European motorway bidding war ends in uneasy truce 14 Mar 2018 Italy’s Atlantia and Spanish rival ACS are joining forces in a 17 bln euro bid for highway operator Abertis. The alliance avoids a value-destroying battle. But the structure is tangled and appears highly leveraged. It only makes sense if the victors end up dividing the spoils.
Viewsroom: Trump slaps tariff fear on markets 8 Mar 2018 Imposing levies on steel and aluminum has lost the president his economic adviser, ex-Goldman No. 2 Gary Cohn. That has shocked investors out of complacency. Also: Italy’s elections leave fringe parties in charge. And big deals may be back on the agenda for the mining industry.
Abertis rethink would avoid bidder roadkill 8 Mar 2018 Rival bidders Atlantia and ACS are mulling a breakup of the Spanish group, reports say. It would nix the idea of a European champion. But if Atlantia forgets Spain to focus on Abertis’ other assets, it would be politically easier – and avoid a pricey bidding war.
Telecom Italia investors find two reasons to cheer 7 Mar 2018 Boss Amos Genish has kicked off the separation of the telco’s fixed-line network, and will slash debt. A rerating of the network could help the group’s valuation, and a step-up in free cash flow brings the prospect of long-awaited dividends. Both should please shareholders.
FCA spinoff tests carmakers’ financial engineering 6 Mar 2018 The Italian auto group may hive off a non-core unit to earn a better valuation. Volkswagen and Daimler may do the same. The sums work on paper, but a lasting uplift hinges on investors reassessing the remaining businesses. M&A and operational improvements may have more impact.
Elliott’s tilt puts heat on Vivendi’s TIM strategy 6 Mar 2018 The activist fund has bought 6 pct of Telecom Italia, according to reports. A small stake could give Paul Singer’s group big influence thanks to investors’ faint support for top shareholder Vivendi. The French company may also have to contend with a more nationalist government.
Election leaves Italy with only radical options 5 Mar 2018 An anti-establishment surge has crushed the chances of another moderate government. The maverick 5-Star Movement or the hard-right League are best placed to lead a coalition. The winners share some goals. But personal rivalry will make it hard for them to work together.
Euro zone reform faces green and red lights 5 Mar 2018 Germany’s new ruling coalition has cleared the way for reforms to strengthen the single currency area. Yet proposals to backstop banks and governments remain contentious. Italy’s new government adds uncertainty. With the ECB’s firepower waning, delay may prove costly.
Protest vote is big winner in Italy’s election 5 Mar 2018 The anti-establishment 5-Star Movement is set to win a third of votes in a poll that delivered a hung parliament. The radical League also surged. Together, they may have the seats to govern. But whatever coalition emerges, voters have clearly rejected traditional, pro-EU parties.
Debt straitjacket will confine Italy’s next leader 2 Mar 2018 Candidates in Sunday’s election promise to spend more. But the winner won’t have much wiggle room. If Italy’s primary budget surplus dips below 1 pct of GDP, cutting overall debt will be hard, a Breakingviews calculator shows. Rising interest rates are a further constraint.
Poste Italiane tries to catch some Amazon sparkle 27 Feb 2018 The mailing incumbent is targeting a 60 pct EBIT jump to 1.8 bln euros by 2022. Its loss-making delivery business is a drag on the lucrative financial segment, but parcel shipments should rise as Italy catches up with a global e-commerce boom. If Amazon grows, Poste can follow.
Italian bank recap requires M&A faith 19 Feb 2018 Mid-sized lender Creval is raising 700 mln euros from shareholders to repair its balance sheet. Pruning bad loans will require even more capital, and projected returns are slim. The hope is that the cleaned-up bank will become a target once domestic consolidation kicks off.
Italy’s electoral race has a dark horse 15 Feb 2018 Opinion polls suggest the March 4 poll will produce a conservative or broad right-left government that will maintain the status quo. But new voting rules make predictions harder than usual. A post-election alliance of anti-EU parties is improbable – but not impossible.
Voter frustration is Italian election’s trump card 12 Feb 2018 Five years of centre-left governments are ending on a high: growth has returned and 1 mln more Italians are employed. Yet prosperity is unevenly distributed and key economic reforms poorly understood. The country's Economy Minister walks Breakingviews through his priorities.
Atlantia can just afford to up the ante on Abertis 9 Feb 2018 The Italian toll-road operator may raise its offer for the Spanish peer to at least 19 euros a share in cash, trumping a bid by German rival Hochtief. Despite the lack of clear cost savings, cheap funding makes the combined group’s increased leverage just about manageable.
The Exchange: Italy’s finance boss 8 Feb 2018 Pier Carlo Padoan, who has run Rome's Ministry of Economy and Finance for the past four years and under its last two prime ministers, says Italy must continue economic reforms no matter who wins elections in March. Padoan also predicts no "Italian surprise" at the polls.
UniCredit’s next task is to kick-start growth 8 Feb 2018 The Italian bank is back in the black with an adjusted net profit of 3.7 bln euros. With the balance sheet fixed and much cost-cutting complete, CEO Jean Pierre Mustier can focus on boosting revenue. But ramping up product sales could be harder without its asset management arm.
Unlocking TIM’s network value requires extra step 7 Feb 2018 Italy’s biggest telco is looking to spin off its fixed-line network. This will shed light on the network’s cash-generating potential. Listing a minority stake further down the line could add value to TIM’s depressed shares and help the holding company lower its debt mountain.
Intesa dividend pledge depends on Italian growth 6 Feb 2018 The country’s biggest bank promises 6 bln euros of net profit in 2021 thanks to a push into wealth and insurance products. If CEO Carlo Messina keeps his word, payouts to shareholders over the next four years will be 50 percent higher. But only if there are no upsets at home.
Cox: Sliding stocks don’t surprise our readers 5 Feb 2018 From Mumbai to Milan, we polled participants at our Predictions 2018 summits. Even before last week's rout, most thought investors are too exuberant, bitcoin is a bubble and Donald Trump is doing poorly. More surprising were regional takes on NAFTA, Italian elections and Brexit.