Roivant double-SPAC deal wallows in own cleverness 20 May 2021 The biotech firm may raise money from a blank-check company, then buy out a drugmaker it previously merged with a SPAC. It sounds complex, but what Roivant is doing is at heart not so different from any IPO. The catch is that it has inside intel, and an incentive to exploit it.
Oatly IPO pumps fresh air into plant-based stocks 20 May 2021 The Swedish group that makes dairy substitutes out of oats surged 30% on its debut, valuing it at $13 bln. Despite heavy losses and growing competition, investors clearly believe the shift in consumption habits is more than a fad. It bodes well for other stock market hopefuls.
Guest view: How companies can cut deforestation 20 May 2021 Yet more destruction of the Amazon last year raises climate-change fears. Former Brazil Finance Minister Joaquim Levy argues the key to ending this economically unsound treatment of rainforests lies in a mix of animal-tracing tech, integrated farming and better use of pastures.
WarnerMedia’s leading man springs a pay trap 20 May 2021 AT&T paid Jason Kilar too handsomely to run its media division a year ago. Now that the telecom company is merging WarnerMedia with Discovery, he may want even more to stick around. Whether he walks or stays, the new company to be led by Discovery's CEO could face a pay showdown.
Capital Calls: Apollo, Microsoft 20 May 2021 Concise views on global finance: The second of the asset manager’s three founders moves on; the software firm is pulling the plug on Internet Explorer.
EU chip M&A is politically sound, financially iffy 20 May 2021 Shares in $5 bln Nordic Semiconductor surged 10% on a report that Franco-Italian rival STMicroelectronics may bid for it. A deal would be a logical bet on the trend of having chips in everyday gizmos, and satisfy politicians’ urge to keep key tech in Europe. But returns look low.
UK shunts Trainline into financial slow track 20 May 2021 The 1.5 billion pound rail ticket website’s shares fell 30% on concerns that a state-backed app will topple its dominance. They are likely to fall further as greater competition squeezes profitability. KKR’s decision to IPO the business two years ago looks all the more timely.
UK-Aussie trade talks expose post-Brexit tangles 20 May 2021 Prime Minister Boris Johnson wants to lower tariffs for goods from Down Under. A deal would bring only a little more growth, cost UK farm jobs, and set a benchmark for negotiations with others. It’s getting harder for Johnson to ignore the tradeoffs after leaving the EU.
Ke founder bequeaths a governance mess 20 May 2021 Zuo Hui, the chairman of China’s $60 bln answer to Zillow, has died unexpectedly at 50. A “worsening of illness” was blamed, but the company never indicated he was sick. It is an investor’s worst nightmare from signing onto the concentrated power of dual-class shares.
Viewsroom: AT&T’s second breakup, Asian super-apps 20 May 2021 The telephone company’s deal with Discovery, the reversal of a failed strategy to become a media juggernaut, opens a window into streaming warfare; and the creation of Southeast Asia do-everything internet group GoTo is a prelude of more to come. Plus, no Davos in Singapore.
ByteDance boss live-streams new risk factors 20 May 2021 Zhang Yiming is the latest high-profile boss to step down amid Beijing's tech crackdown. It's a prudent move to ensure a smoother market debut for the $300 bln owner of TikTok and Douyin. The company’s broader executive shakeup also means it would be smarter to take its time.
JD makes most of its underdog position 20 May 2021 Richard Liu's $109 bln web retailer grew first quarter sales by an impressive 39%. Compared to larger and faster-moving rivals like Alibaba, JD is less of a regulatory target so far. Its premium valuation will depend on whether it can keep up in areas like online groceries.
Hong Kong bank deal offers helpful exit ramp 20 May 2021 Chong Hing’s majority owner is offering to buy the rest at a $2.6 bln valuation, or 0.9 times book. That’s less than half the multiple the Guangzhou-backed fund paid in 2013. Greater Bay Area prospects may be promising but the 51% premium can fund better ways to invest in them.
AT&T’s value gap 19 May 2021 The telecom giant ditched its content ambitions, merging assets with Discovery. That has crystalized the amount of value that the new company has to increase before AT&T shareholders can get their money back.
Inflation scaremongering is overdone 19 May 2021 Company earnings have revealed rising prices, and U.S. inflation in the year to April was the highest since 2008. Economist Larry Summers has criticized the Fed’s view that the spike is transitory. But bond markets, closer to the central bank’s camp, may well be on the money.
