E.ON coal legacy has potential for further smudges 10 Aug 2016 Despite a 3.8 bln euro writedown on its fossil fuel assets, German utility E.ON may still be overestimating the value of its soon-to-be spun off subsidiary Uniper. The likelihood of further adjustments, and a costly nuclear settlement, suggests it needs more capital.
William Hill triple merger not quite win-win-win 9 Aug 2016 A joint 3 bln pound-plus offer from rivals 888 and Rank was rebuffed by the UK gaming group. What it might offer in synergies is undermined by complexity. If the merger logic is so compelling, maybe 888 and Rank ought to start with a simpler twosome.
L&G goes from golden child to whipping boy 9 Aug 2016 The UK insurer’s first-half earnings rose, but shares sank. Its core insurance business was weak, but other areas like “bulk annuities” should ride to the rescue. After the financial crisis, investors fell in love with L&G. Since the Brexit referendum, they are cooling.
Big banks’ stranglehold on UK loosened by a finger 9 Aug 2016 British lenders give customers poor service, but a two-year competition probe has offered few remedies. Caps on overdraft charges could cost the largest banks 1.2 bln pounds a year. But trustbusters have done little to improve all-important small business lending.
Hammond and Carney play discordant UK bond duet 9 Aug 2016 British finance minister Philip Hammond will have to sell more gilts as the economy slows. The Bank of England is buying. But markets are increasingly tuning out rate-setters’ interventions. Extra supply could mean central bank boss Mark Carney has to raise the volume.
China overplays its hand in UK nuclear debate 9 Aug 2016 Making the $24 bln Hinkley reactors an acid test of mutual trust is unwise. The Sino-British relationship is already tilted in China's favour, so Beijing has little to retaliate with if the UK scraps the project. Conversely, forcing it to go ahead could prove a pyrrhic victory.
Steinhoff stuffs its cash into the U.S. mattress 8 Aug 2016 The South African retailer is paying $3.8 billion for U.S. speciality bedding retailer Mattress Firm, a chunky 115 percent premium that promises a return of just 5 percent. If South Africa's prospects weren't so troubling, such a deal wouldn’t be worth getting out of bed for.
Bankers’ best business – endlessly patching up MPS 8 Aug 2016 Counting payments for its latest rescue, Monte dei Paschi will have paid $1.4 bln in investment banking fees since 2007 - twice its market value. All four of the Italian lender's rights issues were short-term fixes for dubious political ends. And all have lined banker pockets.
Cheap wind energy can deal final blow to Hinkley 8 Aug 2016 Electricity from offshore wind farms costs a third less than in 2013. It now undercuts power costs at the two new nuclear reactors planned in the UK. With prices falling further and low project risk, the case for pulling the plug on the Hinkley Point plant is building.
China’s soccer haul enters a league of its own 8 Aug 2016 Mainland buyers have just bought AC Milan, West Bromwich Albion and Auxerre, adding three teams to an already large stash of European football assets. With hazy financial logic, funky structures and political undertones, these deals echo China's wider overseas M&A boom.
LafargeHolcim mega-merger gets to first base 5 Aug 2016 The world's largest cement group has reaffirmed EBITDA guidance for this year. LafargeHolcim's first year has been fraught, but synergies are coming through. Still, given the union's troubled markets, the real challenge is sustainable topline growth.
RBS’s grand relaunch in danger of running aground 5 Aug 2016 Since CEO Ross McEwan took over in 2013, the state-owned UK bank has been slowly sorting its issues. But Brexit, low rates and ongoing high conduct charges are big problems. Throw in new losses from the tortuous Williams & Glyn disposal, and RBS looks hobbled for years to come.
Novo Nordisk premium will survive drug wars 5 Aug 2016 The Danish pharma group's shares fell more than 8 percent after it lowered profit and sales guidance and warned of lower prices in the key U.S. insulin market. Such pressures won't abate. Still, in a growing market, Novo warrants a premium over peers. Just a less hefty one.
Hugo Boss offers preview of luxury retrenchment 5 Aug 2016 The German brand's new CEO is cutting 20 stores and 50 million euros of costs to deal with falling sales. While second-quarter revenue beat expectations, net profit fell 84 percent. Hugo Boss's peers will also face a painful reckoning after their own rapid expansions.
Egypt’s IMF cure poses health risk for Middle East 5 Aug 2016 The most populous Arab state wants a $12 bln IMF deal, but not the harsh austerity sometimes attached. Funding would boost the economy, but reforms could also stoke unrest. In a country at the centre of uprisings that swept across the region six years ago, that's no small risk.
UK’s new bank crutch betrays post-Brexit jitters 4 Aug 2016 The Bank of England's Term Funding Scheme is a reasonable attempt to make UK lenders pass on now-cheaper funding. The bigger their loan book, the cheaper their borrowing. But opting not to restrict cheap funds to specific sectors reveals how concerned the BoE is about a slowdown.
Mark Carney’s sledgehammer isn’t up to the job 4 Aug 2016 The Bank of England boss deserves credit for trying. He has halved the policy rate, will resume asset purchases, and done his absolute best to limit the perverse effects of ultra-low rates. But the economic shock of Brexit is probably bigger than anything his toolbox can handle.
RSA and Aviva have hedge against Brexit gloom 4 Aug 2016 Both UK insurers can dodge post-EU referendum blues. Falling rates pose a risk to their half-year positions, but operations are solid and sterling's slide helps groups with big overseas earnings. Losing EU market access is also less of a threat than it might appear.
SAF-Holland lacks firepower in truck bidding war 4 Aug 2016 The truck parts maker’s $490 million offer for Swedish peer Haldex was trumped by Germany’s ZF Friedrichshafen, which offered just 6 percent more. SAF is already stretching itself and will struggle to outbid a much bigger rival that has the target’s support.
Renzi’s MPS gamble works win or lose 4 Aug 2016 The Italian premier chose not to haircut the bank's debt for fear of losing a crucial referendum. The alternative - raising over six times MPS' market cap - is hard, but not impossible. If the rights issue fails, Matteo Renzi still wins: it parks the issue until after the vote.