Burberry’s brand shows worrying fragility 19 Apr 2017 The UK luxury group's revenue is falling on a constant-currency basis. The strong dollar has hit demand in the U.S., but Burberry also restricted sales to protect its brand. The fact that it has to do so isn't great for investors after multiple rejected takeover offers.
Akzo’s go-it-alone plan has a rose-tinted hue 19 Apr 2017 The besieged maker of Dulux paint is wooing investors by breaking itself up and becoming more profitable. On paper, the strategy is superior to merging with U.S. rival PPG. In reality, lifting margins by a quarter until 2020, while cutting fewer jobs, looks a stretch.
UK election will test markets’ Brexit optimism 19 Apr 2017 Investors think Britain has a better chance of avoiding a damaging EU exit because Theresa May has called an early vote, a Breakingviews index based on asset prices shows. That view could be challenged by a campaign that will force the prime minister to clarify her policies.
Vivendi’s Italy slap dents finances and ambition 19 Apr 2017 The French group’s stakes in Telecom Italia and Silvio Berlusconi’s Mediaset have fallen foul of plurality laws. Chair Vincent Bollore could sell either, appeal, or less painfully reach a workaround with Berlusconi. But the blunder undermines Bollore’s southern European push.
Cardinal sings out two more drug warnings 18 Apr 2017 The U.S. pill distributor said for the third time since October that falling prices would hurt profit. Cardinal Health underscored the hard times ahead by paying $6 bln for Medtronic's medical-supplies unit to diversify. Other links in the pharmaceuticals chain will suffer, too.
Mallya arrest could energise India bad debt fight 18 Apr 2017 Liquor baron Vijay Mallya fled to the United Kingdom after banks sued to recover $1.4 billion. If his arrest leads to extradition it would make an example of the poster child of India’s bad loan problem. That would help New Delhi sell any bailout of state banks to the public.
Theresa May cashes in at peak political valuation 18 Apr 2017 Calling an election on June 8 is the British prime minister’s best chance of securing a personal mandate. Her opponents are weak or divided and the pain of leaving the European Union has yet to bite. A big majority will give her scope to take a tougher stand in Brexit talks.
Credit Suisse pay retreat puts chairman on spot 18 Apr 2017 The Swiss bank has bowed to investor pressure by proposing cuts to 2016 bonuses awarded last month and a cap on payouts for this year. New say-on-pay rules necessitated the climbdown. The episode shows an embarrassing lack of foresight by the board and Chairman Urs Rohner.
Activism prods GAM in right direction 18 Apr 2017 The Swiss hedge fund group will review compensation and cap its CEO’s pay because of pressure from investor RBR. The activist’s more disruptive plans may not win backing from other investors. But it can claim credit for forcing change in an industry resistant to shakeups.
Online retailers betray limits of the internet 18 Apr 2017 Websites like Amazon and furniture seller Made.com are opening physical showrooms so punters can look before they buy online. Being footloose remains better than having old retail’s cost bases. But the new entrants wouldn’t be hiking their own expenses if they didn’t have to.
Swede tissue bid justifies breakups without tears 13 Apr 2017 Forestry group SCA reportedly received an offer for the hygiene business it is about to demerge. Above $22 bln for the unit’s equity would be good. Either way, SCA has given itself options. Others faced with calls to break up, from Akzo Nobel to BHP Billiton, can take note.
M&A code names can be a warning in themselves 13 Apr 2017 Bankers and companies chose "Star Wars" and "Game of Thrones" references, among others, as cryptic project titles to shield deal talks. Their choices reveal much about their own hubris. To Breakingviews' ears, some popular names seem particularly apt for certain transactions.
Active boards needn’t fear activist investors 12 Apr 2017 Dulux paint maker Akzo Nobel wants to stymie a vote on whether its chairman should go, after he rebuffed a $24 bln bid from rival PPG. That makes it look like the company is trying to stifle debate. While activists can overplay their hand, good managers still have the advantage.
Tesco customer-first strategy will chafe investors 12 Apr 2017 The grocer had its first full year of like-for-like UK sales growth in seven years. Boss Dave Lewis hopes to shield shoppers from rising prices, but not crush suppliers. The risk is that he has to fund that plan with the spoils of Tesco’s $4.6 bln purchase of wholesaler Booker.
BHP’s oil jewel has value even without breakup 12 Apr 2017 The mining giant is under activist pressure to spin off its petroleum business. That would deliver little value for shareholders, a sum-of-the-parts valuation suggests. BHP chief Andrew Mackenzie could do worse, though, than show he is open to a bid at a healthy premium.
Nationalism may derail Bombardier deal logic 11 Apr 2017 Combining the Canadian firm’s rail unit with Siemens’ - and perhaps Alstom’s - would help them compete with a Chinese rival. Past merger talks have failed, though, and growing government involvement in Bombardier signals the difficulty in keeping these discussions on track.
Bollore kicks down unlocked door at Telecom Italia 11 Apr 2017 French raider and Vivendi Chairman Vincent Bollore will soon nominate the majority of the telco’s board with only a minority stake. Governance purists could snarl at potential conflicts. Still, resistance has so far been weak, and Bollore’s influence has not been a bad thing.
Banco Popular’s self-help plan looks forlorn 11 Apr 2017 The Spanish lender’s new chair has admitted that it needs to raise capital, and isn’t ruling out the option of a sale. But a capital hike would be prohibitively dilutive, and Popular’s toxic balance sheet may put off buyers. That leaves a bail-in or state-assisted merger.
Libor did hit bank bosses, just not the right ones 11 Apr 2017 A leaked recording has reopened the question of how much senior bankers knew about interbank rate fiddling in 2012. Junior traders who were jailed say they didn't act in a vacuum. Their partial consolation is that today’s bank bosses are now much more under the gun.
LVMH has cash to burn but no hot targets 10 Apr 2017 First-quarter sales at the French maker of Moet champagne and Louis Vuitton handbags grew 13 pct year-on-year. Falling debt and strong cash flows are swelling the acquisitive group’s M&A war chest. But the most attractive targets are protected by family shareholdings.