China shows foreign investors carrot and big stick 31 Jul 2018 Plans to ease restrictions on overseas investment in mainland stocks are a welcome respite from trade tensions. But vetting buyers for security risks, as in the U.S., gives officials new clout. China’s recent veto of Qualcomm’s bid for NXP will make investors extra wary.
Asian videogame giant gives away online store 31 Jul 2018 Tencent-backed Sea, at $4.5 bln, trades at a 50 pct discount to the sum of its three parts, Breakingviews calculates. Investors essentially get the Shopee e-commerce business for free. With Alibaba-owned Lazada a big rival in Indonesia, the valuation gap may prove hard to close.
How Sergio Marchionne saved Fiat and Chrysler 30 Jul 2018 The automakers’ former boss, who has died at 66, rescued both from the wrecker’s yard. His push for breakups and consolidation also helped produce better shareholder returns than his main rivals. A new selection of Breakingviews columns offers a taste of his 14-year tenure.
Rite Aid’s itch should be easy to scratch 30 Jul 2018 Hedge fund Highfields objects to Cerberus-owned Albertsons’ merger with the $2 bln drugstore chain. Minor conflicts at board level don’t help. But plenty of value is being offered to Rite Aid investors. Albertsons doesn’t need to offer much more to make a deal look reasonable.
Carlyle mega-fund rolls with valuation tide 30 Jul 2018 The buyout firm’s largest single pool of capital, at $18.5 bln, coincides with fresh records across the industry. It may get harder for Carlyle and its ilk to deliver high returns. With shareholders prizing fees over investment profit, though, taking more money is a no-brainer.
#MeToo is only one of CBS’s Les Moonves problems 30 Jul 2018 The media group is investigating its CEO over sexual-harassment accusations. Even without that, he was a risk. CBS has an entrenched board, is fighting unhelpfully with controlling owner Shari Redstone and faces a tricky industry-wide transition. Moonves is no longer an asset.
Heineken short on ideas to close AB InBev chasm 30 Jul 2018 The Dutch brewer’s shares fell after it said operating margins would dip this year instead of rise. The gap between its profitability and that of bigger rival AB InBev is widening. And beyond more craft beer, Heineken has few convincing ways to close it.
Vivendi disposals give Bolloré scary M&A war chest 30 Jul 2018 Vincent Bolloré’s acquisitive media group raised $2.7 bln from disposing of stakes in Ubisoft and Fnac Darty, and could borrow more. Possible targets are video games and live music. Yet given a dicey Italian foray and stretched valuations, investors may prefer cash to more M&A.
China’s Starbucks-wannabe has a weak brew 30 Jul 2018 Luckin Coffee says it's worth $1 bln after raising money from Singapore’s GIC and others. It’s growing fast and wants to woo consumers away from its dominant rival. Yet an emphasis on takeaways and sub-prime locations means the startup is not shaping up as a threat.
Saudi’s Aramco plan B is too clever by half 27 Jul 2018 With the oil giant’s listing stalled, Riyadh wants to lever it up to buy a stake in chemicals group SABIC. It shouldn’t overburden Aramco, and offers a roundabout way of getting money to the state. But compared to an IPO it’s riskier, and does less to boost Saudi capital markets.
Exxon long-term view is more than short-term worry 27 Jul 2018 With declining production, the $360 bln group is missing out on current buoyant oil prices. Chevron’s second quarter likewise fell short, but along with European competitors it is boosting share buybacks. Exxon’s owners can justifiably fret about the industry’s uncertain future.
Review: Barclays’ enduring investment bank problem 27 Jul 2018 In “The Bank That Lived a Little”, Philip Augar documents the UK lender’s tortured attempts to build a business capable of taking on Wall Street rivals. Battles over strategy, scandals, bonuses and poor returns will be all too familiar to present boss Jes Staley.
Twitter purges users and shareholders alike 27 Jul 2018 The social network’s efforts to reduce spam, fake users and toxicity shrank active monthly users. Investors fled as well. That leaves both the platform and valuation more salubrious. Healthy returns will now depend on finding growth.
BP takes worthwhile gamble with shale deal 27 Jul 2018 The $10.5 bln that the oil major is paying for BHP’s U.S. shale assets is a full price and allows the miner to finally extricate itself from an expensive mistake. But BP is plugging a strategic gap and can easily cut costs. That makes the price appear more reasonable.
TSB malaise is spreading at Sabadell 27 Jul 2018 The Spanish bank reported a 196 mln euro loss in the second quarter and its capital ratio sunk. Problems at UK arm TSB are not going away, a bet on Italian bonds misfired, and its domestic business is weak. The litany of woes means Sabadell’s discount to peers may widen.
Baby food will only briefly sate consumer giants 27 Jul 2018 The best second-quarter sales performer for Reckitt Benckiser and Danone was infant formula. Demographics are favourable in China, and parents are less tempted by cut-price brands. But with so many companies homing in on this lucrative market, competitive pressures are growing.
Pinduoduo polishes New York’s tech IPO crown 27 Jul 2018 The shopping app’s shares rose 40 pct in their U.S. debut, valuing it at $34 bln. New York has lost some marquee China tech floats to Hong Kong of late, but those it won have mostly outperformed Fragrant Harbour debutants. The Big Apple is still the host with the most.
Yum China deserves more than a cheap takeout 27 Jul 2018 Hillhouse is reportedly in talks to buy the KFC operator. It looks opportunistic given Yum’s knockdown valuation. If successful, the Beijing investment outfit gets a China consumption play with Western-style governance, and its tech savvy could supersize the $14 bln company.
Australian media mega-merger price looks generous 27 Jul 2018 Newspaper publisher Fairfax Media agreed to a $1.6 billion buyout bid from broadcaster Nine Entertainment. Consolidation in the country’s media industry was inevitable given recent liberalisations. But Nine shareholders have reason to be displeased by the premium offered.
Amazon’s growth is leaving the shop behind 26 Jul 2018 Jeff Bezos's outfit gets only about half its revenue from its online stores, down from two-thirds two years ago. E-commerce is growing, but the businesses Amazon has built around it are expanding faster and producing much more profit. That makes its valuation a little less crazy.