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Companies & Funds

Even a half-empty glass would satisfy dealmakers

24 Mar 2023

Despite efforts to put on brave faces, M&A advisers gathered in New Orleans betrayed uncharacteristic pessimism. Just as clients were coming to grips with tougher financing, regulatory and valuation considerations, banks started collapsing. Confidence is in ever-shorter supply.

Bank investors grapple with scary post-truth world

24 Mar 2023

Shares in European lenders like Deutsche Bank fell by as much as 10%. There’s no clear problem, since they’re liquid and well-capitalized. But Credit Suisse effectively failed days after regulators declared it sound. It leaves markets jittery, and banks uncertain how to respond.

Bitcoin is a solution looking for a problem

24 Mar 2023

Peter Thiel says the cryptocurrency is an inflation hedge, and bitcoin’s price has soared since Silicon Valley Bank’s collapse. But his actions don’t match that advice, and the Fed’s backing of the system is antithetical. Plus, importantly, bitcoin, unlike gold, is speculative.

Capital Calls: Microsoft/Activision, Subscriptions

24 Mar 2023

Concise views on global finance: The software giant convinced UK regulators to drop one of two major concerns about its $69 bln deal. Meanwhile, the U.S. Federal Trade Commission has picked an easier — and less controversial — fight than its antitrust crackdown.

Deutsche Bahn $16 bln sale has non-obvious endgame

24 Mar 2023

The German railways group may sell logistics arm DB Schenker for over $16 bln to cut debt. The most obvious fit is rival DSV. But selling to private equity or French shipping giant CMA CGM could mean fewer job cuts, which may be more appealing to Deutsche Bahn’s state owner.

Perfection is enemy of $15 bln Toshiba buyout

24 Mar 2023

A group led by Japan Industrial Partners will offer less than two times what foreign activists paid per share to bail out the firm in 2017. It’s not the dream deal outsiders hoped for, but markets are uneasy and geopolitics fast-changing. If it goes through, it’ll be a win.

Ford’s path to electric glory requires rocket fuel

23 Mar 2023

The US carmaker revealed $3 bln of losses in its electric-vehicle unit, with $3 bln more coming this year. Its targets suggest $8 bln of operating profit by 2027. That gives investors a roadmap for Ford’s race against Tesla, and a clearer vision of how ambitious that is.

Short-seller attack blunts Block’s edges

23 Mar 2023

Shares of the Jack Dorsey-led payments company dropped over 10% after Hindenburg Research flagged customer-quality issues and loopholes that have supported its growth. These seem troublesome not terminal, but it’s enough to put a question over Block’s generous valuation.

Canada’s retail problems augur insular economy

23 Mar 2023

Nordstrom became the latest US chain to fold up north after failing to crack a relatively small market with local competition. Fewer major metropolitan areas than the US is one issue, but the challenges aren’t confined to the sector. Canada is at risk of further isolating itself.

Spooked dealmakers scurry back into their foxholes

23 Mar 2023

Beyond high-profile cases against Google, US trustbuster Jonathan Kanter is rewriting the anti-consolidation playbook. As he shreds historic guidance, pursues criminal charges and focuses on labor, CEOs are putting M&A on ice. It’s worth waiting to see which policies stick.

Zombified Evergrande will haunt for years to come

23 Mar 2023

The Chinese developer’s plan to restructure $20 bln of offshore debt proposes long repayment terms and sweeteners of dubious value. If approved, Evergrande still needs twice the amount in financing to finish building presold homes. The next problem is for onshore borrowers.

Swiss CoCo litigation may have a broader payoff

23 Mar 2023

Holders of Credit Suisse’s $17 bln contingent convertible bonds think authorities were wrong to wipe them out. A legal challenge will take years. Still, Bern might decide to placate angry investors. And a fight will discourage countries considering following the Swiss example.

Credit Suisse rescue sends shockwaves far and wide

23 Mar 2023

The ailing Swiss lender was saved by UBS with a $3 bln takeover. In this Viewsroom podcast, Breakingviews columnists debate why the deal pushes up bank funding costs, how the new mega-lender affects Switzerland’s financial system, and why bank deposits are becoming less reliable.

John Lewis needs a breakup more than a rescue

23 Mar 2023

The UK employee-owned retailer wants to raise $2.5 bln to improve its ailing stores. But that could leave a new investor owning nearly half the company, undermining its mutual status. Merging its grocer Waitrose with rival M&S would bring in cash and forge a more viable player.

Tencent puts spring back in its step

23 Mar 2023

After years of crackdowns and quarantines, the $423 bln giant sees green shoots sprouting in its video-games and ads businesses. The combination of regulatory respite, a post-lockdown consumption bounce plus cost cuts have put Tencent in a sweet spot for 2023.

Deposit guarantees are the new Jedi mind trick

22 Mar 2023

Savings in US banks are safe, say Fed chief Jay Powell and Treasury Secretary Janet Yellen. If depositors believe them, they’re right, and confidence in the system should bounce back. The catch is that risk-free banking isn’t theirs to give. Even if it were, the cost is high.

Insurers put a higher premium on energy transition

22 Mar 2023

Chubb is heaping extra pressure on fossil fuel producers by adding methane-emissions reduction to its underwriting criteria. It’s a cost-effective area to target. Rising public pressure and natural disaster losses also will keep making coverage pricier and harder to secure.

Capital Calls: Nike, Stablecoins, Meme stocks

22 Mar 2023

Concise views on global finance: The Air Jordan maker grew quarterly revenue 14% despite inventory woes and China’s slow reopening; diverging demand for Circle and Tether cryptocurrencies raises questions about how investors are assessing risk; and GameStop’s shares surged 40%.

Swiss CoCo shakeout may yet help bank regulators

22 Mar 2023

The market for quasi-equity bonds is reeling after Credit Suisse wiped out its own ones. The higher cost of issuing the securities means banks may now roll over their maturing debt, rather than replace it as per the market norm. That could actually help financial stability.