Hadas: Renewed growth tests old economic theories 14 Feb 2018 A slight rise in U.S. wage growth threw markets into fits. Investors believe some long-suspended economic patterns are finally kicking in. Then low unemployment will bring higher inflation and bond yields, and ease voters’ angst. But the old rules may just not work anymore.
Blackstone succession plan is reassuringly gray 13 Feb 2018 Naming real-estate head Jon Gray as day-to-day manager of the investment giant is logical. Big questions – like whether to remain a partnership – will still sit with CEO Steve Schwarzman. Blackstone isn’t a typical listed company; the gradual approach to change shows it.
Walgreens Boots mulls $20 bln back-to-future deal 13 Feb 2018 Stefano Pessina’s dealmaking turned a small Italian drug distributor into a $68 bln drugstore chain. Buying out wholesaler AmerisourceBergen would take the business full circle, tighten the firm’s U.S. supply chain, and set up future deals to fend off the new threat: Amazon.
LBO firm needs tough love for American Greetings 13 Feb 2018 Clayton, Dubilier & Rice is buying a majority of the card maker. The founding Weiss family, which took it private in 2013, has failed to grow earnings as consumers go digital. It’s not yet a Valentine’s Day Massacre, but a lack of sentiment will be needed to spark a turnaround.
Tesco has to decide which investors to annoy 13 Feb 2018 Activist fund Sandell wants the UK supermarket group to up its 3.9 billion pound bid for Booker. A high hurdle for approval means a small minority can derail the deal. But if Tesco sweetens the offer, it will anger shareholders like Schroders who already think the price too rich.
Wrongs in Xerox deal don’t make Icahn right 12 Feb 2018 The activist is correct that the copier maker is giving up its autonomy to Fujifilm for cost savings that may never arrive. Yet his alternative, harking back to its 1970s technology leadership, isn’t convincing either. As print keeps shrinking, there is no quick fix for Xerox.
Trump budget is mostly fan fiction for Republicans 12 Feb 2018 The administration called for cuts in non-military programs in its $4.4 trln budget for 2019. Last week’s two-year spending deal effectively dooms the plan, though it may offer a blueprint for GOP budget hawks. A new infrastructure push offers one hope of bipartisan dealmaking.
General Dynamics pays paranoia premium for CSRA 12 Feb 2018 The U.S. defense group is spending some $6.8 bln for cyber specialist CSRA. The synergies don’t quite cover the premium, and returns look underwhelming. The deal hangs on a big boost in U.S. government spending, and the idea that these companies benefit from a more fearful world.
Comcast hints at tense second season for Fox bids 12 Feb 2018 The cable firm could try to thwart media giant Disney’s $52.4 bln purchase of parts of Rupert Murdoch’s empire. Antitrust and family politics would hinder a reprise of Comcast’s $60 bln offer for now, but Disney may yet have to raise its game.
Heineken’s number two status brings marginal costs 12 Feb 2018 The Dutch brewer is one of the few global groups still increasing beer volumes. However, acquisitions will weigh on operating margins in 2018. Heineken needs to invest in its new Brazilian brands to take on market leader AB Inbev. That limits the scope for boosting profitability.
Uber’s Waymo deal recasts existential question 9 Feb 2018 The ride-hailing service is paying Alphabet’s self-driving unit $245 mln in equity, ending a legal fight over trade secrets. Uber says it didn’t use its rival’s know-how. But if driverless cars are its only road to profitability, it needs to be a technology leader, not a laggard.
Newell proxy combatants share flawed strategy 9 Feb 2018 Starboard wants to replace the Elmer’s-to-Rubbermaid group’s board with a slate led by former managers of Jarden, which it bought two years ago. Newell has failed to hit targets, but Jarden’s rollup model was running out of gas too. A breakup would be a better activist ambition.
Market turmoil increases the attraction of cash 9 Feb 2018 Despite the global stock market selloff, investors are showing little interest in the safest government bonds. That’s because U.S. fiscal and monetary policies have diminished the safe-haven appeal of Treasuries. When neither debt nor equity is appealing, cash becomes king.
Congress holds its nose over U.S. fiscal restraint 8 Feb 2018 The legislature passed a deal early on Friday to raise spending by several hundred billion dollars, just two months after a $1.5 trln tax cut. The strain on government coffers during a roaring economy will leave politicians with far less ammo when the next downturn arrives.
Boeing in-sourcing idea fires on two engines 8 Feb 2018 Even as it negotiates with Embraer, the $207 bln company is in talks to buy parts supplier Woodward, the WSJ reports. With a seven-year backlog of plane orders, Boeing could raise profitability by bringing more work in-house. Plus, it could throw sand in rival Airbus’s engines.
Tyson dual shares turn water reform into a washout 8 Feb 2018 An undemocratic ownership structure has allowed the largest U.S. meat producer to ignore investors’ overwhelming call to manage pollutants better. Complying would save the $27 bln company money and show that even the governance-challenged can set a decent environmental standard.
Viewsroom: The Fed’s belated Wells Fargo beating 8 Feb 2018 Chair Janet Yellen forbids the $2 trln lender from growing bigger - on her last day in the job, and 17 months after Wells’ fake-accounts scandal hit. Meanwhile, fellow financial watchdog CFPB seems to be giving hacked Equifax a free pass. Plus: how Nintendo made a comeback.
Twitter’s first profit isn’t much to tweet about 8 Feb 2018 Edging into the black triggered a 20 pct bump in the social-media company’s market value, to $24 bln. Part-time boss Jack Dorsey seems optimistic despite outside scrutiny of Twitter’s feeds. But it’s hard to see how a result achieved by cutting costs is a great sign for growth.
Predictions are hard, especially about the future 7 Feb 2018 Even so, Reuters Breakingviews attempts it each year. The latest effort, “Froth and Frustration,” inspired a series of events and discussions. We also polled audiences from North America to Asia and beyond on key issues. Here’s the outlook for 2018 in text, video and graphics.
BlackRock seeks ultra-active way out of hard place 8 Feb 2018 Boss Larry Fink may raise a $10 bln fund to take long-term company stakes. For the manager of $6 trln, which has grown huge through indexing, it’s a throwback to its origins as an offshoot of buyout shop Blackstone that could help relieve BlackRock’s self-created fee pressure.