ECB snared by bond-buying ambiguity 19 May 2017 European lawmakers have called for more transparency from the European Central Bank over its corporate bond purchases. The demands are flawed: the ECB discloses quite a lot and clarity can backfire. Yet it’s a reminder of the risks from central banks meddling in private credit.
Iliad customer gain implies eventual investor pain 18 May 2017 The French telco’s first-quarter revenue rose, helped by price-cutting promotional offers. Billionaire Xavier Niel has shaken up French telecoms, but the cut-throat Italian market will be tougher. Iliad investors, who don’t get much of a dividend, may get worried if growth slows.
French laundry’s $2.6 bln UK raid leaves stains 18 May 2017 Berendsen has rejected a cash-and-share bid from French rival Elis that values the British group at a 36 pct premium. The approach looks opportunistic given the weak pound and the target’s battered share price. Even so, Elis will barely cover its cost of capital.
Euro zone bonds are taboo worth breaking 17 May 2017 Spain wants the bloc’s 19 governments to pool their debt. That idea is likely to be shunned by Germany. Yet mutualisation is happening anyway through bailouts and central bank largesse, and countries are less profligate than they were. Common bonds needn’t mean wayward spending.
Vivendi’s Havas deal hangs on new media logic 16 May 2017 The French media group reckons the convergence of advertising, distribution and content justifies its 3.9 bln euro offer for the ad firm. Yet the numbers don’t add up without heroic assumptions, and Havas customers may not take kindly to the new arrangement.
Macron faces stronger Merkel after state election 15 May 2017 France’s new president needs German support for his euro zone reform ideas. Angela Merkel’s challenger Martin Schulz is more supportive of tighter fiscal integration and more investment. The triumph for Merkel’s party in a regional poll suggests any changes will need her consent.
Chinese yogurt bid warrants dollop of skepticism 14 May 2017 Mainland dairy giant Yili is prepping a gut-busting $850 mln bid for Danone's Stonyfield business. The price is tempting, but many Chinese U.S. purchases have soured. And Yili was recently thwarted by regulators at home. Danone has bigger interests to consider here than cash.
Review: Piketty is more stimulating when he’s wild 12 May 2017 Too much of the economist's bestseller on inequality was standard-issue theory. As a new anthology of essays on the book makes clear, much is wrong or missing in his reasoning. A critic’s call for "wild Piketty" rings true. The topic needs a broad, multi-disciplinary approach.
France makes life too easy for pushy bosses 12 May 2017 Vivendi, Christian Dior and Safran are all doing complex deals driven by big shareholders’ interests – and minority investors can’t do much about it. Muting dissent is meant to make French companies more nimble. It does, but at the cost of helping insiders get their way.
Macron inherits healthy economy – and will need it 12 May 2017 The French president-elect is taking over at a propitious time. Growth is picking up, unemployment has probably peaked and the budget deficit is expected to fall under the EU limit for the first time in a decade this year. That gives him some scope to sweeten unpalatable reforms.
Vivendi investors pay richly for Bolloré cleanup 11 May 2017 French tycoon Vincent Bolloré wants to merge the media group with ad firm Havas, both of which he controls, via a 3.9 bln euro cash offer. His holding company gets most of the premium, which is bigger than it seems. Vivendi shareholders get a stake in a less attractive company.
BT valuation gap will outlast post-scandal reset 11 May 2017 The 30 bln pound UK telco is cutting jobs and executive bonuses after an accounting mess and a profit warning tanked its shares. The moves clean up the past, but BT's future depends heavily on regulators. That should keep the incumbent trading at a discount to nimbler rivals.
Italian banks offer way to play Macron boost 11 May 2017 Both Credit Agricole and UniCredit beat first-quarter expectations and have more to come. Yet the French bank trades above tangible book value, while its Italian peer languishes. If the new president reforms both France and Europe, UniCredit’s shareholders could get more upside.
AXA takes out double hedge against U.S. and itself 10 May 2017 The French insurer is listing a minority stake in its American operations. Should the Trump administration revisit regulatory equivalence, the move will simplify a sale. In the meantime, investing a few extra billion euros might help AXA hit the upper end of its 2020 targets.
Italy adds bum note to Macron’s ode to joy 8 May 2017 Emmanuel Macron took the French presidency, but that still leaves Italy as Europe’s other crisis-in-waiting. Elections are coming, disruptive parties are stronger and unemployment higher than in France. Growth-friendly policies and more fiscal leniency could mitigate the risk.
Macron has bigger fish to fry than Brexit 8 May 2017 Negotiating Britain’s exit from the EU will no doubt guzzle the incoming French president’s time and energy. But knitting the euro zone closer together will absorb his political capital. Punishing or pleasing the UK will be an outcome not an objective.
Macron may change France in unintended ways 7 May 2017 Luck as much as talent has propelled Emmanuel Macron to the presidency. He will need both if he wants to achieve more than seeing off the far-right Marine Le Pen. The ex-banker will at best deliver piecemeal reforms. At worst, he risks undermining the Fifth Republic.
French banks’ foreign strength cuts both ways 4 May 2017 Strong first-quarter growth in BNP Paribas and SocGen’s foreign markets offset weaker showings at home. Still, SocGen’s 963 mln euro Libyan settlement shows how overseas adventures can go awry. And if Sunday’s election delivers a surprise, French banks face redenomination risk.
Make Britain’s Brexit bill performance-related 3 May 2017 The EU may demand 100 bln euros from the UK for leaving the bloc. Some Britons want to pay nothing. Investment bankers ease impasses between companies by making part of the cost contingent on future performance. Linking the bill to UK GDP might enable both sides to claim victory.
French savers are a good bulwark against Le Pen 3 May 2017 Marine Le Pen’s anti-euro rhetoric will be a liability in Sunday’s election. Some undecided voters may share the far-right leader’s distrust of the EU. But ditching the single currency would be punitive for a country with the euro zone’s third-highest savings rate.