Shareholders exposed by British defence raid 23 Jul 2021 Some UK investors complain private equity buyers are stealing listed groups. A mooted 2.6 bln pound bid for Ultra Electronics by Advent-owned Cobham suggests otherwise. The buyer needs chunky cost savings to make it work. A 62% premium implies the market misjudged Ultra’s value.
Capital Calls: Covid fibs, M&A flop, Hard seltzer 23 Jul 2021 Concise views on global finance: Forcing social media to take down vaccine misinformation is a good step on U.S. content rules. Meanwhile, a German real estate deal fails to get enough shareholder votes, and Boston Beer’s hard seltzer sales fizzle.
South Korea plays foolish game of IPO Whac-A-Mole 23 Jul 2021 Dizzying valuations are prompting regulators to meddle in stock listings including Krafton’s. It's a misguided attempt to rein in retail traders and an overheating market. Kakao Bank escaping scrutiny is just one indication of how hard it will be to keep up with the frothy deals.
Star’s $7 bln fold exposes Crown’s poor gambling 23 Jul 2021 The casino company has withdrawn an offer for its embattled Australian rival. Crown has proven reluctant to engage with Star and competing bidder Blackstone even while watchdogs dig deeper into its governance failings. It risks subjecting shareholders to a painful losing streak.
Viewsroom: Olympic blunders and Robinhood’s IPO 22 Jul 2021 The Tokyo games are struggling with rising Covid-19 infections, corporations pulling out, an unenthused Japanese public and now a bad Holocaust joke. Pete Sweeney and Rob Cox discuss. Meantime, John Foley says Robinhood resembles E*Trade 20 years ago – in good and bad ways.
U.S. airlines serve investors before passengers 22 Jul 2021 Southwest and American have stopped burning cash. Both carriers turned a profit too, even though revenue is below 2019’s levels, and they have cash in case conditions worsen again. The risk is that customers – who helped fund airline bailouts – have their patience tested.
Investors too gloomy over Biogen Alzheimer’s drug 22 Jul 2021 The approval of what might be the top-selling drug of all time has tacked a remarkably meh $5 bln onto Biogen’s value. Sure, the drug seems marginally effective. And it’s costly. But investors are assuming successful payer pushback, which rarely happens in American healthcare.
ECB’s old problem will defy new strategy 22 Jul 2021 Boss Christine Lagarde revealed the practical consequences of tweaking her inflation target: interest rates may stay at record lows for even longer. But given ultra-easy policy has failed for years to make prices rise faster, the chances of hitting her new goal are no better.
Robinhood takes E*Trade lessons almost to heart 22 Jul 2021 The online brokerage’s $33 bln IPO valuation looks modest by today’s, if not by tomorrow’s, standards. Like its dot-com-era predecessor, Robinhood is a double bet on jacked-up markets. It can avoid some of E*Trade’s early pitfalls, but risks stumbling into some bigger new ones.
Capital Calls: Twitter, Domino’s Pizza 22 Jul 2021 Concise views on global finance: Jack Dorsey’s social network reported a 74% bump in revenue despite a slowdown in adding new users; meanwhile, Domino’s Pizza shows one thing that hasn’t abated in 2021 is customers’ love of takeout pies.
Unilever’s inflation struggle is a mixed basket 22 Jul 2021 Higher costs squeezed the $155 bln Marmite maker’s profitability in the first half, forcing CEO Alan Jope to dump his goal of higher operating margins. Hefty marketing spend gives Unilever scope to raise prices faster. But investors are placing a bigger discount on future growth.
EQT makes hay while clouds begin to gather 22 Jul 2021 The $46 bln buyout group’s shares rose 11% after first-half earnings soared. CEO Christian Sinding is selling companies in frothy markets while return-hungry investors pile into his funds. Higher interest rates would undermine both trends, as well as EQT’s richly priced equity.
Las Vegas Sands’ new boss lays down his cards 22 Jul 2021 The first set of quarterly results under Sheldon Adelson’s successor show Covid is sapping growth in Asia. But Robert Goldstein is touting bold plans to take the $38 bln casino empire online. The fresh strategy looks promising and might reward investors who play a long game.
China’s nimbler Robinhoods have arrows in reserve 22 Jul 2021 E-brokerage firms Futu and Up Fintech shed a combined $3.4 bln in market value after Beijing's tech crackdown. Growth may slow, but diverse business models spanning wealth management, IPO underwriting and managing employee stock schemes set them apart from the U.S. firm.
J&J shareholders learn to live with questions 21 Jul 2021 The pharma firm joined the three big drug distributors in a tentative $26 bln settlement that could remove most opioid risks facing them. The stock hardly budged. With issues over talc and sunscreen looming, good and bad news will continue to be met with a ho-hum response.
