’s shares rose after it named Larry Culp as new CEO – much as they did after previous new starts. Once again, there’s room for disappointment. The weakness in GE’s earnings may go beyond its power division, and Culp may have to cut the dividend.
Amazon effect may extend to wages 2 Oct 2018 Increasing minimum pay to $15 an hour won’t do much for most of the e-commerce giant’s full-time workers but will help part-time and seasonal staff. It will raise pressure on rivals like Walmart and Target. And deflecting heat over boss Jeff Bezos’ wealth may be an added bonus.
Proxy plumbing is bigger problem than advisers 2 Oct 2018 The SEC has withdrawn its decade-old backing for the likes of ISS and Glass Lewis. Yet worries about the firms’ influence and potential conflicts are overblown. Modernizing proxy procedures would be a better way for the U.S. securities regulator to bolster shareholder democracy.
Cepsa prices itself to avoid IPO oily patches 2 Oct 2018 The Spanish oil group is going public at a valuation of 7-8 billion euros, the lower end of expectations. That will allow owner Mubadala to sell the required 25 percent at a premium to rival Repsol. Anything richer would have been risky among the current rush of listings.
BHP can hide behind Unilever dual-listing mutiny 2 Oct 2018 Some big shareholders oppose the Dove soap maker’s plan to switch to one, Dutch, headquarters. Pushy investor Elliott has been calling for a similar corporate overhaul at the world’s largest miner. There are differences, but the campaign for simplicity just got more complicated.
Royal Mail’s strategy gets lost in the post 2 Oct 2018 The delivery service partly blames its profit warning on poor worker productivity. While keeping a progressive dividend pledge will please investors irked by its new CEO’s pay, Royal Mail needs more investment to solve its operating issues. It could wind up doing the opposite.
Eritrea’s potash potential justifies the risk 2 Oct 2018 Miner Danakali is looking to add a big chunk to global potash production via a $322 million mine in the African state. Ongoing demand for fertiliser and a surprise Ethiopian peace deal underscore its interest. Investors should apply an exotic risk discount though.
India stems liquidity crisis with IL&FS rescue 2 Oct 2018 New Delhi’s decisive move to take charge of an infrastructure lender that started to default on a $13 bln debt pile brings short-term relief to the money market. Yet rising interest rates will bring more pain: the country’s shadow banks are still highly vulnerable.
SoftBank helps Bytedance sing a $75 bln tune 2 Oct 2018 A $3 bln cash injection from foreign investors puts the Chinese viral news and video-sharing startup on track to become one of the world's most valuable. At home, it has amassed a huge user base to challenge giants like Tencent. Success abroad makes it stand out even more.
U.S. fritters oil stockpile at worst time 1 Oct 2018 While President Trump chides OPEC, his Iran sanctions are pushing up prices. Meanwhile the government is selling down its stockpile to plug a budget hole, not calm the market. With shale producers constrained, the White House should be more strategic with its crude reserve.
California boardroom gender quota is useful nudge 1 Oct 2018 A quarter of public firms based in the state have no women directors. Now they’ll have to change that, as some big investors already demand. Similar rules in Norway, say, have not obviously trickled down. But that may take decades – and board balance is a valid goal in itself.
Broken Akorn deal is exception to MAC rule 1 Oct 2018 Merger escape clauses are notoriously hard to trigger, but a judge has let Fresenius nix its $4.75 bln Akorn deal. Don’t expect many copycats. The case includes misconduct claims, and may yet be overturned. Corporate-friendly Delaware courts are loath to second-guess contracts.
Italy budget gives with one hand, takes with other 1 Oct 2018 The new government has chosen to fight stuttering growth with tax cuts and a “citizens’ income”. Ditching austerity may boost sentiment and lift consumer spending in the short term. But the plan lacks a credible strategy to fight youth unemployment which is over 30 pct.
African miner deals deserve state-fleece discount 1 Oct 2018 Democratic Republic of Congo claims Barrick’s $6.5 bln Randgold deal means it owes the government money. Two years ago, Kinshasa extracted $100 mln when Freeport sold out. Investors should be discounting their synergy estimates to reflect the risk of something similar.
Pfizer takes Hippocratic approach to governance 1 Oct 2018 The drugmaker has split its CEO and chairman roles, but undermined the impact by keeping boss Ian Read on as an executive chairman. Fortunately the $258 bln drugmaker’s pipeline puts it on a sound footing. Like much about Read’s strategy, at least the reshuffle does no harm.
GE brings life and meaning to the word culpability 1 Oct 2018 The stumbling industrial group replaced its newish CEO with former Danaher boss Larry Culp, while taking a $23 bln hit on its power unit. By holding John Flannery accountable and expunging his predecessor’s legacy of dealmaking, GE’s board has shown welcome, if belated, spine.
NAFTA is dead – long live NAFTA 1 Oct 2018 Canada and the United States agreed to update and rename the trade pact just in time for signing by the current Mexican government. Ottawa will open its dairy market and regional auto content will be increased. Supporters of the trilateral deal can breathe a sigh of relief.
Losing reliability is biggest threat to Ryanair 1 Oct 2018 Europe’s largest budget airline cut its full-year profit forecast by 12 pct due to strikes and higher fuel costs. Less profitable rivals are facing similar headwinds. But Ryanair customers are unsure it will fly at critical times like Christmas. That’s a harder issue to fix.
Tesla investors get unsubtle hint from SEC 30 Sep 2018 The watchdog is using its settlement with CEO Elon Musk to impose some much needed adult supervision. The $45 bln electric-car maker must install an independent chair and find two new unbiased directors. It's up to shareholders to push for a broader governance overhaul.
Orcel exit tests UBS’s Goldilocks investment bank 1 Oct 2018 Like the girl in the fairy tale, the Swiss lender wants a capital markets arm that is just the right size: not too big to weigh on its valuation, but not too small to compete. Departing chief Andrea Orcel managed the balancing act. His successors have to prove they can too.
India’s private lenders face a fiercer watchdog 1 Oct 2018 The RBI has put Bandhan in the sin bin for flouting ownership rules, sending its shares down 20 pct or some $2 bln. A central bank clampdown on these overvalued lenders, and their backers, provides welcome clarity. But the timing adds to turmoil in the country’s financial sector.
Trump-friendly trade reform is a hard ask 1 Oct 2018 A trio of international bodies want to tackle some of the U.S. president’s gripes with the WTO and enable more side deals. Yet the proposals do little to bridge differences between Beijing and Washington that threaten the trading system. They also face big headwinds on services.