Stricken Hanergy drops investors into black hole 1 Mar 2019 The solar company wants shareholders to swap frozen shares for stock in a vehicle which may or may not relist in China. Hanergy might well be ejected from the Hong Kong exchange before trading resumes, denying them an alternative. This raw deal would set a terrible precedent.
The yuan belongs in a U.S.-China trade pact 1 Mar 2019 Washington might ask Beijing to formally pledge not to devalue its currency. China says a weaker yuan is not in its interests, which might be true. But past manipulation distorted the U.S. economy, and could happen again. A deal without a currency clause will be flawed.
Elon Musk fires up engine for short-seller battle 28 Feb 2019 Tesla’s CEO is finally selling Model 3s for $35,000, and shutting most of the firm’s stores to pay for it. So it will soon be clear whether he has built the profitable mass-market electric-car maker he’s long promised, or a business fast running out of juice as his foes contend.
The Gap stitches together an M&A opportunity 28 Feb 2019 The $10 bln clothier is spinning out faster-growing Old Navy from its other brands, saying they serve different customers. It’s not like the struggling retail sector needs another listed company. But it might not have one for long, if the more successful arm can attract a buyer.
Blank-check firms need more than a marquee name 28 Feb 2019 Media mogul Haim Saban is folding his acquisition vehicle after failing to close a deal. He blamed market conditions. But a convoluted transaction on top of an already complicated structure didn’t help. It’s a warning to other prominent investors with deals in the hopper.
Viewsroom: Warren Buffett eats crow 28 Feb 2019 Kraft Heinz’s poor earnings, $15 bln writedown and accounting investigation forced the Berkshire Hathaway boss to admit he overpaid for the nuts-to-Velveeta cheese purveyor. Breakingviews columnists discuss what went wrong. Plus: Trump buys more time in his China trade spat.
Engie demystifies before activists come calling 28 Feb 2019 The French gas and power group is decluttering its complex structure by exiting 20 markets. Engie’s state ownership and Belgian nuclear albatross act as a brake on activism, but won’t always save it if its undervaluation lingers. Still, steps to close the gap with big wind and solar peers suggest a capacity for self-help.
Bristol-Myers $74 bln deal needs surgery 28 Feb 2019 Big shareholder Wellington Management and activist Starboard Value have both come out against the pharma firm’s deal for Celgene. The market also isn’t pricing in the acquisition happening as Bristol-Myers envisaged. It doesn’t help that the buyer was already overpaying.
U.S. economy offers something for everyone 28 Feb 2019 GDP growth slowed to a 2.6 pct annual pace in the fourth quarter. That’s faster than forecast, though the 2.9 pct full-year figure fell short of Donald Trump’s target. The president, the Fed and market watchers can all take comfort, while worriers may still fret about this year.
Universal Music auction could end on bum note 28 Feb 2019 Buyout group KKR and China’s Tencent may bid for part of Vivendi’s label, Reuters reports. On paper it’s the best way to gain exposure to fast-growing streaming. That means getting emerging market fans to pay for music. Investing alongside Vincent Bolloré also brings risks.
Hard times favor skinny conglomerates 28 Feb 2019 Kraft Heinz’s stumble has dealt another blow to the notion of the diversified roll-up M&A machine. United Technologies, GE and Newell Brands had already got that message. Conglomerates can still work if they stay lean and keep cash on hand. Take Kraft investor Berkshire Hathaway.
JD’s winding road to profit keeps getting longer 28 Feb 2019 The Chinese e-commerce group’s sales rose by more than a fifth to top $20 bln in the fourth quarter. But heavy investment in new bets means JD is barely breaking even. Financial discipline would help, but may not be enough to counter cooling demand and competition from Alibaba.
John Malone wins most in Europe’s telco M&A whirl 28 Feb 2019 The cable cowboy’s Liberty Global is selling another business, this time to Swiss group Sunrise for $6.3 bln. As in Germany, Malone gets a premium for a sub-scale operation. The benefits for the buyer from bundling mobile, TV and internet services may be competed away.
AB InBev sets itself an easy target 28 Feb 2019 The Corona brewer pleased investors by unveiling healthy revenue growth and plans to cut net debt to below four times EBITDA by end-2020. The goal is feasible even without a mooted IPO of its Asia unit. Just as well since the company can ill afford big cuts in its marketing spend.
Zalando copies Amazon recipe for success 28 Feb 2019 The online fashion retailer wants to focus more on being a shop window for others rather than buying and posting out stock itself. Shifting inventory and delivery costs to retailers mimics the strategy followed by Jeff Bezos’ behemoth and will boost operating margins.
