Soccer giants’ new owners may get tiny returns 30 Dec 2022 Manchester United, Liverpool and Paris Saint-Germain are up for sale, either in part or in full. A near $3.7 bln price tag each seems possible, banking the sellers a tidy return. Yet slowing TV rights deals and spiralling player wages mean the buyers will probably fare worse.
Big news and big views dominate 2022 30 Dec 2022 Breakingviews’ best-read lists describe a dramatic year of political, economic and financial turmoil. War in Ukraine, Elon Musk’s Twitter, tumultuous energy markets, and persuasive pitches for deals at Tencent, Microsoft and Meta were among the headlines that demanded attention.
New threats will corrode infrastructure M&A 30 Dec 2022 Blasts that damaged Baltic pipelines in September alerted investors to the physical risks to energy networks from geopolitics. Add growing cyber concerns and the cost of insurance is set to rise. As the appeal of formerly quasi risk-free bets dims, states will surely step in.
Dealmakers will be lucky to eke out a 2022 repeat 29 Dec 2022 With merger volume slumping from a record $5.8 trln, bankers are regrouping to suit the times. The emphasis will be on buyout firms loaded with firepower and stock-based mergers. After the 2007 peak, though, it took two years for M&A to bounce back. Expect history to rhyme.
Boardrooms will rediscover the value of gray hair 29 Dec 2022 The economy is headed for conditions not seen in over a decade, yet a third of the U.S. workforce was under 20 during the last real recession. CEOs are getting older, while tech and crypto blowups knocked youth off its perch. In 2023, companies will embrace an aging workforce.
Macron’s fiscal torpor will weaken France 29 Dec 2022 The French president is running the only big European economy whose public debt, now at 112% of GDP, is still rising. High government spending helped during the crises but is now pushing up bond yields, stifling growth. Budget neglect will also erode Paris’s influence in the EU.
Conscious consumerism will be left on the shelf 29 Dec 2022 Shoppers have been forking out for organic and plant-based food for health, environmental or other reasons. Squeezed incomes will test their ethical commitment. Throw in higher input costs, and 2023 looks an unappetising year for fake burger purveyor Beyond Meat and its rivals.
“Lifetime value” is Silicon Valley’s next buzzword 28 Dec 2022 As the cost of recruiting customers rises, tech firms and investors are paying more attention to the revenue users bring in. It’s a welcome shift from breakneck growth. Yet as with previous favourites like “total addressable market” or “flywheel effect”, the idea may get garbled.
Stray pet businesses will find new owners in 2023 28 Dec 2022 Americans are expected to spend more than $275 bln on their furry friends by 2030, outpacing GDP growth. Even so, exuberant pandemic-fueled valuations have come crashing down. Nestlé, Mars or Colgate-Palmolive are strong candidates to target the industry’s stand-alone operators.
Carmakers will reverse out of public markets 28 Dec 2022 Shares of companies like Stellantis and BMW are depressed on fears of a recession, and the threat of Chinese rivals. Yet the groups are profitable and throwing off cash. One way to make the most of low prices is to buy back shares. The logical next step is to go private.
E-commerce will go viral on social media in 2023 27 Dec 2022 TikTok and YouTube are among those fighting for a piece of the estimated $46 bln shopping market that’s growing twice as fast as ads. It’s a sensible strategic move, but recession would dash some plans. Many products also won’t suit the apps and competition is expanding quickly.
Global finance unknowns are more “who” than “what” 27 Dec 2022 The blowup of the UK pension market has got regulators hunting for weaknesses in the over-$200 trln shadow banking sector. Emerging market funds and leveraged loans both bring vulnerabilities. But in deciding what to police, the question is who’s exposed. That’s a blind spot.
East-West battleground will shift to metals 23 Dec 2022 After clashing with gas producer Russia, Europe has scrambled to diversify energy supplies to prop up its industries. Western companies will soon feel uneasy relying on China for lithium and nickel, key to a $5.3 trln green push. Expect a pile-up of mining and recycling deals.
Treasury market best tuned up before it breaks 23 Dec 2022 U.S. government bonds are getting harder to trade, and more volatile. The Fed could deploy a simple patch: revive a Covid-inspired rule tweak that lets banks hold Treasuries without locking up precious equity capital. It sounds like a gift for banks, but beats the alternative.
Bulb bailout exposes UK’s pseudo power market 23 Dec 2022 Octopus Energy is receiving a 4.5 bln pound taxpayer backstop to take on the bust supplier’s 1.5 mln customers. Like the government’s subsidy of household bills, the deal reveals the limits of Britain’s supposedly privatised power market. The question is when politicians notice.
