BAE could find a plan B 14 Sep 2012 The UK defence giant has options if shareholders or governments torpedo its planned deal with EADS. A merger with Rolls Royce sounds implausible. But signs that the EADS union really is faltering could tempt a handful of U.S. defence heavyweights to try a transatlantic tie-up.
Markets hit EADS for straying off-target with BAE 13 Sep 2012 Investors seem to think EADS plus BAE is worth $4 bln less than the two companies alone. That’s not how mergers should work. That reaction may be punishment for springing a surprise - and one that will create a major stock overhang. An already complex merger is getting trickier.
BEADS politics ain’t as bad as they used to be 13 Sep 2012 Europe’s three largest powers are involved in the proposed jumbo merger between EADS and BAE, yet there’s a hope politics might play a limited role. Governments have other things on their minds, and EADS isn’t the political mess it was five years ago. But the risk still exists.
Old dogs of war get mega M&A deal 13 Sep 2012 Bankers often say they are in the relationship business. With the proposed EADS/BAE tie-up, this sales patter is actually true. Advisers such as Evercore’s Bernard Taylor and Gleacher Shacklock’s Tim Shacklock have been counselling these companies for donkey’s years.
Euro defence monster flies out of crisis 12 Sep 2012 Civil aviation and defence both are cyclical businesses. But marrying EADS, the continental outfit behind Airbus, with UK defence giant BAE should yield a stronger combined group. Cost savings will be limited, and the terms favour BAE. But EADS becomes a less political animal.
Finmeccanica is threat and opportunity for Italy 22 Nov 2011 A long-running corruption investigation into the defence firm has flared up, engulfing executives and politicians. A scandal could be a spur for needed business reform. But for now, the fragile consensus government may not be helped by a corporate crisis with political fallout.
Qatar risks a foreign investment pile-up 19 Sep 2011 The gas-rich state might have around $100 bln to throw at foreign assets, based on guesses at the size of its sovereign fund. A 7.5 pct stake in Franco-German EADS would cost less than $2 bln. But Qatar’s overseas spending doesn’t look as focused as its domestic growth ambitions.
Afghan withdrawal may avert fiscal war in U.S. 23 Jun 2011 Obama's accelerated troop pullout helps pave the way for a deal to raise the federal debt ceiling. The budget savings go a long way toward closing the gap between the two parties. But the unexpected windfall also lessens the pressure to address needed structural fiscal reforms.
PRC may blunt next U.S. defense chief’s budget ax 9 Jun 2011 Leon Panetta is more accountant than warrior. And he'll need the numbercrunching skills earned as President Clinton's budget chief to trim U.S. defense spending. But fear of an awakening China means cuts as deep as in the postCold War 1990s probably won't be in his armory.
Korean attacks offer warning but not yet crisis 24 Nov 2010 Asia's markets aren't pricing for nuclear war after North Korea opened fire on the South. China, which has the most influence over the hermit state, has good reason to prefer stability. But reopened political fault lines make financial and economic accord all the more important.
Austerity drive should hit guns along with butter 11 Aug 2010 America needs to tackle its deficit. That s an economic reality. There s a political one too: the military can t be spared in the cutting. So it s a good sign that Defense Secretary Robert Gates is already on the fiscal warpath. But it could be a bloody campaign.
Only a real mercenary would target Blackwater 8 Jun 2010 The tarnished military contractor has put itself on the block after enduring years of criticism. Makeover efforts, including renaming itself Xe, failed to distance the firm from a controversial Iraqi shooting spree. Any buyer faces big risks and a tough exit.
China prefers weapons of an economic kind 4 Mar 2010 The state defence budget grew less than GDP. That might be an understatement from a secretive country that wants to look like a benevolent superpower. But China's most powerful weapon right now may be its $2.4 trillion of currency reserves. There's no need to think nuclear.
Latest KKR/GA buyout is back to the future 9 Nov 2009 The firms are buying Northrop Grumman s defence consulting division for $1.65bn. The carveout looks like the opportunistic deals that were traditional before buyouts got huge. It has a manageable capital structure too. The new model for LBOs is becoming clearer.
Italy’s dangerous liaisons make for good business 15 Jul 2009 Italy hasn t been queasy about doing business with Libya and Russia. Libya is now more respectable, but some might still flinch at the prospect of a former terrorist state buying into defence group Finmeccanica. Even so, Italy will persevere with these profitable trade relations.
French state tramples two sets of shareholders 18 Nov 2008 Dassault Aviation, the fighter planes maker, will buy the 21% stake Alcatel holds in Thales, the defence electronics company, after the government opposed a combination with Eads. Alcatel won t get the full price for the stake, and Thales shareholders will be robbed of a bid.
Finmeccanica digs deep for $5.2bn US acquisition 13 May 2008 Buying niche US defence player DRS makes good strategic sense and gives the Italian company access to the world s largest defence market. But with few palpable synergies and at what may be the peak of military spending, 11.4 times ebitda looks like a steep price.
UTC’s offer is a quick fix for Diebold 3 Mar 2008 At first blush, United Technologies' $3bn bid for Diebold looks a bit punchy for a fixerupper. But while Diebold has a few warts, it's hardly a broken company. And UTC just might have the right tools to make it work.
China promises healthy competition in aircraft 19 Mar 2007 Boeing and Airbus have shared the large aircraft manufacturing business since 1997. It s become a cautious duopoly. Now China threatens to break in with a project that offers prestige and eventual profits. It s bad news for the US trade deficit.
Halliburton’s impatience could give IPO investors a bargain 15 Nov 2006 The UK government wants the oil services group to hold off on the IPO of its KBR unit or risk endangering a big chunk of KBR's profits. If Halliburton stubbornly forges ahead, however, KBR may come a lot cheaper than the IPO's current $2.6bn price tag.