BREAKINGVIEWS

Once in a lifetime is our hopeful prediction

2 June 2020

Humanity either learns key lessons from the pandemic, corrects course and becomes a more resilient species. Or it tears further apart and expands the divisions in society that predated Covid-19. In a new e-book on what will change, Breakingviews takes the more optimistic view.

Germany’s new $90 bln fiscal bazooka may misfire

2 June 2020

Chancellor Angela Merkel’s government is working on new stimulus measures. But the package, which is still being negotiated, is short on infrastructure investment. Consumer handouts and tax cuts may end up boosting savings given concern about the outlook for the economy and jobs.

TUI’s summer cheer may be short-lived

2 June 2020

The $3.5 bln holiday operator’s shares have risen by around 60% since Spain said it would welcome tourists again. But fewer sales and high debt could eventually force CEO Friedrich Joussen to raise more equity. With the stock buoyant, it’s a good time to tap shareholders.

Even a chastened SoftBank leans on engineering

2 June 2020

Boss Masayoshi Son is scrambling to clean up his “foolish” and costly WeWork mess. Instead of just selling some Alibaba shares, though, he’s using derivatives linked to them to raise $11.5 bln. The transactions are fiddly, but in this case may be a good use of creative finance.

NetEase fortifies itself against global disarray

2 June 2020

The $51 bln video-game producer is ready to raise $2.6 bln in Hong Kong. Quarantined customers have helped it defy a U.S. backlash against Chinese stocks. A secondary listing closer to home, following a tougher trail blazed by Alibaba, should add a useful layer of protection.

Clashes are facet of U.S. “exorbitant privilege”

1 June 2020

Unrest over racial injustice does nothing for a country already divided and struggling with disease. Yet it takes more to unseat a superpower. America is no longer the only one, but it still has unrivaled heft. The downside: limited pressure to tackle economic or social problems.

Tech giants dare antitrust deal watchdogs

1 June 2020

Facebook, Microsoft and Apple have been on a buying spree of small companies. U.S. regulators are examining such deals but their work has been hindered by Covid-19. Big Tech can argue some firms would fail otherwise. But the effect on consumers is a mixed bag.

Zynga puts overvalued shares to risky use

1 June 2020

The $9 bln video-game company is buying the Turkish maker of Toon Blast and Toy Blast for $1.8 bln, its biggest deal ever. Zynga is partly financing it with stock puffed up by the pandemic. But the high price and its mixed acquisition record should give investors pause.

Kylie Jenner teaches Coty celeb value is cosmetic

1 June 2020

The perfume maker’s stock fell after Forbes suggested the TV star, who sold 51% of her makeup brand to Coty last year, had exaggerated her wealth. Coty had overpaid either way. But the drama exposes the folly of companies buying brands whose value they can’t really control.

Cities exodus will be more fringe than fashion

1 June 2020

Covid-19 and its lockdowns have left many urbanites yearning for more space. Technology makes it easier to contemplate working from a hamlet than after past pandemics. But a mass shift to the ‘burbs and beyond requires a lot of investment to overcome a dearth of infrastructure.

West End foray breathes life into UK property M&A

1 June 2020

Capco, owner of much of London’s upmarket Covent Garden district, has bought a 26% stake in $2.4 bln Shaftesbury, which manages large swathes of the trendy Soho area. A merger could follow. The risky punt shows UK landlords are starting to think about life after the pandemic.

UK’s small-firm debt pile is ripe for forgiveness

1 June 2020

Companies have borrowed $23 billion in state sponsored “Bounce Back” loans. Many will probably default. Pursuing debtors will be politically awkward and dent growth. Better to link repayments to financial health or grant relief to companies that hire back furloughed workers.

Buyout firms make first move in EU telco shake-out

1 June 2020

KKR, Cinven and Providence are offering $3.3 bln for low-cost Spanish operator MasMovil. Stricter financial discipline may mean less of the cut-throat pricing that hurt rivals. After an EU court ruling on a nixed UK merger, it may also be the start of a new round of mergers.