Private equity giants choose their own adventures 2 May 2024 Blackstone, Carlyle, KKR and Apollo’s first-quarter earnings each illustrate a different central quest: sustaining the firm, fixing it, reshaping it or growing it. With a total $2.7 trln of assets, all four are hitting some new goals, but still have their own ogres to vanquish.
Trustbusters target poor man’s John D. Rockefeller 2 May 2024 Today’s energy producers wield far less clout than the industrialist’s Standard Oil, whose breakup shaped US competition law. By comparison, the FTC’s collusion case against Pioneer’s ex-CEO linked to the $65 bln Exxon deal is mostly symbolic. Robber barons lurk elsewhere now.
France’s Atos entrée heads for fuzzy denouement 2 May 2024 The French state wants to buy the defence assets of the IT group, which is trying to restructure 4.9 bln euros of debt. It should then be easier to sell what’s left of Atos. But it’s unclear how or when Paris might marshal private buyers to recoup its outlay of up to 1 bln euros.
M&A-shy EU bank investors are own worst enemy 2 May 2024 BBVA’s shares fell 8% over three days after it pitched an all-share acquisition of $10 bln Spanish rival Sabadell. But the returns look good, and the combined group’s capital ratio will remain high. If investors sink this deal, other CEOs in the fragmented sector may think twice.
Shrunken Vodafone has narrow path to growth 2 May 2024 The $24 bln telco’s stock is down since CEO Margherita Della Valle sold the slow-growing Spanish and Italian units. Outside core and mature UK and German markets, hopes for growth rest on corporate clients and Africa. That may not be enough to close Vodafone’s valuation gap.
Unilever and Nestlé offer two flavours of India 2 May 2024 Weak rural demand ate into earnings at the $63 bln local unit of the Dove soap maker. By contrast, its smaller and more-richly valued Swiss rival grew profit thanks to a larger share of urban customers. The divergent fortunes point to the limits of the Indian consumer’s wallet.
Clash of the mining titans will get more bruising 2 May 2024 Australian giant BHP’s $39 bln swing for Anglo American is a contentious, complex land grab for the metals key to a renewable future. In this Viewsroom podcast, Breakingviews columnists discuss the political and financial hurdles, and why this M&A contest has a way to run.
Bain could be third time lucky in Japan 2 May 2024 It's pushing an IPO of Kioxia again after talks to merge the chipmaker collapsed last year. A deal would help pare a $6 bln company loan. Timing is on the sellers' side; demand for chips and Japanese stocks is robust. Rival buyout firms will cheer a successful selldown too.
Microsoft’s AI land grab becomes costly power game 1 May 2024 The tech giant is splurging on artificial intelligence models and chips. Now it’s made a big commitment to buy renewable energy for data centres, enabling Canadian investor Brookfield to build a massive 10 gigawatts of capacity. It’s another long-term bet on nascent technology.
Anti-obesity drugmakers savor pandemic leftovers 1 May 2024 The main obstacle to Eli Lilly and Novo Nordisk selling more weight-loss treatments is the ability to produce them. It turns out Covid-vaccine infrastructure has useful capacity. Quickly solving supply concerns gives both a shot at bigger slugs of the potential $100 bln market.
Hurricanes threaten to stir perfect economic storm 1 May 2024 Warmer oceans portend an unusually fierce 2024 season in the Atlantic, with two states already propping up their home insurance systems. The nightmare scenario is $200 bln of losses. Insolvencies would be a problem, but not as big as exorbitant premiums and lower property values.
EU bank holdouts are playing with fire in Russia 1 May 2024 Two years after the invasion of Ukraine, lenders Raiffeisen and UniCredit still have sizable businesses based in Moscow. Fearing lack of scrutiny in a sanctions-hit nation, the ECB is ratcheting up pressure to leave. A costly exit looks suddenly preferable to penalties.
Anglo breakup costs complicate a sweeter BHP deal 1 May 2024 The miner’s Australian suitor is mulling a hike to its $39 bln proposal. But if Anglo American were to demerge its listed South African units as part of the deal, BHP or any other buyer might inherit a $2 bln tax bill. That may limit BHP boss Mike Henry’s scope for generosity.
Amazon is the everything-plus-AI store 30 Apr 2024 The $1.8 trln company is still dominating e-commerce and cloud computing, as first-quarter earnings show. But its valuation trails Microsoft’s, which has plunged into AI. Boss Andy Jassy will play catchup in the coming year. But Amazon may not be as behind as investors think.
Musk’s China jaunt keeps underwhelming status quo 30 Apr 2024 Hope that Tesla can push self-driving in the country added $82 bln to its value. China’s cheap manufacturing, ample battery supply, and potential direct sales requires the EV-maker’s boss to maintain copacetic relations. But even the best outcome cannot justify excitement.