AT&T shareholders need Discovery deal to shine 19 May 2021 Ex-CEO Randall Stephenson in 2016 agreed to spend over $100 bln on Time Warner. Monday’s deal to offload the assets and merge them with Discovery recoups most of that, on paper. But the S&P 500 has doubled since. Owners will be hoping the new group can add as much value again.
Bitcoin is, for now, worst of all financial worlds 19 May 2021 The value of the crypto-asset has halved in two weeks, dented by Chinese curbs and Elon Musk’s whimsy. Part of its appeal was the lack of a meddling central bank. Yet others can step into the vacuum and make waves given thin liquidity. It’s also proving an awful inflation hedge.
Rusal’s upside from clean break only goes so far 19 May 2021 The $6 bln aluminium maker’s plan to demerge carbon-heavy assets could unlock value if ESG-focused investors value the other parts more highly. But the greener entity will still have 28% of polluter Norilsk Nickel and the risk of U.S. sanctions snapback. That might cap any gains.
Workers get the whip hand in economic policymaking 19 May 2021 New Zealand will cut low-skilled migration, U.S. President Joe Biden is hiking the minimum wage for federal contractors, and rate-setters everywhere are giving labour markets time to tighten. Such measures will help push up pay. Expect profit margins to fall or prices to rise.
Capital Calls: Retail sales’ wild ride 19 May 2021 Concise views on global finance: Some U.S. retailers are reporting better growth than others, but there’s still much to play for.
Adani flies in Masayoshi’s place close to the sun 19 May 2021 Gautam Adani’s green energy firm is buying SoftBank’s Indian renewables ventures for a fair $3.5 bln. It’s part of aggressive plans to create the world’s largest clean power group. At least the new owner has a track record in scaling industrial businesses on the sub-continent.
KKR makes pricey punt on infrastructure frenzy 19 May 2021 The U.S. group is buying UK-based rail and roads investor John Laing for 2 bln pounds. A 35% premium to net asset value looks steep. But KKR can triple its target’s war chest to exploit a post-Covid spending boom, and holding on to the asset allows for more modest returns.
John Malone is a flawed ambassador for Discovery 18 May 2021 The cable cowboy is giving up supervoting shares so the Food Network owner can merge with AT&T’s WarnerMedia. It’s a vote of confidence from a shrewd investor. Yet Malone and other insiders stand to get extra benefits that might leave other shareholders feeling less than loved.
Oil majors get unsettling glimpse of Kodak moment 18 May 2021 The photo group hit the skids after failing to embrace change. In sketching a future with way less oil, a landmark report by the International Energy Agency points to a similar outcome for polluters like Royal Dutch Shell. Investors now have a stronger hand to push for change.
Amazon’s world is already enough without MGM 18 May 2021 The $1.7 trln e-commerce giant has huge clout in what consumers buy. Buying the studio that owns James Bond would make it a bigger force in what they watch too. For competition watchdogs, Amazon’s creep into every facet of its customers’ lives is an invitation to yell “cut.”
Chancellor: Beware the hyperreal financial market 18 May 2021 Americans have never been richer. Yet much of this wealth is comprised of claims not represented by anything of value in the actual world. Like the steak consumed by the cinematic villain Cypher in “The Matrix”, it looks juicy enough and tastes delicious but is mostly illusory.
Fed fuzziness stores up problem for global markets 18 May 2021 U.S. rate setters say they’ll act if inflation stays too high for too long. What that means in practice is anyone’s guess, going by economists’ divergent views. Fudged guidance buys time for economic recovery to take hold. Asset prices could be jolted when clarity finally comes.
Capital Calls: JPMorgan, FirstGroup, Break fees 18 May 2021 Concise insights on global finance: Jamie Dimon is shuffling his deputies; the UK bus-to-rail group’s sale of its U.S. businesses to EQT has hit an investor revolt; deals involving AT&T and Canadian National Railway highlight the fees due for walking away.
Credit Suisse best bet is hardball over Greensill 18 May 2021 The bank’s clients want it to cover up to $2.3 bln of possible fund losses related to the collapsed financier. Doing so might stop them from pulling business, but it may also complicate legal wrangling and force CEO Thomas Gottstein to raise capital. Better to weather their ire.
French TV deal pits nationalism against antitrust 18 May 2021 The 4.1 bln euro merger of TF1 and M6 creates a domestic broadcasting giant. Owners Bouygues and RTL have crafted a complex structure to get around competition rules but will still dominate TV advertising. The threat from U.S. behemoths like Netflix gives the union a chance.