Divestment

Time for Germany to make Deutsche/Commerz happen

21 March 2018

The country’s two biggest banks are projected to scrape mid single-digit returns on tangible equity by 2019. A merger that cut a tenth of joint costs could get that closer to double-figures. It could also stabilise Deutsche and give Berlin an excuse to sell its Commerzbank stake.

Elliott’s Italian master plan needs state player

16 March 2018

The activist fund wants to oust top investor Vivendi from Telecom Italia’s board and sell its network. A stand-alone telco backbone might attract a higher valuation and be able to shoulder more debt. However, success hinges on state-backed investor CDP’s readiness to chip in.

Altice investors require a stomach of steel

16 March 2018

Patrick Drahi’s telecom group has lost half its market value in less than five months. Spinning off the U.S. arm is sensible. But the slimmed-down parent’s 31 billion euros of net debt is almost 15 times its implied equity value. That is a recipe for wild share price swings.

Elliott picks unusual allies for Italian battle

15 March 2018

Paul Singer’s hedge fund wants to oust Telecom Italia’s chairman and other directors backed by top shareholder Vivendi. Nominating well-connected locals improves its chances of success. Still, it’s odd to see the free market champion joining forces with the Italian establishment.

City’s Brexit trickle need not turn into an exodus

13 March 2018

Banks such as Goldman Sachs and Standard Chartered are already moving London-based bankers to Frankfurt. Losing the “passport” to the EU’s single market means more will go. But large-scale flight can be avoided – as long as UK regulators stick closely to EU rules.

German energy carve-up generates good sparks

12 March 2018

RWE is splitting its ailing Innogy unit in a 22 bln euro deal with rival E.ON. The former will focus on generating power, while the latter specialises in distribution. A knotty asset swap obscures the value picture. But the plan enjoys stronger logic than previous reshuffles.

Shell investors could live with a BHP shale punt

9 March 2018

The Anglo-Dutch oil major may bid with Blackstone for the miner’s $10 bln U.S. shale assets, Sky says. The business would be less risky for Shell’s balance sheet than drilling for traditional oil. And private equity’s high return targets could reduce the danger of overpaying.

Renault-Nissan will struggle to lose third wheel

7 March 2018

The Japanese group may buy France’s 15 pct Renault stake, according a Reuters report the carmakers deny. It’d ease the French group’s heavily discounted share price and a full merger may allow the alliance to cut more costs. But it’s hard to see politicians yielding full control.

Disney’s Sky choices: bid, barter or back down

6 March 2018

Comcast’s swoop on the British broadcaster puts the U.S. group’s $52 bln tie-up with Rupert Murdoch’s Fox at risk. CEO Bob Iger can enter a bidding war he may lose, offer U.S. assets in exchange, or give up on Sky. The third option is most logical, but hard to sell to Murdoch.

HNA’s Swiss airplane food IPO is far from gourmet

6 March 2018

The former Chinese deal machine is listing up to 65 pct of Gategroup to help ease its liquidity crunch. The maker of in-flight meals has expanded since HNA paid $1.5 bln for it in 2016. Factor in an IPO discount, though, and HNA will do well to recoup its original investment.

FCA spinoff tests carmakers’ financial engineering

6 March 2018

The Italian auto group may hive off a non-core unit to earn a better valuation. Volkswagen and Daimler may do the same. The sums work on paper, but a lasting uplift hinges on investors reassessing the remaining businesses. M&A and operational improvements may have more impact.

GKN recruits stateside backup for Melrose bid

2 March 2018

The UK engineer fighting a 7 bln pound hostile bid may merge its car unit with U.S auto supplier Dana. Though a deal would be complex, it reinforces GKN’s case that a breakup creates value. The prospect of bringing in new management also defuses one of Melrose’s criticisms.

Accor’s hotel sale has unwelcome discount

28 February 2018

The leisure group sold half its property empire for 4.4 bln euros. The low price and a cut on the fees it earns to manage the hotels suggests its partners got the better deal. A buyback will keep investors sweet, but leave less firepower to fend off competitors like Airbnb.

Comcast’s $31 bln Sky bid spoils Disney-Fox party

27 February 2018

The U.S. cable group is offering 12.50 pounds per share in cash for the UK broadcaster controlled by Rupert Murdoch. That complicates the mogul’s plan to sell his entertainment assets to Disney boss Bob Iger. Murdoch must enter a bidding war for Sky or re-think the broader deal.

George Foreman Grill maker gets leaner, not meaner

26 February 2018

The maker of the famed kitchen device – as well as bits and bobs ranging from faucets to fish food – is combining with its majority owner in a deal valued at $10 billion. Spectrum Brands comes out with a neater structure. Its collection of businesses, though, is still messy.

Standard Life Aberdeen sale exposes core problem

23 February 2018

The recently merged group sold its insurance business to Phoenix for 3.2 bln pounds. Though the price looks unexciting, the deal releases capital and leaves behind a pure fund manager. But as long as the group continues to lose assets, the benefits of scale remain unproven.

Siemens’ $50 bln IPO may be first step to breakup

19 February 2018

The German industrial giant’s shares could be worth 25 pct more if a sale of its healthcare unit lifts a conglomerate discount. But investors may still balk at owning a company with listed stakes in disparate sectors like wind and rail. In that case, calls for a breakup may grow.

Danone’s Yakult sale points to a healthier future

14 February 2018

The dairy giant is selling most of its stake in Japan’s Yakult and will rake in roughly 1.4 billion euros. The value of the investment that it made in 2003 has nearly quadrupled. The proceeds will help the company meet its debt-reduction goal. The capital discipline is welcome.

Unlocking TIM’s network value requires extra step

7 February 2018

Italy’s biggest telco is looking to spin off its fixed-line network. This will shed light on the network’s cash-generating potential. Listing a minority stake further down the line could add value to TIM’s depressed shares and help the holding company lower its debt mountain.

Old-media stalwart tries out new business model

31 January 2018

Thomson Reuters’ $20 bln deal to cede control of its Financial & Risk unit to Blackstone includes a 30-year commitment to help fund the news division. That gives Reuters protection in a competitive industry, assuming its now highly leveraged biggest client prospers.