Saint-Gobain’s deal cunning could backfire 8 Dec 2014 The French materials group is seizing control of Swiss peer Sika by paying $2.8 bln for a minority family stake which has majority voting rights. Sika’s board is laudably indignant. And Saint-Gobain’s tactics have a hidden cost of upsetting other investors and the target’s staff.
Spanish heiress’ pain is builder FCC’s gain 20 Oct 2014 The Spanish group plans a 1 billion euro capital hike to pay down debt. That will massively dilute Esther Koplowitz’s majority stake after she refinances her own 1 billion euro debt. FCC can attract new investors, provided the price is right and markets agree.
Carillion’s new Balfour offer still falls short 19 Aug 2014 The plan to merge the UK construction groups always looked fraught. The potential for cost savings is high, but Carillion has left questions about execution risk unanswered. Its proposal is also less generous than its 36 pct premium claim implies. Balfour can remain stony-faced.
Wary India investors can wet their toes with REITs 11 Aug 2014 Newly approved real estate investment trusts may hasten the return of the nation’s stagflation-scarred retail investors. Property can be a better alternative to gold and REITS may revive hunger for equities. Builders could use them to mend balance sheets, and fund new assets.
Bilfinger’s best option could be a breakup 6 Aug 2014 Two profit warnings in five weeks have wiped a third off the German industrial services group’s share price, costing the CEO his job. Unless it can be turned around, Bilfinger’s unwieldy structure and muted growth prospects make a breakup as plausible as a full sale.
UK construction tie-up needs more than cost cuts 25 Jul 2014 The mooted amalgamation of Britain’s Carillion and Balfour Beatty might qualify as a merger of equals, but only because Balfour has fallen on hard times. Synergy promises will make the numbers work. The danger is that operational misfortunes will drag down the larger group.
China default shows market forces exist for some 22 Jul 2014 A second bond looks set to fail, and funding costs for riskier issuers have been rising. Yet big and state-linked borrowers still enjoy low rates, because investors believe failure is only for the unlucky few. The real shift will come when China challenges that tenet.
Builder’s shaky foundations dent UAE’s credibility 27 Jun 2014 Shares in Arabtec have lost more than half their value in six weeks. The abrupt resignation of its CEO, uncertainty over sovereign support and poor communication are to blame. It’s a warning to investors attracted to the country by its new emerging market status.
Orange talk shows Bouygues’ pull on French state 16 May 2014 The former monopoly could buy the telecoms arm of the French construction company. Bouygues is also crucial to Alstom’s fate. Martin Bouygues failed to bag mobile operator SFR. But he’s been remarkably adept at using that defeat to get the French government onside.
America may be able to build its way to prosperity 9 May 2014 That’s the gist of two new reports on infrastructure spending. Brookings argues investing in roads and bridges would secure 3.8 mln long-term jobs and trim inequality. Crucially, S&P reckons such projects would pay for themselves. If so, that’s a strong case against inertia.
Lafarge and Holcim should get selling 10 Apr 2014 Investors worry the cement groups’ $50 bln merger will destroy value, with rushed disposals to win antitrust clearance. But if the Franco-Swiss duo has found the right assets to sell, and the synergies stack up, it’s worth swallowing some losses to get on with the integration.
Lafarge-Holcim share jump has gone far enough 7 Apr 2014 The planned $50 bln merger of the French and Swiss cement groups has added a combined $5 billion to their market capitalisations. Credible synergies could be worth much more. But uncertainty over completion and the risk of value-destructive forced disposals justify scepticism.
Cement megadeal heralds industrial merger comeback 6 Apr 2014 Holcim and Lafarge are set to unveil a $55 bln cement behemoth. This “merger of equals” rests on skilful construction to assuage French politics. The ambition of combining two sector leaders amid big antitrust obstacles shows that CEOs are ready to take M&A risk to boost returns.
Bouygues tries last-minute less-is-more SFR bid 4 Apr 2014 The French construction group has come up with its fourth offer for Vivendi’s mobile arm a few hours before a decisive board meeting of the media conglomerate. It proposes more cash for a smaller overall valuation. That places high hopes on Vivendi’s preference for cash.
Caterpillar shows how to dig in mining downturn 27 Jan 2014 The U.S. heavy equipment maker finally beat estimates after several poor quarters. But a commodities recovery to boost mining equipment sales looks a ways off. Cost cuts, a new buyback and a better construction-unit showing give investors something to hold on to in the meantime.
U.S. homebuilder deal heralds two-tiered recovery 7 Nov 2013 A $1.6 bln acquisition by McMansion specialist Toll Brothers marks a timely expansion in California. Years of depressed house sales translate into pent-up demand. Only the very rich, though, will be able to shrug off rising mortgage rates. No wonder Toll’s shares are so pricey.
A long M&A pruning effort sees forest for trees 4 Nov 2013 Weyerhaeuser is offloading its homebuilding arm for $2.7 bln in the latest piece of a seven-year divestiture campaign. The carve-up has refocused the $18 bln U.S. timber company and left it valued at about 20 times earnings. To buy in now would be going out on a limb.
Mud sticks for China’s warring heavy industries 29 Oct 2013 Rivals Zoomlion and Sany have faced accusations of fraud, espionage and even attempted kidnapping. Competition is meant to spur efficiency, but the chronically oversupplied construction machine sector shows that without clear rules and a working market, the reverse can happen.
Market underestimating commodity bust hangover 23 Oct 2013 The end of the 10-year mining super-cycle was bound to cause pain. Yet equipment-maker Caterpillar surprised itself and investors with its fourth earnings miss in a row. The industry leader and rivals are trading at valuations that imply a recovery soon. That’s wrongheaded.
Ferrovial hedges regulatory risk at Heathrow 23 Oct 2013 The Spanish infrastructure group has sold an 8.7 percent stake in the company that controls Heathrow to a top UK pension fund, USS. Ferrovial gets a good price and remains the airport’s largest investor. Bringing in a local partner makes sense for such a regulated asset.