Goldman’s 1MDB pain looks light next to AmBank’s 1 Mar 2021 The Malaysian lender is paying what equates to 30% of its market value for its part in the sovereign fund scandal, more than four times the Wall Street firm’s ratio. Domestic politics is at play, but AmBank’s fine is ominous for global banks yet to draw a line under the affair.
Unizo mess could make Japan M&A less hospitable 1 Mar 2021 Less than a year since the hotelier’s $2 bln takeover battle, it is under pressure from the massive debt used to repay buyout backer Lone Star. An aggressive deal structure exacerbated pandemic risks. The danger is that Japan Inc’s more open-minded approach to deals closes again.
The house always wins with SPACs 26 Feb 2021 In poker, if you don’t know who the sucker is, it’s you. That’s also true of blank-check firms like the one that just did a deal with Lucid Motors. Sponsors, SPAC traders, merger co-investors and target-company owners all rake it in. Regular shareholders get the crumbs.
Review: The wild history of the commodities boys 26 Feb 2021 “The World for Sale” offers a virtuoso depiction of the globe’s top oil, food, and metals traders. Javier Blas and Jack Farchy tell of their startling risk appetites, spy novel antics, and geopolitical heft. Still, it’s good that their wings have been increasingly clipped.
Capital Calls: CPPIB, Barclays, McPlant, DoorDash 26 Feb 2021 Concise views on global finance in the Covid-19 era: Canada Pension Plan Investment Board's CEO is booted for jab-line jumping; the UK bank wins a legal, if not ethical, victory over financier Amanda Staveley; Beyond Meat partners with McDonald’s and Yum; and DoorDash is too hot.
Central banks will have to fight reflation tantrum 26 Feb 2021 Improving economic prospects have boosted bond yields. Fed boss Jerome Powell and his global peers will welcome the cause but not the effect. If their rhetoric can’t halt the sharp rise in borrowing costs, they will be forced to ramp up asset purchases to safeguard the recovery.
EU chip factory fantasy puts cart before horse 26 Feb 2021 Commissioner Thierry Breton wants an advanced semiconductor plant to cut reliance on Asia. The problem is that Europe’s chip designers and carmakers are ill-equipped to use such a cutting-edge site. Getting them on side, and investing more in research, is the place to start.
Evergrande contagion tests Beijing’s generosity 26 Feb 2021 China’s $10 bln retailer Suning.com threw a financial lifeline to the troubled property developer. Its founder is now selling a controlling stake as the embattled group faces $5 bln of debt due this year. A government bailout, which may be imminent, would send the wrong message.
AT&T clumsily cuts the cord on DirecTV 26 Feb 2021 The U.S. telecom titan is spinning off its pay-TV business in a $16 bln deal, six years after buying it for $67 bln. TPG will share control while kicking in just $1.8 bln for a 30% stake that includes a 10% cash coupon. It’s a pricey way to ease out of a disastrous acquisition.
Airbnb’s post-IPO showing is a pre-SPAC throwback 25 Feb 2021 The home-sharing app’s quarterly revenue fell 22%, yet still beat rivals. Because it went through its growing pains in private, Airbnb’s first results as a listed company show an already solid business. Many startups taking the blank-check route to market won’t have that luxury.
Coinbase’s listing is a cryptic way into crypto 25 Feb 2021 The exchange for bitcoin may ink a $100 bln valuation in an upcoming listing. Growth and profit are encouraging. But its model relies on transactions, and past crashes are a problem. More disclosure would be reassuring. The prospectus leaves room to assume the worst.
Viewsroom: Electric cars share some market fever 25 Feb 2021 Toyota, Ford and GM are all trading at their highest level in years as investors start to pick some winners among traditional automakers. Fear of missing the next Tesla, though, means shareholders are keeping the heady valuations for upstarts like latest SPAC target Lucid Motors.
Guest view: 2021 is tipping point to hit net zero 25 Feb 2021 Economic crises often see innovation budgets cut. With energy efficiency trends worsening governments must hold the line, urge IRENA’s Francesco La Camera and the IEA’s Fatih Birol. A big chunk of decarbonisation will come from technologies that are still at the prototype phase.
European cardboard box M&A would be tight squeeze 25 Feb 2021 Paper maker Mondi may bid for envelope rival DS Smith, according to Bloomberg. Wrapping in debt and a premium, the box specialist could be worth 9 bln pounds. The e-commerce boom justifies Mondi pivoting from declining office paper, but only if it can unpack big synergies.
“Good” rises in bond yields can turn bad 25 Feb 2021 U.S. borrowing costs are climbing. That’s less of a problem for stock markets when the cause is rosier growth prospects. Jay Powell says he isn’t about to tighten monetary policy, the usual party pooper for equity rallies. But inflation concerns would quickly sour the mood.
