French telco jigsaw missing key regulatory piece 17 Apr 2018 Bouygues could bid for Altice’s French business, Bloomberg reports, to end a painful price war. It’d make more sense than failed 2016 talks with state-owned Orange. But regulators may still prefer four less-profitable operators to three stronger groups with power to raise prices.
Abertis rethink would avoid bidder roadkill 8 Mar 2018 Rival bidders Atlantia and ACS are mulling a breakup of the Spanish group, reports say. It would nix the idea of a European champion. But if Atlantia forgets Spain to focus on Abertis’ other assets, it would be politically easier – and avoid a pricey bidding war.
Cowed LafargeHolcim sets sights appropriately low 2 Mar 2018 The new boss of the world’s largest cement maker has scrapped a share buyback and set the group’s EBITDA growth target at 5 pct. Jan Jenisch can probably do better. Still, given LafargeHolcim’s various headaches since its merger the conservatism is understandable.
Atlantia can just afford to up the ante on Abertis 9 Feb 2018 The Italian toll-road operator may raise its offer for the Spanish peer to at least 19 euros a share in cash, trumping a bid by German rival Hochtief. Despite the lack of clear cost savings, cheap funding makes the combined group’s increased leverage just about manageable.
Capita’s kitchen sink still leaves dirty linen 31 Jan 2018 The UK outsourcing group’s shares slumped 40 pct after its new CEO flagged a 700 mln pound rights issue, asset sales and scrapped its dividend. They should plug balance sheet holes. To recover Capita will need investment, and show how it differs from recently collapsed Carillion.
Bull market lets activists see virtue in passivity 26 Jan 2018 Bill Ackman, who lost his fight with ADP, has taken a stake in Nike but isn’t pushing for change. Dan Loeb sat back as Honeywell’s new boss ignored his advice and beat his targets anyway. Even pushy hedge funds can be tempted to simply ride the waves when a rally lifts all boats.
Chancellor: Carillion’s flaws are common to many 22 Jan 2018 The collapsed UK construction firm’s problems may look idiosyncratic. But its problems with “onerous contracts” were exacerbated by a balance sheet stuffed with intangible assets and ultimately shaky assumptions. These issues are not peculiar to Carillion.
Carillion collapse exposes new bank folly 22 Jan 2018 The failed UK contractor used lenders to finance 412 mln pounds of payments to suppliers when cash was running low. The process, known as “reverse factoring”, seems a lucrative way for banks to provide short-term credit. But insolvency exposes the true extent of the risks.
Carillion mess puts Corbyn a step closer to power 18 Jan 2018 Even before the contractor imploded, the public contracts it operated were known to be expensive. After Carillion it’s hard to argue private sector efficiency justifies the cost. UK Opposition leader Jeremy Corbyn’s preference for a bigger public sector is increasingly in vogue.
UK poorly placed to fight Carillion domino effect 17 Jan 2018 Ministers are fretting about Interserve, after fellow contractor Carillion’s collapse. If this were the banking sector, the state could deploy familiar tools to contain contagion. But the government’s dual role as client and bailout-wary market promoter complicates matters.
Carillion pension hole is ominous for UK companies 16 Jan 2018 Before its collapse the construction firm estimated it owed 587 million pounds to retirees. Britain’s pension protection fund, however, reckons the shortfall is nearer 900 million pounds. That’s bad news for Carillion’s creditors – and for other groups with big liabilities.
Carillion collapse is UK outsourcing stress test 15 Jan 2018 The troubled construction firm has gone into liquidation after failing to secure fresh funds. The UK government was right not bail out one of its key suppliers. Nevertheless, a messy cleanup will raise questions about the risks in handing state work to private contractors.
Blackstone exploits lack of virtue in CDS market 11 Jan 2018 The investment firm’s GSO unit is trying to engineer a default at Hovnanian to make more money as part of a $363 mln restructuring. Sellers of credit insurance may cry foul, but the homebuilder’s investors are cheering. The nature of default swaps can create perverse incentives.
Saving Carillion will cost banks and investors 9 Jan 2018 The troubled building services group is due to meet creditors to lay out a plan to avoid financial doom. That will require it to write off almost half its 925 mln pounds of debt. Though shareholders may put up some cash, banks will be forced to take the biggest hit.
M&A deal finds Saudi diversity but few believers 18 Dec 2017 McDermott is barely paying a premium for CB&I. Yet the transaction reduces the energy-infrastructure firm’s reliance on the turbulent Middle Eastern kingdom, and should yield cost savings worth over $1.5 bln. Investors are skeptical any player can thrive given oil’s troubles.
M&A friction limits EU single-market opportunity 13 Dec 2017 Two Spanish ministries are interfering in a 16.5 bln euro Italian bid for local toll-road group Abertis. France and Italy similarly meddled in recent cross-border deals within the euro zone. Building scale isn’t proving as borderless as proponents of EU champions would like.
Carillion meltdown shows risk in return-free world 17 Nov 2017 Creditors of the UK construction group face losses in a looming restructuring. The company expanded too fast and took on risky contracts. Meanwhile, BBB-rated Veolia is borrowing at sub-zero yields. Investors should remember that even central banks can’t make default impossible.
China’s Belt and Road plan builds bridge to Canada 27 Oct 2017 Aecon is being sold to a Beijing construction titan for C$1.5 bln. The 42 pct premium should satisfy the target's investors and Canadian officials have little to squawk about. It's also a deal that can bypass China's M&A crackdown as it befits an infrastructure drive.
Political fiddles skirt UK housing market problem 2 Oct 2017 The Conservative government is putting up more cash to help homebuyers, while the Labour Party proposes rent controls. Both policies risk hurting those they are supposed to help. Lasting reform means pushing down house prices; no politicians seem ready to pay the political price.
CRH deal cements its U.S. infrastructure bet 21 Sep 2017 The building materials company is buying Kansas-based Ash Grove for $3.5 bln including debt. It’s a full price for a group which likes to buy cheap. Despite doubts over President Trump’s pledge to rebuild highways and bridges, pushing into its key market makes sense for CRH.