United Kingdom

Glencore’s Teck gambit could slip on an oily patch

6 Apr 2023

The Swiss commodity giant’s $22 bln plan to buy its Canadian peer and spin off its coal arm offers an alternative to investors voting on Teck’s own breakup plan. Yet Glencore’s oil trading unit may hurt the value of the non-coal bit. Teck’s pitch has flaws too, but looks cleaner.

KKR’s FGS deal sets new bar for comms valuations

6 Apr 2023

The private equity group may buy 30% of the WPP-owned financial communications firm. The high price allows employees to cash out over $200 mln, meaning a few may leave. The best hope for KKR is that FGS’s revenue is increasingly stable and growing, justifying the higher multiple.

Sterling’s safe haven status will prove fleeting

6 Apr 2023

Investors have piled into the pound since the start of troubles at US banks, pushing it 5% higher against the dollar. Yet easing turmoil stateside will lead markets to fret more over UK issues: a probable recession, dire long-term growth, and a likely dovish central bank.

Glencore will have to dig deep for Canadian miner

3 Apr 2023

Teck Resources rejected the Swiss giant’s plan for a $23 bln all-share takeover and spinning off their combined coal units. The Canadian firm is pursuing its own split. Since the deal would help solve Glencore’s dirty-fuel problem, it will have to pay more to win over its target.

Bank rescue real estate turns from dowry to downer

30 Mar 2023

In 2008, failed lenders like Bear Stearns owned prime property that helped underpin value for buyers. But Credit Suisse sold off much of its real estate before UBS swooped. Its long-term leases may prove a headache as remote working shrinks demand for office space.

John Lewis needs a breakup more than a rescue

23 Mar 2023

The UK employee-owned retailer wants to raise $2.5 bln to improve its ailing stores. But that could leave a new investor owning nearly half the company, undermining its mutual status. Merging its grocer Waitrose with rival M&S would bring in cash and forge a more viable player.

BoE’s inflation pickle can taste sweet in Britain

22 Mar 2023

A surprise jump in consumer prices will force the Bank of England to hike interest rates by 25 basis points, rather than pausing. Governor Andrew Bailey can now focus on helping a shaky UK economy by freezing borrowing costs for the rest of 2023 and start cutting them next year.

UK fiscal austerity may not survive next election

15 Mar 2023

Finance minister Jeremy Hunt used 24 bln pounds of budget headroom to boost investment and incentives to work. He also set a trap for the opposition: accept spending cuts after 2024 or be tagged as a high-tax party. Labour Party leader Keir Starmer doesn’t have to take the bait.

UK growth demands better-directed fiscal fireworks

13 Mar 2023

Finance minister Jeremy Hunt’s March 15 budget may feature 30 bln pounds of headroom to ease headaches like workers’ pay. But Britain’s real malaise is a lack of long-term business investment. To keep pace with foreign largesse, Hunt needs to deploy significant tax breaks.

Transatlantic valuation gap is mostly illusory

7 Mar 2023

Arm, CRH and Flutter may pursue US listings, while Shell mulled one. Since European stocks trade at a discount to the S&P 500, they might be hoping for a higher price. But the value chasm doesn’t hold for all sectors, and can be largely explained by differing growth rates.

UK’s Brexit fix has perks for all sides

2 Mar 2023

Prime Minister Rishi Sunak agreed a trade deal with the European Union this week. In this Viewsroom podcast, Breakingviews columnists explain what the accord will mean for future relations between Britain and the 27-nation bloc and how Northern Ireland may get an economic boost.

M&G would be a tricky hop for kangaroo raider

2 Mar 2023

Australia’s $48 bln financial giant Macquarie may bid for the $6 bln UK fund management group. A swoop would be well timed given M&G’s new boss is still bedding in, and the deal math just about works. But any transaction would involve a messy breakup, and the risk of a rival bid.

Banks’ state shareholders can afford slow selldown

2 Mar 2023

The Belgian and Dutch governments took advantage of a market rally to offload chunks of BNP and ABN. Valuations have risen but are still low relative to lenders’ returns. That means Britain and Germany would be wise to move gradually with their NatWest and Commerzbank holdings.

Revolut audit snag undermines $33 bln price tag

1 Mar 2023

The startup published 2021 results after a long delay. Growth soared but bean-counters raised questions over how its IT systems record revenue. That’s unlikely to help its quest for a British banking licence, which will in turn limit Revolut's ability to make sustainable profits.

Navigating the bumps in the energy transition road

28 Feb 2023

War and power crises raise questions about the smoothness of global decarbonisation. In this episode of the Exchange podcast, former Shell Chief Executive and current ABB Chair Peter Voser explains how global companies are adapting, and why European oil majors can still go green.

Why the dollar keeps winning in the global economy

28 Feb 2023

The greenback’s share of foreign exchange reserves is at 59%, a two-decade low. Challengers to its role as the world’s means of exchange abound. Yet the globalised financial system bolsters its lynchpin status. Absent major shifts in capital flows, the U.S. currency will thrive.

UK begins long and uncertain road back from Brexit

27 Feb 2023

Rishi Sunak agreed a deal over Northern Ireland trade with the European Union. If the UK leader can get it past his own party, it should improve relations and collaboration. Closer links will need bigger compromises than Sunak can stomach, but his deal is symbolically important.

Revisiting JPMorgan’s innovative Cazenove deal

24 Feb 2023

The American giant’s 2004 joint venture with the venerable UK stockbroker is often cited as a rare example of a successful investment banking takeover. A new memoir by former CEO Robert Pickering confirms Cazenove was right to sell. Less clear is whether JPMorgan needed to buy.

IAG takeoff weighed down by debt dilemma

24 Feb 2023

With net debt above its market value, the $9 bln British Airways owner could use a rights issue. But it’s also back in the black after a painful pandemic, and deals may yield cost savings. Boss Luis Gallego has to work out which path is likely to annoy long-term investors least.

Rolls-Royce strategy bind is a problem best shared

23 Feb 2023

Shares in the $13 bln UK engineer surged as it moved on from pandemic losses. Yet it still needs to spend big on new tech to get ready for the energy transition. Given the costs outweigh its scope to do so, Rolls ought to share them via partnerships with big aircraft makers.