German M&A rules leave targets worse off 24 Mar 2016 An attractive tie-up of U.S. cash dispenser Diebold and German rival Wincor Nixdorf was left hanging in the balance because of safeguards meant to protect minorities. The deal stacks up strategically and financially. Rules and taxes that prevent sensible value creation don’t.
British retailers need more age-appropriate attire 24 Mar 2016 Next’s same-store revenue is falling and inventory is taking a week longer to clear than a year ago. Yet it plans to grow its selling space by 8 pct. Other retailers too are expanding even when shrinking looks smarter. The maths of such strategies can quickly turn unattractive.
Myth of central bank omnipotence is hard to kill 24 Mar 2016 A few weeks ago global policymakers were supposedly out of ammo. Now a weakening dollar and recovering markets have prompted gossip they were secretly in cahoots. A better explanation is that central bankers have recognised that trying to boss investors around is futile work.
Tidjane Thiam has a PAF back to credibility 23 Mar 2016 Credit Suisse’s boss blamed colleagues for hiding distressed debts that cost the bank $1 bln. Saying he’d take a bonus cut “out of solidarity” only dug the hole deeper. Thiam could partly redeem himself by being paid in toxic assets, as bankers once were in a plan called PAF.
Chancellor: Lessons from the Mississippi Bubble 23 Mar 2016 This year marks the 300th anniversary of the start of John Law’s ambitious, and ultimately failed, economic experiment. Much like today’s central bankers, Law thought printing banknotes and forcing interest rates lower would solve all of France’s problems. He was so very wrong.
Credit Suisse’s epiphany is late and embarrassing 23 Mar 2016 By adding cost cuts and lowering risk assets, the Swiss bank should make acceptable returns in 2018. Tidjane Thiam could have done more when he outlined his strategy in October. Instead, positions in illiquid assets have helped lose $1 billion – and the bank is on the back foot.
Telecom Italia faces test of two towers 23 Mar 2016 Rival bids for Telecom Italia’s towers could be a useful independence test for the company’s board. One looks better for shareholders today. The catch is that the other deal is with Mediaset, which is also in separate talks with big Telecom Italia shareholder Vivendi.
When a 90 pct takeover premium isn’t enough 23 Mar 2016 That’s what Premier Foods, the UK owner of Mr Kipling cakes, has knocked back from $12 bln rival McCormick. It sounds crazy. Yet the suitor can clearly afford much more. Premier’s low valuation explains the gap. The board is doing shareholders’ work for them.
Bang & Olufsen buyout hinges on China bass boost 22 Mar 2016 The Danish electronics maker is in bid talks with Chinese luxury distributor Sparkle Roll. Both companies’ business models are under pressure. At B&O’s inflated $447 mln price it would be hard to make a deal stack up – unless sales can be massively increased in China.
Brussels blasts send European unity two steps back 22 Mar 2016 A recent Turkish deal over migration showed the EU can solve problems collectively, if imperfectly. Yet new attacks will inflame misgivings over security and free movement. As Britons mull whether to stay or go, the risk is that questions of prosperity and fairness get sidelined.
Scary data won’t settle the Brexit debate 22 Mar 2016 A UK exit from the European Union could knock 3.9 pct off domestic GDP in 2030, Oxford Economics reckons. As worst-case scenarios go, this and other similar claims just aren’t that terrifying. The Remain campaign will have to do more to convince all but the most rational voters.
German greed can pay a triple dividend 22 Mar 2016 Public servants are calling for a 6 pct wage hike. Berlin historically has baulked at this kind of raise. Yet higher wages could further rebalance the German economy away from exports and combat euro zone deflation. That could be a useful plus as the migrant crisis bites.
IHS-Markit $13 bln merger is long on hope 21 Mar 2016 A bigger, diverse data company could cross-sell to different clients, the theory goes. Markit’s shareholders could end up roughly 10 pct better off. But extra revenue of $100 mln looks aspirational. Big share buybacks and high debts could hobble investment in new products.
AXA stalwart would be partial fix for HSBC 21 Mar 2016 The UK bank already said it will choose an outsider as its next chair. Board member Henri de Castries, stepping down at French insurer AXA, fits the bill. Ideally though, HSBC would pick someone who hadn’t committed the governance no-no of simultaneously being chairman and CEO.
Telecom Italia gets direction at a high price 21 Mar 2016 Chief Executive Marco Patuano is leaving the Italian group amid tensions with shareholder Vivendi. The stock price jump shows investors aren’t too sad. But the departure is abrupt and potentially undemocratic. Vivendi’s intentions and strategy are still unclear.
Home Retail: A tale of when smaller is better 18 Mar 2016 Even a generous bid isn’t a happy ending for the UK retailer. Investors who bought in at the Argos owner’s market debut a decade ago are now a third worse off. Burberry and Experian, the consumer groups it spun out, have soared. Mergers fix some problems; demergers more so.
Aramco divorce leaves Shell investors in the dark 18 Mar 2016 Shell and Saudi Aramco are negotiating the split of their Motiva joint venture, which spent $10 bln upgrading the United States’ biggest refinery. Shell gets some assets and potentially some cash. But the unwind’s opacity makes it hard to tell which side gets the better deal.
Bank CoCos deserve all the brickbats 18 Mar 2016 Deutsche Bank’s John Cryan thinks new hybrid bank bonds are flawed. Market turmoil is forcing regulators to clarify when baffled investors get coupons. Yet unless there is also standardisation of when they convert from debt to equity, CoCos will always be prone to death spirals.
Abengoa has a fighting chance 18 Mar 2016 The debt-laden engineering and renewable energy firm has put together a restructuring plan that will provide it with fresh cash and swap existing debt into equity. Not all creditors are on board yet. But it could be enough to prevent Spain’s biggest ever bankruptcy.
Li Ka-shing brings funding finesse to telco M&A 18 Mar 2016 The tycoon may sell 20 pct of his UK mobile unit to outsiders. That could raise 1 bln pounds to help buy Telefonica’s O2, on top of the 3.1 bln pounds sovereign funds are already chipping in. That would let Li complete the 9 bln pound deal with no fresh investment.