Germany

Transatlantic pet care deal will need grooming

20 August 2019

Elanco is paying $7.4 billion in cash and shares to buy Bayer’s animal-health division. The deal may make more sense for the seller than the buyer. The Eli Lilly spinoff will have to ramp up sales and deliver on ambitious cost-cutting plans to make a success of its acquisition.

Buyout barons play good guy in German lighting M&A

20 August 2019

Bain and Carlyle’s $4 billion Osram bid may be trumped by chipmaker AMS. Trade unions, which sit on the target’s board, are more worried by the latter than the former. While Chairman Peter Bauer may hear out the Austrian suitor, its heavy debt load will be hard to ignore.

Germany would kill a few birds with one green bond

15 August 2019

Raising ring-fenced money to manage a shift away from fossil fuels would underscore Berlin’s focus on making the transition. It would also give eco-friendly finance a boost. And ideally, the government would exclude spending on a greener future from its balanced budget goal.

U.S. recession signal bears clear fingerprints

14 August 2019

A key bond-market metric flashed a downturn warning last seen in 2007, hammering stocks. Business confidence and investment are dropping, China is slowing and Germany’s output just fell. The common thread linking these is Donald Trump’s trade war. At least he’ll win lower rates.

German weakness gives ECB carte blanche to be bold

14 August 2019

Europe’s biggest economy shrank in the second quarter as global trade tensions hurt export-orientated manufacturers. The problems will filter through to other sectors. That will lessen any Teutonic resistance to European Central Bank boss Mario Draghi’s planned monetary easing.

Scout24 demonstrates how not to deal with Elliott

13 August 2019

The $6 bln German classifieds group may sell its automotive arm - a key request of the U.S. activist hedge fund which owns 7%. Scout boss Tobias Hartmann could have announced the no-brainer months ago after a failed buyout. Instead he waited, and Elliott has him on the back foot.

Henkel struggles with consumer sector trade-off

13 August 2019

Today’s industry wisdom is that forgoing profitability to invest in brands can protect highly-prized top line growth. But the maker of Persil liquid is failing on both sales and margins. The market is right to be sceptical about the family company’s ability to turn things around.

AMS takes a leap of faith with Osram offer

12 August 2019

The Austrian company that supplies Apple has made a 4.3 bln euro offer for the German lighting firm including debt. Diversifying is good, as is a plan is to exploit the growth of driverless cars. But piling on debt to clinch the deal is a risk given ambitious synergy assumptions.

UK and German fiscal activism is just a palliative

9 August 2019

Britain’s GDP shrank in the second quarter. Germany may well report the same within the week. Brexit is largely to blame for the former and trade tensions for the latter. In both cases, budget stimulus would merely mitigate the economic slowdown without fixing its root causes.

Healthineers robot buy puts big price on old veins

8 August 2019

The $41 bln Siemens spinoff is paying $1.1 bln for Corindus, which helps automate vascular operations. It’s paying a vein-popping 100 times revenue to stay ahead of Philips in the race to fix ageing blood vessels. Healthineers will have to pump up growth to justify the price.

EU banks will struggle to exit value graveyard

7 August 2019

UniCredit, Commerzbank and ABN Amro all reported falls in first half pre-tax profit. Low interest rates threaten to crush revenue faster than CEOs can cut costs. Though euro zone bank shares have underperformed the wider benchmark by 15% this year, lowly valuations are justified.

European TV M&A belongs on the cutting-room floor

7 August 2019

Broadcasters like Italy’s $3.5 bln Mediaset are pushing for cross-border deals as the sector loses viewers to Netflix and advertisers to Google and Facebook. M&A is not the answer: most TV costs are local, meaning few savings, while the added complexity may be counterproductive.

Siemens Gamesa buffeted by renewables tailwind

30 July 2019

The 10 billion euro Spanish wind-farm builder’s shares sank 17% as competitive pressures hit prices. Wobbles are likely as governments phase out subsidies. But with the costs of wind power now sinking below rival sources, the sector in general is in breezier shape.

VW debt paints fairer picture than battered shares

25 July 2019

The carmaker’s valuation implies it will be worthless by the mid-2020s. Yet its 10-year bonds yield just 1.4%. Shareholders are panicked by the threat of tariffs, ride-sharing, and self-driving cars. But the disparity shows investor pessimism towards the auto sector is overdone.

Sewing’s Deutsche gamble is off to a rocky start

24 July 2019

The German lender announced a 3 bln euro loss in the second quarter, as CEO Christian Sewing kicked off a plan to shrink the investment bank. More worrying is flat revenue across the core business. Sewing needs much faster growth to convince investors his restructuring will work.

Deutsche Bank accidentally boosts boutique model

10 July 2019

The lender’s enforced decision to shut its cash equities business raises the question of whether investment banks need armies of traders and analysts to back up stock offerings. A leaner platform could show they don’t. That would be a shot in the arm for smaller rivals.

Deutsche creditors give ECB charity short shrift

9 July 2019

The banks regulator is aiding the German lender’s revamp by letting it run on a lower capital ratio. In response, Deutsche Bank’s hybrid bond yields spiked. A botched overhaul would be bad for creditors – and also the central bank’s credibility.

BASF’s acid stings complacent investors

9 July 2019

The 55 bln euro chemicals group lost 6% of its market value after a trade-war profit warning. Since results are closely linked to industrial production, it’s odd that the company was valued at a historic premium while the global economy cooled. Peers’ shares will feel the burn.

Deutsche equities exit breathes life into rivals

8 July 2019

CEO Christian Sewing is hacking back the 15 bln euro bank’s unit that sells and trades shares in a bid to boost profitability. That makes sense given the sector’s stagnant revenue and low margins. Rivals should follow, but having one less player will reduce the pressure to act.

Next BMW CEO’s best bet is greener cars

8 July 2019

The 44 billion euro automaker’s current boss Harald Krueger will in 2020 vacate one of the more attractive jobs in a tough industry. The company’s valuation and profitability put rivals to shame. To hold onto that lead, the new boss will have to focus more on electric vehicles.