How a $12 bln UK buyout could ring up returns 20 May 2016 Private equity is reportedly circling Telefonica’s local unit after Brussels blocked a sale. That would be one of Europe’s largest-ever leveraged buyouts. The numbers might just add up - if the buyers can get O2 for a reasonable 8.5 bln stg or so, and then lift margins.
Thomas Cook is shock absorber for tourist turmoil 19 May 2016 Despite increased like-for-like revenue, the UK holiday group’s shares dropped by almost a fifth as it reported half-year results. A missing Egypt-bound airplane underlines how difficult the tourism business has become.
Burberry’s cloth-cutting looks too tame 18 May 2016 The British brand plans to rip out 100 million pounds of costs after a 10 percent drop in full-year pre-tax profit. But despite speculation, there was no move to lighten the load on lead designer and Chief Executive Christopher Bailey. That may be a missed opportunity.
Chancellor: UK housing crisis isn’t supply problem 17 May 2016 British home prices are higher than ever relative to incomes. But nosebleed values aren’t a sign of inadequate supply. It’s all about ultra-low interest rates and foreign capital flows. When Chinese capital flows reverse, the London property bubble will burst.
Limp UK banks probe cedes antitrust fix to fintech 17 May 2016 Britain’s long investigation of retail banking has made feeble proposals: more transparency, easier account switching and a cap on overdraft fees. Opening big lenders’ data to tech-savvy players should boost competition. But EU-level changes would have made that happen anyway.
Vodafone ambitions reflect tougher telco times 17 May 2016 The $85 bln mobile group has finished a $30 bln networks splurge. It also thinks EBITDA will grow between 3 and 6 pct this year. The wide range reflects the fact that its main markets are highly competitive. Given the EU’s tougher line on mergers, this won’t get any easier.
Burberry could use refresher in old-school retail 17 May 2016 A sector-wide slowdown has exposed the inefficiencies in the UK label’s operations. High costs and low sales density show room for tailoring. Burberry chief Christopher Bailey needs help, but of a less than luxurious kind - specifically, some traditional retail expertise.
Blockchain teamwork could help banks fight hackers 13 May 2016 An $81 mln central bank heist and a new attack on a commercial lender underscore the rise of cyber-related risks. The European Central Bank wants banks to log serious incidents. But industry collaboration - as seen with distributed ledgers - would do more to shore up defences.
Tesco boss spies a possible bargain 13 May 2016 Dave Lewis is opting to take 75 pct of his bonus in shares. That aligns his 4.6 mln pound pay package better with shareholders, whose stock slumped last year. Since Tesco sales are now turning round, his timing may be shrewd. The group stocks a lot of things, but not hair shirts.
Carney’s Brexit forecast: fog followed by storms 12 May 2016 The Bank of England chief has warned that leaving the EU might tip the economy into recession while fuelling inflation. It’s a scary combination. The more immediate problem is that he has no real idea how much of the current economic slowdown is due to referendum uncertainty.
Bankers and lawyers hold key to fighting graft 12 May 2016 Britain’s plan to launch a register for companies’ beneficial owners is important. Yet it only works if what’s in the register can be verified. Were watchdogs, banks and law firms tougher in checking ultimate beneficiaries’ status, dodgy deals might get snuffed out earlier.
EU sets high antitrust bar for future telco deals 11 May 2016 Despite blocking the purchase of the UK’s O2, Margrethe Vestager claims she doesn’t have a one-size-fits-all approach. The UK market does have idiosyncrasies, and the antitrust tsar raised legitimate concerns. But Brussels is hardening its stance on the risks from consolidation.
UK’s own corruption safeguards less than fantastic 11 May 2016 The prime minister’s description of Nigeria and Afghanistan as “fantastically corrupt” has some basis in global graft indices. And Britain talks a good game on anti-corruption. But its recent adoption of US-style “deferred prosecution agreements” suggests no room for complacency.
Prize diamond sales mask a less sparkly mid-market 6 May 2016 Three whopper gems will be auctioned by Sotheby’s and Christie’s, with one set to fetch $70 million. These hefty price tags give the diamond trade a misleading lustre. Slowing Chinese purchases and a supply glut mean the outlook for more mundane stones is far less dazzling.
Who’s London’s next mayor? It doesn’t matter 5 May 2016 Neither Sadiq Khan nor Zac Goldsmith, frontrunners for May 5’s vote, have the tools to fix London’s housing shortage. That’s a national issue. The question for businesses isn’t who runs the capital after Boris Johnson, but whether expansion elsewhere in the UK makes more sense.
Barclays Africa sale starts clock on Diamond bid 5 May 2016 The UK bank has placed $878 mln of shares in its Africa arm at a tight discount of 6.5 pct, with South Africa’s state pension fund taking a tenth. Central bank opposition to private equity won’t stop a tilt by its former boss for the rest. Barclays can sell that in 90 days’ time.
LSE investors look even more bearish on merger 4 May 2016 The UK exchange’s shares dived after U.S. rival ICE said it wouldn’t submit a bid. Investors weren’t giving an LSE-Deutsche merger much credit for potential revenue synergies as it was. Now, fear a deal could get blocked may be prevailing over value creation from cost savings.
British store wars get simpler but no less fierce 4 May 2016 Sainsbury is disclosing fees suppliers pay to get their goods on shelves – equivalent to half its operating profit. Such complex agreements are falling out of favour with frustrated shoppers. Ditching them should help increase sales but won’t do much to end an ongoing price war.
Shell, after eating for two, starts strict diet 4 May 2016 After buying rival BG, Shell has cut costs. But it will need the $30 bln of planned asset sales to help cover gaps in cashflow over the next three years. It looks like a tall order, though the rising oil price will help. Shell probably has scope to reduce spending further.
Next models three unflattering UK trends 4 May 2016 The fashion chain lowered its sales outlook for the third time in five months and cut profit guidance. Life will only get harder. New players like Sainsbury’s are selling clothes, foreign rivals are better judges of what shoppers want, and consumers may be nearing “peak stuff”.