Grand bargain can end Italian toll-road standoff 4 Jul 2019 The government in Rome reckons it can pull a lucrative motorway licence from Atlantia without paying compensation after last year’s fatal bridge collapse. The $21 billion infrastructure group would respond with a lengthy lawsuit. A better option for both sides is to reduce tolls.
ChemChina vexes Beijing’s bureaucrat dealmakers 4 Jul 2019 In an odd display of buyer’s remorse, the country’s envoy to Switzerland has slammed the $43 bln takeover of Syngenta in 2017. It hints at the complex politics of such M&A. The reaction also calls into question the many orchestrated mega-mergers involving state-owned giants.
Wanda’s Ironman IPO could lose a little weight 4 Jul 2019 The triathlon-to-soccer arm of tycoon Wang Jianlin’s empire plans a $500 mln U.S. listing. China's legions of fans and the prospect of the 2022 Olympics in Beijing will be a draw. But a share sale eases only some of its debt load; less burdened rivals may beat it to the finish.
Canopy ouster catapults cannabis into adolescence 3 Jul 2019 The biggest producer of legal weed has fired founder and co-CEO Bruce Linton amid widening losses and tensions with biggest investor Constellation Brands. Capital has rolled into cannabis based on little more than grand ideas. Fighting over how it’s spent is part of growing up.
Trump’s latest Fed picks at least clear the bar 3 Jul 2019 Christopher Waller is a U.S. central bank insider. Judy Shelton is more of a maverick with her liking for the gold standard. Yet her business background might usefully add to debate at the Fed. They’re an improvement on the partisan hacks Trump offered up last time around.
Time to look beyond Europe for next IMF boss 3 Jul 2019 The international lender’s chief has always been European. Christine Lagarde’s exit will be a chance to drop the outdated convention. Any hope of salvaging the multilateral system means giving emerging and developing economies more clout. Competence matters more than nationality.
Dixon: Bold PM can bring virtuous circle to Greece 3 Jul 2019 Liberal conservative Kyriakos Mitsotakis is expected to replace leftist Alexis Tsipras as prime minister after Sunday’s election. If he roots out the bad practices that have bedevilled Greece for decades, the country could finally enjoy an investment-led recovery.
Broadcom’s Symantec swoop rests on tricky reboot 3 Jul 2019 The chipmaker led by Hock Tan is in talks to buy the troubled $14 bln cybersecurity outfit. It’s another move to diversify after its bid for Qualcomm was crushed. To earn a return, Tan will need to repeat recent integration success, cut costs, and manage hard-to-quantify risks.
Canada’s student flat deal hedges its UK bets 3 Jul 2019 The Canada Pension Plan Investment Board has sold university housing player Liberty Living to Unite Group for 1.4 billion pounds. The seller’s small premium is offset by the buyer’s synergies. CPPIB gets to cash out, but a 20% stake creates upside if student inflows endure.
Italy’s EU budget victory is temporary reprieve 3 Jul 2019 Rome’s anti-austerity government may avoid breaching European fiscal rules thanks to a last-minute budget windfall. That means it will not have to dig up spending cuts, or risk a fine. Yet the coalition’s plans for large tax cuts next year are paving the way for a bigger battle.
Sainsbury’s stagnation adds pressure for new plan 3 Jul 2019 The UK retailer’s sales fell for the third quarter in a row. After the failed merger with Asda, CEO Mike Coupe has cut prices and invested in stores. But his strategy is not bearing fruit, and a chaotic Brexit could further hurt. Coupe needs to come up with a bolder strategy.
Africa growth outlook puts democrats on back foot 3 Jul 2019 Ballooning populations mean per capita wealth is falling in key democracies Nigeria and South Africa. That’s a recipe for trouble. Alongside a stronger performance by autocratic Egypt, it also makes worrying reading for those who believe a democratic Africa is a more stable one.
Nexon suitors must clear three tough levels to win 3 Jul 2019 Plans to sell control of the $13 bln maker of “MapleStory” and other video games have stalled, but may yet be revived. Bidders like KKR will have to get past a messy corporate structure. Then there’s South Korean nationalism to slay. And the last big challenge is China's Tencent.
KKR puts fresh eyes on Japanese conglomerates 3 Jul 2019 Just two years after buying Hitachi Kokusai for $2.2 bln, the LBO shop is selling one of its two units for the same sum. Japan Inc has been slow to offload unloved businesses, but deals like this reveal some of the missing value. It could also make it harder for bargain hunters.
Tesla’s return to growth is only half the ride 2 Jul 2019 Elon Musk’s $40 bln automaker enjoyed record sales last quarter. That will relieve cash-burn fears for now. But demand for high-margin cars has slumped, cheaper Model 3 versions are now available, capex needs a boost and tax breaks are shrinking. Turning a profit remains tough.
