United Kingdom

John Lewis needs a breakup more than a rescue

23 Mar 2023

The UK employee-owned retailer wants to raise $2.5 bln to improve its ailing stores. But that could leave a new investor owning nearly half the company, undermining its mutual status. Merging its grocer Waitrose with rival M&S would bring in cash and forge a more viable player.

BoE’s inflation pickle can taste sweet in Britain

22 Mar 2023

A surprise jump in consumer prices will force the Bank of England to hike interest rates by 25 basis points, rather than pausing. Governor Andrew Bailey can now focus on helping a shaky UK economy by freezing borrowing costs for the rest of 2023 and start cutting them next year.

UK fiscal austerity may not survive next election

15 Mar 2023

Finance minister Jeremy Hunt used 24 bln pounds of budget headroom to boost investment and incentives to work. He also set a trap for the opposition: accept spending cuts after 2024 or be tagged as a high-tax party. Labour Party leader Keir Starmer doesn’t have to take the bait.

UK growth demands better-directed fiscal fireworks

13 Mar 2023

Finance minister Jeremy Hunt’s March 15 budget may feature 30 bln pounds of headroom to ease headaches like workers’ pay. But Britain’s real malaise is a lack of long-term business investment. To keep pace with foreign largesse, Hunt needs to deploy significant tax breaks.

Transatlantic valuation gap is mostly illusory

7 Mar 2023

Arm, CRH and Flutter may pursue US listings, while Shell mulled one. Since European stocks trade at a discount to the S&P 500, they might be hoping for a higher price. But the value chasm doesn’t hold for all sectors, and can be largely explained by differing growth rates.

UK’s Brexit fix has perks for all sides

2 Mar 2023

Prime Minister Rishi Sunak agreed a trade deal with the European Union this week. In this Viewsroom podcast, Breakingviews columnists explain what the accord will mean for future relations between Britain and the 27-nation bloc and how Northern Ireland may get an economic boost.

M&G would be a tricky hop for kangaroo raider

2 Mar 2023

Australia’s $48 bln financial giant Macquarie may bid for the $6 bln UK fund management group. A swoop would be well timed given M&G’s new boss is still bedding in, and the deal math just about works. But any transaction would involve a messy breakup, and the risk of a rival bid.

Banks’ state shareholders can afford slow selldown

2 Mar 2023

The Belgian and Dutch governments took advantage of a market rally to offload chunks of BNP and ABN. Valuations have risen but are still low relative to lenders’ returns. That means Britain and Germany would be wise to move gradually with their NatWest and Commerzbank holdings.

Revolut audit snag undermines $33 bln price tag

1 Mar 2023

The startup published 2021 results after a long delay. Growth soared but bean-counters raised questions over how its IT systems record revenue. That’s unlikely to help its quest for a British banking licence, which will in turn limit Revolut's ability to make sustainable profits.

Navigating the bumps in the energy transition road

28 Feb 2023

War and power crises raise questions about the smoothness of global decarbonisation. In this episode of the Exchange podcast, former Shell Chief Executive and current ABB Chair Peter Voser explains how global companies are adapting, and why European oil majors can still go green.

Why the dollar keeps winning in the global economy

28 Feb 2023

The greenback’s share of foreign exchange reserves is at 59%, a two-decade low. Challengers to its role as the world’s means of exchange abound. Yet the globalised financial system bolsters its lynchpin status. Absent major shifts in capital flows, the U.S. currency will thrive.

UK begins long and uncertain road back from Brexit

27 Feb 2023

Rishi Sunak agreed a deal over Northern Ireland trade with the European Union. If the UK leader can get it past his own party, it should improve relations and collaboration. Closer links will need bigger compromises than Sunak can stomach, but his deal is symbolically important.

Revisiting JPMorgan’s innovative Cazenove deal

24 Feb 2023

The American giant’s 2004 joint venture with the venerable UK stockbroker is often cited as a rare example of a successful investment banking takeover. A new memoir by former CEO Robert Pickering confirms Cazenove was right to sell. Less clear is whether JPMorgan needed to buy.

IAG takeoff weighed down by debt dilemma

24 Feb 2023

With net debt above its market value, the $9 bln British Airways owner could use a rights issue. But it’s also back in the black after a painful pandemic, and deals may yield cost savings. Boss Luis Gallego has to work out which path is likely to annoy long-term investors least.

Rolls-Royce strategy bind is a problem best shared

23 Feb 2023

Shares in the $13 bln UK engineer surged as it moved on from pandemic losses. Yet it still needs to spend big on new tech to get ready for the energy transition. Given the costs outweigh its scope to do so, Rolls ought to share them via partnerships with big aircraft makers.

TCI’s Airbus fury may have collateral benefit

22 Feb 2023

Hedgie Chris Hohn says the plane maker’s plan to buy a 30% stake in Atos’s cyber arm will destroy value. He’s probably right, but private investors take a back seat in defence deals, where governments call the shots. His salvo might however help Airbus drive a harder bargain.

HSBC turnaround party has muted morning after

21 Feb 2023

The $150 bln bank has hit the targets boss Noel Quinn set three years ago, and is enjoying a valuation close to pre-pandemic levels. But Quinn’s current ambitions seem modest compared with recent performance. His conservatism may mean the bank’s rate-rise jackpot has peaked.

BHP investors aren’t seeing the wood for the trees

21 Feb 2023

Boss Mike Henry is upgrading the $170 bln miner by selling its most polluting units, buying more energy transition metals and speeding efficiencies – while digging up good results. But shareholders eager for quick fixes don't appreciate the shift in how the giant is operating.

Soccer’s new M&A binge will mostly benefit players

17 Feb 2023

Qatari investors are planning a $6 bln Man United offer, according to Bloomberg, while billionaire Jahm Najafi may swoop on Tottenham. Clubs are losing more of their revenue to player wages and transfers. That will only get worse as more rich owners chase scarce sporting talent.

StanChart’s takeover defences are getting stronger

16 Feb 2023

For years the emerging markets lender’s shareholders would probably have welcomed a cash bid. But CEO Bill Winters is getting closer to a 10% return on tangible equity. Prospective suitors like First Abu Dhabi Bank would have to pay an extra chunky premium to clinch a deal.