German $13.5 bln auto-parts bid may lack gas 11 Jul 2014 ZF Friedrichshafen is mulling an offer for U.S. peer TRW. It’d be the sector’s biggest tie-up since 2007. In the race to build connected, automated vehicles, the deal makes sense. But the privately owned German group may struggle to match counteroffers from larger, public rivals.
Burberry could have avoided pay revolt 11 Jul 2014 The fashion retailer’s pay policies are outdated. Shareholders have objected to the 20 mln sterling pay package of CEO Christopher Bailey, awarded without performance targets. But if the board had been clearer about its underlying reasons, the ride wouldn’t have been as rough.
Imperial prepares $7 bln gamble 11 Jul 2014 The UK tobacco group wants to acquire assets sold following a possible merger of U.S. peers Reynolds and Lorillard. Imperial may win a path to scale in America. But the positive market reaction is too sanguine about balance-sheet strain and the acquisition of low-growth assets.
Banco Espirito Santo’s part-reveal is inconclusive 11 Jul 2014 The Portuguese bank says it has a 2.1 bln euro capital cushion to protect it from its troubled parent. The central bank agrees. But details are still murky, and a cloud hangs over its Angolan unit. Until the Espirito Santo network restructures, investors have reason to fret.
Why investors were taken in by Gowex 11 Jul 2014 The scandal-hit Spanish wifi provider raised many red flags. Why were they all ignored? Because more people benefit when companies flourish, and Spain needs success stories. Gotham City, Gowex’s nemesis, did everyone a service, but its work shouldn’t have been necessary.
Portugal makes world look a little shakier 10 Jul 2014 Problems at one smallish bank don’t justify the slump in European stocks. Yet even as the U.S. finally heals, recent data from the EU, China and Japan has mostly been discouraging. In another lukewarm year, investors probably should be jittery – and market over-reactions expected.
Portugal in race against time to sort out BES 10 Jul 2014 Despite a recent successful rights issue, the Iberian lender is exposed to its troubled major shareholder and has a large exposure to dodgy Angolan loans. Its owners face a difficult refinancing this year. Authorities should demand full transparency and a quick restructuring.
Rob Cox: Capital crisis making Italy SpA stronger 10 Jul 2014 Italian capitalism is undergoing Darwinian selection. Companies can no longer rely on the state, age-old shareholder pacts or even Mediobanca for capital. Firms are being forced to adapt to the rules of global finance to avoid extinction. The next generation looks fit to prosper.
Tesco finance hire is big win for embattled grocer 10 Jul 2014 Britain’s largest supermarket chain has solved one of its problems. Poaching a top-class CFO from retail rival Marks & Spencer relieves pressure on much-criticised CEO Phil Clarke. Tesco can now focus on its bigger challenges: capital allocation and investment returns.
Deflation is good in UK but risky in euro zone 10 Jul 2014 Falling prices can be positive. In Britain, shrinking shop prices encourage consumption and may delay rate rises. In euro zone countries where unemployment is high and competitiveness weak, falling prices reflect structural flaws and may depress rather than stimulate.
"Seller beware" when profiting from market calm 10 Jul 2014 Volatility, gauged by indicators like VIX, is ultra-low. While it could be the calm before a storm, investors including Pimco have been selling insurance against price swings. It’s one way to make money amidst shrinking yields, but it’s also a risky bet against the unexpected.
Pope Francis shows mega-banks how to do it 9 Jul 2014 The Catholic leader is revamping the Vatican’s financial arm, bringing in new leaders, shrinking its mission and installing better supervision. The likes of JPMorgan, Citi and BNPP arguably committed worse sins. But the pontiff seems to be doing a better job of cleaning house.
Ambition exceeds realism in investment bank review 9 Jul 2014 UK watchdogs have launched a competition probe of banking, markets and asset management. Concerns about the integrated firms’ market power are nothing new, but competition fell and barriers to entry rose in the crisis. The challenge will be to respond with more than tinkering.
Renzi can show market bona fides with Eni shakeup 9 Jul 2014 Italy’s oil giant trades at a discount to peers partly due to project delays, geopolitical turmoil and downstream difficulties. Giving Eni more freedom to run itself for shareholders, and maybe sell its stake in oil-services firm Saipem, would best serve the state’s 30 pct interest.
Edward Hadas: Google, privacy and the common good 9 Jul 2014 There is no perfect balance between the public’s right to know and the individual’s right to privacy. Businesses might want to duck the debate, but a European court has made neutrality impossible for Google. Like it or not, companies are well placed to help draw the lines.
Lufthansa embarks on ill-fated no-frills odyssey 9 Jul 2014 New CEO Carsten Spohr is pushing the German carrier into a high-risk experiment – pioneering low-cost, long-haul flights. The strategy rests on an unproven business model and is hobbled by inconsistencies. Lufthansa might want to cancel the flight.
IPO spat highlights sell-side weaknesses 9 Jul 2014 Independent advisers are popular on European new issues. Now the bookrunners they police are moaning that their presence leads to overpriced floats. While the charge looks spurious, the row points to the need for transparency in the role of sell-side analysts during IPOs.
UK takeover rules are fiddly but fit for purpose 9 Jul 2014 AbbVie, the U.S. pharma group, has retracted comments made about shareholder support for its $51 bln bid for London-listed Shire. Britain’s M&A framework is tripping up overseas predators. But the system works: it avoids legal tangles and ensures investors are treated fairly.
Don’t believe predictions of low interest rates 9 Jul 2014 Central bankers and economists say the official cost of money in the post-zero rate era will remain cheap by historic standards. Their prognostications rely on a theory which is unsound, unsupported by evidence and impossible to apply. Future rates are as likely to be high as low.
Shire can get more from AbbVie 8 Jul 2014 The London-listed drugmaker is pondering a fresh, $51 bln unsolicited bid from its U.S. rival. AbbVie touts shareholder support and is offering a hefty 45 pct premium. Shire’s board can probably extract one more increase in return for a recommendation.