Germany

Germany’s rich-country problems matter for Europe

15 January 2020

The continent’s biggest economy grew just 0.6% in 2019. A hefty budget surplus creates room for fiscal stimulus. But Chancellor Angela Merkel’s coalition government is divided over what to do and may not act decisively enough. What hurts domestic growth hurts regional prospects.

Siemens CEO’s climate blog sends semi-woke signal

13 January 2020

Joe Kaeser has admitted the 98 bln euro German engineer should not be working on Australia’s Adani coal mine, but cannot pull out. Creating a panel to vet deals for their greenness, and possibly nix them, is partial penance. The CEO’s public disapproval may be a better deterrent.

Hadas: Fiscal deficits are A-OK after all

8 January 2020

It turns out economists can learn from experience. Decades of disinflation and years of extreme monetary policy have reversed the conventional wariness of government borrowing. The new pro-deficit thinking could moderate the next recession, but then rekindle unwanted inflation.

Deutsche, Commerz get 30-year reunification bonus

3 January 2020

New businesses flourished after East Germany rejoined the West in 1990. Their founders are now approaching retirement, and heirs may have no interest in running the family firm. That’ll spark a Mittelstand M&A boom, bringing much-needed fees for the country’s embattled banks.

Italy and Germany will unite on EU tech taxes

19 December 2019

New European Commission chief Ursula von der Leyen will struggle to persuade Rome and Berlin to compromise over much-needed euro zone banking reforms. Her best bet is to pick another battle. A levy on technology giants’ revenue may help the EU rivals find some common ground.

German listings breakup puts LBO shop in fast lane

18 December 2019

Hellman & Friedman paid 3 bln euros for the car sales division of classifieds group Scout24. It’s a rich price, but the unit’s racy growth means the buyout fund should make a healthy return. A higher exposure to risky property leaves the seller’s investors with a bumpier ride.

The hottest new car model is a Daimler-BMW deal

18 December 2019

The German giants want to save a combined 13 bln euros to fund the pricey transition to electric cars. But crunching together could yield synergies worth more than three times that. The Fiat-Peugeot playbook will be scrutinised heavily in Stuttgart and Munich in the year ahead.

Daimler grab challenges Germany’s China angst

16 December 2019

State-owned BAIC plans to up its stake in the Mercedes-maker, matching domestic peer Geely’s 10%. The move strengthens CEO Ola Kaellenius’ access to the world’s largest car market. While the German government frets about Chinese influence, the benefits for now outweigh the risks.

Delivery Hero’s $4 bln order corners kimchi market

13 December 2019

The German company is buying South Korean food delivery rival Woowa. The price is a big increase from a $2.6 billion valuation a year ago, but the target enjoys hearty growth and healthy profitability. Joining forces in the country makes sense – provided regulators allow it.

Hadas: Workers on boards make good capitalists

11 December 2019

A clever new study shows German companies whose employees sit on supervisory boards invest more than those without. Wages are higher and profitability is no lower. The model may be hard to replicate. Still, it’s a reminder that cooperation can outperform conflict.

Deutsche places bet on thinned-out investment bank

10 December 2019

Christian Sewing’s crucial 2022 target for an 8% return on tangible equity looks a stretch. The Deutsche Bank boss knows it will be tough given negative rates, but hopes extra revenue from his traders and dealmakers will help. That’s doubtful given cuts and their recent showing.

Osram hedge-fund latecomers face a rude awakening

9 December 2019

Austria’s AMS has won its battle for the German lighting group, after receiving sufficient backing from the latter’s army of speculators. Even more hedge funds are betting that quirky domestic M&A rules will help them secure a higher exit price. But that wager could yet go wrong.

Viewsroom: Angela Merkel faces early retirement

5 December 2019

The German chancellor’s administration is in peril after coalition partner SPD chose left-wingers to lead the party. A snap 2020 election would probably end her 14 years in power and remove another of the world’s centrist governments. Plus: Australia’s colossal bank scandal.

Osram M&A traps hedge funds in prisoner’s dilemma

3 December 2019

Speculators now own up to 45% of the German lighting group. If they can be enlightened enough to work together, there’s a way to make would-be acquirer AMS pay more than $5 bln. But if they revert to self-interested type, the deal will fall through and they will all lose money.

Wobbly German coalition will sap EU reform energy

2 December 2019

Chancellor Angela Merkel’s coalition partners, the Social Democrats, elected leaders who want to rethink the basis of the alliance. Failure to agree may lead to a minority government or early 2020 elections. That would slow progress on key projects like European banking union.

Sinking Thyssenkrupp needs more than a quick lift

21 November 2019

The German group’s shares fell after it cut its dividend. Selling its elevator unit will raise cash but leave a loss-making rump. With restructuring, the steel-to-ships maker could be worth much more than the current 7.5 bln euros, but boss Martina Merz faces an arduous climb.

Buyout groups risk pricey scrum in German lifts

13 November 2019

Private equity managers are teaming up to buy Thyssenkrupp’s elevator unit, worth maybe 17 bln euros. That smacks of the ill-fated club deals that epitomised the last buyout boom, although the target’s stable cash flows makes a blowup unlikely. The biggest risk is overpaying.

Siemens will sand down its valuation discount

7 November 2019

The German industrial group had a good fourth quarter. Shares are valued at 15 times forward earnings, compared with 19 times for peer ABB. If Chief Executive Joe Kaeser can achieve his relatively modest 2020 earnings ambitions, he can close that gap with his European rival.

Deutsche’s CEO cuts his way through vanishing bank

30 October 2019

Boss Christian Sewing’s survival strategy is simple: slash costs, dump bad assets and grow in steadier businesses like corporate banking and asset management. He’s succeeding on the first two and failing on the last. That puts Deutsche’s crucial 2022 returns target at risk.

Commerzbank profit surge buys CEO a little time

29 October 2019

The German lender said operating profit was 27% above forecasts in the third quarter. The unexpected release may reassure shareholders that boss Martin Zielke can beat his dismal long-term targets. The challenge will be to keep revenue growing as further ECB easing bites.