ChemChina megadeal will need FrankenFinancing 3 Feb 2016 A near-$44 bln takeover of Swiss agribusiness Syngenta would be one of the biggest deals ever struck by an unlisted buyer. That calls for a monstrous funding package. The target could probably shoulder $16 bln or so of new debt. Big Chinese banks will also need to step up.
Ferrari fiasco earns Marchionne demerit points 2 Feb 2016 Just a month after spinning out of Fiat, the Italian supercar marque has projected weak growth, sending the stock down 13 percent. Ferrari is still a great brand, but investors were wrong to buy boss Sergio Marchionne’s luxury spin. Even after falling, the shares look expensive.
ChemChina’s Syngenta bid is prickly for Monsanto 2 Feb 2016 The state-owned group is nearing a $42 bln deal for the Swiss seeds and pesticides group. The cash and friendly nature make it better than a similarly valued offer from Monsanto. The U.S. company could improve its bid or turn its attention to BASF. Neither M&A option looks easy.
Russia oil diplomacy a better bet than stake sales 2 Feb 2016 Low oil prices mean Moscow either has to cut public spending, raise commodity taxes or accept a high budget deficit. Flogging minority stakes in state companies would be one way out. But new hints of a possible deal with OPEC to cut production offer a cleaner solution.
Europe has as much to lose from Brexit as UK 2 Feb 2016 David Cameron looks set to secure limited concessions from the EU. That reflects the uneven hit to member states’ budget and trade - some countries might even gain from Brexit. But given what it might unleash politically, a sub-par deal is risky for Brussels as well as Britain.
Lesson from UBS: Who’d be an investment bank CEO? 2 Feb 2016 Andrea Orcel has made the Swiss bank’s broker-dealer arm the envy of rivals, but it could only squeeze out a 4.4 pct return in the fourth quarter. With deal volumes at rock bottom, the industry as a whole looks beset. Alternative careers may never have looked so appealing.
BP’s dividend may become unaffordable 2 Feb 2016 The UK-based oil major is slashing costs, cutting capex and selling assets. But it didn’t manage to make ends meet in 2015 amid tumbling oil prices. Debt is going up. BP can rely on more self-help, but absent a recovery in oil, big payouts to shareholders will be hard to justify.
Sainsbury’s Argos deal checks out 2 Feb 2016 The UK supermarket has bagged Argos owner Home Retail Group for 1.1 billion pounds, a price that leaves it ample room for error. Even if it does no more than cut back obvious overlap, the deal should create value. Both businesses were in a strategic pickle; Home Retail’s was worse.
New Alfa Laval boss can sweeten sour news 2 Feb 2016 The high-flying $7 bln Swedish engineer is being hit hard by collapsing orders in the marine as well as oil-and-gas sectors. Shares dropped 13 pct after a bleak outlook. Incoming boss Tom Erixon needs quick wins. As costs are under control, a share buyback could be his best bet.
Luxottica wears its dysfunctional governance well 2 Feb 2016 The revolving door at the Italian eyewear group hasn’t spooked the market as much as it should. The shares are up over 30 percent since Luxottica lost the first of three CEOs in 17 months. With steady growth and a rollout in emerging markets, it can afford the dramatics for now.
Investment acronyms shift from optimism to angst 2 Feb 2016 BRICS has been buried. Just as well: it was a “Bloody Ridiculous Investment Concept”. Now VIIPs and TICKs vie to take its place. But searching for groups of vibrant economies jars with the gloomy mood. The most appropriate new acronym might be a set of worries labelled CFO.
Bank dark-pool cases deserve harsh light of trial 1 Feb 2016 Barclays and Credit Suisse will pay $150 mln to settle U.S. charges of duping clients in their trading venues. Ending costly probes makes sense, but it’s unlikely savvy investors didn’t know of high-frequency traders and other risks. A court test would clear up some mysteries.
European mobile mergers won’t kill competition 1 Feb 2016 The European Union is reviewing a UK merger between O2 and Three. Other deals are in the works. More concentration raises the spectre of higher bills for consumers. But past tie-ups suggest that’s not inevitable at all.
Brexit index: The “Out” risk is real 1 Feb 2016 Britons are warming to the idea of Britain leaving the European Union, says a new Breakingviews Brexit index. It crunches nine different metrics to show the “Out” camp is gaining ground. The inputs include asylum applications, consumer confidence – and Daily Mail front pages.
Oil slump seriously harms Saudi Arabia’s health 1 Feb 2016 Big cuts to healthcare spending show the many ways in which low prices are putting strain on the Kingdom’s economy. Treating Saudi’s population of diabetics would absorb 15 percent of oil export revenue at $20 a barrel. Private investors will be needed to fill the gap.
Dixon: How to rehabilitate capitalism 1 Feb 2016 The classic leftist response to capitalism’s unfairness - tax and spend - has failed. A better bet is to fight unfairness caused by corruption, vested interests and tax cheating, while investing in education. India and Italy show some of the right ideas.
Magic formula fuels Ryanair’s ascent 1 Feb 2016 The lure of cheap flights has proved a match for Europeans’ fear of terrorism. The Irish carrier lowered prices after attacks in Paris, attracted 20 pct more passengers in the latest quarter than a year earlier, and even expanded its margins. High-cost rivals can’t keep up.
Swiss 1MDB probe holds fat tail risks for Malaysia 1 Feb 2016 Switzerland’s attorney general has indicated $4 bln was misappropriated from state firms, undermining Prime Minister Najib Razak’s efforts to shrug off the mess involving the sovereign fund. Though he can manage the fallout at home, foreign investigations are a lingering threat.
UK banks get capital clarity, plus BoE charity 29 Jan 2016 The Bank of England wants the largest UK lenders to hold only a touch more capital to lessen their systemic threat to the domestic economy. Given no big players will be hit badly, it looks like the latest reduction in bank-bashing. But the system also will be less opaque.
Barclays 2008 blessing still has elements of curse 29 Jan 2016 The UK bank’s former adviser Amanda Staveley is suing over aspects of an 11.8 bln stg capital raising. For Barclays, the financial positives from dodging a state bailout outweigh the negatives. But shareholders now also see reputational and ethical issues as more important.