LSE-Deutsche Boerse hangs over Brexit precipice 22 Jun 2016 UK equities could crash if Britons vote to leave the European Union. Among other things, this could upend the carefully composed share split in the British and German exchanges’ merger. For Frankfurters carping at where the new company would be based, it could be the final straw.
VW’s poor governance back on the spot 22 Jun 2016 Germany’s financial watchdog wants a probe into whether the carmaker’s former management manipulated the market. The legal bar for a conviction is high. But it adds to the pressure on chairman and former finance chief Hans Dieter Poetsch. VW really needs an outsider at the top.
Brexit: Making Sense of Britain’s EU Vote 21 Jun 2016 Breakingviews has covered the British referendum on EU membership from the start. Here’s a collection of our best articles - which should appeal to all but those Leave campaigners that dislike the opinion of “experts”.
Bollore’s Italian playbook won’t work at Ubisoft 21 Jun 2016 Vivendi, controlled by the French tycoon, owns over 20 pct of the video game maker and wants board seats. That tactic worked at struggling Telecom Italia, but Ubisoft is a different proposition whose founding family won’t go down without a fight. Minorities shouldn’t either.
Kion’s forklift deal assumes serious heavy lifting 21 Jun 2016 Europe’s largest forklift maker Kion is paying $3.3 billion for U.S. logistics tech company Dematic. That’s 20 times last year’s operating profit. To earn its cost of capital, the buyer might have to wait until 2020 and make rosy assumptions on revenues, margins and synergies.
Chinese ouster big wake-up call for Spanish boards 21 Jun 2016 Shareholders in Spain’s NH Hotels have voted to remove China’s HNA from the board of the Spanish hotel group due to accusations of a conflict of interest. Activist investors are a rare sight in the cosy boardrooms of Spain. This sets an important precedent.
Tencent displays financial skills in Supercell buy 21 Jun 2016 A consortium led by the Chinese gaming giant will buy 84 pct of the Clash of Clans maker for $8.6 bln. Tencent will have voting control, yet will invest less than half that sum in equity. It’s a shrewd way to reduce the risks of buying into a notoriously hit-driven business.
Going Dutch is the future for European brokerage 21 Jun 2016 Rabobank and Kepler Cheuvreux have agreed to let the Netherlands-based bank keep client relationships while using the French equity house’s research and sales. New European rules will make the cost of sellside analysis explicit and thus often uneconomic. Such tie-ups make sense.
Bahrain tips Middle East’s delicate balance 21 Jun 2016 Stripping citizenship from the spiritual leader of its majority Muslim Shi’ite population will inflame ethnic tensions in the tiny archipelago that’s home to the U.S. Fifth Fleet. The real story is the tension between its neighbours, Iran and Saudi. Bahrain has become a troubling proxy.
AXA outsources upside to Mario Draghi 21 Jun 2016 The French insurer’s new five-year strategy expects annual earnings growth of 8 percent. If rates don’t rise, however, that will be more like 3 percent. Unless the ECB can gee up the euro zone economy, matching assets with liabilities will remain a struggle for all insurers.
Germany bows to ECB “whatever it takes” mirage 21 Jun 2016 National judges grudgingly agreed with a European Court of Justice ruling that a never-used ECB bond buying plan was legit. It spares the euro zone legal and market turmoil. The verdict stipulates limits but the power of the promise was always more psychological than practical.
France at risk of catching referendum bug 21 Jun 2016 Giving French voters a say on EU membership would pose a far bigger risk to the bloc than the British vote. Mainstream Gallic politicians know this. Yet the rise of the far right could make it tempting to take the sort of pre-election gamble that enticed UK premier David Cameron.
Siemens’ M&A timing needs a spot of fine-tuning 20 Jun 2016 The German group overpaid for U.S. oil kit maker Dresser-Rand just before the oil price collapsed. Now it is to fork out $1.1 bln to team up with wind turbine rival Gamesa, whose shares have rallied in recent years. Had it got its timing better, Siemens could have saved $3 bln.
Poland risks EU rifts with Hungary-style statism 20 Jun 2016 Warsaw wants to nationalise foreign-owned Polish lenders and sell them to domestic investors. The clear parallel is Hungary’s authoritarian attempt to restructure its banks and other sectors. European countries’ newfound introspection poses a creeping threat to the single market.
Abu Dhabi bank M&A could ease state’s fiscal fix 20 Jun 2016 A union of state-held National Bank of Abu Dhabi and the smaller First Gulf Bank makes sense in an era of low oil prices. But with public spending cut 20 pct last year, Abu Dhabi could also use the cash. A value-creative merger could in due course herald a Saudi Aramco-style IPO.
Brexit is trigger for market liquidity migraine 20 Jun 2016 If asset managers are anxious before Britain’s EU vote, traders who handle their orders are just as troubled. Sterling’s 1992 ERM exit made them huge profits. In 2016, too-high volatility and growing illiquidity mean market-makers could struggle even to ensure normal service.
Ferragamo boss spells out new reality for luxury 20 Jun 2016 The Italian shoemaker’s chief says the label will focus on widening profit margins as sales become unpredictable. Cost cutting helps, but many problems in the luxury sector are self-inflicted. Rapid expansion and price hikes during the good times leave fewer options now.
Renzi’s rout weakens Italian reform momentum 20 Jun 2016 The prime minister’s centre-left party lost Rome and Turin in local elections to the radical 5-Star movement. The weak results could energise opposition to a critical referendum, and make it harder for Renzi to call elections. That could force him to water down vital reforms.
Climate is in firing line from Britain’s EU vote 20 Jun 2016 A UK exit from the EU could weaken the fight against global warming. Brussels would lose a key voice for climate action, and coal-loving Poland’s influence would rise. A smaller EU - and go it alone Britain - would also find it harder to sway big polluters like China and the US.
Siemens and Gamesa’s tie-up puts wind in their sales 17 Jun 2016 The German engineer is handing its wind assets and 1 bln euros to the Spanish group in return for a 59 pct stake. In wind power, scale matters. Combining Gamesa’s onshore emerging-markets presence and Siemens’ offshore developed-market focus also sounds a good idea.