Aramco’s SABIC saga ends in unhappy compromise 17 Jun 2020 The $69 bln that the oil giant has ended up paying for a 70% stake in the chemicals firm is a lot more than its current value. Aramco’s consolation is that it can pay SABIC’s owner, a Saudi wealth fund, over a longer period. But neither buyer nor seller is getting what they want.
Corona Capital: J.C. Penney, Hockey 17 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: Executives at bankrupt clothing chain J.C. Penney sell their shares for, well, pennies; and ice hockey gear supplier Bauer adapts for the Covid-19 era.
Uber’s M&A plans thumped by inflated values 16 Jun 2020 DoorDash and other food delivery services are basking in higher multiples as the pandemic helps business. That puts a damper on Uber’s deal plans. Its valuation is muted because of shared rides. But fortunes can change quickly when lockdowns ease, putting Uber in a better spot.
Nikola insiders take Tesla hype for a spin 16 Jun 2020 BlackRock, Fidelity and Norges Bank are among investors that may sell shares in the electric-truck maker barely two weeks after its merger with a blank-check firm. That’s quick for any company, let alone one with barely any sales. Even Elon Musk’s outfit isn’t quite that racy.
The Exchange: Bruce Flatt 16 Jun 2020 The office is not dead, though hot-desking may be. The elevator needs a rethink. And don’t rule out the shopping mall. Brookfield Asset Management’s chief executive made these and other predictions for the post-pandemic global economy in a recent chat with Breakingviews editors.
Royalty Pharma merits private equity drug discount 16 Jun 2020 Pablo Legorreta’s company, which buys up revenue streams on potential blockbuster drugs, went public at a nearly $17 bln valuation. It has been a buyers’ market with limited competition. But rising political risk warrants a big discount to more diversified peers like Blackstone.
Wirecard CEO is approaching his day of reckoning 16 Jun 2020 The $14 bln payments group is due to publish its delayed 2019 annual results on Thursday. If EY flags issues with its accounts, Markus Braun’s position will be untenable. Even the auditor’s seal of approval may not save the chief executive from investors who want him out.
Corona Capital: Next crisis, Overvalued markets 16 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: Deutsche Bank analysts sound a warning about future catastrophes, while investors try to square overpriced stocks with their hopes of a recovery.
Merkel’s EV gambit just flags how far EU has to go 16 Jun 2020 Germany wants to install 1 million charging points by 2030 to persuade drivers to switch to battery-powered vehicles. The EU may need six times that amount, costing $23 bln, to hit carbon reduction targets. At a time when money is tight, it’s a big ask.
Perfect storm blows Swire Pacific model away 16 Jun 2020 The Hong Kong conglomerate expects big first-half losses in its property, airline and marine services units. Protests, Covid-19 and weak oil demand have taken their toll. The sprawl wasn’t providing much of an edge before disaster struck, however, and warrants reconsideration.
China’s $9 bln classifieds buyout is an easy sale 16 Jun 2020 A group including Warburg Pincus will take U.S.-listed 58.com private. A 20% premium is decent for a business that has fallen out of favour to sexier tech stocks. Private equity boasts a strong record in classifieds, and can offer 58.com a clean exit from an unwelcoming market.
GE institutionalizes outsider executive culture 15 Jun 2020 John Slattery is the first non-legacy GE employee in decades to run Aviation, the U.S. firm’s crown jewel. It’s a bold move by fellow outsider, CEO Larry Culp. Among Slattery’s challenges is to manage GE’s ties with Boeing – which just snatched another job from under his nose.
AT&T game division sale is M&A in newb mode 15 Jun 2020 The telecom giant is mulling an auction of the unit behind Mortal Kombat. The timing is right – video game makers are ascendant – and a mooted $4 bln comes in handy to pay down debt. The harder move is figuring out what to do with other, bigger assets like DirecTV.
Buyout fund investors score some leverage on fees 15 Jun 2020 Private equity pools raised between 2006 and 2015 performed no better than public stocks, an Oxford University study found. Pension funds and other backers probably won’t abandon groups like Blackstone and KKR. Yet proof of shrinking returns helps make the case for lower costs.
BP’s greener credentials sharpen focus on dividend 15 Jun 2020 The energy giant is writing off up to $17.5 bln after slashing long-term oil price forecasts. BP’s green transition would get an extra boost if it cut dividends to spend more on low-carbon output. But as Royal Dutch Shell has found, that irks investors it needs to keep sweet.
Corona Capital: Frequent fliers, Folies Bergeres 15 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: United Airlines hocks its MileagePlus loyalty program for $5 bln from Goldman; Lagardere tries selling Parisian nightlife venues, including Les Folies Bergeres and Bataclan theatre at perhaps the worst time ever.
UK’s pandemic insurance test will be first of many 15 Jun 2020 A British court will decide in July whether 1,200 firms can claim for lost sales caused by Covid-19. Insurers can easily absorb worst-case losses of around $380 mln. But with other countries planning similar rulings, business interruption policies could yet prove a big headache.
Tencent’s China car deal defies and disappoints 15 Jun 2020 A consortium led by the tech giant has agreed to buy New York-listed Bitauto for $1.1 bln, the same price proposed months ago. Globally, buyers have tried to cut lower prices on pre-pandemic deals. But the outlook for China’s auto market is rosier: Tencent is getting a bargain.
Hertz throws equity wrench in bankruptcy melee 12 Jun 2020 The car-hire firm wants to raise up to $1 bln by selling shares to replace debt that usually finances a restructuring. It may pay off, but equity usually crashes into a wall in Chapter 11. The stock market’s irrational exuberance is letting Hertz test-drive an unusual vehicle.
Corona Capital: KKR, Rugby, Centene 12 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: KKR volunteers advisers to share the pain, Super Rugby heads back to the pitch, and Centene's best bet.