Satellite union will struggle to defy gravity 30 Apr 2024 Luxembourg-based SES agreed a $3 bln cash acquisition of US rival Intelsat. The news wiped a fifth off the buyer’s shares. Investors thought they were getting a ton of cash from the lowly valued satellite operator, but instead they’re getting a deal with questionable returns.
Overdue $80 bln Spain bank merger has new hurdles 30 Apr 2024 BBVA broached an all-share deal with $10 bln Sabadell. The smaller lender’s valuation has improved since the same merger was discussed in 2020, which could make it easier for the board to agree a sale. Yet it also makes the sums harder for the buyer, whose investors are spooked.
Jay Powell might wish for the sound of silence 30 Apr 2024 With inflation at 3.7%, the Federal Reserve chair is stuck. Signal lower rates are coming, and he may have to backtrack. Talk about increasing them, and bonds may go haywire. With a potential change in the White House, Powell’s intentions carry even greater weight, too.
Global retailers are headed for Shein reckoning 30 Apr 2024 Zara owner Inditex, H&M and other apparel giants are holding ground against the Asian fast-fashion upstart. However, AlixPartners’ retail expert Matt Clark argues in this Exchange podcast that Shein’s focus on garment quality could threaten the dominance of pricier rivals.
CEO departure puts HSBC at risk of strategy drift 30 Apr 2024 Noel Quinn is retiring from the $164 bln bank after less than five years in charge. If Chair Mark Tucker picks an internal replacement the new broom risks looking like a second choice. Appointing an outsider could leave HSBC without clear medium-term targets for a year or longer.
L’Occitane sets a high bar for Hong Kong exits 30 Apr 2024 Chairman Reinold Geiger’s offer to take his skincare group private values it at 6 bln euros, a decent 30% premium. Funding led by Blackstone might help keep a lid on interest expenses while the company restructures and seeks a listing in Europe. Other buyouts will be trickier.
Von der Leyen’s China plan is all bark and no bite 30 Apr 2024 To keep her job atop the European Commission, Ursula von der Leyen will talk tough but wield a small stick towards Beijing. Open supply lines from the People’s Republic are key to Europe’s economic well-being. Brussels’ rhetoric will likely be harsher than sanctions and tariffs.
China can stay on sidelines in BHP-Anglo battle 30 Apr 2024 The People’s Republic may not kick up a stink about a merger like it did with the Aussie miner’s 2008 Rio tilt. Suppliers of copper are more fragmented than those of iron ore, Beijing’s M&A interventionism has matured, and friends like South Africa can lead any deal opposition.
Japan’s hottest new activist isn’t an activist 30 Apr 2024 Hiroyuki Otsuka, formerly at Carlyle, raised $1 bln from MUFG, Mizuho and other local firms for his debut engagement fund. The next phase for unlocking value in Japan will depend less on foreigners. But keeping bosses happy while pushing for change is easier said than done.
China auto show puts smart at centre of car wars 30 Apr 2024 BYD, Geely and peers touted everything from self-driving software to massage chairs at lower prices than in the past. They are extending a lead over global rivals, with help from tech juggernauts such as Huawei. But global carmakers including Tesla can follow that roadmap, too.
Republic First is the good kind of bank failure 29 Apr 2024 The shuttered lender was low on equity and high on drama, home to years of lawsuits and board fights. Even with familiar balance-sheet issues, there’s little risk of knock-on effects elsewhere. Bank windups are working - though judging by placid depositors, maybe a bit too well.
Comcast’s theme parks are an underrated attraction 29 Apr 2024 The cable conglomerate’s giant Epic Universe resort is finally due to open in 2025. Super Mario and Harry Potter are solid headliners, but the $240 bln enterprise’s valuation suggests investor skepticism about joining the ride. Mixing media and internet makes only so much magic.
Yen intervention is a lost cause worth pursuing 29 Apr 2024 Tokyo may have acted to prop up the currency after it dropped below 160 to the dollar. It’s a losing bet until the US Federal Reserve cuts rates or the Bank of Japan tightens monetary policy further. But there is value in signalling to the world that this is not a one-way street.
The Agnellis’ risky Philips bet starts to pay off 29 Apr 2024 The Dutch group settled its US faulty sleeping aid claims for a manageable $1.1 bln, lifting its stock 35%. The relatively quick fix vindicates Exor CEO John Elkann’s $3 bln punt on Philips when legal worries kept investors away. It may also shift the thinking on big litigations.
Sánchez’s psychodrama leaves Spain at loose end 29 Apr 2024 PM Pedro Sánchez is staying on after threatening to resign over a court probe into his wife’s dealings. He appears weakened before a series of elections, raising doubt on his ability to push for reforms and ensure the country remains the fastest-growing major European economy.