U.S. climate win may distort global net-zero race 18 Aug 2022 The $430 bln legislation signed by President Joe Biden should spark faster uptake of solar, wind and hydrogen in the country. Over time, it could cut green power costs worldwide. But the U.S. plan’s reliance on subsidies risks thwacking Asian renewable energy supply chains first.
Target’s smaller grocery aisle will take a toll 17 Aug 2022 The $80 bln retailer led by Brian Cornell benefited from pandemic shopping until inventory piled up – to $15 bln in the second quarter. Rival Walmart confronts similar problems, but it sells more food as a percentage of revenue. Sticky inflation makes things harder for Target.
Tencent is running in two different directions 17 Aug 2022 The Chinese video game giant suffered a 43% plunge in operating profit from falling markets and a weak economy. Boss Pony Ma is cutting costs and promising buybacks, but he also is pushing on overseas expansion and new businesses like cloud. The message on discipline is garbled.
Elon Musk’s Man Utd joke masks serious M&A logic 17 Aug 2022 The world’s richest person was kidding when he said he would buy the $2 bln soccer club. Yet there’s money to be made for any buyer who, unlike the current owners, is willing to focus more on revenue growth and less on dividends. Rivals Liverpool and Man City offer a template.
Cash buyers have whip hand in London office slump 17 Aug 2022 The value of the UK capital’s buildings could fall 12% in the next 18 months, Bank of America reckons. But private equity houses will struggle to swoop as high interest rates make debt-fuelled purchases uneconomic. Cash-rich pension funds will put a floor on price declines.
Capital Calls: Chinese property bonds 16 Aug 2022 Concise views on global finance: Beijing plans to guarantee new domestic fixed-income issues by half a dozen homebuilders, but that’s hardly enough to revive overall demand for housing.
Taiwan digs trenches in battle for chip talent 17 Aug 2022 Officials may force Foxconn to unwind an $800 mln deal with a Chinese chipmaker. This follows a crackdown on mainland companies poaching engineers, as Taipei tries to keep its tech expertise to itself. It could make a surprisingly powerful defence against hostile Beijing.
Bank living wills could rise from the dead 16 Aug 2022 New U.S. watchdogs may be tougher on how lenders unwind in a crisis. A breakup is one penalty for failing the exercise. But it’s odd timing given JPMorgan and others just increased capital buffers. Resurrecting the stick would make Wells Fargo the most vulnerable.
Anti-Beijing bandwagon sideswipes Biden’s EV push 16 Aug 2022 Only cars with a good chunk of U.S. battery parts and critical minerals qualify for a $7,500 tax credit passed by Congress. A global supply chain that relies on China means few vehicles will qualify. The race against climate change takes a back seat to the America First drive.
Capital Calls: Walmart whiplash 16 Aug 2022 Concise views on global finance: The U.S. mega-retailer revised its profit forecast yet again, just weeks after sounding the alarm.
Darktrace buyout offers road to debug governance 16 Aug 2022 Thoma Bravo is mulling an offer for the $4 bln cyber firm. Close links to investor Mike Lynch, who faces U.S. fraud charges, may explain its discount to peers. Given that a new owner could hike the valuation by untangling those links, Darktrace owners should demand more upfront.
Banks’ LBO debt hangover may leave lasting scars 16 Aug 2022 Dicey markets forced Goldman Sachs and peers to take a hit on $80 bln of buyout loans that got stuck on their balance sheets. Calmer conditions mean the worst may be over. But the trauma, along with rising rates and competition from private lenders, adds to the case for job cuts.
BHP’s bumper year is bad news for its M&A quarry 16 Aug 2022 The mining giant’s record EBITDA and dividend suggest it could up its $5.8 bln rejected offer for OZ Minerals. But the impressive performance is in part due to better overall discipline that investors are only just appreciating. Boss Mike Henry will be reluctant to change course.
Electric perfection is enemy of hybrid-car good 16 Aug 2022 Activists are attacking Toyota and others for sticking with designs that recharge using combustion. Yet pure electric models are only as green as their power grids and require heavy infrastructure investment. Puritanism is premature, and could prompt consumer backlash.
Dan Loeb can help Disney get with the program 15 Aug 2022 The pushy hedge fund manager is back with a fresh stake in the $222 bln entertainment empire. He wants to shake up the board and is prodding boss Bob Chapek to spin off ESPN. Cutting the cord with old cable networks would help accelerate the company’s transition into streaming.
