Santander progress yet to show up where it counts 31 Jan 2024 The $65 bln lender has already hit its 2025 profitability targets, yet still trades below tangible book value. Investors may fear risks like European rate cuts, or they might not buy Santander’s strategy. Until they award a higher valuation, boss Ana Botín’s job is incomplete.
Economic slack gives Bailey cover to cut rates 31 Jan 2024 The market wants the Bank of England to lower borrowing costs soon. Governor Andrew Bailey is set to keep them steady on Thursday because inflation remains high. Yet sub-par economic performance in the next few years could pave the way for easier monetary policy from May.
Diageo investors seem braced for a beerier future 30 Jan 2024 The $78 bln drinks giant’s sales of spirits fell in the second half of 2023, but Guinness held up. If investors thought Diageo could hit its sales targets, it would be worth more. One takeaway is that they think more of its future revenue could come from less highly valued beer.
Financial fallout is hardwired into new nuclear 26 Jan 2024 France’s EDF wants help with the costs of its Hinkley Point C plant, which now exceed 30 bln pounds. Britain can say no, but needs the power. Globally nuclear capacity is supposed to treble by 2050, but future investor, state and customer spats on overruns look inevitable.
Red Sea oil tension may revive Russia-Saudi spat 22 Jan 2024 Exchanges of fire between Yemen’s Houthis and the US military have hiked costs for Moscow to ship oil via the Suez Canal to China and India. One upshot could be Russia loses market share to Saudi Arabia. That may reopen the sort of tensions that led to the duo’s 2020 price war.
BP’s business-as-usual vibe can only go so far 17 Jan 2024 The UK oil major has appointed Murray Auchincloss to the top job. While the ex-CFO seems to want to stick with BP’s current strategy, that might not help its valuation discount. Ways that conceivably could – like spinning off his transition assets – are worth his consideration.
BoE can win inflation race but lag on rate cuts 17 Jan 2024 UK price growth could drop in the spring due to lower energy bills, enabling the Bank of England to hit its 2% target before the US and Europe. But wage and services inflation will stop Governor Andrew Bailey from reducing borrowing costs. So will a likely UK fiscal splurge.
General Atlantic buys infrastructure for its IPO 16 Jan 2024 The US buyout firm is taking control of UK specialist asset manager Actis. The deal gives it $12.5 bln of assets in hot markets and geographies. Boss Bill Ford is trying to build a more diversified firm ahead of a possible float. His pitch to investors just got stronger.
Barclays alumni’s UK M&A rests on typical optimism 16 Jan 2024 The all-stock deal between loss-making Panmure Gordon and Liberum will create the UK’s top independent investment bank. To succeed, City grandees Rich Ricci, who will run the firm, and Bob Diamond, who will finance it, must hope for a big rebound in the small-cap IPO market.
Reparation bonds could unlock $300 bln for Ukraine 15 Jan 2024 The US and EU are struggling to keep writing mega cheques to Kyiv and reluctant to hand over frozen Russian central bank assets. One alternative is for Ukraine to sell bonds backed by future claims for reparations. It could then use the cash to defend itself against Moscow.
Burberry’s weakness could entice luxury shopper 12 Jan 2024 After a profit warning, the $6 bln UK fashion group is worth 45% less than it was a year ago. Potential buyers will have noticed. While private equity firms may struggle to make decent returns in a slow market, sector leader LVMH could find the situation more tempting.
Fujitsu’s tricky UK dilemma: double or quits 12 Jan 2024 The $29 bln Japanese firm’s faulty accounting system led to the convictions of Post Office workers. With 7% of global sales in Britain, Fujitsu may need to offer compensation. But if its reputation means it can’t secure future state contracts, that might not be worth it.
Shell will be tempted to join US M&A party 5 Jan 2024 With rivals Exxon Mobil and Chevron doing chunky deals, the $214 bln European oil major may wish to follow suit. A pitch for $30 bln Permian player Endeavor is affordable and arguably logical. But it would test how far CEO Wael Sawan can realistically pivot back to fossil fuels.
Dear Chancellor: inflation will fall…when it falls 28 Dec 2023 Bank of England Governor Andrew Bailey has to write to the UK finance minister when consumer price growth is above or below 2%. Yet it’s clear mere central bankers can’t influence the behaviour of people or firms. Breakingviews imagines a letter in 2024 which says as much.
Mega-bank M&A goes from impossible to imaginable 28 Dec 2023 After 2008, CEOs saw investment-bank deals as risky while regulators saw them as dangerous. UBS will prove otherwise if it safely and profitably absorbs Credit Suisse. Imitators will not get the same sweet deal, but targets like SocGen and Barclays at least come cheap.
EU tech rules will create clicks, not competition 27 Dec 2023 Brussels wants to force Google, Meta and Apple to open up app stores, messaging networks and search engines. The US giants will have to let startups compete and offer consumers more opt-outs. It’s likely to result in lawsuits and hassle for users rather than rivals for Big Tech.
Man Utd deal is messy substitute at trophy price 27 Dec 2023 Tycoon Jim Ratcliffe’s purchase of a 25% stake values the British club at a hefty $6.2 bln. That still leaves him running behind the Glazer family with no easy path to control. A fuzzy turnaround plan means the Red Devils’ fortunes on the pitch may not recover soon either.
BP and Equinor will find common ground 20 Dec 2023 The British oil major is undervalued against peers and is in a leadership vacuum. That makes it vulnerable to a takeover as US mega-mergers shake up the sector. Daring to tie up with Norwegian ally Equinor offers a powerful hedge and a springboard.
StanChart M&A theory will finally become reality 19 Dec 2023 For years, the bank run by Bill Winters was cheap but dysfunctional. Now, it’s producing significantly higher returns on tangible equity but the valuation remains low. If that persists in 2024, it will be hard for suitors like First Abu Dhabi Bank to resist launching a bid.
Farfetch rescue leaves scattered luxury debris 18 Dec 2023 The struggling online merchant secured a bailout from South Korean e-commerce giant Coupang, which is injecting $500 mln. The deal gives Farfetch a fresh shot at existence, but leaves former backer Richemont wiped out, and its new investor with fresh messes to clean.