Trump-Kim breakdown is blessing in disguise 28 Feb 2019 The U.S. president said talks ended abruptly without a nuclear deal because North Korea wanted sanctions lifted for too little in return. Seoul markets understandably shuddered. A pause, however, provides time to think through the effects of an economically stronger Pyongyang.
Hong Kong exchange primed for some M&A trades 28 Feb 2019 The $43 bln bourse operator enjoyed a blowout 2018, but its three-year strategic plan offers few bold ideas for reducing dependence on local equities. Looming Chinese reforms pose a further threat. A trio of new blue-chip advisers may be able to help HKEX diversify its portfolio.
Spotify turns India’s music scene into mosh pit 28 Feb 2019 The $26 bln streaming service will find its newest market loud and unruly. Indians spend more time listening to songs than most, but they pirate more too, making subscriptions a challenge. Spotify will also collide with everyone from Apple to Tencent to Mukesh Ambani’s app.
Investors give India-Pakistan peace a chance 28 Feb 2019 A rare air skirmish between the two nuclear-armed nations has left an Indian pilot captive. Relations have been worse in the past and war averted. Modest movements in stocks and bond yields suggest limited, if any, escalation is expected. Indeed, both sides have too much to lose.
Germany’s Merck chips into aggressive M&A game 27 Feb 2019 The drugs and chemicals supplier is making a hostile $5.2 bln offer for Versum, after Barrick’s $18 bln unsolicited tilt at Newmont. Both aim to nix earlier agreed deals, while Roche is injecting $4.3 bln into new tech. Recent market wobbles have not yet dulled merger mania.
Fed settles for big balance-sheet future 27 Feb 2019 Chairman Jay Powell told Congress that the U.S. central bank would stop running down its assets this year. That means holding at least $3.5 trillion, four times the pre-crisis figure. That’s not the “normalization” many were looking for – but there are reasons for it.
Oprah sits pretty as Weight Watchers loses badly 27 Feb 2019 The U.S. diet club’s shares plunged by a third after a flabby start to 2019, but celebrity shareholder Oprah Winfrey is riding to the rescue. Well she might – her investment in the company has already resulted in her more than quadrupling her money in three and a half years.
Nigeria votes for another four years of drift 27 Feb 2019 Re-elected President Muhammadu Buhari faces a daunting to-do list. His first term suggests most of it will stay undone. Easing the state’s grip on the currency and oil sector could revive growth. That the former general’s main rival backed such reforms means neither is likely.
Tech giants get glimpse of watchdog’s M&A bazooka 27 Feb 2019 The U.S. FTC is creating a body to police anticompetitive behavior in Silicon Valley, and isn’t ruling out the possibility of breakups. While unwinding mergers would be extraordinary, the mere threat would be a useful weapon as the agency investigates Facebook’s privacy breaches.
Hadas: The CEO guide to corporate old age 27 Feb 2019 So far this century, real revenue at big U.S.-listed companies is up only about half as much as domestic GDP. Last week’s Kraft Heinz writedown suggests that both bosses and shareholders often harbour unrealistic hopes of doing better. Lower expectations would help everyone.
Norway’s giant oil fund flaunts Achilles’ heel 27 Feb 2019 The Nordic state’s $1 trillion wealth vehicle lost money in 2018. A political mandate that obliges it to hold more equities rather than diversifying its exposure explains why. Even if these shackles were removed, the fund’s size complicates efforts to rev up performance.
Rio Tinto lays bare the mining paradox of plenty 27 Feb 2019 Including a special payout, the digger led by Jean-Sébastien Jacques returned a whopping $13.5 bln to shareholders last year. Despite Rio's ample cash, risks are rising and safety problems like Vale’s will lift costs. That should keep the industry's growth ambitions in check.
Cash call shows limits of Metro Bank’s revolution 27 Feb 2019 The self-styled disruptor of British banking will raise 350 mln pounds at a yet-to-be-determined share price to fix a capital glitch. Slower growth and higher costs will hurt its already weak profitability. With regulators investigating, new investors will need a steep discount.
Dutch activism could ground Air France recovery 27 Feb 2019 The Hague has snapped up 12 percent of the carrier to counter the influence of the French government and protect Dutch jobs. More state meddling may undermine new boss Ben Smith’s cost-cutting plan, and exacerbate tensions with French unions, raising the risk of more strikes.
Beiersdorf splashes skin cream on fundamental sore 27 Feb 2019 The Nivea maker forecast slower growth and pledged to invest in its brands. It’s a late remedy to the threats facing consumer groups: greater competition from niche brands and disruptive internet sales. The German group needs more radical treatment to keep its premium rating.