German entry into select bond club would bode ill 8 Aug 2014 Ten-year Bunds look set to fall below 1 percent for the first time. Germany would then join Japan and Switzerland in being able to borrow for so long for so little. But ultra-cheap debt seems to accompany weak growth and too-low inflation, and lead to desperate policy measures.
Metalworkers, not McKinsey, bend VW to their will 8 Aug 2014 The U.S. consultant has advised some of the most conservative institutions in the world – the Bank of England, even the Vatican. But that hasn’t stopped unions forcing the German carmaker to show it the door. It flags how hard it will be to execute VW’s turnaround plan.
Bilfinger’s best option could be a breakup 6 Aug 2014 Two profit warnings in five weeks have wiped a third off the German industrial services group’s share price, costing the CEO his job. Unless it can be turned around, Bilfinger’s unwieldy structure and muted growth prospects make a breakup as plausible as a full sale.
VW fights symptoms not root of profit woes 31 Jul 2014 Volkswagen is embarking on a 5 bln euro efficiency scheme. Tackling bloated costs and poor margins at the core brand is long overdue. But the group is shying away from addressing the real causes of the malaise. It is too complex, overly centralised, and badly governed.
Deutsche/UBS: there’s life in EU bond trading yet 29 Jul 2014 The two banks and Credit Suisse outperformed Wall Street in second-quarter debt trading. That bucks a trend that has seen U.S. rivals take market share. Of the two, Deutsche Bank looks better placed to gain from any sustained bounce back in fixed income.
Sky Europe transforms BSkyB investment case 25 Jul 2014 The UK satellite group is paying its 39 pct shareholder Fox 4.9 bln stg for sister Sky outfits in Germany and Italy. The businesses are close already and the price looks reasonable. Sky Europe promises scale, growth, and cost savings. But leverage will soar and cash returns shrivel.
Murdoch calls on European outposts for Time Warner 24 Jul 2014 The mogul’s Fox empire is poised to sell pay-TV arms in Italy and Germany to BSkyB, his UK satellite affiliate. There’s strategic logic to the asset shuffle and proceeds could help sweeten the $80 bln U.S. bid. How Murdoch treats many non-Murdoch owners involved is the linchpin.
“New Deutsche” just got pushed back again 23 Jul 2014 The German investment bank is under fire from U.S. regulators for poor-quality financial reporting. In recent months Deutsche Bank has raised capital and revamped strategy – but that’s the easy part. Making investors believe culture has genuinely changed will take much longer.
Aldi’s premium qualities go further than discounts 23 Jul 2014 No-frills retailing made Aldi founder Karl Albrecht the richest German. He has died aged 94. The fiercely competitive pricing model strikes fear into grocers in Europe, the U.S. and Australia. Yet the Albrecht legacy is as much about managing expansion as cutting prices.
Clever Bundesbank recruits labour as a policy tool 21 Jul 2014 Even in thriving Germany, no one has figured out how to push up wages enough to reverse disinflationary pressure. The central bank is trying something new: encouraging unions to fight harder for pay rises. It may have enough authority to incite some healthy inflation.
VW tilt at Fiat would be a bad idea 17 Jul 2014 Shares in Fiat are climbing on a German media report of a possible bid from Volkswagen for all or part of the $13 bln Italian carmaker. VW has enough on its plate. It’s hard to see the benefit of adopting Fiat’s problems. The logic of Fiat selling its Chrysler unit is weak too.
German soccer glory was predictable – with luck 13 Jul 2014 Brazil’s World Cup was first-rate entertainment, thanks to many surprising results. In finance, as in sport, forecasting is a dangerous game. But it is where the greatest value lies. The key is to draw conclusions from pertinent facts. Luck helps, too.
German $13.5 bln auto-parts bid may lack gas 11 Jul 2014 ZF Friedrichshafen is mulling an offer for U.S. peer TRW. It’d be the sector’s biggest tie-up since 2007. In the race to build connected, automated vehicles, the deal makes sense. But the privately owned German group may struggle to match counteroffers from larger, public rivals.
Lufthansa embarks on ill-fated no-frills odyssey 9 Jul 2014 New CEO Carsten Spohr is pushing the German carrier into a high-risk experiment – pioneering low-cost, long-haul flights. The strategy rests on an unproven business model and is hobbled by inconsistencies. Lufthansa might want to cancel the flight.
Commerz probe to test Merkel’s financial diplomacy 8 Jul 2014 The German bank is the next target of American prosecutors’ scrutiny on dealings with blacklisted countries, after BNP Paribas. Commerzbank is partially state-owned. Potential mega-fines could stretch U.S.-German relations already strained by spying scandals.
Evonik in $400 mln soccer deal it doesn’t need 30 Jun 2014 The German specialty chemicals company is buying a 9 percent stake in a first-tier soccer team, emulating Adidas, Audi, Allianz and Bayern Munich. But Evonik’s products don’t reach end users. The potential benefits of its deal with Borussia Dortmund are hazy at best.
Numbers show Germany will beat Brazil to World Cup 27 Jun 2014 The football-mad host nation has cruised into the knock-out stages of soccer’s jamboree. Some fancied rivals have gone home early. But a Breakingviews calculator – based on hard numbers like transfer value, population and public engagement – suggests Germany will lift the trophy.
Rebalancing “Made in Germany” looks real 25 Jun 2014 Rising real wages and strong consumer confidence confirm that Europe’s biggest economy has changed gears. Gone are the days of a purely export-driven boom and poor domestic consumption. The new minimum wage will only reinforce the trend, to the benefit of the whole euro zone.
Next stop: Siemens-Alstom train merger 24 Jun 2014 Losing the competition for Alstom’s power assets was a blessing in disguise for the German engineering group. It can now focus fully on its internal restructuring. Fixing the ailing train unit is crucial. Hiving it off to Alstom itself could well be the best solution.
GE remains the best bet for Alstom’s board 20 Jun 2014 Rival bids from GE and Siemens for Alstom’s energy business have converged in terms of cash, complexity, political acceptability, and Alstom’s future structure. This is not conventional M&A, so the outcome is unpredictable. But GE’s bid remains simpler, and richer in cash.