McCormick may struggle to digest $4.2 bln deal 19 Jul 2017 The $12 bln spice vendor is paying a fat 20 times EBITDA for the mustard and hot-sauce business of Reckitt Benckiser. With modest synergies in prospect, McCormick will need strong growth to pay down debt. Investors have reason to question the acquisition’s aftertaste.
Morgan Stanley gives Goldman a lesson in diversity 19 Jul 2017 Stabilizing fixed-income trading isn’t the only way CEO James Gorman showed Lloyd Blankfein his tail for the second quarter in a row. His growing wealth unit helped, too. With the diversified firm firing on all cylinders, it is justifiably overtaking Goldman even on valuation.
Discovery, Scripps tie-up a subscale DIY fix 19 Jul 2017 The cable network part-owned by John Malone may be in talks to combine with its smaller peer. A deal with the producer of HGTV would give Discovery more clout with distributors, but it would still be a bit player in a fast-changing industry. Bigger pockets might get the job done.
Reckitt shows bigger rivals how it’s done 19 Jul 2017 The UK company sold its French’s Mustard unit to U.S. food group McCormick for $4.2 bln, a spicy 7.4 times sales – even though there’s no recovery story and limited synergies. With buyers this hungry, less efficient peers Unilever and Nestlé ought to emulate Reckitt’s recipe.
Akzo’s misguided strategy will weather CEO change 19 Jul 2017 The Dutch paint maker’s new boss Thierry Vanlancker inherits his predecessor’s fanciful mid-term targets. The goals are backed by Chairman Antony Burgmans, a key opponent of a deal with PPG who may now find his position strengthened. Real change at Akzo is even less likely.
Einhorn’s bold Toshiba play has just enough logic 19 Jul 2017 The Greenlight boss unexpectedly took a stake in the beleaguered Japanese group, betting it's hit bottom. That's gutsy, but not necessarily reckless: Toshiba is closer to selling its chip business, which could give it much-needed financial relief and unlock value in other units.
Mayo board’s exodus sets spicy governance example 18 Jul 2017 Hampton Creek may have used dodgy methods to boost sales of its eggless mayonnaise. Now most of the Silicon Valley startup’s directors have quit after they clashed with the co-founder and CEO. It’s a last resort, but boards at Theranos and Uber, for example, might have tried it.
Guest view: Culture can’t be bank-reform casualty 18 Jul 2017 Moves to relax U.S., UK and European regulation and supervision necessitate still greater attention on the important issues of institutional conduct, argues William Rhodes, a former Citigroup executive and co-chair of the G30’s steering committee on bank culture and governance.
BofA’s progress fails to achieve escape velocity 18 Jul 2017 The $236 bln U.S. lender's $4.9 bln of Q2 profit beat estimates as retail, wealth management and investment banking all did the best in years. CEO Brian Moynihan is also keeping costs down. Yet return on equity is stuck in single digits. Only help from the Fed can change that.
Third Senate GOP health attempt is most charmless 18 Jul 2017 Having twice failed to pass alternatives to Obamacare, Republicans may try to repeal it with no replacement. Based on a similar 2015 effort an estimated 32 mln Americans would lose insurance cover, some 10 mln more than under the nixed bills. It’s hard to see senators backing it.
Goldman’s compass points in wrong direction 18 Jul 2017 Fixed-income trading revenue fell 40 pct in the second quarter as Lloyd Blankfein’s Wall Street firm again navigated the market worse than rivals. The $90 bln Goldman is slowly changing course, but its high valuation relative to rivals demands faster improvement.
German climate change policy takes Trumpian turn 18 Jul 2017 Angela Merkel has castigated the U.S. President for pulling out of the Paris accord. Yet two German states are putting mining jobs ahead of cutting carbon emissions. If they don’t reconsider, the Chancellor’s green credentials – and the global agreement – will suffer a blow.
Netflix triggers shareholders’ Pavlovian response 17 Jul 2017 The video-streaming service added more subscribers than expected in the quarter and grew operating income, up 83 pct, faster than revenue. That sent shares soaring, even though expected profitability falls a long way short of being able to justify the stock’s fairy-tale multiple.
Trump fuzziness gives NAFTA mediators wiggle room 17 Jul 2017 The president wants to cut deficits with Mexico and Canada and strengthen rules for products made in North America. But his trade rep is offering few details, while cribbing other ideas from the ditched TPP. Such a vague approach may increase the chance of striking a decent deal.
Dimon acolyte injects controversy into custody war 17 Jul 2017 Ex-JPMorgan exec and Visa CEO Charlie Scharf is BNY Mellon’s surprise new boss. An accomplished outsider may initially please investors in a firm still lagging rivals despite a push from Nelson Peltz. But growing revenue from clients facing intense fee pressure will be tough.
U.S. student debt dims home-ownership outlook 17 Jul 2017 Economic growth is supposed to lure millennials out of their parents’ basements. But a study from the New York Fed suggests that borrowing for surging college costs accounts for up to a third of the decline in home buying by 28-to-30-year-olds. That purchasing power won’t return.
KKR’s former barbarians tackle toughest gate yet 17 Jul 2017 Joe Bae and Scott Nuttall look poised to succeed septuagenarian co-founders Henry Kravis and George Roberts. It may spark broader changes to boost the $16 bln firm’s value. But as public rivals Blackstone and Carlyle can attest, private-equity grandees cede power ever so slowly.
Central banks oust politicians as market fixation 17 Jul 2017 Investors are worrying about interest rates rather than elections. Statistics are a more reliable guide to the economic outlook than polls to political outcomes. But the path for monetary policy remains uncertain. Expect asset prices to be jumpy and their moves more synchronised.
BlackRock bitten by its own cannibalization 17 Jul 2017 The world’s largest fund manager pulled in over $100 bln of new money in the second quarter. Most went into cheap ETFs, making revenue and profit fall short. Larry Fink’s shop is still thriving, but it’s not immune to fee pressures partly created by itself and rival Vanguard.
Peltz goes for the close shave at Procter & Gamble 17 Jul 2017 Unlike his last proxy fight at DuPont, the activist is taking a more surgical approach, lobbying for one board seat at the $223 bln razors-to-detergent conglomerate. Trian is also supporting management and not calling for a breakup. Shareholders would be daft to turn him down.