Corona Capital: Fauci, Covea/Exor, Uber pay 12 May 2020 Concise views on the pandemic’s corporate and financial fallout: Anthony Fauci testifies on the coronavirus in Congress; Covea pulls back on PartnerRe; and Uber’s executive pay gets only lukewarm support.
Hotels can ride out a cleaner, more vacant future 12 May 2020 The U.S. lodging industry is bleeding $1.4 bln a week in sales. The lockdown wind-down will offer some respite, but new hygiene measures like deep cleans and 24-hour delays between guests will slash occupancy. Big brands like Hilton and Accor have a leg-up in the post-Covid era.
PNC picks Covid moment to cash in BlackRock chips 12 May 2020 The regional bank is selling its 22% stake in the asset manager, worth $17 bln. PNC has had a great ride, but new rules could have become a headache for both companies. The timing means boss Bill Demchak will have a big war chest to go looking for bargain acquisitions.
Climate activists get bigger bang from smaller ask 11 May 2020 U.S. fossil-fuel firms have been more resistant to shareholders’ demands on global warming than European rivals. But a majority of Phillips 66 owners just backed a climate vote that Exxon and Chevron will soon face. The activists’ success may be down to their more targeted scope.
White House only has half a 5G strategy 11 May 2020 The Trump administration has strengthened its telecom regulator’s ability to defend against problematic foreign involvement in the nation’s next-generation network. But building a robust 5G platform also means fostering decent alternatives to blacklisted entities like Huawei.
Coty applies KKR’s cash to cover deal scars 11 May 2020 The private-equity firm will pay $3 bln for a majority stake in brands Coty bought from P&G for $12.5 bln. A direct investment of $1 bln in Coty will further tone down its crushing debt load. It's a loss of face – but not quite of control – for parent JAB.
Fed jump-start leaves CLO buyout motor sputtering 11 May 2020 The vehicles that buy most leveraged loans are suffering as downgrades saddle them with too much ropey debt. The Federal Reserve’s lending facilities will help – but not enough to gin up much appetite for new loans. Private equity dealmaking could be stuck in the slow lane.
Corona Capital: Tequila sales, U.S. healthcare 11 May 2020 Concise views on the pandemic’s corporate and financial fallout. Sales of Mexico’s famous liquor soared in April – though not enough to take more than an edge off as the country’s economy falters. And the Amazon-Berkshire Hathaway-JPMorgan healthcare venture may need a new boss.
Saudi’s $69 bln asset rejig collides with reality 11 May 2020 Giant Aramco is trying to cut the price of last year’s deal to buy 70% of chemicals firm SABIC. A discount would give Riyadh’s Public Investment Fund less cash to pivot Saudi’s economy away from oil. Budget concerns make helping the kingdom’s corporate cash cow more important.
Fringe taxes will go mainstream when lockdowns end 11 May 2020 Governments are currently handing out money, but their focus will eventually shift to recouping the costs of the crisis. The target will be those who benefited most from bailouts. Expect wealth taxes, tariffs on tech firms, and levies earmarked for public health to gain new fans.
Virus will accelerate European mall king’s decline 11 May 2020 Unibail-Rodamco is facing a cash crunch as retail tenants withhold rent. Although the crisis looks temporary, the accelerated advance of online shopping is an existential threat to the 7 bln euro Westfield owner. Disposals may be the only way to shrink its 24 bln euro debt load.
Review: The devil wears Ferragamo 8 May 2020 The life of a junior banker is hell, and Bill Keenan offers a guided tour from his Deutsche Bank days. Through a torrent of Excel emergencies and late-night food deliveries he grasps Wall Street’s rapacious essence. That makes “Discussion Materials” an enjoyable if grating read.
Nomura plays it too safe during downturn 8 May 2020 The Japanese bank posted a quarterly loss of $325 mln as slumping markets dented its asset management unit. Nor did its trading desk produce the sort of bump enjoyed by rivals like Morgan Stanley. New boss Kentaro Okuda has some work to do in restoring Nomura’s killer instincts.
Luckin pileup crashes into China’s car lot 8 May 2020 The coffee chain scandal hit shares in Car Inc, a rental firm chaired by Luckin founder Lu Zhengyao. Lu also leads Ucar, whose banks could dump a slug of Car Inc pledged as collateral, triggering a change of control and dragging in Warburg Pincus. It’s a lesson in key-man risk.
Uber, Lyft need more than cuts to fill profit tank 7 May 2020 The U.S. ride-hailing firms are slashing staff amid a drop in their core business. Uber is in better shape with more revenue streams like food delivery. But lowering expenses only goes so far. Reductions can also hurt their long-term future if autonomous-vehicle investments fall.
Elliott’s utility rescue flips a familiar switch 7 May 2020 Paul Singer’s hedge fund is part of a group investing $1.4 billion in struggling Texas-based CenterPoint. It has had a tough few months, on top of the challenges that power companies in general face. And Elliott has experience: A similar deal with FirstEnergy in 2018 paid off.
Viewsroom: Mega-mega mergers 7 May 2020 The Great Lockdown will inevitably encourage governments to foster the creation of ever-larger “national champions” through corporate consolidation. Rob Cox, Edward Chancellor and Lauren Silva Laughlin discuss possible combos – and why this would be a bad outcome for capitalism.
Thyssenkrupp lift deal becomes $18 bln albatross 7 May 2020 Advent and Cinven paid up for the German group’s elevator unit because it looked virus-proof. Sadly for the buyout barons, a possible 10% revenue drop this year means it may be anything but. The duo could be stuck with a low-return asset, a level below private equity’s top floor.
Cable networks risk post-virus vicious cycle 7 May 2020 Live sports are a big reason Americans tolerate pricey pay-TV packages. The lack of games is an excuse to cut the cord. Yet the NFL and others will want more for broadcast rights to make up for empty seats. That could push cable bills higher, and more subscribers toward the exit.
UK telecom merger harks back to pre-virus era 7 May 2020 Liberty’s Virgin Media and Telefonica’s O2 are creating a $39 bln mobile and cable giant. For a deal negotiated under lockdown, there’s little evidence of Covid-19. Valuations are robust and cost savings reasonable. A big dollop of extra debt allows both partners to extract cash.