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.
Tesco will have to fight for its independence 30 Dec 2014 At $40 bln, the UK’s No. 1 grocer would be an M&A mouthful. A leveraged buyout looks tricky but strategic buyers have a rare opportunity. Tesco’s long-suffering current shareholders might jump at a chance to cash out. Much depends on the person chosen as the new chair.
UK faces risk of cold-weather blackouts 30 Dec 2014 Britain’s electricity system is ageing and the mix of generating technology is changing. Both factors increase the danger of power cuts at peak times. Contingency plans include paying companies to accept temporary grid outages. New capacity can’t come soon enough.
BP’s Rosneft stake exposed for what it is 22 Dec 2014 Turmoil in Russia will hurt BP’s accounts via its 20 percent stake in Rosneft, at least on paper. But in cash terms, the impact looks manageable. This is a financial holding which provides BP with limited dividend income. Any strategic value looks very long term at best.
Aer Lingus attractive yet tricky target for IAG 18 Dec 2014 The Irish carrier has rebuffed an approach by the owner of British Airways. At the right price, Aer Lingus looks like a natural partner for IAG. But its unwieldy shareholder structure – including a large holding by Ryanair – and anti-trust concerns will be obstacles.
Royal Mail points to lesser role for bookrunners 18 Dec 2014 Last year’s much criticised privatisation of the UK postal company did not go so badly after all, a report has found. But it still offers lessons for improving the process of IPO price discovery. Technology can help, as would bookrunners relaxing their grip on information flow.
WPP chair should be vertical as well as horizontal 17 Dec 2014 Martin Sorrell says the ad group’s Chairman-designate Roberto Quarta will help its “horizontality.” The word also sums up the partnership aspect of good CEO-chair relations. But given the WPP CEO’s run-ins with investors, Quarta will want to be a degree higher, not on a level.
UK bank review winners and losers hard to untangle 16 Dec 2014 Standard Chartered comfortably passed the Bank of England’s tough stress test, while RBS and Lloyds just scraped through. Yet the BoE exercise was easier on emerging markets-focused lenders. The banks’ scores still leave investors with significant uncertainty about dividends.
Carney the showman risks stage-managed policy 11 Dec 2014 The BoE governor wants monetary policy to be more transparent. So the central bank will publish transcripts of rate-setting committee meetings after eight years. A pre-meeting will stay secret. That’s where the real debate will happen, ahead of a performance for the record.
FCA boss has lucky escape in briefing fiasco 10 Dec 2014 Martin Wheatley keeps his job but loses his bonus after the UK regulator botched a media briefing on insurance in March. The report into the debacle sets out his weak response to the unfolding crisis. If he wasn’t doing a good job otherwise, he would have paid a higher price.
Economist aura helps Bloomberg in financial times 9 Dec 2014 Replacing Matt Winkler, the top editor at Mike Bloomberg’s media empire, with the British weekly’s John Micklethwait ends an era. As well as portending the biggest internal shakeup in 25 years, the move could mean there’s a bigger chance of Bloomberg snapping up the pink-hued FT.
UK retail property values look ever more exposed 9 Dec 2014 Another profit warning from Tesco has drawn attention to Britons’ changing shopping habits. In grocery, it’s all about discounts, online and convenience. That calls into question the big retailers’ property valuations – especially those with super-large stores.
Tesco troubles are deep and long-lasting 9 Dec 2014 The UK grocer has cut profit guidance again, this time by a quarter, sending the shares to a new low. Tesco’s competitive weakness means more bad news could come. To keep investors on board, Tesco needs a chairman, a strategy and a strong balance sheet more than ever.
UK doesn’t look ready for a rate hike 8 Dec 2014 Bank of England research suggests the impact of rate rises on mortgage holders could be manageable. If wages and rates rebound as the BoE forecasts, that might be so. But the data is sufficiently equivocal, and the UK economy sufficiently weak, to make it not worth finding out.
Pharma’s dying assets lack M&A remedy 5 Dec 2014 Both GlaxoSmithKline and Sanofi have scrapped sales of mature drugs. The motives differ, but both flops highlight the challenge of finding suitable owners for such assets. Other industries would spawn rollup vehicles. Here, buyers lack expertise, and sellers aren’t desperate yet.
BoE independence faces stiff test 5 Dec 2014 Lower borrowing costs helped George Osborne plug a hole in UK tax receipts. Add the chancellor’s home-buying scheme, and the government’s interest in monetary easing is clear. It is critical for Osborne-appointed BoE Governor Mark Carney to be seen to be making his own decisions.
Tesco’s best option in Asia is a Thai IPO 5 Dec 2014 The British supermarket wants to raise cash. Its business in Asia is healthy with good growth potential. If Tesco wants to retain control, listing 46 pct of its fast-growing Thai operations in Bangkok could raise 2 bln pounds. That’s enough to shore up the group’s balance sheet.
Canary Wharf bid short on tactics and value 4 Dec 2014 Qatar Investment Authority and Brookfield Property have gone hostile with a raised 2.6 bln stg offer for Songbird, owner of London’s easterly finance district. Bypassing the board is not how to buy key UK infrastructure. And the 34 pct premium ignores the Wharf’s trophy status.
UK’s economic torpor looks structural 4 Dec 2014 The slow shrinkage of the UK fiscal deficit is one sign of a weak recovery. There are others – a sharp increase in the current account deficit and GDP per person below the 2007 level. The country’s problems are too deeply entrenched to be solved by government budget tinkering.
CVC may find Sky is the limit in gaming punt 4 Dec 2014 The buyout firm is paying $940 mln for 80 pct of the online gaming arm of satellite broadcaster Sky. The 15 times trailing EBITDA price tag reflects the rapid growth of internet betting. But Sky’s minority stake and board representation could complicate CVC’s investment.