Klarna listing would be a mixed blessing 25 Feb 2021 The Swedish fintech’s next funding round could value it at $30 bln, and it’s mulling a direct listing. Allowing early investors to cash out carries obvious appeal. The downside is there would be a daily commentary on Klarna’s regulatory risks and shortcomings relative to rivals.
Pandemic speeds AB InBev’s necessary revamp 25 Feb 2021 More drinking at home and higher raw materials costs will pressure the $100 bln brewer’s margins in 2021. After years of zero-based budgets, it needs looser purse strings to revive sales. But with $83 bln of debt, its valuation discount to less profitable rivals will persist.
Capital Calls: Soho House, Aston Martin 25 Feb 2021 Concise views on global finance in the Covid-19 era: The private members’ club shrugs off lockdowns to plan a New York IPO; The loss-making luxury carmaker’s shareholders need to buckle up.
Afterpay zealots buy now and will pay later 25 Feb 2021 The $30 bln Aussie fintech champ reported more impressive growth as installment-plan purchases swell. A deal to buy out its U.S. business raises fresh valuation questions, however, as do bigger losses, PayPal’s entry and regulatory concerns. A reckoning for investors awaits.
ViacomCBS’s streaming dream comes with a catch 25 Feb 2021 The U.S. broadcaster’s market value is up by $16 bln since it put a launch date on its streaming service, suggesting the hype enjoyed by Disney and Netflix is contagious. That’s justified if ViacomCBS can hit its subscriber targets, but boss Bob Bakish faces other pressures too.
McKinsey’s public problem may have public solution 24 Feb 2021 The ouster of boss Kevin Sneader following a $573 mln opioid bill suggests a firm that peddles advice is struggling with its own direction. McKinsey could consider an IPO. Outside investors are no cure-all, but they can help self-absorbed companies see themselves more clearly.
Oatly value ingests Beyond Meat’s bloat 24 Feb 2021 The Oprah-backed oat milk maker can hit a $9 bln valuation in an IPO based on its faux meat rival’s multiple. That’s an almost fivefold increase from last year. Big partnerships help justify growth. But using one inflated stock to validate another is too much of a good thing.
Tax gains not enough for $12 bln drug-trial deal 24 Feb 2021 Icon is buying clinical-trials outsourcing rival PRA Health for a mix of cash and stock. The deal brings cost savings, expansion, and even tax savings on the combined business thanks to the acquirer's Irish abode. But at 5%, the return on investment still isn’t attractive.
Vodafone mast carve-out sharpens growth challenge 24 Feb 2021 The 39 bln euro phone firm’s Vantage Towers unit may be worth 14 bln euros when it lists in March. Selling a stake helps CEO Nick Read cut debt but gives him less protection from disgruntled investors. Fortunately, Vodafone’s core service business is recovering just in time.
Twitter is an M&A target – Snap, not so much 24 Feb 2021 Microsoft and other older tech firms are sniffing around social networks not only because of growth but also access to users and their data. Price matters, though, as does entrenched management. Twitter’s valuation and its ownership structure make it a prime candidate.
Indian renewables SPAC sets temperate tone 24 Feb 2021 Goldman-backed ReNew Power is listing in New York via a blank-cheque firm. It’s a decent bet on India’s pivot to clean energy, with a structure and valuation that factor in the industry’s flaky customers. Future Asian SPAC deals in waiting may not be so well grounded.
Capital Calls: Pharma, Volvo delay, Hotels 24 Feb 2021 Concise views on global finance in the Covid-19 era: Big Pharma’s new popularity could give it leverage in Congress; China’s Geely can profit from Volvo IPO delay; and boutique hotels feel the heat.
Carlos Slim’s KPN cash call includes buyout cover 24 Feb 2021 The Mexican mogul raised 2.1 bln euros from negative-yield bonds that can flip into a 16% stake in the Dutch telecom operator. If KPN treads water, Slim can keep his stock and repay less than he borrowed. If it’s snapped up by a predator, he still gets some of the upside.
Lloyds’ wealth push could use an M&A shove 24 Feb 2021 The 28 bln pound bank has emerged from the crisis with a slow core business and mediocre valuation. A plan to manage more clients’ money could help, but the lender is starting from a low base. Luckily, incoming CEO Charlie Nunn has about 5 bln pounds of spare cash to play with.
Insurers’ Brexit pleading deserves short shrift 24 Feb 2021 Domestic firms want the government to ease capital requirements following the UK’s departure from the EU. It’s true dividend restrictions mean they may already have ample capital. But amid a slump that’s not enough to make already confusing solvency metrics even more so.