Grubhub jump-starts race for food-delivery M&A 8 Jan 2020 Competition from cash-burning rivals like Uber has eroded the $5 billion meal delivery firm’s value. An October letter by the CEO correctly spelled out the need to consolidate. Now Grubhub is mulling a sale. Regulatory problems may await. So it’s best to be the first to merge.
Trump’s soybean dream can be crushed 8 Jan 2020 The U.S. president says China could soon buy as much as $50 bln in farm products from American farmers, including more of the oilseed. But the U.S. doesn’t have the beans, and Brazil’s currency offers a better value. The weakened U.S. agriculture trade could struggle to return.
One Medical IPO looks financially bedbound 8 Jan 2020 A U.S. doctor’s visit is often characterized by clunky tech, long waits and a referral to a higher-priced specialist. One Medical wants to turn the system on its head. Pleasing patients is easy. Doing so while turning a profit and reducing medical expenditure may not be possible.
Hadas: Fiscal deficits are A-OK after all 8 Jan 2020 It turns out economists can learn from experience. Decades of disinflation and years of extreme monetary policy have reversed the conventional wariness of government borrowing. The new pro-deficit thinking could moderate the next recession, but then rekindle unwanted inflation.
Carlos Ghosn’s image rehab begins in wrong gear 8 Jan 2020 The ex-Renault boss used his first public statements since fleeing Japan to claim a plot involving Nissan and Tokyo prosecutors. The assertions were light on detail, though. That left too much time for missteps such as likening his arrest to Japan’s attack on Pearl Harbor.
Anglo’s tricky fertiliser bet has political hedge 8 Jan 2020 The miner is sinking $500 mln to buy Sirius’ troubled potash project in northern England. It will need to stump up an extra $3 bln to extract the mineral, whose price is murky. At least PM Boris Johnson, keen to revive poorer UK regions, should support Anglo American’s plan.
Elliott doubles down on Capgemini game of chicken 8 Jan 2020 The U.S. activist will not tender its 14% stake in Altran, which the French consultancy wants to buy for $4 bln. Buoyant markets should limit Elliott’s downside if the deal fails. And if Capgemini secures a majority, a legal trial may yet give investors a shot at a higher price.
Fire sale further weakens NMC’s defence 8 Jan 2020 The $3 billion hospital operator fell 15% after big shareholders dumped its stock. The sale, which follows attacks by short seller Muddy Waters, was needed to repay debt. But it highlights the reluctance of the Gulf group’s backers and management to support its depressed shares.
Aussie petrol station bidding war lacks fuel 8 Jan 2020 UK-based EG Group is interested in buying pump operator Caltex Australia, raising pressure on Canada’s Couche-Tard to up its $6 bln offer. Its costs could already far exceed returns, however. For the target, it’s only a possible relief from a fraught go-it-alone IPO plan.
Samsung signals memory-chip cycle’s new normal 8 Jan 2020 The South Korean group ended 2019 with a 34% slump in quarterly operating profit. With fewer rivals, prolonged downturns are less of a worry; supply cuts hint at an unusually quick recovery. Samsung can focus on innovation and curbing added risks of pricing power.
Goldman Sachs reorg brings new target into view 7 Jan 2020 Investors can now see how much revenue the Wall Street firm’s fledgling consumer bank and credit-card venture with Apple bring in. Spoiler alert: the revenue is small, and profitability meager as Goldman invests. Still, improving these modest numbers gives something to shoot for.
Guest view: How to cut the ESG disclosure overload 7 Jan 2020 The data Fortune 500 companies provide on environmental, social and governance risks can be overwhelming, hard to compare and lacking much financial use. Geoffrey Heal and Shiva Rajgopal of the Columbia Business School lay out a plan to clean up the informational morass.
Investors fuel unicorns’ belief in their own magic 7 Jan 2020 Private tech startups can control their valuations by only raising money when their worth is rising. Valuing businesses based on a fraction of their capital and the latest preferred-share terms also creates problems. Even WeWork may not be enough of a reality check.
Iran will decide if oil bulls outdo gold bugs 7 Jan 2020 Middle East tensions have boosted crude prices more than that of the precious metal. Tehran could yet attack Saudi oil fields or disrupt the vital Strait of Hormuz. Anything less than that would see gold, which was already in high demand, outperform.
UBS goes for growth with wealth management rejig 7 Jan 2020 Fresh from hiring rival executive Iqbal Khan, the bank which oversees $2.5 trln is axing unnecessary layers to serve rich clients better and faster. Only 2% of the unit’s jobs will go, though. UBS needs to boost lending to get its cost structure into line with leaner competitors.
