Aggressive AB InBev risks joining sorry M&A club 9 Oct 2015 The Bud brewer is as close to a hostile bid for SABMiller as possible without formally going directly to shareholders. About half of big, unsolicited, cross-border deals eventually close. The results, however, are often disastrous, as Vodafone, RBS, Mittal and others can attest.
The Devil’s Dictionary of Post-Crisis Finance 9 Oct 2015 Ambrose Bierce wrote “The Devil’s Dictionary” a century ago, ranging acerbically across government, commerce and life. Breakingviews’ original re-use of the form for finance – in 2007, when the crisis was barely beginning – is no longer adequate. Herewith part one of the sequel.
SABMiller’s Budweiser fightback lacks punch 9 Oct 2015 The Peroni brewer’s promise to find $550 mln of new cost savings by 2020 is paltry in the context of the $100 bln approach from AB InBev. SAB might have more powerful defences in its locker. It had better, if it wants to stay independent from the Budweiser brewer.
Prognosis is bleak for Shire’s troubled Baxalta bid 9 Oct 2015 The rout in pharma stocks has made the Irish group’s all-share offer less attractive for its recently spun-off U.S. rival. Shire would have to add much more stock to offer Baxalta the $30 bln it initially touted. It should delay – even if it then misses its chance altogether.
Bill Gross gets both personal and legal with Pimco 8 Oct 2015 The former boss of the $1.5 trln investment firm has sued over his exit last year. He paints former colleagues like Mohamed El-Erian as greedy and duplicitous and argues he’s entitled to more of an expected $250 mln 2014 payout than he received. No one comes out looking good.
Volkswagen just spins its wheels before Congress 8 Oct 2015 U.S. CEO Michael Horn offered lawmakers a few new tidbits about the carmaker’s emissions scandal and response. He lacked answers to basic questions, though, and the politicians failed to ask tougher ones. Getting to the bottom of the mess requires both sides to kick it up a gear.
Hillary Clinton lands soft punches on Wall Street 8 Oct 2015 The White House hopeful has unveiled a slew of ideas for reining in financial excess. Initiatives like imposing risk fees on big banks and improving hedge fund reporting won’t win many friends in the industry. But they’re manageable blows that Wall Street could roll with.
Dell’s gnarly $50 bln EMC idea smells of peak M&A 8 Oct 2015 The PC maker may offer to buy the data-storage firm. Borrowing $40 bln or so wouldn’t be easy. Spinning off part of EMC’s 81 pct stake in its $35 bln subsidiary VMware would add complexity, too, and make it tough for the numbers to work for everyone. It could be a deal too far.
Senator’s Fannie Mae short tip had better pay off 8 Oct 2015 Bob Corker, a critic of the mortgage finance firm and its sibling, offered the highly unusual investment advice in a TV interview. Hedge funds want to keep Fannie and Freddie Mac alive, while Corker wants Congress to enact belated reforms. Sadly, his proposed bet is no certainty.
Only beer goggles make AB InBev deal look right 8 Oct 2015 Cost savings in previous brewery mergers suggest the Budweiser maker is far from covering the 37 pct premium in its $100 bln offer for SABMiller, based on Breakingviews calculations. Sales growth and disposals might help. Sweetening the bid, however, is a tall order.
VW’s emissions cleanup looks half-hearted at best 8 Oct 2015 Siemens’ 2006 bribery scandal suggests investigations at VW might lead to legal action between the supervisory board and former top execs. In that case, VW’s new Chairman and former CFO Hans Dieter Poetsch would have to sue himself. VW’s new start is more fraught than fresh.
Scandal exposes long odds for fantasy sports sites 7 Oct 2015 DraftKings and FanDuel rely heavily on fees members pay to bet on pro games. Allegations that employees used inside information to wager may well drive those customers away. Add advertising expenses and legal challenges, and the companies may be headed for blow-out losses.
Yum’s China indigestion strengthens spinoff case 7 Oct 2015 The U.S. fast-food giant reported surprisingly slow third-quarter growth, due mainly to weak Chinese demand. That cut the stock price a fifth, and may derail Middle Kingdom expansion. Operations there have big upside, though, and liberating them now should top the company’s menu.
Monsanto plants seeds for weathering rough times 7 Oct 2015 Weak grain prices and forex swings battered the crop giant’s earnings, bringing a lower 2016 forecast just weeks after its Syngenta bid collapsed. The whole sector is down, though, and a faster stock buyback and $300 mln of cost cuts will help the company through a lean period.
Scorched U.S. tech and pharma feel the M&A chill 6 Oct 2015 Two of the hottest sectors for deals this year have extended their run. Apple chip supplier Skyworks agreed to buy PMC-Sierra for $2 bln and AmerisourceBergen is purchasing PharMEDium for $2.6 bln. Investors in both acquirers jeered, building on a worrisome trend for mergers.
Rob Cox: Wal-Mart just shy of target on gun front 6 Oct 2015 Like CVS with smokes, the retailer stopped selling AR-15 rifles, the kind used in an Oregon college shooting, because it’s bad business. Yet Wal-Mart blocked a Wall Street parish’s plan to make that and similar policies permanent. The church’s case merits Supreme Court review.
Internet TV may sink Discovery’s quest for EU gold 6 Oct 2015 The U.S. cable network behind “Shark Week” and other nature fare plans to pad profit with subscriptions to its Eurosport channels. Like Americans, though, Europeans clamor for video streaming from Netflix, Amazon and other upstarts. The bundled-programming ship may have sailed.
Freeport rejig only partly solves credibility gap 6 Oct 2015 Jim Bob Moffett’s energy group is bowing to pressure from activist Carl Icahn. It’s ditching board seats and a controversial management structure and may hive off the oil and gas unit it bought in a bad 2012 deal. Like Chesapeake, though, more fundamental changes may be needed.
EU data ruling could stunt single digital market 6 Oct 2015 Europe’s top court has called an agreement over data transfer between the euro zone and America “invalid”. Legal alternatives exist, but will be costly for smaller companies. It will make it harder for Europe’s tech industry - and a single, regional internet market - to blossom.
DuPont succumbs to activist in absentia 5 Oct 2015 Ellen Kullman is retiring as chair and CEO of the $45 bln chemical giant, five months after fending off a pushy Nelson Peltz. Another profit warning and an interim boss who’s a restructuring guru suggest an abrupt transition. DuPont may have to give a breakup another hearing.