Corbyn’s good idea on EU outweighs the bad 18 Sep 2015 The new opposition leader will campaign to stay in the European Union in the UK’s forthcoming referendum. Less smart is Jeremy Corbyn’s vocal support for a financial transactions tax, which could hit growth. Still, investors will take a duff levy over EU isolation.
Debt markets mistake Spain for Italy 18 Sep 2015 Last year the Iberian country was being compared by investors to safe Germany. Now foggy politics mean investors want a higher return than on Italian debt. The political premium looks temporary: Spain is faster-growing and no riskier than its Mediterranean cousin.
Electra’s activist still has everything to prove 18 Sep 2015 Sherborne, the activist investor run by Edward Bramson, is revisiting last year’s bid to shake up the UK-listed investment trust. This time, Bramson seems more exercised about investment performance than board seats. He will need better arguments than those already rejected.
Dolan family’s bet against dumb pipes a no-brainer 17 Sep 2015 Selling Cablevision to Altice leaves the clan with Madison Square Garden and choice content like “Breaking Bad” and the New York Knicks. The move to make the cable holdings separate years ago looks smart. Dumping them as more viewers buy programming à la carte seems even smarter.
Bud can swallow SABMiller without busting a gut 17 Sep 2015 AB InBev’s offer for the Peroni brewer could come in at $110 billion. Up to half might be paid in equity, while disposals may cut the cash outlay by around $20 billion. Even before synergies, that could leave the new group’s net debt to EBITDA ratio the right side of four times.
Altice keeps powder dry in $18 bln Cablevision bid 17 Sep 2015 Patrick Drahi’s telecoms group is buying its second U.S. cable operator to become the fourth-largest player. The valuation looks high but savings will help. Importantly, Altice isn’t contributing much cash. Possible co-investment with private equity could reduce costs further.
Wilbur Ross is taking the mickey on Greek banks 17 Sep 2015 The U.S. investor wants the euro zone to provide up to 23 bln euros in contingent capital so lenders’ existing shareholders aren’t diluted. While the idea has merit, Ross’ specific proposal looks greedy. The public sector would end up doing too much, private investors too little.
It may be Miller time for buyout barons 16 Sep 2015 If AB InBev can buy rival SAB, its U.S. arm probably will be divested. Miller’s partner, Molson Coors, would struggle to raise the $12 bln or so Breakingviews estimates it would take to gain control. That could open the brewery door for private equity to put some $6 bln to work.
Liquid banks foretell dryer bond markets 16 Sep 2015 Lenders are close to reaching their targets for safe assets like government bonds, as required by new liquidity rules. Recently they have been forced buyers, helping suppress yields. If that demand has peaked, bond investors have more to worry about than U.S. rates and China.
Bud’s mega-beer deal will brew global reset 16 Sep 2015 After years of speculation, AB InBev has approached SABMiller about a takeover that could value the combined entity at around $280 bln. The giant would complete global consolidation of the brewing industry and lead a new round of regional disposals, spins and amalgamations.
Glencore $2.5 bln issue shows defiance in distress 16 Sep 2015 Suspected short-sellers and hedge funds were underweighted in the Swiss trading group’s equity raising. While the wafer-thin discount means those left out aren’t much diluted, it’s a pointed reminder that there’s plenty of room for things to get personal at owner-managed companies.
Richemont triggers premature luxury share surge 16 Sep 2015 Surprisingly strong five-month sales from the Cartier owner sent shares up 7 percent. Peers’ stock also bounced. There’s a boost from tourist flows in Europe and relief after a summer of China woes. But it’s far from certain that luxury has turned itself around.
Inditex has capacity to give shareholders more 16 Sep 2015 The 89 bln euro Zara clothes retailer can sustain double-digit growth. Having invested heavily in logistics, IT and stores, profit rose 26 pct in the first half. Inditex is hardly stingy but it has 4.4 bln euros net cash and enough financial strength to jack up the dividend.
Unions’ modern foe is worker apathy 15 Sep 2015 British trade unions are up in arms about a plan to toughen strike laws. But they should also worry that only a quarter of workers are members. Gaps between the richest and the poorest incomes tend to be narrower in developed countries where more of the workforce is unionised.
Rob Cox: The pope, Bernie, Jeremy walk into a bar 15 Sep 2015 … only to find they have far too much in common to make a joke of their fictional congregation. On economics, the Vermont senator surging in Democratic polls and the new UK Labour leader owe more to the bishop of Rome’s encyclical than prevailing capitalist orthodoxy.
Frankfurt shows carmakers in the squeezed middle 15 Sep 2015 Motor manufacturers are jammed between conflicting expectations of drivers and regulators. Customers want fuel-hungry SUVs and driverless technology at no extra cost. Authorities want lower emissions and tighter safety standards. Carmakers’ profit margins could get crunched.
CDS market wrestles to throw off Libor’s shadow 15 Sep 2015 A $1.9 billion settlement adds credit default swaps to the market abuse hall of shame. There, as with Libor, banks are accused of abusing their position. Yet further issues look less likely: post-crisis regulation is offsetting lenders’ still-significant role.
Deutsche Bank cost cuts would set new marker 14 Sep 2015 The German bank’s new CEO is set to cut 23,000 jobs, Reuters says. That would be a more ambitious target than at Barclays or other EU banks. It’s the first, encouraging sign that John Cryan is doing something to address a swollen cost base that eats up above 80 pct of revenue.
Case for German immigration remains strong 14 Sep 2015 Berlin’s temporary suspension of passport-free travel is a worrying step. But it’s also unsurprising, given Angela Merkel’s need to wrestle with the politics of her stance at home. Germany still has a pragmatic interest in solving its poor demographics and its labour shortages.
Glencore model is battered but not broken 14 Sep 2015 Ivan Glasenberg’s mining creation has been wrong-footed by commodity prices, China, and shareholder worries about debt. The pressures may undermine Glencore’s premium valuation and its penchant for doing big deals. Its mix of trading and mining, however, is logical and robust.