Female fans will fuel Formula One in 2023 23 Dec 2022 Liberty Media’s testosterone-powered franchise is ready to shift gear. A docuseries following its drivers was among Netflix’s best-watched shows and lured more women to the racing stands. Forget Lewis Hamilton: finding a Louise Hamilton could rev up that trend and boost revenue.
Weed’s next frontier is in Asia 23 Dec 2022 The cannabis market is estimated to be a $100 billion industry by 2026, but largely confined to the U.S., Canada and parts of Europe. While legalising ganja has been a slow burn in Asia, official attitudes are shifting. Demand from regional consumers will slowly light up.
Missing jobs mystery puts Fed on back foot 22 Dec 2022 A new study from the Philadelphia Federal Reserve says the U.S. added 1 mln fewer jobs in the spring than the government reported. It’s not the only example of mismatched economic data, and underscores the challenge the Fed faces in piloting the pandemic-era economy.
Capital Calls: Barbarians at the check-in desk 22 Dec 2022 Concise views on global finance: Hotel landlord Vivion is engaged in a war of words with short-seller Muddy Waters, but it could fight back more effectively with cash.
Central bank schism is bad news for bunds 22 Dec 2022 Markets reckon the Federal Reserve will stop hiking rates before the European Central Bank. That has pushed yields on 10-year German bonds closer to those of U.S. Treasuries. The trend will last in 2023, as sticky euro zone prices and a fiscal splurge pressure Berlin’s debt.
Climate change will become a CEO dealbreaker 22 Dec 2022 For corporate chieftains who profess to recognize the threat of climate change, the balancing act between pursuing shareholder value and helping the planet avoid a crisis is becoming unsustainable. Breakingviews imagines a missive from a CEO who opts to put values before value.
Bowling Green, Kentucky is the next big U.S. city 22 Dec 2022 So is Syracuse, N.Y.; and Dayton, Ohio; and Normal, Ill. That’s where manufacturing of semiconductors and electric cars is going, thanks in part to existing old infrastructure and new policies under Joe Biden. It means less profit – but a more evenly distributed U.S. workforce.
Capricorn mess mixes new and old ESG goofs 22 Dec 2022 Shareholders are angry at a takeover of the $950 mln oil group formerly known as Cairn Energy, months after they rejected a separate deal. It’s partly about price. But it also reflects investors’ new concern over environmental risks, and a very old dislike of poor governance.
Interlopers may yet crash the Gulf bank fee party 22 Dec 2022 The Middle East is one of the globe’s few healthy IPO markets. To relative outsiders like Barclays, it may look like big U.S. and domestic banks will grab the best mandates. Yet Saudi Arabia’s insistence that foreign banks base themselves in Riyadh presents an opportunity.
Putin’s Russia will look more like North Korea 22 Dec 2022 The Kremlin leader will strengthen his hold over the ailing economy, from banking to industrials. Massive nationalisation, along with the end of U.S. and European investments, could soon be followed by strict capital controls. The complete closure of the Russian economy is next.
Private lending will grow up by slimming down 22 Dec 2022 The industry led by Ares and Blackstone reached over $1.3 trln in assets, but now faces a reckoning. Lenders that took risky bets to compete with banks face difficult negotiations with private-equity borrowers. Bigger, more sophisticated players should still thrive.
Venture capitalists’ pain could be humanity’s gain 22 Dec 2022 Rate hikes have sapped enthusiasm for crypto, metaverses and gimmicky startups, with funding down 27% year-on-year. That will free up money to focus on nanotechnology and AI, which can boost lifespans and productivity but take longer to commercialise. Less frivolity is welcome.
Linchpins of excess inflate NBA’s $4 bln deal 21 Dec 2022 The Phoenix Suns sale represents a giant 160% bounce on its valuation last year. Buyer Mat Ishbia is paying with a fortune built on U.S. mortgages and the SPAC craze. A rivalry with another billionaire adds ego to the bloated mix of sports, housing and financial engineering.
Flu-remedy shortages sap investor misperceptions 21 Dec 2022 Drugmaker GSK spun off $35 bln Haleon in July with legal issues, high debt and low expectations, but strong demand for children’s Advil and other medicines are providing a salve. Similar splits in media, oil and tech have defied the odds, too. Contrarian bets can be therapeutic.
Microsoft’s $69 bln deal runs on European time 21 Dec 2022 A U.S. effort to block the software developer’s Activision acquisition promises to be a long and uphill climb. Brussels and London, however, could extract concessions sooner. It’s an indication of how other jurisdictions backstop increasingly hardline American regulators.