Bank of America is JPMorgan without the swagger 15 Apr 2021 Surging markets and an improving credit outlook handed Brian Moynihan his best return on equity to date. Yet it’s still half what Jamie Dimon’s bank managed, and their valuations are far apart. Given Bank of America’s conservativism, an economic growth spurt may widen that gap.
Capital Calls: Delta Air Lines, L’Oreal 15 Apr 2021 Concise views on global finance: The U.S. air carrier says it was cash-flow positive in March, signaling the beginning of the end of the pandemic; the French cosmetics group has too much cash, which could be useful for dealmaking.
UniCredit’s boss needs currency more than deals 15 Apr 2021 The Italian bank’s new CEO is a veteran rainmaker. But UniCredit’s lowly share price makes M&A difficult and expensive. A hyper-focus on improving the lender’s returns will bolster UniCredit vis-à-vis prospective targets. Andrea Orcel’s best deal is not to rush into one at all.
Everyone’s chipmaker deftly tries to please all 15 Apr 2021 A global shortage spotlights TSMC's near-monopoly in manufacturing advanced semiconductors. It's raising capex 66% as earnings soar and foreign governments lobby it to boost output. That’s a huge spending jump but the $560 bln giant has a strong track record of managing risk.
China’s antitrust push forces digital reinvention 15 Apr 2021 Beijing has ordered 34 online platforms including ByteDance and JD.com to rectify their behaviour. Unable to demand exclusive contracts, abuse subsidies or personal data, some will scramble to find new revenue streams. That means M&A, vertical integration, and research spending.
Michael Dell has cake and eats it with VMware 15 Apr 2021 His IT conglomerate will spin off a $53 bln stake in the listed cloud business after extracting a chunky dividend. Cleaning up Dell’s balance sheet and separating VMware benefits both. With Michael Dell in control of Dell and chairman of VMware, the M&A drama also could double.
Televisa twist gives Univision a better script 14 Apr 2021 The Mexican company is injecting its content assets into the U.S.-based Spanish-language media group for $4.8 bln. Televisa becomes the largest shareholder in a bigger and less leveraged business. Size matters in media, but Univision is a late arrival to the streaming party.
U.S. corporate tax hike is mostly no big deal 14 Apr 2021 Joe Biden’s plan to raise the rate to 28% from 21% would boost Washington’s coffers. For companies and investors, though, it may not matter much over time. In a series of charts, Breakingviews illustrates why. Within reason, America’s tax rate will remain competitive, too.
Goldman’s trading blowout is a blast from the past 14 Apr 2021 The Wall Street bank’s 31% return on equity for the first quarter, a number it hasn’t seen in over a decade, reflects the boom in markets that buoyed JPMorgan too. Banks are far safer than when Goldman last made such jumbo returns. Subdued valuations suggest they won’t last.
Coinbase float is crypto’s paradoxical moment 14 Apr 2021 The digital currency exchange’s direct listing on Wednesday may value it at more than $100 bln. The validation will fuel bitcoin, already at an all-time high, as well as Coinbase itself. The figure also presents a puzzle. If Coinbase is worth this much, competition is coming.
Epic’s $29 bln price tag looks beyond “Fortnite” 14 Apr 2021 Its latest fundraising values the maker of the cult shoot-’em-up game at two-thirds more than last August. That’s a bigger bump than listed peers got from the pandemic. Investors are counting on boss Tim Sweeney’s bets on digital marketplaces and game-making software to pay off.
Czech billionaire’s supermarket raid looks pricey 14 Apr 2021 Daniel Kretinsky doubled his stake in British grocer J Sainsbury to 10%, prompting talk of a takeover. The $7.5 bln chain has thrived during the pandemic, but a reopening economy will mean more competition and higher costs. A buyout would yield mediocre returns.
Capital Calls: Christine Lagarde, Bernie Madoff 14 Apr 2021 Concise views on global finance: The European Central Bank president’s quest for inflation will take a while to achieve its goal; investor gullibility will live on after the death of the Ponzi schemer in a U.S. federal prison.
SAP’s nice surprise makes case for value discount 14 Apr 2021 The $166 bln German IT group is wooing customers to its cloud software, boosting revenue. Yet investors aren’t giving CEO Christian Klein much credit. It’s hard to predict when clients will roll off SAP’s old-school products. A track record of shifting targets doesn’t help.
Virgin Active gives landlords a post-virus sweat 14 Apr 2021 The pandemic-hit gym group founded by Richard Branson wants lower rents. It’s using a new restructuring tool to force the issue with support from other creditors. Faced with a wave of copycats, bruised property owners’ only option is to be more selective about future tenants.
Toshiba CEO exit gives better governance a chance 14 Apr 2021 Nobuaki Kurumatani already was losing support from investors and staff. His ties to buyout bidder CVC may have cost him backing from directors too. The board can help make up for a series of missteps by running a robust sale process that secures a good deal for shareholders.
Wall Street’s roaring 2021 is as good as it gets 13 Apr 2021 Dealmaking and trading are ebullient, and money earmarked for bad debts may go to shareholders instead. But from Goldman’s no-work Saturdays to BofA’s pay hikes and law firm bonuses, the cost of keeping staff happy is rising. Big firms rarely get so much out of so few for long.
Grab’s $40 bln debut comes with twin airbags 13 Apr 2021 The Southeast Asian taxi-to-fintech firm is going public at a sales multiple twice Uber’s. U.S. SPAC sponsor Altimeter is contributing to a $4 bln PIPE and signing a long lockup. It’s a smart way to underwrite an amped-up valuation and sets a template to speed others to market.
Capital Calls: LVMH surges back to full health 13 Apr 2021 Concise views on global finance: The 300 billion euro luxury conglomerate’s first-quarter sales surpass pre-Covid-19 levels.
Credit Suisse bonus cuts are a necessary gamble 13 Apr 2021 Losses from the Archegos blowup forced the Swiss bank to set aside less for payouts. The risk is that rainmakers and star traders leave. CEO Thomas Gottstein might welcome a smaller investment bank given low historic returns. It’s an overdue test of the market for banking talent.