Beware the Italian risk in German elections 9 Sep 2013 Germany’s election is more open than it looks. Merkel’s current coalition might lose its majority. The Social Democrats are loath to enter another alliance with her conservative party. Protracted negotiations may make Berlin look like Rome, paralysing Europe for weeks.
Slim’s support makes own bid for KPN look cheap 26 Aug 2013 The Mexican tycoon is backing the Dutch telco’s disposal of its German business to Telefonica Deutschland. But the new price raises KPN’s standalone value, making the smallish premium in Slim’s offer for the parent seem miserly. KPN needs to squeeze more out of its lead investor.
Germany is not the euro zone – what a shame 23 Aug 2013 If the whole single currency zone could catch up with its largest member, the crisis and the recession would be history. But while the latest survey confirms that the euro area is picking up, Germany remains far ahead. This unbalanced recovery could lead to more trouble.
Deutsche Wohnen bets bigger is better in Berlin 20 Aug 2013 The residential landlord plans to offer 1.75 billion euros in stock for rival GSW Immobilien. This is a bet that Germany’s capital will stay among Europe’s hottest rental markets. A successful deal promises synergies with a respectable net present value of 430 million euros.
Liberty Global’s M&A upset doesn’t make sense 16 Aug 2013 The cable giant bought a second German unit in 2011. Now a judge has overturned the deal’s antitrust clearance. He says the two outfits could have become rivals, despite operating in different regions. Given how much it costs to expand a cable network, that’s highly implausible.
Central bankers offer easy gains for bond traders 15 Aug 2013 Policymakers are more concerned about short-term than long-term interest rates. That leaves the long end of the bond market free to respond to an economic pickup, which seems to be arriving. It’s a cue for the U.S., German and British yield curves to steepen further.
Battered E.ON and RWE still far from bottom 14 Aug 2013 The inexorable rise of renewable energy is fundamentally challenging German utilities’ business model, devaluing past investment and cutting back future profit. E.ON and RWE are just starting a long downsizing. The adjustment will be painful for already suffering investors.
Commerzbank recovery starts to convince 8 Aug 2013 Germany’s second-largest lender has delivered on its promises in the first half of 2013. Its restructuring plan remains in its infancy and for now is inflicting big charges. Complete transformation is still years away. But the investment story is getting easier to believe in.
Lufthansa restructure puts it on right flight path 2 Aug 2013 Europe’s largest airline is in the midst of a painful reformation. It could be a long haul, but despite dismal headline figures for the first half, it has made headway in bringing costs down. Much hinges on a success of Lufthansa’s revamped no-frills airline Germanwings.
BMW showcases beauty of long-term strategies 1 Aug 2013 The German carmaker is revving up R&D and capital investment. Spending 12 pct of revenue hurts short-term earnings, but it has ramped up expenditure before to great effect: it now outperforms its premium-brand rivals. Investors should be as farsighted as BMW’s management.
Siemens’ new CEO shows lack of a better choice 30 Jul 2013 Joe Kaeser, the current CFO, is to become new chief of the troubled German group. While a member of the old regime, he’s not a bad pick. His attention to detail, in-depth knowledge of Siemens and long-standing focus on profitability are what the company needs at the moment.
Deutsche’s gains look smaller than UBS’s 30 Jul 2013 The German bank made impressive progress on capital and leverage in Q2, and has plans to go further. But it is still hostage to capital-market shocks and litigation. While shares in Swiss peer UBS are more expensive, its turnaround and strategic re-shaping are more convincing.
Siemens needs a new chief executive 26 Jul 2013 Once again, Peter Loescher is unable to deliver on his promises. He has been forced to admit that his 2014 targets are out of reach. This chronic inability to execute puts the future of Germany’s second-largest company at risk. It’s time for Siemens to find a new head.
Axel Springer gets top euros for dead trees 25 Jul 2013 It’s easy to see why Germany’s largest publisher wanted to sell a third of a declining domestic print business. It speeds up the move to digital. It’s harder to know why a buyer was willing to pay 920 mln euros, 9.7 times 2012 EBITDA. Springer shareholders should be happy.
Merkel a collateral victim of U.S. spying scandal 25 Jul 2013 Widespread U.S. spying on German Internet and mobile-phone users is angering voters. Angela Merkel doesn’t seem to take the debate seriously. It’s unclear what she knew about possible German involvement. Her battered credibility could have electoral consequences.
Carlos Slim needs more than pique to stop KPN 24 Jul 2013 The biggest investor in the Dutch telco has failed to bless its $11 bln German selloff. That’s awkward. Whether strategic or financial, the depth of the Mexican mogul’s misgivings is unclear. Still, blocking the sale would be hard unless Slim can offer a sound alternative deal.
Strong Daimler results can’t hide China woes 24 Jul 2013 A better-than-expected second quarter shows the premium carmaker has the product life cycle on its side for now, as new models are selling briskly. But Daimler still has not fixed its problems in China, where it is falling further behind. Investors should take note.
KPN’s 8.1 bln euro German retreat is at full value 23 Jul 2013 Telefonica of Spain is buying the Dutch group’s German unit, E-Plus, in a cash and shares deal equating to 9 times EBITDA. That is a big multiple by the depressed standards of European mobile. KPN is getting a large slice of the deal’s hefty synergies.
Linking German arms of Telefonica and KPN is sound 22 Jul 2013 Merging the German units of the Spanish and Dutch mobile giants would create a 16 bln euro business, yielding 4 bln euros of synergies. The market is tough, a spectrum auction looms, and neither parent is financially strong. Provided Brussels isn’t too harsh, it makes good sense.
Spy scandal might darken SAP’s cloud ambitions 18 Jul 2013 The German software maker blamed lower 2013 sales targets on an Asian slowdown. But SAP’s biggest bet is technological, not regional. Its massive investments in cloud computing won’t work out if revelations of American spying undermine businesses’ trust in the technology.