Goldman finds value even in ETF scraps 2 Jul 2019 The Wall Street firm’s foray into index-tracking equity funds is worlds away from its once-elite values, and offers little potential for revenue. But it should buttress Goldman’s push into wealth advisory. Going down-market may just be an ineluctable cost of diversification.
Lagarde lends ECB continuity more than credibility 2 Jul 2019 International Monetary Fund boss Christine Lagarde is set to replace Mario Draghi as head of the European Central Bank. The Frenchwoman will stick to the policy path he has charted and is a consensus builder. But she lacks central bank experience and will have to win her spurs.
PG&E’s hands may slip on bankruptcy steering wheel 2 Jul 2019 The California utility is, for now, in charge of its exit from Chapter 11, where it landed with $30 bln of wildfire liabilities. But the less new capital it seeks, and the more it ties future cash flow to past costs, the more credible a rival plan from creditors will become.
WPP disposal offers cautionary tale for Publicis 2 Jul 2019 The UK ad group is selling the debris from a debt-driven acquisition spree under former boss Martin Sorrell. Its $12.3 bln French rival is borrowing to splurge on a data business. Publicis’ lowly valuation shows investors fear that CEO Arthur Sadoun may repeat Sorrell’s mistakes.
UK climate disclosure needs more than a big stick 2 Jul 2019 The government may force companies and pension funds to say how global warming will affect them. That might catch out the few that currently don’t. But given information from those that do is often useless, setting clear rules may be better than a legal obligation to publish.
Budweiser serves up a pricey pint in Hong Kong 2 Jul 2019 AB InBev values its Asian unit at up to $65 bln, or about 20 times EBITDA. That’s close to multiples of rivals in fast-growing emerging markets like China, but half the business is in slower, more mature ones. The IPO will seem less giddy if Carlos Brito pours on M&A next.
Credit Suisse succession goes back to square one 2 Jul 2019 The abrupt departure of international wealth management chief Iqbal Khan removes a potential heir to boss Tidjane Thiam. That’s partly because the CEO wants to stick around after years of painful restructuring. Still, the Swiss bank’s board needs to prepare for his eventual exit.
UK’s fallen fintech star highlights sector perils 2 Jul 2019 Funding Circle shares dropped 20% after it cut growth forecasts in half. The $600 mln peer-to-peer lender’s post-IPO decline underscores the trade-off between managing risk and meeting investors’ growth expectations. Regulators should be on the lookout for less prudent rivals.
India Insight: Modi faces tricky confidence crisis 2 Jul 2019 The prime minister’s corruption crackdown has chastened tycoons and hurt private investment. Doubts over data, the fragility of lenders, and plummeting car sales add to the jitters. Strengthening the financial system would go a long way to getting the country back on track.
Hong Kong protesters score Pyrrhic victory 2 Jul 2019 A furious faction broke into the city’s empty legislature and trashed it, deepening a crisis for Chief Executive Carrie Lam. The violence will weaken some of the movement’s support. It also may spook big business and give Beijing a pretext to dig in. There’s little to celebrate.
The Exchange: Hong Kong’s political crisis 2 Jul 2019 Michael Tien was among the first politicians from the city’s pro-Beijing faction to oppose the controversial extradition proposal. Just before protesters ransacked the legislature, he spoke with Breakingviews about Chief Executive Carrie Lam’s future and giving residents a vote.
OPEC extends its awkward holding pattern 1 Jul 2019 The oil-producing group and allies like Russia can probably gee up prices a little by prolonging output cuts brought in last year. Gulf tensions should offset a demand-led hit to prices. But they will also make big contracts like Exxon’s $53 bln one in Iraq harder to close.
Huawei is now driving the U.S.-China trade bus 1 Jul 2019 President Trump’s ban on the Chinese telecom firm made sense, but mixing business and national security puts his own party in a bind. It’ll be hard to seal a broader trade deal without giving Huawei a break. U.S. lawmakers won’t like it, but politics may force them to cave.
UK is getting right fiscal policy for wrong reason 1 Jul 2019 Rivals Boris Johnson and Jeremy Hunt both promise a post-Brexit spending splurge when one becomes prime minister. The latest gloomy data shows the economy needs a boost. Bond investors might fret and tax cuts will mainly help the rich, but the departure from austerity is overdue.
Brookfield on slow train to infrastructure payback 1 Jul 2019 The investor and Singapore’s GIC are buying U.S. railroad group Genesee & Wyoming for about $6.4 bln. The return on total investment works out under 5%, partly reflecting the scarcity of transport assets. Brookfield at least has the portfolio and experience to squeeze out more.