Berlin Wall fall reaped mixed economic harvest 4 Nov 2014 It’s hard to judge how well ex-Communist economies have done since the system collapsed in 1989. The Soviet empire was terrible and the transition was rough. But a quarter-century later, only a few small post-Communist states are unequivocal successes.
Deutsche Bank’s fixed income wager yet to pay off 29 Oct 2014 The German group hasn’t yet paid all the high legal costs of past sins or satisfied future regulations. But its biggest bet is that investment banks are in a merely cyclical, not a structural, decline. Despite solid third quarter trading revenue, the case is far from proven.
Deutsche Boerse’s next CEO could learn from LSE 27 Oct 2014 The German exchange lacks the punch of the industry’s biggest players. Incoming boss Carsten Kengeter, an ex-banker like LSE chief Xavier Rolet, could ape his London rival. That would mean a bigger push into growth areas like clearing or indexes, using M&A if necessary.
Daimler can turbo-charge its cash return 23 Oct 2014 The German carmaker is boasting of record sales, rising margins and rich proceeds from asset disposals. But its dividend has not grown in line with a recovery in performance. After years of parsimony, Daimler can afford to be more generous to shareholders.
Germany’s economic miracle is past its peak 22 Oct 2014 Germans are flirting with a recession that may usher in a new era of feeble growth in Europe’s largest economy. Many reasons for past performance are fading away, and misguided policies add extra burdens. Angela Merkel can still change tack before it’s too late.
Adidas can’t afford to be sentimental about Reebok 20 Oct 2014 The German sports group is reportedly set to receive a $2.2 bln offer for the unit. Having overpaid for Reebok in 2006, Adidas has since turned it round and may be loath to sell. But Reebok has little strategic use. Fiduciary duty demands a cold appraisal of its financial value.
Hugo Dixon: Markets right to worry about euro zone 20 Oct 2014 The epicentre of last week’s fright was the 18-nation currency bloc, whose three big economies – Germany, France and Italy – are in their own ways stuck. There is a grand bargain sketched out by Mario Draghi that might shift the malaise. But it won’t materialise soon, if at all.
Europe’s chipmakers crash into macro slowdown 10 Oct 2014 Shares in Germany’s Infineon and Italy’s STMicro plunged after a U.S. rival missed forecasts. Infineon stock has now fallen 20 pct in a month. Its focus on industrial and automotive clients hurts. The pricey $3 bln purchase of International Rectifier just got harder to justify.
German love of austerity trumps downturn angst 8 Oct 2014 Europe’s largest economy is shaken by a bout of bad data. But economic woes aren’t yet serious enough to trigger a rethink of priorities putting budget consolidation first, both at home and in the EU. Only a full-blown employment crisis would usher in looser fiscal policies.
Rocket and Zalando call top of Europe’s IPO market 3 Oct 2014 Despite being heavily subscribed, the tech incubator and the online retailer performed badly after listing, together wiping out 1.5 bln euros. The stock market has been the easiest exit route for European asset sales this year. Hereon, vendors won’t be able to name their price.
Adidas buyback secures injury time for management 1 Oct 2014 The world’s second-largest sportswear maker is handing back 1.5 bln euros to shareholders. They may welcome a tighter balance sheet. But the move doesn’t address Adidas’ core profitability challenges. Management is still disappointingly short on ideas where it matters.
Andreessen would probably pass on Rocket Internet 29 Sep 2014 The U.S. venture capitalist is worried about cash-burning startups that grow accustomed to easy fundraising and high valuations. Berlin-based Rocket, the tech company incubator set to go public with a 6.7 bln euro market cap, exhibits some of the warning signs.
Gross exit offers soft reset on Pimco governance 26 Sep 2014 With the investment firm’s domineering ego out the door, owner Allianz can now push for team-based structures less dependent on single individuals. The temptation to resist is an urge to tighten the grip from Munich over a subsidiary that naturally benefits from autonomy.
German M&A boom defies ghost of Daimler-Chrysler 24 Sep 2014 Be it SAP or Siemens, Merck or Bayer, Germany’s big blue chips are on a foreign buying spree. At $91.5 bln, outbound M&A is up sevenfold on 2013. That’s despite the car crashes of previous mega-deals. Investors are giving a new generation of bosses the benefit of the doubt.
Merck’s mega-deal leaves pharma in need of a fix 22 Sep 2014 The German drugs and chemicals maker will buy U.S. life-science group Sigma-Aldrich for $17 bln. The deal defies expectations that Merck would bulk up in pharmaceuticals. It makes strategic sense, and isn’t too expensive. But the humdrum pharma unit is left in need of repair.
Siemens pays up for late entry to shale party 22 Sep 2014 The German engineer will pay a hefty $7.6 bln for Dresser-Rand, a U.S. maker of oilfield kit. This trumps Dresser’s possible merger with Sulzer of Switzerland and should stop a GE counterbid. But Siemens risks destroying value by joining a bandwagon late, as it did in solar.
SAP’s biggest takeover is hard to Concur with 19 Sep 2014 The German software giant is buying the U.S. travel specialist for $7.36 bln. That’s SAP’s fifth sizeable “cloud” deal in three years. Concur brings blue-chip clients. But at 9.5 times historic sales, SAP is overpaying. And it now has a big backlog of acquisitions to integrate.
Zalando would find air rarefied in upper range 18 Sep 2014 Europe’s No. 1 online fashion retailer is aiming for an ambitious valuation for its Frankfurt listing. Anything in the upper half of its 18 to 22.50 euro range looks rich. Zalando has yet to prove it can deliver profit as well as growth. Then there are the governance risks.
Bayer’s plastic float sows seeds for one more sale 18 Sep 2014 Investors added $5 bln to the German blue-chip’s market cap after it unveiled plans to float its capital-intensive MaterialScience unit. Once again, markets are rewarding sharper focus. A logical follow-up would be to quit agrochemicals, leaving a pure healthcare business.
No-debt mania continues to dictate German policies 16 Sep 2014 Angela Merkel’s rhetoric on higher investment is shifting, but actual policy changes will remain symbolic. Perpetuating a balanced budget continues to be her government’s priority. That is misguided and harmful, but German voters seem to like that fundamentalist approach.