Cash-crunched Aston Martin can only buy time 7 Jan 2020 Shares in the troubled 007 carmaker dropped by almost a tenth after boss Andy Palmer announced 2019 EBITDA would nearly halve. Its $1.4 bln equity value is not much more than projected net debt. The group needs solid sales of a new SUV just to pay its mounting interest bill.
India’s big build hinges on credibility revamp 7 Jan 2020 New Delhi wants the private sector to fund one fifth of a $1.4 trln infrastructure plan over five years. Much of the country’s bad debt, however, has come from previous projects. Investors will want evidence politicians are offering manageable risks before they sign up again.
Mark Zuckerberg can be his own activist investor 6 Jan 2020 Keeping shareholders happy isn’t necessarily compatible with cleaning up data abuses and toxic content. But Facebook’s CEO needn’t change his professed ideals. He could change the company’s legal form so it can better serve society – and put his supervoting power to good use.
Xerox colors in its avant-garde HP outline 6 Jan 2020 The copier group now has bank commitments for $24 bln of debt for its Carl Icahn-backed $33 bln bid to buy larger rival HP. That removes one big question about a proposed deal that still seems the wrong way around. It puts pressure on HP to talk, or come up with something better.
Predictions: The heat’s rising everywhere in 2020 6 Jan 2020 Expect investors and banks to join the climate-change fight; pain in Russia and South Africa; heightened risk in Hong Kong; and U.S. elections testing Wall Street nerves. Opportunities will abound, too. All this and more awaits in a pivotal year for politics, profit and planet.
An ever-drier world will unleash investment flood 6 Jan 2020 By 2030 humans will be using 56% more water than is sustainable, a new report shows. Closing the gap may cost $1 trln a year. But companies and investors are showing more interest in preventing a global water crisis. That bodes well for finding solutions – and making a profit.
Predictions 2020: Turning up the heat 6 Jan 2020 Expect investors and banks to join the climate-change fight; pain in Russia and South Africa; heightened risk in Hong Kong; and U.S. elections testing Wall Street nerves. Opportunities will abound, too. All this and more awaits in a pivotal year for politics, profit and planet.
Buyout barons will be next to face pay backlash 6 Jan 2020 Private-equity managers can earn more than company CEOs or bankers, whose remuneration has drawn most scrutiny in recent years. The $4 trln industry is now too big to stay under the radar. A surge in company failures would make well-paid dealmakers easy targets for politicians.
Aramco’s war-risk snake trumps oil-price ladder 6 Jan 2020 The threat of U.S. sanctions on Iraq should boost the oil price, and the Saudi giant’s value. Yet its shares have slumped to their lowest level since trading commenced last month. That may be because the company’s operations are more likely to be a target for Iranian retaliation.
South Africa’s Absa opts for safety-first recovery 6 Jan 2020 The $9 bln group made former central bank deputy Daniel Mminele its new CEO. Like other local lenders, the former Barclays unit needs growth from elsewhere on the continent to offset domestic weakness. Installing a career regulator suggests little appetite for a high-risk charge.
Europe will emulate Japan’s foreign takeover binge 6 Jan 2020 A shrinking domestic market and cheap money prompted Japanese firms to ramp up abroad. Their EU counterparts already have greater international exposure but face similar stagnation and demographics at home. Watch the shopping habits of Siemens, Eni, Roche, ING, SocGen and others.
The Exchange: India’s water crisis 6 Jan 2020 Kicking off Predictions 2020, Amit Chandra of Bain, Reshma Anand of Hindustan Unilever Foundation and Mridula Ramesh of the Sundaram Climate Institute come together in Mumbai to discuss who should pay for the scarce resource, and how the private sector can map out its true cost.
Beijing steers green cars in a new direction 6 Jan 2020 Subsidy cuts exposed tepid demand for electric vehicles in a country that accounts for 40% of global sales. Hybrids will gain stronger state support instead. China’s sway spells trouble for the likes of Tesla and Nio while giving a charge to others including Toyota and Honda.
Hong Kong poised to reclaim IPO crown 6 Jan 2020 It has been a decade since the Asian financial hub beat the Big Apple in new equity issuance. Violent protests are a challenge, but Alibaba provided some reassurance. The U.S. backlash against China and a stable of mainland unicorns will help make Hong Kong No. 1 again in 2020.
Big Tech will be both friend and foe to Big Pharma 3 Jan 2020 A programme developed by Google has beaten doctors in detecting malignant tumours. Artificial intelligence could save patients’ lives and help drugmakers develop more sophisticated treatments. Yet better screening could also help governments and insurers rein in drug spending.