Companies & Funds

Ontario gives succor to Hudson’s Bay activist

18 June 2019

The Canadian province’s pension plan has ended a deal to sell shares to the retailer’s chairman at the same price he is now bidding for the whole company. That suggests common ground with investor Jonathan Litt, who says the buyers can pay more than the $1.3 bln offered so far.

Wells Fargo needs more than a new CEO

18 June 2019

There are obstacles to getting an external replacement for interim chief Allen Parker. But getting Wells Fargo back on course is more than a one-person job. The answer might be to keep Parker on, sandwiched between an executive chair and a seasoned second-in-command.

Facebook throws down crypto-gauntlet to critics

18 June 2019

The social network’s poor track record on privacy makes it an unlikely creator of digital money. Yet it boasts 2.4 bln users and has enlisted some of the biggest names in tech and finance as partners. The new currency, Libra, is a bet that Facebook’s trust problems are overblown.

Qatar shows up late to wealth fund buyout party

18 June 2019

The gas-rich emirate’s wealth fund plans to choose its own investments in areas like tech and private equity, instead of using third-party managers. That chimes with what rivals are doing, and echoes its own racy history. Now is hardly the best time to revert to type, though.

Lowball Nordic IT sale gives Apax a better exit

18 June 2019

The buyout firm accepted a lowly 1.3 bln euro cash-and-shares offer for Norwegian computer services firm Evry from Finnish rival Tieto. The measly 15% premium is less than half the value created by cost savings. Still, a 20% stake in the combined group should be easier to sell.

China infrastructure bump comes at steeper cost

18 June 2019

Beijing is tweaking rules to allow local authorities to step up spending on public projects, which might add 4 percentage points to infrastructure growth this year. Rule changes should let officials borrow more, but they will face a harder time generating returns.

Sweden provides a cautionary digital tale for HSBC

18 June 2019

Hong Kong’s new online banking licences open the UK-based titan to new challenges in a market that accounts for 30% of pre-tax profit. Scandinavian giants such as Swedbank quickly fell prey to startups. And HSBC will be up against the likes of tech-savvy Alibaba and Tencent.

U.S. bank shareholders are their own worst enemy

17 June 2019

Hopes of more M&A among the nation’s 5,000 lenders have put high valuations on even ho-hum targets. So buyers often can’t avoid the cardinal sin of diluting book value, even if cost cuts outweigh any premium. A Texas bank’s $2.1 bln takeover of a smaller rival is the latest case.

Ride-hailing misses the U.S. IPO bus

17 June 2019

Lyft and Uber are rare laggards among 2019 debutants. Plant-based burger maker Beyond Meat is the top performer, but others involve video chats, online retailing, cybersecurity, and plain old blue jeans. Investors see a bright future – except perhaps in the overhyped gig economy.

Chanel’s bling valuation will keep suitors at bay

17 June 2019

The privately held label made 2 bln euros of net profit in 2018. Valued like rival Hermes, it’s worth 90 bln euros. Chanel may be in flux after Karl Lagerfeld’s death, but its bulk would make suitors think twice even if its controlling investor wanted to sell.

Sotheby’s bid a bad case of Pinault envy for Drahi

17 June 2019

Cable tycoon Patrick Drahi is buying the auction house for $3.7 bln at a 60% premium. Even with cost cuts, the financial prospects are humdrum. As with fellow French billionaire François-Henri Pinault’s purchase of Christie’s, the returns look more reputational than financial.

Skill, luck and law drive $11 bln biotech buyout

17 June 2019

Array BioPharma has developed several potential blockbusters for others. But it wouldn’t be selling to Pfizer at a 62% premium without an earlier gift from antitrust regulators. A pact between two rivals sent valuable drugs Array’s way, along with cash, making it a juicy target.

Rome can get edge on Paris with network M&A

17 June 2019

Telecom Italia may buy rival network provider Open Fiber. A deal could revive its fortunes by taking out a competitor. And a valuation of over 2 bln euros would allow the government, a shareholder in both, to secure control of the telco, at the expense of French rival Vivendi.

Now is the time to buy Deutsche Bank

17 June 2019

The German lender’s market value has shrunk to 13 bln euros, or about 20% of tangible book value. The retail lending and fund management units alone justify a higher price. If boss Christian Sewing can shrink the investment bank without major stumbles, the shares will rebound.

Lufthansa is early loser in European airfare war

17 June 2019

The German carrier’s Eurowings unit has been dinged by aggressive pricing from rival budget operators. With costs per seat almost double those of market leader Ryanair, it’s not hard to see why. A change of course is needed but, given domestic labour rules, that won’t be easy.

Babcock right to reject Serco’s cheeky merger plan

17 June 2019

The 2.5 bln pound UK defence contractor rebuffed the outsourcer in January. Serco is smaller, has lower margins and provides less-skilled services. The combination would also be over-reliant on British military. Though consolidation makes sense, the financial logic must stack up.

UBS sets a troubling precedent in China

17 June 2019

The Swiss bank put economist Paul Donovan on leave after misconstrued comments triggered outrage in the mainland. Local rivals fed the unwarranted flare-up. The episode hints at new pressures for outsiders in the country; excessive subservience, however, creates bigger headaches.

Toyota uses financial heft to hedge green bets

17 June 2019

The $176 bln behemoth is spreading clean energy investments across pure electric cars and hybrids as well as hydrogen, partnering with rivals like Subaru to reduce costs. The company’s sheer scale makes the strategy feasible, but Nissan’s more conventional solution is a threat.

Broadcom flashes a broader economic warning

14 June 2019

The $105 billion chipmaker’s woes extend far beyond the U.S. ban on exports to China’s Huawei. Broadcom’s rapid expansion has made it a supplier to everybody from mobile phone firms to telcos to the auto industry. When their demand for chips declines, growth often slows too.

Review: Why an AI apocalypse could happen

14 June 2019

Elon Musk and Stephen Hawking have warned that superintelligent machines could destroy humanity. In "The AI Does Not Hate You", journalist Tom Chivers offers a terrifying primer on why they should be taken seriously. Governments and companies, though, still need convincing.