London real estate at an inflection point 17 Jul 2014 Property values in the UK capital are up 20 pct in a year. But leading indicators – buyer enquiries, new mortgages and volumes – have stalled. For prices to hold, foreign buyers will have to spend more in spite of a stronger pound and punitive taxation.
BoE doves look an endangered species 16 Jul 2014 UK unemployment is falling and inflation has rebounded towards the Bank of England’s 2 percent target. Any policymakers who are opposed to an early rate rise can point to the persistent and puzzling weakness of wage growth. But the cards are increasingly stacked against them.
Hugo Dixon: UK prepares for possible EU failure 16 Jul 2014 David Cameron has appointed a eurosceptic as his foreign minister and nominated a little-known former lobbyist as Britain’s European commissioner. The prime minister looks to be lining up a Plan B of campaigning to quit the EU if he fails to reform it. This would be a mistake.
China’s $1.5 bln pizza takeout can deliver returns 16 Jul 2014 Hony Capital has gobbled up Britain’s Pizza Express. The Chinese buyout firm looks better placed than seller Cinven to bring crispy goodness to Middle Kingdom diners. A price of 10 times EBITDA is digestible. A dollop of debt means modest growth could bring 21 pct annual returns.
Burberry and StanChart need Peace to break out 15 Jul 2014 The retailer and the bank are both chaired by John Peace. He’s retreating from a third chairmanship at Experian but is still spread thinly. Throw in bust-ups over executive pay and corporate governance, and both blue-chips might usefully start looking for a new chairman.
Shire shows power of tax inversion levers 14 Jul 2014 The UK pharma group says a $54 bln proposal from U.S. suitor AbbVie is potentially acceptable. The 50 pct premium reflects the value of tax synergies and the recommendation needed to achieve them. AbbVie will doubtless prevail if its share price holds, and there is no counterbid.
Hugo Dixon: How to fight UK immigration fears 14 Jul 2014 UKIP has fanned fears so much that Brexit is now a risk. The best response is to show how free movement of people within the EU benefits the economy and society overall, while acknowledging that some groups may be harmed and working to improve their lot.
Burberry could have avoided pay revolt 11 Jul 2014 The fashion retailer’s pay policies are outdated. Shareholders have objected to the 20 mln sterling pay package of CEO Christopher Bailey, awarded without performance targets. But if the board had been clearer about its underlying reasons, the ride wouldn’t have been as rough.
Imperial prepares $7 bln gamble 11 Jul 2014 The UK tobacco group wants to acquire assets sold following a possible merger of U.S. peers Reynolds and Lorillard. Imperial may win a path to scale in America. But the positive market reaction is too sanguine about balance-sheet strain and the acquisition of low-growth assets.
Tesco finance hire is big win for embattled grocer 10 Jul 2014 Britain’s largest supermarket chain has solved one of its problems. Poaching a top-class CFO from retail rival Marks & Spencer relieves pressure on much-criticised CEO Phil Clarke. Tesco can now focus on its bigger challenges: capital allocation and investment returns.
Deflation is good in UK but risky in euro zone 10 Jul 2014 Falling prices can be positive. In Britain, shrinking shop prices encourage consumption and may delay rate rises. In euro zone countries where unemployment is high and competitiveness weak, falling prices reflect structural flaws and may depress rather than stimulate.
Ambition exceeds realism in investment bank review 9 Jul 2014 UK watchdogs have launched a competition probe of banking, markets and asset management. Concerns about the integrated firms’ market power are nothing new, but competition fell and barriers to entry rose in the crisis. The challenge will be to respond with more than tinkering.
IPO spat highlights sell-side weaknesses 9 Jul 2014 Independent advisers are popular on European new issues. Now the bookrunners they police are moaning that their presence leads to overpriced floats. While the charge looks spurious, the row points to the need for transparency in the role of sell-side analysts during IPOs.
UK takeover rules are fiddly but fit for purpose 9 Jul 2014 AbbVie, the U.S. pharma group, has retracted comments made about shareholder support for its $51 bln bid for London-listed Shire. Britain’s M&A framework is tripping up overseas predators. But the system works: it avoids legal tangles and ensures investors are treated fairly.
Shire can get more from AbbVie 8 Jul 2014 The London-listed drugmaker is pondering a fresh, $51 bln unsolicited bid from its U.S. rival. AbbVie touts shareholder support and is offering a hefty 45 pct premium. Shire’s board can probably extract one more increase in return for a recommendation.
Buyout barons make a tricky target for Carney 8 Jul 2014 The Bank of England governor could follow U.S. authorities in limiting the debt ratios for loans backing leveraged buyouts. The sentiment is noble, and the American model could be adapted. But taming animal spirits is hard when markets are global and banks’ influence is waning.
Capacity doubt hangs over booming longevity market 7 Jul 2014 The pension scheme of UK telco BT has offloaded 16 bln stg of longevity risk in the largest deal of its kind. Demand is fed by reinsurers. Yet reinsurance capacity will only go so far. Conventional capital markets may have to play a bigger role.
Ashley bonus badly conflates owner and exec roles 2 Jul 2014 Founders often make awkward teammates for outside investors. Mike Ashley of Sports Direct is a case in point. The UK retailer now has a bonus scheme that might pay him hundreds of millions of pounds. It is bad. It confuses Ashley’s position as an owner with his executive role.
Babywear bid target must prove it can stand alone 2 Jul 2014 Mothercare rebuffed a $453 mln approach from U.S. suitor Destination Maternity. There are understandable concerns about financing and strategy. But the ailing UK firm must show how it can develop healthily alone. Otherwise investors will throw their toys out of the pram.
Edward Hadas: The stupidity of student debt 2 Jul 2014 Education loans keep growing in the U.S. and the UK. The new reliance on debt is financially dangerous and shows weak economic thinking. The sensible way to fund the social good of higher education is pay-as-you-go: with affordable tuition, donations and government money.