Gamblers’ $8 bln tie-up raises odds for rivals 26 Aug 2015 Paddy Power and Betfair have agreed to a possible all-share merger. The two look evenly balanced: the Irish group is big in traditional betting, its UK peer in online exchanges. Greater scale should offer some defence against industry consolidation and rising taxes.
Monsanto $46 bln Syngenta offer deserves a hearing 26 Aug 2015 The U.S. seed giant’s last cash and shares approach to its Swiss rival was rebuffed. Monsanto has offered a little more, but can’t go much higher without destroying value or relying on rosy assumptions. The pressure is on Syngenta to talk, or show investors it has a better plan.
Miners’ dividends are a fragile commodity 25 Aug 2015 BHP Billiton has raised its payout even as prices fall. That helps win investor support for its aggressive iron ore production strategy. Yet across the sector, funding generous payouts will become tough unless supply and demand rebalance. There is little to suggest they will.
Zurich buys protection with 5.6 bln pound RSA bid 25 Aug 2015 The Swiss insurer has made a 550 pence-per-share indicative offer for its UK peer. At that price, it could achieve a 10 pct return with fairly undemanding cost savings. Twitchy markets may help Zurich clinch a deal that both sides’ shareholders can argue is a fair result.
Oil has room to get even more irrational 24 Aug 2015 The plunge in WTI to below $40 a barrel leaves most of the U.S. shale industry unprofitable and budgets of many countries in the red. Yet cost cuts, currency devaluations and tolerance for losses keep black gold pumping. That may anchor oil at what seem like unsustainable prices.
Investors’ self-doubt worsens equity woes 24 Aug 2015 Global equities are extending declines. Valuations can’t quite explain the depth or breadth of losses. Investors’ low conviction in past asset allocation decisions could have more to do with it. So might waning faith in policymakers riding to the rescue.
Credit doomsayers offer confusion not foresight 24 Aug 2015 Investors were selling corporate bonds before the latest global stock market slide. That could be an echo of the 2008 financial crisis, when equities ignored warnings in credit markets. The message, though, is mixed. Credit pros aren’t reliably prescient Cassandras.
ABN Amro’s IPO could prove sweetly timed 21 Aug 2015 The Dutch bank’s second-quarter earnings doubled to 600 mln euros, justifying state zeal for a reprivatisation. ABN’s first sale may end up a third below the government’s in-price, like the UK’s selloff of RBS. But with the domestic economy firing, pressing ahead makes sense.
Equity investors succumb too willingly to gloom 21 Aug 2015 Rich-world stocks have sunk as markets take in bad Chinese economic news and sliding currencies in manufacturing powerhouses. True, slowing growth in emerging markets may hold back global activity. But indiscriminate selling suggests investors aren’t being entirely rational.
Glaxo sale comes with cheeky earnings side effect 21 Aug 2015 UK pharmaceutical firm GlaxoSmithKline is selling a multiple sclerosis drug to Novartis for up to $1 bln. It’s a logical move and Glaxo gets a good price. The quirk: it will include proceeds from the one-off as part of underlying revenue. Pharma investors need to watch their core.
Greek elections no cause for great worry 20 Aug 2015 Alexis Tsipras is likely to win a mandate for his U-turn in accepting a tough bailout programme and re-emerge as leader of a more moderate government. The main problem is there will now be a one-month hiatus when little will be done.
Markets fear central bankers are only human 20 Aug 2015 Unexpected events like China’s devaluation and commodity price drops are having a surprisingly big effect on long-range market inflation expectations. Previously, investors tended to look past such phenomena. But trust in policymakers’ ability to offset shocks is at a low ebb.
Portugal offers drama without a crisis 20 Aug 2015 Debt is too high, investment too weak, and reforms patchy. Still, the country’s politics are relatively stable, the economy is growing and unemployment is falling. Lisbon has done more to avoid collapse than Greece but has yet to find a way of lightening its fiscal burden.
Raiffeisen’s bonus plan is a capital idea 20 Aug 2015 The Austrian bank’s listed arm will only pay bonuses if its balance sheet position improves. That safety-first policy befits its considerable exposure to Russian borrowers. Over-reliance on any single target for setting pay can be risky, but this is a step in a helpful direction.
Yum adjusts Chinese flavouring, now for packaging 19 Aug 2015 The KFC parent has waved off Sam Su, the man who practically invented fast food in China. Su’s tinkering with the classic menu wasn’t enough to overcome a slew of unfortunate food scares. For a crispy golden sequel, Yum could do worse than spin off the China business altogether.
Edward Hadas: Amazon’s ultra-XY management style 19 Aug 2015 The retail giant denies running a cruelly competitive workplace. But when a super-charged inspirational management style collides with an excessively discipline-centred one, impossible expectations of what staff can achieve become normal. Fortunately, the mix is unlikely to last.
Glencore tripped up by faith in rational markets 19 Aug 2015 The commodity trader’s earnings have disappointed as copper and coal have tumbled. Anticipating the market is getting harder because both rivals’ behaviour and Chinese demand for raw materials are even more unpredictable. Glencore is thus focusing on what it can control: cash.
Carlsberg’s new CEO sends for the stomach pump 19 Aug 2015 The Danish brewer’s new boss Cees ‘t Hart has slashed forecast operating profit. Missed cost savings, bad weather and over-exposure to Ukraine and Russia ensure a lengthy hangover. With a new strategy not due until 2016, this looks like a sensible attempt to purge the bad news.
Rebellious Germans ignore Greek silver lining 19 Aug 2015 German Chancellor Angela Merkel is facing a revolt from her own party over the Greek bailout. The fear that Greece is a bottomless pit is fair. But it’s not all lost money: nearly a third of the 86 bln euro loaned will repay debt to public creditors, including Germany.
Sizing up FX rigging damage is imperfect science 18 Aug 2015 There are ways of guessing how much currency rate manipulation cost some investors on some days. Settlements by banks in the U.S. have set the ball rolling. But these are just estimates, and sometimes there may have been gains. Nuisance value may matter more than client losses.