Companies & Funds

Activism and stubbornness collide at SandRidge

18 June 2018

Carl Icahn’s fight with the $550 million oil driller will dominate its annual meeting this week. Neither has a straightforward plan for ending shareholders’ misery. Meanwhile a takeover by rival Midstates could slip away. The priority should be to get that deal off the ground.

Google takes JD.com to lunch to discuss Amazon

18 June 2018

The U.S. search firm’s $550 mln investment won’t buy much direct influence over the Chinese internet retailer. It’s more a hint that Google’s strategically flighty parent, the $800 bln Alphabet, hasn’t forgotten about taking on Amazon and Alibaba – and someday returning to China.

AT&T and Comcast alike in debt, not in risk

18 June 2018

Big acquisitions will leave the telco and cable firm with more than $170 billion of debt each. At first, Comcast’s bid for bits of Fox would create the heavier relative leverage load. But it’s AT&T’s recently closed merger with Time Warner that looks more vulnerable.

Carrefour tin ear puts fat cats in Macron’s sights

18 June 2018

The supermarket’s ex-boss forwent part of a 13 mln euro payoff after pressure from the French government. It shows that the ex-banker President Emmanuel Macron is no slave to laissez-faire economics. His move to liberalise firing rules makes corporate excess a legitimate target.

South32 finds acceptable way to splash the cash

18 June 2018

The BHP spinoff is paying $1.3 bln for the rest of Canadian miner Arizona Mining. The 50 percent premium sounds reminiscent of past mining M&A excess. Yet the deal makes strategic sense, and isn’t too pricey. Besides, South32 needs to deploy its mountain of net cash.

Audi arrest puts brakes on VW’s reform drive

18 June 2018

The head of Volkswagen’s luxury brand is being held over fears he may hinder an investigation into emissions cheating. The question is why the long-serving executive still had his job. The carmaker’s messy governance is still hindering new boss Herbert Diess’ cleanup operation.

Virgin Money is cheap bride in UK bank wedding

18 June 2018

The UK upstart lender is selling out to rival CYBG in an all-share deal worth 1.7 billion pounds. The premium on offer is little more than half the value of expected cost savings. Despite a UK slowdown and higher consumer credit risks, Virgin shareholders will feel short-changed.

Italian corporate finance suffers political shock

18 June 2018

The country’s election and its turbulent aftermath contributed to a sharp drop in capital markets activity. Despite still-buoyant M&A, total investment banking fees are down 30 pct year-on-year. This is bad news for banks, but worse still for local companies seeking funding.

French cable group suffers earnings power shortage

18 June 2018

Nexans lost almost a fifth of its value after saying EBITDA may fall 15 pct. The company’s racy growth plans rest on trends like offshore wind and soaring data use, but investors value it as a sector basket-case. Given the profit warning and a departing CEO, that looks fair.

Renault M&A race sidelines governance niceties

15 June 2018

Investors backed CEO Carlos Ghosn’s pay despite the French state’s opposition. His 7.4 million euro package was greased with soft targets. Yet the high proportion of shares at least gives Ghosn an extra incentive to push for a value-boosting merger with Japan’s Nissan.

Zell has financial reason to speak better of women

15 June 2018

The real estate mogul made tone deaf comments about women at a conference – not for the first time. Sam Zell has a history of speaking off the cuff, offset by a reputation as a skillful asset trader. His female-run REIT, an outperformer, shows why he ought to rein in his speech.

Rolls-Royce investors wisely keep the seat belt on

15 June 2018

The plane engine-maker aims to generate 1 pound of cash per share over the mid-term, quadruple this year’s estimate. Despite the bullish new target, shareholders don’t look to be pricing it in fully. A distant horizon and history of one-off costs explain why.

Glencore Congo settlement is a calculated risk

15 June 2018

Paying royalties to Israeli businessman Dan Gertler in euros rather than dollars helps solve the commodities giant’s headache in the African country, while avoiding falling foul of American sanctions. The danger, though, is that the United States changes the goalposts.

Chinese P2P giant Lufax dodges valuation bullet

15 June 2018

A mooted private fundraising of more than $1 bln makes sense. With regulatory change coming to peer-to-peer lenders, floating now could upset Beijing, and might only be doable at a bargain price. Abundant venture capital offers a way to keep growing without a distracting IPO.

India’s taxi-app war enters China territory

15 June 2018

Local operator Ola lost over $700 mln in the year to March 2017 despite growing revenue 70 pct. That’s nearly as much as Uber was burning when it was battling China’s Didi. The U.S. company’s commitment to India suggests losses will keep piling up for both SoftBank-backed firms.

Hermes loses niche status in fashion and finance

15 June 2018

The fashion group is joining rivals LVMH and Kering in France’s CAC 40 index. The Hermes family must get used to hoi polloi like ETFs and hedge funds crowding into its stock, and tougher disclosure norms. For companies, like luxury handbags, there’s a cost to going mainstream.

Xiaomi IPO escalates China’s battle of the bourses

15 June 2018

The handset-maker will now sell at least half of its mooted $10 bln offering in Shanghai. That is a blow to the other listing venue, Hong Kong, which changed its rules to woo more tech IPOs. The city will have to share a lot of this business with its two mainland rivals.

Chinese tutor’s short answer will be instructive

15 June 2018

Muddy Waters invoked Enron in its fraud accusations against $24 bln Tal Education. Complicated attacks can be hard for outsiders to parse, but corporate responses to bearish investors are often telling. China Internet Financial Services and AMD provide useful case studies.

Judges supplement U.S. defences on China trade

15 June 2018

The Supreme Court said courts shouldn’t take foreign governments’ claims about their own laws at face value. The underlying case, over vitamin price-fixing, rumbles on. This decision attacks an inconsistency Beijing has exploited in arguing firms are just following orders.

SoftBank and WeWork co-create rocketing valuation

14 June 2018

The giant Vision Fund may inject more cash into the loss-making shared-office provider at nearly double its previous $20 bln worth. WeWork is growing fast, but that was already priced in. One test is whether SoftBank puts a lot of money where its mouth is, or only a little.