BAE investors shoot first, ask questions later 20 Feb 2014 Europe’s largest defence contractor spooked shareholders with a gloomy 2014 outlook and a $1.5 bln writedown. As with Rolls-Royce, investors have been slow to price in the effects of lower U.S. military spending. But the reaction - a 9 pct slump in BAE shares - looks overdone.
Euro zone growth cycle is virtuous but slow 14 Feb 2014 The current pace of euro zone growth would be acceptable in normal times. Better-than-expected GDP growth in Germany and France will help reduce unemployment, further increasing demand and reducing fiscal deficits. But it’s too slow to heal the deep scars of the 2009 recession.
Allianz hits back of the net with FC Bayern deal 13 Feb 2014 Germany’s largest insurer is paying 110 mln euros for an 8.3 pct stake in the country’s most successful soccer club. Allianz has got a slightly cheaper deal than Audi’s investment in the team in 2010. And its clout as a giant institutional investor may spur improved governance.
Commerzbank could yet boost BNP’s bland strategy 13 Feb 2014 BNP Paribas’ new strategy lacks ambition. Buying part of Commerzbank would help: Commerz is improving and the French lender wants to grow in Germany. BNP remains reluctant but should be ready to pounce if this year’s EU stress test yields surprises.
Conti takes smart road west in $2 bln Veyance deal 11 Feb 2014 The German automotive group is buying the U.S. rubber and plastics firm from private-equity owner Carlyle. Investors may be disappointed Conti is doing M&A rather than returning cash. But the price looks undemanding and there’s strategic logic in diversifying away from Europe.
German court’s “No, but” may undermine ECB’s OMT 7 Feb 2014 The constitutional court strongly implied that the central bank’s bond-buying programme is outside its remit. OMT defenders will worry, but there are hints that the higher European court can make things right. Still, the decision will reinforce German doubts about the ECB.
KKR needs lucky goals to win in German soccer 3 Feb 2014 The buyout group is investing 61 mln euros in Berlin-based team Hertha BSC. The club is struggling financially and mediocre on the pitch. A thriving Bundesliga tournament and a booming Berlin suggests potential. But turning Hertha round looks a long shot for private equity.
German job miracle becomes ever harder to sustain 3 Feb 2014 The country’s long-lasting labour market revolution is half-kaput. New jobs are still appearing at an amazing rate. But this is no longer translating into falling unemployment. And an ill-considered labour market re-regulation is poised to worsen the deep structural problems.
Merck share price slump pumps up M&A pressure 27 Jan 2014 Is anyone worth 880 million euros? Merck stock dropped 10 percent after its finance chief left abruptly. The plunge reflects the German pharma group’s challenges and inflated hopes of transformative M&A. Quick completion of its AZ Electronics purchase would calm fraying nerves.
Common sense prevails as McKesson lands Celesio 24 Jan 2014 U.S. drug wholesaler McKesson has revived its 6.2 bln euro takeover of German peer Celesio. That makes sense: the bulletproof new deal benefits the buyer; the selling Haniel family; and Elliott, the U.S. hedge fund that had built up a blocking stake.
SAP’s near-term ambition gets lost in the cloud 21 Jan 2014 The German software company has placed its investment in web-based computing ahead of operating-margin targets. Yet competitors elsewhere are also piling into the cloud. SAP’s high-speed, deep-memory database may give it an edge, but its outlook for now is overcast.
Germany’s tough love adds to Deutsche’s woes 20 Jan 2014 Banking regulator Bafin and German politicians are turning the screws on the country’s flagship bank. The tougher scrutiny is partly due to the general anti-banker mood, but things could turn sour quickly. Investors are disregarding this tail risk at their own peril.
Deutsche Bank’s profit targets look a long way off 20 Jan 2014 Germany’s largest bank had an underwhelming final quarter for the second year in a row. Its two CEOs still think 2015 goals are attainable. But with Deutsche’s ongoing legal headaches now joined by investment-bank underperformance, investors will be increasingly sceptical.
Deutsche is wasting its Libor crisis 16 Jan 2014 The German bank’s leadership promised cultural change. But the management response to Libor has been piecemeal – or has backfired. Relations with its home regulator appear strained. Co-chiefs Juergen Fitschen and Anshu Jain have a last chance to engineer visible renewal.
Facts belie tale of selfish German export mania 16 Jan 2014 Germany is often chastised for living at the expense of others. Stunted domestic demand and a misguided export obsession are said to threaten global stability. The reality is different, as the latest GDP numbers confirm. Consumption is thriving, while trade held back growth.
German investment drought imperils growth prospect 14 Jan 2014 Angela Merkel has vowed to end Germany’s long-standing freeze on public and private investment. But she is only considering symbolic actions that will not reverse two decades of negligence. The country’s depleting infrastructure is threatening its long-term economic potential.
Botched $8.5 bln Celesio deal creates only losers 13 Jan 2014 U.S. drug wholesaler McKesson has failed to buy its German peer - despite both sides and most shareholders wanting a deal. The drawn-out process exposed weaknesses at Celesio and in Germany’s M&A rules. Elliott, the hedge fund that tried to play kingmaker, will suffer too.
U.S. utilities face German-style solar burn 3 Jan 2014 Solar power accounts for just 1 pct of U.S. electricity production, against 10 pct in Germany. But generators stateside are already feeling the heat and pushing for levies on solar panels. They’re keen to avoid the scorched profit seen at traditional Teutonic utilities like E.ON.
Time for Siemens’ turnaround CEO to deliver 3 Jan 2014 Joe Kaeser is now piloting Europe’s biggest engineer. He has easy profit targets ahead, and some obvious levers to pull: disbanding a sprawling unit, ditching trains and avoiding big M&A. But a stock rally means these moves are largely priced in. So any setbacks could hurt.
Deutsche, MPS find convenient exit from swaps mess 20 Dec 2013 Monte dei Paschi has settled a lawsuit with Deutsche Bank over their controversial financing deal. MPS pays 220 mln euros less to close the position and pleases regulators by cutting exposure to Italian government bonds. Deutsche gets shot of one of its trickier legal issues.