Li Ka-shing buys way to European telco credibility 27 Jan 2015 The $15 bln move by the Hong Kong tycoon to bulk up in UK mobile through his conglomerate Hutchison Whampoa may be the end of a difficult chapter. Li has struggled to profit from European 3G. By doubling down on the bet, he can build the scale needed to move forwards.
BA owner’s new pitch to Aer Lingus is nearly there 26 Jan 2015 British Airways owner IAG lifted its bid proposal by another 6 pct to 1.4 bln euros. It’s still not generous. But given the conditions Ireland is likely to impose, which will limit the value of Heathrow slots, this might be enough for the Irish carrier’s board to start talking.
Monitise woe a disruptive sign for bank disrupters 22 Jan 2015 The UK mobile payments company has guided for flat 2015 revenue and put itself up for sale, citing share price weakness. Visa’s stake sale and the launch of Apple Pay were catalysts. And a shift from a licence model to subscriptions is proving tricky for all software providers.
Enjoy UK’s economic idyll while it lasts 21 Jan 2015 Britain seems to have reached the sunny uplands. Earnings are rising faster than prices, unemployment is falling and policy rate rises are off the agenda. But persistent disinflation casts a dark shadow. If prices stop rising, wage increases may also disappear.
Big Oil’s dividends look safe – for now 20 Jan 2015 Leverage is low and costs and capex can be cut, so the likes of Shell and Total don’t need to slash payouts now. But the current oil price drop has a 1986 feel. Then it took five years to regain the previous peak. If the pain lasts that long, payouts will have to be sliced.
Unilever’s high-fat valuation looks vulnerable 20 Jan 2015 Sales at the maker of Dove soap and Lipton tea fell 2.7 pct last year, hit by currency moves. Revenue is likely to be flat in 2015. Unilever’s business can handle a low-growth world: cost cuts boost earnings and lower oil helps. But its shares trade on awkwardly rich multiples.
Telefonica finds decent fallback for O2 UK 19 Jan 2015 The Spanish telco is reportedly in talks to sell its UK arm to Li Ka-shing’s Hutchison Whampoa for up to 9 bln pounds. Price, structure, timing, antitrust, and existing network deals may all present hurdles. Still, the status quo looked unsustainable after BT pounced on rival EE.
Cucinelli and Burberry sit in lap of luxury 14 Jan 2015 Both companies are growing sales at double-digit rates. Demand for Brunello Cucinelli’s pricey cashmere has sent shares up 140 pct since its IPO and Burberry’s digital strategy is delivering big global volumes. Brands in luxury’s squeezed middle will struggle to keep up.
Dear chancellor: Low UK inflation can be ignored 13 Jan 2015 Mark Carney has to write George Osborne a letter. The Bank of England governor will explain to the chancellor why the inflation rate is at a 14-year low, and what the central bank plans to do about it. Breakingviews knows what to say. For now the best policy is inaction.
Boards in crisis may have to cut corners 13 Jan 2015 British governance purists are indignant about Quindell, a troubled small company which has granted share options to lure a heavyweight chairman. Boards usually pay too much attention to the share price. In the face of potential collapse, though, nothing else matters more.
Morrisons needs to change more than CEO 13 Jan 2015 Britain’s fourth-biggest grocer will replace its chief executive. The timing is odd, since Dalton Philips’ recent moves are bearing some fruit. Christmas sales held up fairly well. Still, a new CEO will have more freedom to rethink the company’s strategy and finances.
Shire gambles AbbVie break fee on risky $5 bln deal 12 Jan 2015 The Dublin-based drugmaker is buying NPS to expand in lucrative rare drugs. The 51 pct premium is covered almost entirely by compensation from the collapse of Shire’s sale to U.S. peer AbbVie. That doesn’t much mitigate the risk of doing a deal ahead of a key regulatory ruling.
IAG can pay more for Aer Lingus 12 Jan 2015 The UK airline’s sweetened 1.3 bln euro offer for the Irish national carrier is still too low. The price covers the value of the target’s fleet, its Heathrow slots and net cash. But the modest 32 pct premium ascribes little worth to Aer Lingus’ growing operating business.
UK boxed in by costly inflation measurement error 8 Jan 2015 A clever new report clearly shows the flaws of the unfairly high RPI index. Even if the government acts now, it will take decades to free gilts and state pensions from its clutches. The silver lining is that disinflation is making the problem somewhat less acute.
Tesco’s strategic reinvention is incomplete 8 Jan 2015 Britain’s top grocer will cut 1.35 bln stg of capex and head-office costs, ditch its dividend and close some stores. Price cuts will help it take on discounters. Yet there is still no chairman, no property revaluation, and no firm promise to retreat from Asia or Eastern Europe.
Sliding sterling set for more turbulence 7 Jan 2015 The pound is falling against a broadly strong dollar but also against a less-than-mighty euro. There are reasons to be pessimistic about the British currency. UK rate rises are expected to start later, political uncertainty is rife. But it’s even safer to bet on high volatility.
Overseeing the Bank of England will never be easy 7 Jan 2015 Newly released minutes show the UK central bank’s supervisory Court did little in the 2007-9 crisis. No surprise there. Subsequent reforms have brought private board standards to this public institution. The changes may help, but no board can take politics out of monetary policy.
Sainsbury defies the gloom in UK retail 7 Jan 2015 The British grocer had a relatively happy Christmas. Like-for-like sales fell 1.7 pct in its third quarter – a surprisingly strong performance in a brutal market. Much depends on the recovery plans of bigger rival Tesco. But Sainsbury’s shares look oversold.
UK bank firewalls need pragmatism not dogmatism 6 Jan 2015 Lloyds is questioning why it needs a separate board to oversee non-retail activities. If ring-fencing could cure all ills, carve-outs would merit short shrift. But the UK can act tough in better ways – especially by demanding adherence to global bail-in rules.
Centre-left may have UK election edge 5 Jan 2015 Britain’s three main parties are weak. Its two nationalist groups are stronger. The economy might help the in-power Tories – or give voters confidence to swing left. If they also want public spending, a new Breakingviews calculator suggests a Labour-led coalition could win sway.