Carl Icahn is a problem of Occidental’s own making 31 May 2019 The activist is upset about the U.S. shale driller’s $38 bln purchase of rival Anadarko. Oxy boss Vicki Hollub pulled some shareholder-unfriendly moves, like avoiding a vote, even if Anadarko’s disdain for its owners made her do it. Icahn will be ready to pounce on any missteps.
India can’t afford to copy China on growth stats 31 May 2019 New Delhi's frequent revisions of GDP data are less egregious than Beijing’s habit of forcing officials to hit targets, and experts have other ways to measure economic health. But fears of manipulation are embarrassing, and potentially more damaging for capital-scarce India.
Renault-Fiat merger savings matter more than price 31 May 2019 The French carmaker’s board may feel a proposal by its Italian-American rival takes advantage of a depressed share price. The bigger prize, though, is synergies worth 50% of combined operating profit. If those are credible, Renault should not quibble too much about valuation.
Allianz picks brave moment to double down on UK 31 May 2019 The German giant is forking out $1 bln to lift its exposure to British home, car and pet insurance. Bolting a Legal & General subsidiary onto an existing joint venture will boost scale. But fierce competition, looming regulation and a shaky economy make it hard to ramp up returns.
Steel is awkward candidate for UK bailout largesse 31 May 2019 Thirty years after privatisation, a big chunk of Britain’s steel sector is going bust. The UK’s scope to offer support is less hopeless than it might appear, but the government would need to be convinced the industry is strategic and sustainable. Neither is obviously the case.
Gazprom payout pledge yet to catch fire 31 May 2019 After a management shake-up, the $78 bln gas company says it will pay out half its net income in dividends in coming years. That would please the state, which has been pushing the issue. But the implied dividend yield of 15% suggests investors doubt the bonanza will happen.
Hedge funds see honey in Japan’s value traps 31 May 2019 The Land of the Rising Sun dominated Hong Kong’s Sohn gathering. Many see signs of unjustified panic in slumping equities this year, creating opportunities to buy low. But even optimists highlight the cash hoarding and slack governance that have long scared investors away.
Mexico threat opens one trade-war front too many 31 May 2019 Donald Trump says a 5% tariff will be imposed on all Mexican imports until illegal migrants are stopped. Yet trade talks with Beijing are stuck and may result in more levies, while there is little progress with the EU or Japan. America’s economy can’t afford so many battles.
Online tutor puts U.S. love of China IPOs to test 31 May 2019 Chinese companies have pitched themselves in New York as a bet on rising consumption, insulated from trade ructions. But poor performances of Luckin Coffee and others have tempered enthusiasm. That means even profitable ones like education upstart GSX may fail to make the grade.
As impact investing grows, its purpose strays 30 May 2019 Investing for social or environmental good, once a niche for foundations and development banks, now attracts the likes of Blackstone and KKR. There’s plenty of demand for the sector’s $500 bln of capital. For the biggest players, though, it’s still all about market-rate returns.
Timing may at last be right for CBS-Viacom reunion 30 May 2019 The U.S. media groups are again talking about recombining after two failed attempts. The logic of the possible $29 bln merger has changed little. But with CBS under new management and Viacom neither thriving nor floundering, conflicting egos and valuations are no longer problems.
Viewsroom: A new game of carmaker matchmaker 30 May 2019 Fiat Chrysler spurned Peugeot by offering to merge with France’s Renault, which is itself joined to Nissan. How will the pairings play out, and what does it mean for the automotive sector? Plus: Why fossil-fuel giants like BP are painting themselves a pale shade of green.
U.S. food-delivery rivals risk capital destruction 30 May 2019 Using the internet to turn people’s laziness and hunger into a business sounds like a sure win for Silicon Valley. Uber, Grubhub, DoorDash and others are feasting on meal-delivery cravings. But sector valuations may overstate the market opportunity, at least in the United States.
Cox: Merger of equals is French expletive 30 May 2019 Fiat and Renault hope to succeed where other deals billed as partnerships failed to deliver on promises to France. From LafargeHolcim and Alcatel-Lucent to TechnipFMC and EssilorLuxottica, hopes have been dashed. Proving the exception requires an understanding of those failings.
Macau mogul picks up Crown jewels for a song 30 May 2019 Lawrence Ho is buying 20% of his former partner’s Australian casino operator for $1.2 bln, less than rival Wynn earlier indicated it might pay. A bet Down Under could play well for the New York-listed group but James Packer’s partial exit is a raw deal for other shareholders.
