Indian bank M&A looks hard to copy 24 Nov 2014 Kotak Mahindra’s $2.4 billion all-share offer for ING Vysya is a rare example of consolidation amongst India’s sizeable private banks. Founder Uday Kotak needs to reduce his stake. Dutch group ING’s willingness to accept a smaller shareholding in a larger group is also key.
Sotheby’s CEO exit more scream than car crash 21 Nov 2014 Two artworks with those names are together worth about the $220 mln that Bill Ruprecht’s pending departure has added to the auctioneer’s value. The scream comes from board members like Dan Loeb, dissatisfied with the firm’s performance. By acting now, they may avoid a car crash.
Pru’s lesson for investors: trust animal spirits 21 Nov 2014 The UK insurer’s stock hit a record this week, leaving rival Aviva trailing in its wake. It is a painful reminder of how Aviva lost out by failing in its attempt to buy Pru in 2006. The main reason there was no deal? The bidder lacked investor support to pay a fair premium.
Apollo, TPG dabble in Caesars sleight-of-hand 20 Nov 2014 The casino’s private equity owners are haggling with creditors. One idea is to split a key unit into operating and property arms, as rivals have. Such financial engineering would fit well with Apollo and TPG’s earlier moves to turn this top-of-the-market LBO into a decent bet.
ThyssenKrupp recovery is credible but priced in 20 Nov 2014 After three years of losses, the German engineer’s annual results showed 195 mln euros of earnings. Cost-cutting is ahead of plan, orders are up and debt is down. A surprise dividend shows new confidence. On a rough 30 pct premium, the shares optimistically expect more good news.
Brazil faces its come-to-Corcovado moment 19 Nov 2014 A corruption scandal at $63 bln national oil champion Petrobras is unfolding quickly with news that one executive has been fired and about 15 more fingered. Writedowns could hit $15 bln and political fallout may spread. The debacle affords Brazil an opportunity for major reform.
Activist row bigger than Keystone for TransCanada 19 Nov 2014 A sparring match with a dissident investor may be more important than the fate of the $35 bln Canadian group’s tar sands pipeline. Bay Street has welcomed activists, and the regulatory environment is favorable. But for now, TransCanada appears to have shareholders on its side.
Areva holders pay for years of state blunders 19 Nov 2014 The French nuclear plant maker lost a fifth of its market cap after a profit warning. The state still owns 90 percent of the group, limiting the damage. But the collapse is an opportunity to review a long series of destructive government errors, both industrial and political.
Parcel pressure weakens Royal Mail investment case 19 Nov 2014 Package delivery is one of the few sources of growth for the UK postal company. But online giant Amazon is now doing its own shipping, leading Royal Mail to cut its revenue aspirations in parcels from 4 pct to 1-2 pct. Grim trading reality is out of kilter with the share price.
Deutsche’s CoCo buyers are not totally irrational 19 Nov 2014 Bank debt that turns into equity when shares are losing value hardly sounds appealing, but the German lender has sold a $1.5 bln tranche of it at a relatively low spread. Why? There’s a 7.5 pct yield, and ECB bond-buying creates scarcity while EU stress tests give comfort.
Rushed BES sale would compound Lisbon’s bank folly 19 Nov 2014 The Bank of Portugal thinks Banco Espirito Santo’s healthy rump can be sold early next year. But dashing to offload Novo Banco could leave other domestic banks with losses. Unless Portuguese bank regulation wants to take another reputational hit, a sale shouldn’t be fast-tracked.
Rupert Murdoch’s M&A arsenal loses some firepower 18 Nov 2014 Time Warner thwarted the mogul’s $80 bln bid in part by denigrating non-voting Fox stock on offer. Now, sister company News Corp’s owners have protested loudly over their dual-share structure. The attention on Murdoch’s weak governance could be costly in future acquisitions.
Uber is one startup that needs to grow up fast 18 Nov 2014 The taxi app’s disregard for rules has spurred it toward a $30 bln valuation. But execs who threaten to “dig up dirt” on critics, employ unsavory tactics against rivals and post stats on clients’ one-night stands pose an existential risk. Such laddishness is bad for business.
AstraZeneca struggles to advance value defence 18 Nov 2014 The UK pharma group fought Pfizer’s $120 bln bid in May by promising growth. It’s now reiterating punchy sales targets and casting oncology as a new growth driver. In fact, the Astra story has only inched forward. Its defence has been aided most by U.S. curbs on tax-driven M&A.
EasyJet can finally close valuation gap on Ryanair 18 Nov 2014 Europe’s second-largest no-frills carrier has set the tone in the sector in recent years. Better customer service on cheap flights propelled a 13 pct rise in earnings. A weak euro may hurt, but the strategy is solid. A 10 pct discount to Ryanair is hard to justify.
Investors carried away with HK Exchange’s options 18 Nov 2014 Expectations for the link-up with Shanghai have boosted shares of the Hong Kong stock market’s owner by 33 pct this year. The tightly-controlled scheme alone doesn’t justify the rally. Investors are betting the connection will get bigger and broader. They will need to be patient.
Bond issue disclosure: how not to do it 17 Nov 2014 Shares in Spanish renewables group Abengoa tanked last week amid confusion about a subsidiary’s debt that was variously “recourse,” “non-recourse” and “guaranteed.” The company has now clarified the situation. Issuers this reliant on the debt markets can’t afford such botches.
China’s stock connection: a guide for the perplexed 14 Nov 2014 Hong Kong and Shanghai are about to activate a long-awaited link between their exchanges. The hook-up could have big implications for investors. But it’s also restrained by China’s determination to limit cross-border capital flows. Breakingviews explains what’s at stake.
EU helps New York beat London in hot art market 13 Nov 2014 Works by Warhol, Koons and Twombly helped Christie’s sell a record $853 mln at its latest contemporary art sale in New York. Sotheby’s traded a less spectacular $344 mln a day earlier. London, though, is far behind in the sizzling sector. European regulations are partly to blame.
SABMiller has fight to justify heady share price 13 Nov 2014 The beer is getting weaker at the world’s No. 2 brewer. Volumes fell 1 pct in the first half. Australia, where SAB did its last big deal, is proving especially tricky. It is faring better in soft drinks. But the stock’s high rating has scant support without M&A upside.