Germany

German $6 bln non-LBO is sign of lean buyout times

15 February 2019

Hellman & Friedman and Blackstone are buying classifieds group Scout24. They can’t pile much debt on it, and the return looks way off the level investors usually expect. With buckets of cash, private equity needs to do deals. Buying fast-growing targets offer a little security.

Commerzbank comeback only increases M&A allure

14 February 2019

Germany’s second largest bank by assets saw pre-tax profit jump in 2018 after a 5 percent increase in underlying revenue. Improving returns make the lender a more attractive partner from Deutsche Bank’s view. Its own shareholders may conclude the company will be better off alone.

EU risks picking wrong fight with foreign giants

13 February 2019

France and Germany want to help companies fend off Chinese and U.S. behemoths by merging. Yet Europe’s fragmented markets and limited state subsidies mean it will never win the size game. Better to double down on strict antitrust rules while blocking unfair foreign buyers.

Derailed train M&A spells poor EU antitrust revamp

6 February 2019

Competition tsar Margrethe Vestager blocked Siemens and Alstom’s rail merger in defiance of Franco-German pressure. Paris and Berlin are agitating for rule changes and may back a replacement who will be more willing to create regional champions. That would be a mistake.

Siemens-Alstom is poor advert for EU champions

5 February 2019

German and French politicians are annoyed because the rail merger may be blocked. But their argument that the deal is needed to shield Europe from Chinese competition is flawed. The duo’s workers may also suffer. This is the wrong regional standard-bearer to promote.

Wirecard shows fintech stars share banking ills

4 February 2019

The payments group denied an FT report alleging false accounting. Yet shares are down 25 pct since last week. Soothing investors will mean bulking up in compliance and boosting transparency. They’re the kind of problems associated with rickety banks, not disruptors.

Deutsche Bank reprieve is only temporary

1 February 2019

The German lender’s first net annual profit in four years and plans for bigger cost cuts are welcome. But revenue fell, partly because its trading business did worse than U.S. peers in the final quarter. CEO Christian Sewing needs top-line growth to deliver even mediocre returns.

Philips could be a tortoise to Healthineers’ hare

29 January 2019

The 31 bln euro Dutch medical tech group has a lower valuation and operating margin than its larger German peer. Steady growth and a Healthineers stumble could help it close the gap. Global ageing should lift both companies, though Philips has the greater recovery potential.

Deutsche-Commerz even more defensive than it looks

25 January 2019

The German government is still exploring a merger between the ropey domestic lenders. As a way to create economic returns for investors, it’s underwhelming. As a means to limit capital injections if Deutsche Bank’s various U.S. woes become massive fines, it has some logic.

Franco-German unity is dated gauge of EU progress

22 January 2019

The two countries plan to cooperate more on defence and culture. If only harmony extended to issues such as economic governance. And even when the pair speak as one, say on Alstom-Siemens’ rail merger, they don’t always get their way. But that is a sign of success, not failure.

EU can afford to shunt Siemens-Alstom to a siding

18 January 2019

Margrethe Vestager may well block the rail groups’ merger. That would rile German and French politicians yearning for a European champion to face down distant fears of Chinese dominance. But if the antitrust tsar pulls the plug, neither Siemens nor Alstom would suffer too much.

German growth near-miss delays overdue self-help

16 January 2019

Normally, signs that Europe’s largest economy avoided a recession in the final quarter would be good news. But to avoid a slow decline Germany needs to invest its healthy budget surplus. Without a proper slump, the fuel to speed up its misfiring output will remain untapped.

JAB departure is sign to halt deal binge

15 January 2019

Chairman Bart Becht unexpectedly retired from the Krispy Kreme owner after swallowing several chunky acquisitions. Rising debt and the declining value of investments like Coty raise questions about JAB’s model. The remaining partners need a break before returning to the table.

Euro zone faces Franco-German growth whammy

9 January 2019

A drop in Gallic consumer confidence is worrying for a country that’s usually reliant on domestic demand. Meanwhile industry in Germany, an export champion, is feeling the strain from global trade tensions. Where the bloc’s two biggest economies lead, smaller peers will follow.

Germany may outdo Italy as a bank bail-in wrecker

9 January 2019

NordLB needs at least 1.2 billion euros to help provision dud loans after merger talks with rivals failed. Along with smaller Italian peer Carige, the regional German lender is a prime candidate for resolution. Politics means a mix of private equity and public funds is a likelier solution.

Apple suppliers have few tools to defy gravity

3 January 2019

The iPhone maker’s profit warning has hurt shares in European chipmakers like AMS. Apple can appease investors with buybacks or extra software revenue. But suppliers are in a bind. Any attempt to diversify means they will have plough cash into new ventures that may easily flop.

Deutsche Bank will be unlikely 2019 trading star

27 December 2018

Europe’s largest investment bank is undergoing its second restructuring in as many years under new boss Christian Sewing. Torrid trading means the lender trades at a fraction of book value. But its business mix should do especially well from currency volatility and rising rates.

Investors will swap City offices for Euro sheds

27 December 2018

Yields on shiny London real estate are on the floor, and Brexit could affect sky-high capital values. Luckily, those looking to invest in property in 2019 have a Plan B. European warehouses are both cheap and likely to gain from an ongoing surge of online commerce.

German takeaway truce delivers tasty value treat

21 December 2018

Delivery Hero is selling its German business to rival Takeaway.com for 930 mln euros. As with Uber's capitulation to Didi in China's car-share wars, it means an end to cutthroat competition in another gig-economy market - and relief for both companies' investors.

East Africa will buck global great rift trend

20 December 2018

Twenty-five years after genocide, Rwanda’s economy is motoring sufficiently to need new markets. The potential inclusion of Ethiopia would make East Africa a single market of 250 million people. If it prospers, it would provide a useful counterpoint to global balkanisation.