Chevron’s North Sea deal eases its wounded pride 30 May 2019 The U.S. oil major has sold its assets off the British coast for $2 bln, at a better valuation than recent deals have fetched. Buyer Ithaca should still make a decent return. Chevron shows it hasn’t completely lost its dealmaking nous after being jilted at the altar by Anadarko.
Axel Springer buyout works best with breakup 30 May 2019 KKR may take the $6.6 bln German media group private alongside CEO Mathias Doepfner and the founder’s widow. An unwieldy structure that spans publications like Bild and Business Insider as well as classifieds means a low valuation. Separating the two is the surest route to riches.
Greyhound sale is first leg of owner’s long trip 30 May 2019 Under pressure from an activist, Britain’s FirstGroup is selling the iconic U.S. coach group and spinning off its UK bus unit. Simplifying the $1.8 bln group should unlock value. But uncertainty over timing and liabilities means investors are miles away from their destination.
Huawei’s EU friends will stay on the line for now 30 May 2019 BT and Vodafone paused sales of some of the Chinese group’s phones after America put it on a blacklist. Yet Huawei equipment still pervades European telecom networks. Ripping it out now would be costly and disruptive. Better to wait and see whether the U.S. pressure persists.
Goldman abandons Trump’s White House, for India 30 May 2019 The Wall Street bank just cut the ribbon at a new $250 mln Bengaluru office with room to grow staff by about 50%, to 7,300. After supplying the U.S. president with a coterie of close advisers, Goldman is clearly rejecting his anti-global positions by eyeing overseas expansion.
China booze giant raises empty glass to investors 30 May 2019 Thirsty investors signed up en masse for Kweichow Moutai’s yearly gathering. The $166 bln distiller addressed concerns about why its parent created a unit that could funnel business away from the listed outfit. The candidness is welcome but it won’t avert a governance hangover.
Nio forces investors to test-drive new model 30 May 2019 When the $4 bln electric-car maker listed last year, it was branded as China’s Tesla. But the loss-making startup’s strategy has shifted sharply. Nio now plans cheaper models and may build a factory with state backing. Shareholders bought one company, and ended up with another.
Uber and Lyft create Asian valuation conundrum 30 May 2019 U.S. ride-hailing exuberance faded into lacklustre market debuts. At the same time, Singapore’s $14 bln Grab, for example, recently raised capital privately at 7 times expected revenue, compared to Uber’s 5 times. Fast-growing payment units can only justify some of the gap.
U.S. watchdog should throw down Facebook gauntlet 29 May 2019 The FTC is working with the social network on a settlement for failing to protect user data, including a mooted fine of up to $5 bln. A lawsuit against Mark Zuckerberg’s firm might be a better option. It’s risky, but it could grab Facebook’s attention and change its behavior.
Dick’s assault on gun violence goes click not bang 29 May 2019 Over a year after it banned assault-style weapons, the U.S. sporting goods retailer’s sales and profit have held up. Chain stores sell only a fraction of America’s guns, limiting the impact. But Dick’s example suggests companies don’t have to pay a price for being principled.
Bond market rate cut beats Fed to the punch 29 May 2019 U.S. Treasury yields have fallen over a quarter point in a month, equivalent to a central bank easing. Blame trade worries plus structural factors like weak inflation and negative rates overseas. Fed rate cuts are never a one-off; this market-led one is unlikely to be different.
Rolex retail IPO can avoid fate of buyout castoffs 29 May 2019 Along with the internet, private equity has squeezed the life out of many high street chains. Apollo-owned Watches of Switzerland, which is eyeing a 660 mln pound float, may be the exception. A promising U.S. growth plan will help the bling purveyor justify its premium multiple.
Hadas: Facebook could fall into a new-money trap 29 May 2019 The social network could muscle into the fast-growing but competitive payments business. But founder Mark Zuckerberg appears to want to start a new currency. That’s crazy. A company with data-control issues is more likely to fall apart than break the government-bank money nexus.
UK’s dirty-money defences tinker at the edges 29 May 2019 The sybaritic shopping habits of the subject of one of Britain’s new unexplained wealth orders make spicy reading. But the UK is not using all its tools to stop the acquisition of UK assets by illicit funds. The hefty economic contribution from the money is one reason why.
Imagine choosing Mario Draghi’s successor on merit 29 May 2019 The race to replace the European Central Bank boss is underway. Finland’s Olli Rehn says competence, rather than nationality, should decide the choice. Breakingviews ranks the candidates on policy experience, open-mindedness, and their ability to cajole investors and citizens.