Fraud case reminds that bad M&A is a team effort 30 Nov 2018 U.S. prosecutors are trying to prove Autonomy CEO Mike Lynch deceived buyer HP in an $11 bln deal gone wrong. Such things tend to be a team effort. While fuzzy accounting rules that fostered this dispute are less of an issue now, the forces behind disastrous deals are evergreen.
NAFTA 2.0 signing is party for protectionism 30 Nov 2018 America, Canada and Mexico cheered their new, if little-changed, trilateral pact. But U.S. officials also noted that steel and aluminum tariffs remain. And the White House wants to pick which carmakers are subject to import duties. Taxing trade is in full swing.
Marriott breach invites data cops to check in 30 Nov 2018 Another 500 mln people now have to worry about identity theft. Hanging onto personal data, protecting it ineffectively and disclosing breaches only slowly are habits in corporate America. It’s not only Google, Facebook and their ilk that merit privacy rules more like Europe’s.
Review: Paul Volcker’s exemplary life 30 Nov 2018 The former Fed chairman is famous for crushing inflation. His new memoir, “Keeping At It”, reveals the attributes that made him arguably America’s greatest central banker. His common sense, distrust of economic theory and personal integrity are valuable guides to his successors.
China and U.S. can give a little in Argentina 30 Nov 2018 It will take two to tango in Buenos Aires. The upcoming meet between Presidents Trump and Xi is at risk of yielding nothing. Beijing hints it can't compromise on its state-directed economic model; Washington believes it has conceded more than it should. Both are wrong.
Allianz’s 2021 vision opens door to big M&A 30 Nov 2018 The German insurer promised more of the same with a set of modest goals for the next three years. Yet CEO Oliver Baete’s tweaked capital target suggests he is leaving room for a hefty deal. Rival AXA’s derided purchase of reinsurer XL, however, should serve as a cautionary tale.
Altice wins most from $2 bln fibre sale 30 Nov 2018 Patrick Drahi’s debt-ridden telco needs cash to keep building fast broadband in quiet bits of France. Investors like Allianz will pay up for infrastructure-like assets. Selling a minority stake lets Altice lock in high valuations, while offloading some of the risk if fibre flops.
SoftBank gives IPO investors one number to dial 30 Nov 2018 Instead of a range to help determine the price of the mobile unit’s shares, the figure has been set at 1,500 yen. That suggests fervent demand from retail buyers inspired boss Masayoshi Son to skip the typical sale process. It all but ensures an overly generous $63 bln valuation.
Smarting Aussie lenders brace for Banking 2.0 30 Nov 2018 Commonwealth Bank of Australia and other top institutions have been battered by an inquiry that has wiped some $39 bln off their market value in 2018. As nine months of theatrics wind down, investors can expect five major changes, including tighter credit and tougher punishments.
India is hit hardest by Asia’s $4 trln water risk 30 Nov 2018 That’s how much GDP is at stake if the region doesn’t better manage the 10 Himalayas-fed rivers its economic hubs rely on. China appears to be steering a good course. But India isn’t fixing the governance mess exposed by rising water stress. That threatens economic growth.
GM top-tier reshuffle may both boost and backfire 29 Nov 2018 The $52 bln carmaker’s second-in-command Dan Ammann is taking the wheel at Cruise, the unit that makes self-driving vehicles. The ex-Wall Streeter is the right person to whip it into shape and prepare for a possible IPO. But GM boss Mary Barra is losing her chief problem solver.
Viewsroom: Climate risk is investing opportunity 29 Nov 2018 Experts reckon unrestrained global warming will lop 10 pct off U.S. GDP by 2100. California’s wildfires prove it’s already having disastrous effects. But investors and companies alike can be part of the solution. Plus, Carlos Ghosn’s arrest leaves three carmakers in disarray.
Elliott’s latest Arconic activism is to save face 29 Nov 2018 Paul Singer’s hedge fund may revive private-equity interest in bidding for the $10 bln parts maker by ring-fencing its liability for a deadly 2017 London fire. But a sale is unlikely to produce much profit on a three-year investment. Even activists have to cut and run sometimes.
Americans spend faster to die younger 29 Nov 2018 Life expectancy has fallen for the third year in a row. Yet the U.S. lays out far more money than other countries to foil the Grim Reaper – and the amount is rising. The issue isn’t just what’s spent but where. More on basic public health and education would be a good start.
Altria could polish cut-price Juul 29 Nov 2018 The $100 billion Marlboro maker may be eyeing a stake in the vaping unicorn as e-cigarettes cut into its growth. Buying upstarts can be expensive for mature companies threatened with disruption. But Juul now has regulators on its back. That could help Altria strike a bargain.
