EADS/BAE merger risks hitting political wall 1 Oct 2012 Lagardere, the media group owning 7.5 pct of EADS, adds to the uncertainty of the aerospace and defence merger by deeming it “unsatisfactory”. But the real obstacles are political. France and Germany must convince the UK, the three in turn have to win over the U.S. No small feat.
Franco-German politics first hurdle for BAE/EADS 25 Sep 2012 The two European defence and aerospace companies can’t merge unless Paris and Berlin settle their differences over governance and shareholdings. The tension is typical of EADS’ own complex political and economic history. The BAE deal offers a golden opportunity to clear the air.
Boeing could play BAE-EADS spoiler on many fronts 19 Sep 2012 Europe’s $45 bln defense deal needs U.S. security clearance and perhaps a nod from Congress. Boeing wields enormous clout in Washington and has a history of using it against rivals. Valuations and looming military cuts also mean a bid for all or part of BAE can’t be ruled out.
Dual listing may hinder bets on BAE-EADS 18 Sep 2012 If the duo can agree on a $45 billion tie-up, that should be a godsend for thumb-twiddling merger arbitrageurs. But political and security hurdles abound. Moreover, plans to create a “dual-listed” successor add an extra layer of risk for any arbs backing the deal.
BAE could find a plan B 14 Sep 2012 The UK defence giant has options if shareholders or governments torpedo its planned deal with EADS. A merger with Rolls Royce sounds implausible. But signs that the EADS union really is faltering could tempt a handful of U.S. defence heavyweights to try a transatlantic tie-up.
Markets hit EADS for straying off-target with BAE 13 Sep 2012 Investors seem to think EADS plus BAE is worth $4 bln less than the two companies alone. That’s not how mergers should work. That reaction may be punishment for springing a surprise - and one that will create a major stock overhang. An already complex merger is getting trickier.
BEADS politics ain’t as bad as they used to be 13 Sep 2012 Europe’s three largest powers are involved in the proposed jumbo merger between EADS and BAE, yet there’s a hope politics might play a limited role. Governments have other things on their minds, and EADS isn’t the political mess it was five years ago. But the risk still exists.
Old dogs of war get mega M&A deal 13 Sep 2012 Bankers often say they are in the relationship business. With the proposed EADS/BAE tie-up, this sales patter is actually true. Advisers such as Evercore’s Bernard Taylor and Gleacher Shacklock’s Tim Shacklock have been counselling these companies for donkey’s years.
Euro defence monster flies out of crisis 12 Sep 2012 Civil aviation and defence both are cyclical businesses. But marrying EADS, the continental outfit behind Airbus, with UK defence giant BAE should yield a stronger combined group. Cost savings will be limited, and the terms favour BAE. But EADS becomes a less political animal.
Priceline books industry ticket back to reality 8 Aug 2012 The travel site’s strong growth and lock on small European hotels convinced investors it was worth as much as $38 bln. But disappointing second-quarter results from it and rival Orbitz have burst the bubble. And Priceline faces the added problem of growing competition.
Investors may be happy to ride on renovated JAL 3 Aug 2012 The airline’s plans to raise roughly $8.5 bln in an IPO may seem a heavy lift amid weak markets and a perennially limping industry. But big funds will likely clamor for seats on a flight fueled by a mix of government largesse and one of Japan’s most promising turnaround stories.
How can India’s Liquor Baron keep his Kingdom? 19 Jul 2012 Vijay Mallya’s woes at Kingfisher Airlines are infecting the rest of his empire. The airline’s debt is backed by guarantees from his holding company. Unless he saves Kingfisher, he risks losing another jewel in his crown. And Diageo and Heineken are waiting in the wings.
World’s new air giant taking off at turbulent time 18 Jun 2012 The marriage of Brazil’s TAM with Chile’s LAN has taken nearly two years to consummate and will create the most valuable airline in the world. The promise of greater regional integration is fueling big expectations that will be difficult to meet given economic headwinds.
Emirates reaches limits of organic growth strategy 18 Apr 2012 The Dubai carrier is mulling acquisitions again after a decade of organic growth. Tough competition and a unique chance to win volume from India are strong incentives for Emirates to brave the risk of buying minority stakes in regional rivals.
Delta would be crackers to fly into refining 5 Apr 2012 Pricey fuel is the airline’s nemesis. But buying Conoco’s idled plant would increase Delta’s risk. It wouldn’t hedge volatile crude prices and would leave the company exposed to the financial challenges of running a refinery. There are better ways for Delta to cut its costs.
Why 100 pct FDI could save India’s Kingfisher 20 Feb 2012 Mounting debts and deteriorating service levels are bringing the airline to the brink. The can has been kicked further down the road, but eventually something must give. New investors are in very short supply. A proposal to allow 49 pct FDI does not go far enough.
Indian airlines get the wrong help 7 Feb 2012 The country’s beleaguered aviation sector needs a boost. But letting airlines avoid punitive state taxes by directly importing fuel isn’t smart. Some tax is necessary to pay for environmental costs. The real target should be the vast state subsidy given to loss-making Air India.
China has moral high ground over "dirty skies" 6 Feb 2012 Beijing’s principle of non-interference looks callous when it lends support to oppressive regimes, as in Syria and Sudan. But the refusal to pay the EU’s pointless, extraterritorial and unilateral airline carbon tax is right, even if Chinese doubts about global warming are not.
Catalan airline succumbs to predictable collapse 30 Jan 2012 Spain’s fourth largest carrier couldn’t compete in today’s ruthless aviation market without help from Catalonia’s regional government. Spanair could hardly expect to survive on handouts long term. Other second-tier European airlines will have to rely on self help or mergers.
TPG can be forgiven its mile-high club fetish 17 Jan 2012 A successful contrarian bet on bankrupt Continental in 1993 was the buyout firm’s seminal deal. Since then, David Bonderman has chased airlines across the globe, including now American, and scored with a few like Ryanair. Even bad romances like Midwest can’t dampen the thrill.