Need and yield make cat bonds roar 8 Aug 2017 Low rates and a hunger for uncorrelated returns are fueling demand for bonds insuring against catastrophes, like the World Bank's new deal for Mexico. Yields on these instruments have fallen even as issuance has soared. Disaster, if it strikes, may only increase their popularity.
Cox: Japanese beer could use some home-brew 7 Aug 2017 Sapporo just acquired San Francisco's Anchor Steam, a godfather of American craft ale. Kirin already bought a stake in Brooklyn while Asahi took over Peroni and Grolsch. All three are profit laggards. Overseas shopping diverts from a more pressing matter: consolidation in Japan.
Musk fine-tunes Tesla with junk-fueled turbo boost 7 Aug 2017 The electric-car maker’s CEO is using $1.5 bln of debt to fund ramping up production of the Model 3. Diluting its overvalued shares by just 3 pct would have done the trick at less risk. But the money is cheap. And bondholders don’t need stockholders’ faith in Musk to be paid back.
United Tech avionics bid may start bigger dogfight 7 Aug 2017 The $95 bln conglomerate is mulling an offer for Rockwell Collins, right after Boeing’s margins-sapping entry into the business. Honeywell is under pressure to sell its unit. The combination of earnings and activist pressure leaves aviation executives with some tough choices.
Israeli water deal is a glass half full 7 Aug 2017 Mexichem leaked $220 mln of value on its $1.9 bln purchase of Permira- and kibbutz-backed Netafim. With global populations, drought and pollution growing, though, the drip-irrigation pioneer should fill its new owner’s coffers. India and China, especially, have yet to be tapped.
Bollywood treasure offers exotic plot for Apple 7 Aug 2017 The U.S. tech giant is eyeing top producer Eros’ library of Indian films and music. The mooted price tag of $1 bln for over 10,000 titles far exceeds the seller’s market value. Inflated prices reflect the rush to secure content in a market where consumers are willing to pay.
German-U.S. med kit deal requires flawless surgery 7 Aug 2017 Kidney dialysis group Fresenius Medical Care is forking out $2 bln in cash for loss-making rival NxStage. The German group enjoys a remarkably low cost of capital. But even if it delivers ambitious cost savings and the American group keeps getting better, returns will fall short.
EQT drills too deeply to sell its Rice deal 4 Aug 2017 The U.S. natural gas producer has projected implausible new possible synergies for its $6.7 bln deal. EQT also is brushing aside an admitted conglomerate discount. It's dubious logic considering how insiders could reap healthy payouts simply for making the company bigger.
Passive investing won’t really devour capitalism 4 Aug 2017 Paul Singer is the latest financier to warn about the danger of index funds and ETFs, calling their apparent stability "unsustainable and brittle," and a threat to free markets. Too much passivity might be a problem one day. But oversized hedge-fund fees are an immediate one.
Women-friendly job plans offer few easy wins 4 Aug 2017 U.S. unemployment hit a 16-year low of 4.3 pct in July, but women still aren’t working as actively as in, say, 2000. Childcare tax breaks as proposed by Ivanka Trump can have unintended results. Lessons from Japan, Chile and other countries may help Washington avoid missteps.
White House dangles a $100 bln tech loyalty test 4 Aug 2017 Silicon Valley chiefs clash with President Trump on much including climate change, but most are sticking around to advise him. Some may have a practical reason: the big plan to upgrade government IT. Amazon and others will be challenging dominant contractors such as IBM and HPE.
Toyota tunes up with Mazda deal 4 Aug 2017 The Japanese giant and its peer are taking small stakes in each other, and will build a $1.6 bln U.S. plant together. Toyota is racing to keep up with shifts in technology and consumer tastes. Drawing closer to Mazda and other Japanese automakers helps.
Hollywood agents exhibit empire-building talent 3 Aug 2017 WME-IMG, backed by Silver Lake and SoftBank, landed a fresh $1 bln from Canada and Singapore. It'll help fund deals like the mixed martial-arts investment last year. Given rapid growth beyond just representing Gigi Hadid, The Rock and the like, the firm's valuation looks modest.
U.S. water industry trickles toward Wall Street 3 Aug 2017 On the surface, America’s H2O suppliers have much in common with banks. They’re stymied by rates, regulation and too many players, and badly need systems upgrades. That’s encouraging some dealmaking. But with $800 bln in investment needed, the industry needs to pick up the pace.
Viewsroom: Venezuela’s downward spiral 3 Aug 2017 Questionable elections for a rubber-stamping new assembly may give President Nicolas Maduro more power. But the country’s people, economy - and some U.S. companies - will suffer. Also: Sprint, under a ton of debt yet overvalued, weighs up its M&A options.
Permian tech-like valuations come down to Earth 3 Aug 2017 Parsley Energy is the latest Texas driller to report sharply higher oil output yet see its stock fall. Companies’ growing efficiency drives global oil prices and has won multiples far higher than Google’s and Facebook’s. But in a commodity business, investors want profits too.
Avon makes for a beautiful M&A case study 3 Aug 2017 Let's dedicate a plaque in the Blockheaded Business Decisions Hall of Fame to the door-to-door cosmetics seller. Five years ago, Avon's board rejected a $10.7 bln offer from Coty and recruited Sheri McCoy to be CEO. She now departs after presiding over a near-90 pct wipeout.
Brazil’s Congress discounts cost of corruption 3 Aug 2017 Lawmakers voted to shield President Michel Temer from criminal trial, at least for now. The calculus set immediate economic interests, which should benefit from the decision, against the longer-term merits of tackling political graft. Call it the net present value of shame.
U.S.-China spat casts doubt on MoneyGram payoff 3 Aug 2017 Shares in the U.S. payments firm trade 12 pct below an offer from Jack Ma’s Ant Financial. Markets are now pricing in a sizeable risk that the Trump administration will stymie the $1.2 bln deal. That would send a nasty message to Beijing, at the expense of MoneyGram investors.
U.S. tax-cut hopes may give pensions a rare boost 2 Aug 2017 International Paper is borrowing to stoke its retirement fund. Rising plan costs and a desire to lock in tax benefits before any reduction in rates prompted the move. With other firms likely to follow, this is one way Trump’s fiscal policies can trickle down to the little guy.