Germany

Now is the time to buy Deutsche Bank

17 June 2019

The German lender’s market value has shrunk to 13 bln euros, or about 20% of tangible book value. The retail lending and fund management units alone justify a higher price. If boss Christian Sewing can shrink the investment bank without major stumbles, the shares will rebound.

Lufthansa is early loser in European airfare war

17 June 2019

The German carrier’s Eurowings unit has been dinged by aggressive pricing from rival budget operators. With costs per seat almost double those of market leader Ryanair, it’s not hard to see why. A change of course is needed but, given domestic labour rules, that won’t be easy.

VW $17 bln IPO gets reform drive back on the road

14 June 2019

The German carmaker is offering a smaller slice of its truck unit at a lower valuation, after delaying the float in March. It’s a sign that CEO Herbert Diess wants to simplify the group even if proceeds are less than hoped. That’s encouraging for VW’s often-ignored investors.

Pricey German auction interferes with 5G signal

13 June 2019

The country’s telco operators spent 6.6 bln euros on radio frequencies for next-generation mobile networks. That makes it harder for the likes of Deutsche Telekom and Vodafone to make money from 5G connections. Fierce competition means shareholders, not consumers, bear the brunt.

KKR finds risky media bargain with Axel Springer

12 June 2019

The private equity group is partnering with the German company’s founding family to buy out minority investors for 3 bln euros. It gets a racy digital listings business at the price of a sluggish newspaper publisher. Yet the lack of control limits KKR’s options if growth slows.

Bayer animal-health buyout will need heavy petting

3 June 2019

Private equity groups are itching to get their hands on the German group’s flea-powder and tick-collar unit, the FT says. To earn a decent return, a new owner would need to supercharge sales, boost margins and cut R&D. Even then, the mooted 8 bln euro price tag looks excessive.

Transatlantic $10 bln chip deal does not compute

3 June 2019

Germany’s Infineon is paying a premium of almost 50% to buy U.S.-based Cypress Semiconductor. CEO Reinhard Ploss has given few details on how he will hit ambitious long-term revenue targets. Given the deal’s success hinges on hitting these goals, the price looks too high.

Axel Springer buyout works best with breakup

30 May 2019

KKR may take the $6.6 bln German media group private alongside CEO Mathias Doepfner and the founder’s widow. An unwieldy structure that spans publications like Bild and Business Insider as well as classifieds means a low valuation. Separating the two is the surest route to riches.

Berlusconis’ German TV raid looks opportunistic

29 May 2019

Mediaset, controlled by the former Italian prime minister’s family, snapped up 10% of Germany’s ProSieben. There’s a case for Europe’s media groups to combine to fight Netflix, but the move brings the Italians few real benefits. A cheap price is probably the main draw.

Cox: “China does it” is a bad antitrust argument

23 May 2019

Sheryl Sandberg says Facebook shouldn’t break up since its Middle Kingdom rivals never will. France and Germany pushed hard for an anti-competitive train merger because of a looming Chinese monopoly. Western values should guide competition law, not Beijing’s Communist Party.

Deutsche may shaft another group of shareholders

20 May 2019

Minority investors in the German bank’s 6 bln euro asset manager could be next up in Deutsche’s wave of value destruction. Allianz and Amundi have expressed interest in DWS. But Deutsche CEO Christian Sewing's need to maintain control makes a lowball deal with UBS more likely.

Cerberus’s German bank punt looks stuck in Hades

16 May 2019

The U.S. buyout group has seen the value of its stakes in Deutsche Bank and Commerzbank fall by around half and one-third respectively since 2017. Cerberus now needs revenue to rise and costs to drop at both lenders just to break even by 2022. That’s not a foregone conclusion.

Thyssenkrupp belatedly stumbles on best M&A option

16 May 2019

The 8 bln euro German conglomerate has two choices for its prized elevator unit: a quick IPO, which CEO Guido Kerkhoff prefers, or merger with Finnish peer Kone. The second would create more value, and be more likely to gain antitrust approval than its recent failed steel deal.

Deutsche credit upgraded from hopeless to hapless

15 May 2019

The bank’s credit default swap spread, a measure of riskiness, has nearly halved. The fall was due to a legal technicality, not a change in fortune, but should help clients trade with it. Still, high funding costs mean CEO Christian Sewing will struggle to boost profitability.

German $6 bln flop shows private equity’s dilemma

14 May 2019

Hellman & Friedman and Blackstone axed a takeover of listings group Scout24, after too few investors accepted. Rising valuations for peers like Auto Trader made the offer look stingy. Buyout groups want assets that promise growth, but frothy markets mean they’d have to overpay.

Thyssenkrupp shoved into a panicky Plan B

10 May 2019

The German conglomerate is binning a split after weak operations hit its shares, Reuters reports. Spinning off its elevator business instead would help, especially if the EU blocks a merger of its steel arm. But Thyssenkrupp would still need to show it can cut bloated costs.

Siemens self-medicates with weak activist tonic

8 May 2019

The $96 bln industrial giant’s plan to slim down by spinning off its power business looks designed to pre-empt a shareholder rebellion. But the new entity’s complex structure and its odd bundle of clean and dirty energy assets could still draw the attention of a pushy investor.

Wirecard $19 bln short trade belongs on the shelf

8 May 2019

The payments group made a natural target for investors betting on share price falls after the Financial Times questioned the integrity of its accounts. But now CEO Markus Braun has the backing of auditors and SoftBank, and has upped EBITDA guidance. Shorts face too many hurdles.

VW’s reform drive needs more horsepower

2 May 2019

A year after taking the wheel, CEO Herbert Diess has canned a much-needed truck IPO and now expects 2019 operating profit will be at the lower end of his target range. The 82 billion euro carmaker won’t close the valuation gap with peers unless he gets the spinoff back on track.

UniCredit should approach Commerz by the side door

1 May 2019

The demise of the German lender’s merger with Deutsche Bank clears the way for its Italian peer. A straight takeover of Commerzbank could be politically tricky. Spinning off UniCredit’s German arm HVB and then merging it, however, might be an easier sell.