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.
UK chancellor runs out of stimulus 3 Dec 2014 George Osborne’s budget is no pre-election pleaser, despite populist moves on property, bank and corporate tax. Deficit reduction is further behind schedule in part due to prior tax cuts. The fiscal outlook remains poor. Necessity forced low-cost gestures and further austerity.
“London levy” targets distortive foreign inflows 3 Dec 2014 The UK has a new 12 pct tax on property deals over $2.4 mln. That, and hikes in the cost of being “non-domicile,” will make the global mega-rich think twice about alighting in London. Property taxes elsewhere will fall. Policy is for once being set for the nation not the centre.
History may frown on Great War loan buyback 3 Dec 2014 The UK chancellor is to repay the state’s century-old war debt. By current standards, the undated stock is expensive for the government to service. Terms give holders of the hard-to-trade bond a decent payoff. It looks like a win-win. Time could prove a harsher judge of the deal.
UK’s latest small firm loan ploy flogs dead horse 3 Dec 2014 The Bank of England is extending its Funding for Lending Scheme helping banks lend to small businesses. By giving the fragile banking sector more leeway, the FLS has its uses. But it will probably still flunk its stated aim: increasing small firms’ use of debt.
Heineken resilience to UK beer reform is a puzzle 2 Dec 2014 Shares in British pub companies fell sharply last month when lawmakers voted to give so-called “tied” outlets freedom to choose where they buy their beer. Shares in Heineken, owner of 1,300 pubs, have risen. The impact is hard to quantify but is unlikely to help the Dutch brewer.
Market too cool on Aviva-Friends tie-up 2 Dec 2014 Some investors see another value-destructive UK insurance merger. At about 20.5 bln stg, the pair is worth no more than before the deal leaked. But even if synergies are worth less than the 1.8 bln stg claimed, the fact they come from fund management as much as IT is cheering.
Debt powers Altice into European TMT’s big league 1 Dec 2014 Patrick Drahi’s telecom group paid $23 bln for France’s SFR and is nearing a $9 bln Portuguese purchase. More deals may follow. Cheap debt and euphoria about cable have helped. The billionaire’s team will have to excel at integration to run an empire that dwarfs many blue chips.
BG board has major repair job on its hands 1 Dec 2014 Investor pressure has made the UK gas firm slash a share award for CEO-elect Helge Lund. The package remains generous but needs no investor vote. A better board would have anticipated the row at the outset. That says something about BG’s culture – which still has to be addressed.
Hugo Dixon: Cameron pulls back from EU brink 1 Dec 2014 A month ago, the UK prime minister was close to advocating quotas on EU migrants. That would have sharply increased the risk of a “Brexit.” But when Cameron actually made his speech, the focus was on stopping migrants getting access to benefits – a policy which looks deliverable.
If Vodafone wants Liberty it has to get creative 1 Dec 2014 The mobile giant is eyeing cable group Liberty Global for a $90 bln-plus takeover. The strategic case is easier to make than the financial one. Regulators may be persuadable. Investors and Liberty Chairman John Malone could be colder. Vodafone has to be resourceful.
SABMiller’s Coca-Cola push is Africa buy signal 27 Nov 2014 The UK brewer and the U.S. drinks giant are merging assets in southern and eastern Africa to create a soft-drinks bottler with $3 bln of sales. SAB gets control and gains market access. The move points to the continent’s strategic potential, and similar consolidation could follow.
Investors can forgive BT going back to the future 26 Nov 2014 If the former British Telecom buys Telefonica’s UK mobile business, it will regain a unit demerged in 2001. The round-trip is unusual but forgivable. 02’s demerger delivered good returns for BT investors who kept their stock. BT refocused, and its re-entry to UK mobile is timely.
Remember the UK housing bubble? 26 Nov 2014 Not long ago an overheating housing market was seen by many as the big UK danger. Now mortgage approvals are dropping and house inflation is easing – even though mortgages are getting cheaper. Tighter home-loan regulation is a factor. Workers’ low earnings are the main restraint.
Friends Life deal terms make an auction tricky 25 Nov 2014 The UK insurer is a bite-sized acquisition for bigger European peers. But both foreign and domestic buyers can see that Aviva has offered Friends a full price that pays away lots of synergy value. And matching Aviva’s premium could be just as tough for consolidators like Phoenix.
Carney’s bonus cap workaround itself needs a cap 25 Nov 2014 A legal defeat on EU bonus caps has the UK calling for global rules to claw back bankers’ fixed pay too. The BoE governor’s idea to pay part of salaries in deferred bonds would achieve that. But there are limits: cut pay too far - or delay it too long – and London might suffer.