UK companies benefit from takeover threat 9 May 2014 If AstraZeneca’s independence was guaranteed, would it have made as many difficult restructuring decisions as it has? The threat of being kicked out motivates management in pharma, much as in any other. Remove it and entrenched leaders will have no reason to improve.
Barclays CEO finds his backbone 8 May 2014 After a few false starts, Antony Jenkins is radically shrinking the UK lender’s investment bank, cutting 27 pct of the unit’s staff. Investors see a re-rating as Barclays rebalances to higher quality earnings. But Jenkins still has to prove his boldness will lead to good returns.
Pound joins euro as weak dollar victim 8 May 2014 The Federal Reserve keeps printing money and Europe isn’t. That forces the greenback down, and the euro and now sterling up. The euro zone’s deflationary risks are rising while the UK recovery is becoming more unbalanced. When Fed policy finally changes, the UK looks more at risk.
AstraZeneca is not the UK science base 7 May 2014 UK politicians worry that a Pfizer takeover would erode British scientific competence. But if that foundation were strong, the deal would hardly matter. The drug industry has fundamental problems. That’s why Astra has been slashing R&D by itself, and cost-cutting is driving M&A.
Sainsbury is yet to prove super-market strength 7 May 2014 Price war? What price war? Good full-year results from the UK supermarket group counter the view that competition is crushing British grocers’ profits. Sainsbury’s outgoing CEO Justin King is upbeat on the outlook too. The risk is its pain is being postponed rather than avoided.
AstraZeneca implies surrender can be bought 6 May 2014 The UK drugmaker has launched its defence against Pfizer’s $106 bln approach by detailing a portfolio with a potential 73 pct of added sales by 2023. It sounds more like an inventory waiting to be valued than an argument for independence. The chances of a deal have barely fallen.
Barclays shows why it needs to do a UBS 6 May 2014 The UK bank saw Q1 fixed-income revenue fall even more than forecast. Its Swiss peer didn’t fare much better, but UBS is already well into a wealth management-focused turnaround. While Barclays has fewer options, its strategic revamp on May 8 needs to be similarly radical.
Hugo Dixon: Do national champions merit protection? 5 May 2014 Only when the target is genuinely strategic and the bidder may not have the country’s interests at heart. In other cases, including Pfizer’s bid for AstraZeneca and GE’s acquisition of Alstom’s power business, governments should stay neutral.
Pfizer’s M&A churns out more pennies than pounds 2 May 2014 A $106 bln AstraZeneca bid would deliver savings. But drug mega-deals create little value. Pfizer could’ve bought most of the top biotech firms instead of Wyeth, its last acquisition, and had higher returns. Buying stakes in innovative companies is a preferable route to riches.
Viacom’s UK deal broadcasts hope for old-time TV 2 May 2014 Sumner Redstone’s media giant will pay $757 mln for Britain’s Channel 5. That looks rich for a shoestring free-to-air station known for reality shows and programme imports. But Viacom gets a decent platform for overseas growth. And old-school TV is a show with much further to run.
Pfizer yet to land knockout blow on Astra 2 May 2014 The U.S. drugmaker upped its proposal to $106 bln, and promised to keep some of the UK group’s workforce. It does not look high enough to bring Astra to the table. Worse, Pfizer’s aggressive public tactics may only antagonise shareholders.
UK engagement with Pfizer is irresponsible 2 May 2014 British politicians and scientists want assurances that a takeover of AstraZeneca by U.S. rival Pfizer would be in the national interest. But good UK science requires more than corporate control. A rushed dialogue with a semi-hostile bidder helps neither the target nor the nation.
RBS’ worry-free quarter will be hard to repeat 2 May 2014 The state-owned UK bank’s shares soared 12 pct after first-quarter net profit trebled. But RBS only took a tenth of this year’s restructuring costs to support CEO Ross McEwan’s new strategy, and dividends remain way off. The bank has turned a corner, but there’s a long way to go.
Review: The UK’s EU choice is safety or adventure 2 May 2014 Should the UK leave the EU? Hugo Dixon, founder of Breakingviews, answers “The In/Out Question” with a firm “no.” He is mostly persuasive, at least for the short term. But he exaggerates potential British influence inside the EU - and may be too grim about Britain’s fate outside.
Astra has small tactical advantage over Pfizer 1 May 2014 Time can benefit bidders rather than targets – that’s why Kraft left Cadbury flailing for months. But uncertainties around regulatory clearance and Washington politics complicate the dynamics of Pfizer’s approach to AstraZeneca. The U.S. group will want a quick, recommended deal.
BP could be most tempted by BG 1 May 2014 Bid speculation around BG has intensified since the recent departure of the gas giant’s CEO amid fresh operational setbacks. Bigger majors like Exxon or Shell could be interested. BP might have better reasons to buy, though there are hurdles.
Time for an FPC “Draghi moment” on UK house prices 1 May 2014 The ECB president famously eased the euro zone crisis with a pledge to do “whatever it takes.” The UK’s Financial Policy Committee has been too timid about making a similar commitment to restrain booming house prices. Its June meeting is the moment for Draghi-style boldness.
Barclays U.S. bankers are a Skip away from a jump 29 Apr 2014 The UK lender’s Wall Street chief has quit after finding regulatory box-ticking duller than dealmaking. Skip McGee’s exit will hurt morale, as the ex-Lehmanite was a foil to CEO Antony Jenkins’ aborted war on pay. The flipside is that Jenkins should now have more clout Stateside.
There’s something unhealthy about robust UK 29 Apr 2014 The first quarter’s 0.8 pct GDP gain looks nice, but is buoyed by foreign cash flowing into hot London property. New calculations will boost output and increase the savings rate, but the statistical shift won’t change one sobering fact: GDP is still not back to the 2008 level.
Pfizer tax arbitrage will hasten more deals 29 Apr 2014 The biggest charm of the U.S. drug giant’s $99 bln offer for the UK’s AstraZeneca lies in switching to a lower-tax domicile. The latest and largest such deal raises the odds Congress will tighten rules. Until then, Pfizer’s validation of the tactic will encourage copycats.