Hospital M&A adds to U.S. healthcare absurdity 9 Jan 2020 A merger wave has made highly-concentrated local markets for hospitals more so, while raising prices and lowering quality, according to a new study. With antitrust cops having only limited powers, hospitals – already 6% of U.S. GDP – will keep sucking more blood from the economy.
London’s new year IPO will buck sad 2019 trend 9 Jan 2020 KKR is looking to list one-quarter of its UK smart-meter group, Calisen. Last year the volume of London listings dipped as new offers were pulled and existing ones lurched. The strategic tailwinds behind Calisen’s sector should stop it being added to the pile of duds.
Euro zone bank rally is built on sand 9 Jan 2020 The bloc’s 20 largest lenders, such as BNP and ING, are worth $84 bln more than in October. Investors believe the ECB is now done with rate cuts, which squeeze profit. But renewed trade frictions could change such thinking. And rising capital requirements will weigh on returns.
IAG dealmaking will outlast Willie Walsh 9 Jan 2020 The Irishman is disembarking after nine years at the helm of the BA and Iberia owner. The holding structure he led from its birth has been more successful than Air France-KLM and makes it easier for his successor to go shopping, say for a carrier that flies to South America.
Royal couple test House of Windsor revolving door 9 Jan 2020 Harry and Meghan’s plan to step back seems a financial no-brainer: the pair’s commercial opportunities far exceed their small state income. Like ex-politicians in business, though, success derives from close ties to former public life. That means keeping Buckingham Palace sweet.
Gulf’s long-serving ruler is ailing at a bad time 9 Jan 2020 Oman’s Sultan Qaboos is ill. For 50 years the iconic leader has positioned his realm as a neutral Gulf player. If he dies as the Iran crisis rages, an opaque succession process and shaky finances could deprive a fractious region of a key backchannel when it’s most needed.
UK grocery war will be fought on more than prices 9 Jan 2020 Tesco’s local sales barely rose over the festive period. Like other big peers, the 25 bln pound company lost market share to discounters such as Lidl. Improving online services and stocking sought-after premium goods may do more to halt the rot than selling products more cheaply.
China’s Ucommune may have missed WeWork IPO memo 9 Jan 2019 The country's biggest shared-office outfit is gearing up to go public after its U.S. peer flamed out. A $2.6 bln private valuation implies a similarly punchy 13 times estimated sales. And like WeWork, Ucommune rents from its entrenched founder. A down-round or worse probably awaits.
Infrastructure investors catch the tech bug 9 Jan 2020 Macquarie may be in talks to buy AirTrunk for over $2 bln. It follows a record year for data centre M&A which saw volumes triple. Growing consumption of the new oil is fuelling demands for storage warehouses. And the hunger for yield is building up towering multiples.
Viewsroom: Hong Kong’s uncertain 2020 9 Jan 2020 Political unrest continues to roil the financial hub. For investors, though, it’s mostly business as usual as markets take protests in their stride. As Beijing replaces its top representative in the city, and makes other changes, that uneasy balance may be hard to sustain.
Tesla’s lucrative mode enabled 8 Jan 2020 Elon Musk’s electric-car maker is now worth $89 bln. That requires some hefty assumptions, not least on annual car sales. Shift the numbers up and down to see how many Tesla needs to deliver to justify its racy valuation.
Tesla valuation speeds into ludicrous mode 8 Jan 2020 The electric-car maker is worth $89 bln after finally hitting one of CEO Elon Musk’s targets. Tesla’s future is rosier than a year ago. But the valuation means believing it’ll soon sell 3 mln vehicles a year, an eightfold increase, or be a robo-taxi giant. Neither is realistic.
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.