Unity sets AppLovin bid level to difficult 15 Aug 2022 The game software maker has rejected its rival’s $17.5 bln entreaty. The all-stock structures promises a big slug of synergies for Unity Software shareholders. Sweetening the deal while making the math work for AppLovin’s, however, will be a serious M&A challenge.
Rio minorities’ bet is far from copper-bottomed 15 Aug 2022 Investors who hold the 49% of Turquoise Hill Resources not owned by the mining giant have spurned a $2.7 bln offer to buy them out. True, copper prices could rebound and hike the value of their giant Mongolian copper mine. But Turquoise’s minorities may need a deal more than Rio.
Capital Calls: Adam Neumann’s new venture 15 Aug 2022 Concise views on global finance: Venture capital firm Andreessen Horowitz funnels $350 mln into the WeWork founder’s real estate startup.
Beijing is too bashful with its balance sheet 15 Aug 2022 Corporate loans plunged in July while real estate worsened and retail stayed weak. Even as the central bank cuts interest rates, the government is staying fiscally conservative, relying on indebted local provinces to stimulate demand. That looks increasingly unsustainable.
Anshu Jain’s influence still lingers at Deutsche 15 Aug 2022 The Indian banker, who has died aged 59, was an industry icon who pushed the German group to go toe-to-toe with Wall Street. His stint as CEO was beset by solvency and conduct woes. But Deutsche Bank’s latest strategy is about as reliant on trading as Jain’s plan a decade ago.
Voluntary delistings show China gets U.S. message 15 Aug 2022 Five state-owned firms worth $318 bln are leaving New York, citing thin trade and other funding sources. The People’s Republic and Washington have yet to fix an audit row that would purge all mainland companies from U.S. boards. Beijing is wisely preparing for the worst.
Strong market an apt tribute to India’s Big Bull 15 Aug 2022 Billionaire investor Rakesh Jhunjhunwala, who has died aged 62, led the way for first-time buyers. This horde is now propping up Indian stocks at rich valuations, muting the impact of foreign selling amid U.S. rate hikes. If the enthusiasm holds, it will mark a coming of age.
Pfizer and Moderna react well to cash boosters 12 Aug 2022 The Covid-19 vaccine makers combined may generate an extra $110 bln through 2024. With its bounty, younger Moderna would be wise to double down on R&D. Mature Pfizer is better off pursuing acquisitions like Global Blood Therapeutics. The trick for both will be to stay focused.
Gaming’s big comedown will be spread unevenly 12 Aug 2022 The sector has changed radically since 2008. It weathered Covid with ease, but it’s hard to say how cash-strapped gamers will fare in another recession. Reliable franchises like EA’s “FIFA” could end up more valuable, while the demise of buzzier upstarts may create M&A openings.
Richemont’s governance armour is hard to pierce 12 Aug 2022 Activist Bluebell wants ordinary investors to appoint their own director on the board of the $63 bln Cartier owner. Yet Chair Johann Rupert’s big voting power means he could stifle the attempt. Without a fresh voice, contrarian business ideas may not get much airtime.
Capital Calls: Illumina, Peloton 12 Aug 2022 Concise views on global finance: Growth is stagnating at the $30 bln DNA sequencing company, and regulatory problems with its Grail deal are also coming into view; a class action lawsuit against the virtual fitness outfit provides an unlikely reminder of its former glory days.
Wine IPO is a very rich toast to affluent India 12 Aug 2022 The country’s largest producer Sula has plenty to cheer but more competition from Australia and sluggish growth are some reasons not to pop the cork at 86 times earnings. With a growing crowd of massively overpriced stocks targeting India’s wealthy, investors can be picky.
Financial edits befit New York Times 11 Aug 2022 Pushy investor ValueAct has taken 7% of the $5 bln news outfit, urging it to hawk a digital bundle a la Netflix. There’s logic to the idea, which could boost the top line. Targeting a family-controlled company is risky, however, even after cracking Japan’s stubborn boardrooms.
Endeavor is a switch hitter in baseball deal 11 Aug 2022 The $11 bln firm known for representing movie stars is selling a baseball subsidiary because the players balked at potential land mines with agents. But the buyer is Silver Lake, an LBO firm that controls Endeavor. Problems just go from one side of the plate to the other.
Twitter investors may yet boot Elon Musk and win 11 Aug 2022 The entrepreneur has sold more Tesla stock in the “hopefully unlikely” event his $44 bln offer for the social network closes. Letting its flaky, unwilling buyer walk would free Twitter up to find a more reliable owner. The break fee might even cover any discount to Musk’s bid.