Breakdown: U.S. antitrust frenzy stops with judges 21 Jul 2021 Several federal agencies and dozens of states have challenged big, powerful firms, including tech giants like Facebook. Breakingviews lays out who can do what, when, and with what chance of success when the endgame depends on courts where companies get a sympathetic ear.
Jamie Dimon’s $50 mln award is sane in a mad world 21 Jul 2021 That’s the rough value of stock options the JPMorgan CEO will receive for sticking around for a “significant” time. It’s better structured than some packages handed out by big U.S. firms. But it’s not clear he needs the inducement, and the it’s-all-relative argument rings hollow.
UK’s Northern Ireland antics imperil other goals 21 Jul 2021 Less than two years after agreeing a bespoke deal for the province, Boris Johnson wants to change it. A lack of trust with the European Union complicates a compromise. A new Brexit standoff will also threaten the prime minister’s other ambitions, such as a global climate deal.
EU dirty money watchdog sounds less toothless 21 Jul 2021 Brussels wants to set up a single agency to prevent future Danske Bank-style scandals. The new body will take time to set up and could be watered down by politicians. But direct oversight of the EU’s riskiest financial entities and scope to levy big fines are a step forward.
Mind-blowing earnings are already so last season 21 Jul 2021 Big companies are set to report stellar second-quarter results. But the best will soon be in the rear-view mirror and many worries, notably about Covid-19 variants, lie ahead. Head-scratching drops in U.S. bond yields will only make stock markets even more prone to stumbles.
European tech titans’ sweet spot may turn sour 21 Jul 2021 Both $300 bln ASML and $170 bln SAP upped their revenue-growth projections. They’re riding trends like soaring demand for chips and cloud computing. But much of the good news is already priced in to their expensive shares. The next surprise for investors may be less encouraging.
BHP’s oil exit would be better sooner than later 21 Jul 2021 The mega-miner is reported to be mulling a $15 bln sale of its petroleum arm. The subsidiary’s status as a profit engine amid rising energy prices makes it a tough decision. But even if done at a knock-down rate, CEO Mike Henry can burnish BHP’s allure with oil-hating investors.
Capital Calls: Volvo, Moderna, Mediobanca 21 Jul 2021 Concise views on global finance: The Swedish automaker boosts its appeal ahead of a possible IPO by buying out its Chinese joint venture partner; joining the S&P 500 will cut both ways for the vaccine maker; another Italian tycoon ups his stake in the Italian investment bank.
SoftBank checks in early for post-Covid hotel boom 21 Jul 2021 The Japanese group’s Vision Fund 2 is investing $1.7 bln in South Korean unicorn Yanolja. As travel returns, it’s a bet on the upstart’s AI-powered software and contactless services for guests. Business is booming, suggesting the sector is eager to master new tech.
Aussie oil deal drills into some messy territory 21 Jul 2021 Embattled Oil Search rejected a $6.5 bln offer from rival Santos. A merger would help clear up the target’s poor governance and improve the bidder’s balance sheet. And yet a takeover looks a financial stretch for Santos and could devolve into a value-destructive bidding war.
Great Wall Motor is all thrills, no frills 21 Jul 2021 The $54 bln Chinese automaker’s no-nonsense approach tripled earnings in the first half. Its affordable conventional designs are crowd-pleasers, while smart bets on battery technology are goosing the valuation. Shareholders in flashier rivals like Geely might take note.
Elliott aims for a more bite-sized Duke Energy 20 Jul 2021 The activist investor wants the large U.S. utility to split in three. That might help the parts to be better run, but they would also be easier to sell, and regulators might be more likely to let such deals through. A carve-up could be the cure for Duke’s underperformance.
Altria better off giving cash away than burning it 20 Jul 2021 The Marlboro maker agreed to sell a wine business for $1.2 bln and is sitting on $13 bln worth of shares in A-B Inbev, from a previous sale of Miller Brewing. Exiting that in October, when it can, makes sense especially given Altria’s habit of splurging at shareholders’ expense.
Cigar exit is next strike in Swedish Match revamp 20 Jul 2021 Most of the $14 bln group’s sales come from oral tobacco and nicotine pouches which are less harmful than cigarettes, giving it a rich valuation. But rivals like Philip Morris are catching up. Getting out of stogies could raise $2 bln and give its stock a brighter ethical flame.
UK healthcare M&A revolt leaves sickly prognosis 20 Jul 2021 Investors in hospital operator Spire blocked a $1.4 bln takeover by an Australian rival, in the latest sign of pushback to takeovers. Yet reaching a similar value on its own looks tricky given lingering virus effects. Tensions with rebel shareholders are an added complication.