Deutsche Bank’s new dark clouds have silver lining 29 Nov 2018 The lender has been hit by police raids linked to clients’ alleged tax evasion and speculation its investment bank head could leave. Yet Panama Papers issues have thus far not meaningfully hit European banks. And Deutsche’s traders should have a decent 2019 – whoever’s in charge.
Powell and Carney at least know their own limits 29 Nov 2018 The Fed chair irks U.S. President Donald Trump when rates rise, while the Bank of England boss took all-around flak for unveiling worst-case Brexit scenarios. Central bankers are imperfect but, unlike some critics, they rarely claim infallibility and usually show their workings.
New Unilever CEO’s hard graft will come later 29 Nov 2018 Insider Alan Jope has the right skills to deliver the sound strategy that he inherits from Paul Polman. But a share-structure change that the consumer giant had to ditch may need be revisited. The big deals needed to boost slow growth will be harder to clinch with a dual listing.
Jilted Intu flags more pain for UK landlords 29 Nov 2018 A group of investors led by the shopping centre operator’s deputy chairman abandoned a 3 bln pound takeover. It leaves Intu floundering with too much debt amid a bleak retail market. The fiasco suggests healthier peers may struggle to sell assets, and face further writedowns.
China’s gene-edited babies cry out to regulators 29 Nov 2018 A scientist says he genetically altered human embryos to protect them from HIV, sparking a firestorm. Clearer guidelines are needed, but sweeping restrictions could stifle biotech innovation. The Chinese research community’s weak self-discipline is another problem.
Horlicks buyer may face big fat problem in India 29 Nov 2018 Unilever is a leading suitor for GlaxoSmithKline’s local $3 bln “nutrition” business, which includes the 145-year-old malted milk drink. As obesity and malnourishment climb up the national agenda, however, sugary Horlicks could lose its healthy image and limit its shelf life.
Guest view: Trade war is popular, not populist 29 Nov 2018 President Trump's deployment of tariffs against China is an economically sound attempt to rebalance a distorted relationship, Asia hedge fund manager Stewart Paterson argues. Concerns about inflation's impact on U.S. consumers are overblown; it's Wall Street that should worry.
Fed’s stability checkup downplays wobbly features 28 Nov 2018 Chairman Jerome Powell says the financial system is in good health, echoing a report from the U.S. central bank. The jobless rate is low while inflation remains in check. But risks like trade fights and corporate debt only get brief mentions. Watchdogs may regret that posture.
Tiffany stumbles in luxury game of catch 28 Nov 2018 The luxury jewelry store reported a surprise slowdown in sales driven by all-important Chinese tourists. They’re still buying, just doing so at home. Currency changes and tariffs are partly to blame. Rivals have tripped by chasing tourist flows, but Tiffany is right to resist that urge.
Pimco makes Christmas turkey out of UniCredit 28 Nov 2018 The Italian lender is raising $3 billion from the bond giant at nearly 8 pct, miles more than it would have cost earlier this year. UniCredit’s plight is analogous to a last-gasp Christmas turkey shopper. Having delayed until the last moment, it now has to pay through the nose.
Biotech unicorn gorges at market trough of dreams 28 Nov 2018 Moderna’s potential could merit an $8 bln IPO, even if investors often underestimate the time and cost of developing new drugs. Amid waning bullishness, the firm is wise to heed the finance commandment of the cash-hungry sector – when hors d’oeuvres are being passed, take two.
Hadas: How to stop radical CEOs from going rogue 28 Nov 2018 Renault and then Nissan hired Carlos Ghosn to subvert conventions. But the will to transgress is hard to keep within boundaries. Companies have four defences against talented but errant bosses: bureaucracy, conscience, boards and punishments. All of them can be strengthened.
Bank of England hurls a lifebelt to UK Brexit plan 28 Nov 2018 The UK central bank has warned domestic GDP could fall 8 pct in a disorderly Brexit scenario. A deal more akin to the state’s exit plan could lead to a 0.75 pct dip. That helps Prime Minister Theresa May’s deal, but maybe not enough to get it through parliament.
L’Occitane buyout could be a fragrant option 28 Nov 2018 The $3 bln, Provence-inspired skincare brand may have attracted private equity interest. A costly expansion has hurt the group controlled by boss Reinold Geiger, but a clean balance sheet, prospects in China and an unglamorous share price suggest an alluring makeover candidate.
Greece tries “hair of the dog” bank recap plan 28 Nov 2018 Athens-based Eurobank, saddled with bad real estate debt, is buying property company Grivalia for 760 million euros. It can then use the latter’s equity to spin off 7 billion euros in dud loans. It’s a novel way to recapitalise a bank, but probably hard to copy.