GE in hard-to-beat 11.4 bln euro bid for Alstom 30 Apr 2014 The U.S. conglomerate’s offer for the French group’s power assets is at the upper end of a reasonable price range. Germany’s Siemens will find it hard to improve on a fair offer favoured by Alstom’s board - and it would probably bring less cash to the table.
ABB shocker raises questions about profit target 29 Apr 2014 The Swiss engineering company’s shares tanked 7 percent on news that its power systems unit faces bigger problems than thought. Persistent operational issues and increased restructuring efforts will make it hard for the group to meet its 2014 profit target.
Record U.S. oil stocks show need for policy shift 28 Apr 2014 There’s more crude on hand than at any time in the last 30-plus years – perhaps since 1931. That reflects booming production. Drillers are getting less for their oil than global market rivals. The gap will tend to widen unless lawmakers rethink a long-running ban on exports.
Uncle Sam’s Putin sting also threatens investors 28 Apr 2014 Sanctions can cut both ways. The U.S. is targeting Rosneft boss Igor Sechin. Will Russia retaliate against BP, which owns 20 pct of the oil giant? Probably not, thanks to the British company’s approach. But all foreign business partners are subject to Putin’s wrath.
Siemens’ Alstom proposal attractive but risky 28 Apr 2014 The German engineer has offered to swap assets with its French rival after a possible GE/Alstom deal ran into government opposition. Exchanging trains for turbines could create two strong players, and generate larger synergies. But antitrust obstacles may be tough to overcome.
Alstom split would energise business units 25 Apr 2014 Too much debt, a ropey rating and looming refinancing needs are Alstom’s key problems. The French engineering group would need more time to fix them than its shareholders seem to allow. A split would make sense, and GE can help.
French M&A: a guide for foreign buyers 24 Apr 2014 Deals for Publicis and Lafarge belie the sneers that France is closed to outsiders. If GE really wants to buy all of Alstom, it needs to be sensitive to local politics. Save some top roles for the French side. Maybe even rename the enlarged, “Paris-based” group Alstom-Electric.
GE/Alstom deal rumours test French reform drive 24 Apr 2014 Shares in the Paris-based engineer jumped 14 pct on reports it has received a bid. Alstom vaguely denied the story. But mere talk about a sale to the U.S. conglomerate will embarrass the French government just as its business-friendly reforms are proving a hard sell domestically.
Sinopec retail sale is key to topping up its value 23 Apr 2014 The state-owned Chinese oil group is seeking investors for up to 30 pct of its petrol station arm. Though comparisons are tricky, multiples for other operators suggest a valuation of at least $50bln. A sale at that level could prompt a revaluation of the rest of Sinopec.
Regulatory dithering can cost the economy dearly 22 Apr 2014 The U.S. government’s continued deferral on the Keystone pipeline decision is a case in point. One year’s economic benefit from the project may be $1.8 bln; if the answer is no, the energy system can be optimized another way. Win or lose, regulators need to make up their minds.
Texas cracker spat hides Petrobras waste at home 22 Apr 2014 The state-run energy giant paid too much in buying a U.S. refinery for $1.2 bln in 2006, when President Rousseff chaired the board. But at $20 bln, a plant in Brazil is costing far more than similar facilities abroad. It’s a cash drain Petrobras and its investors can ill afford.
Exxon tries to make $133 mln of CEO pay invisible 16 Apr 2014 The U.S. oil giant says Rex Tillerson takes home less than peers – and far less than shown in SEC filings. Yet including stock he knows he’ll get later, he’s in the top spot. While delaying pay by up to 10 years is shareholder-friendly, claiming the CEO doesn’t receive it is not.
RWE, E.ON gain little from German energy revamp 8 Apr 2014 Coal and gas power generators might hope to profit from a reform of costly subsidies for solar and wind power. But while the government is trying to cut costs, the target - almost doubling the share of renewables by 2025 - hasn’t changed. RWE and E.ON will continue to suffer.
Weir may struggle to extract a merger from Metso 1 Apr 2014 The Scottish engineer has tentatively bid for its $5 bln Finnish rival. A merger makes sense. But Metso has just shed a problem unit, has clear self-help plans, and is at a cyclical low thanks to its focus on mining. With two powerful backers, the Finns can afford to be patient.
Alstom warms up turnaround plans with $1 bln sale 1 Apr 2014 The ailing French engineering giant is selling its heat exchanger unit to private equity group Triton for 730 mln euros. It’s an important milestone, but Alstom’s asset disposal programme will have to go further. The group is also under pressure to deliver on cost cuts.
GM, regulator dabble in Wall Street shortcomings 31 Mar 2014 A combo of laziness, greed and incompetence characterized the response by the carmaker and its overseer to the ignition switch fault. In this sense, the Detroit saga echoes many of the corporate and regulatory failings that preceded - and contributed to - the financial crisis.
Ukraine needs gas efficiency more than imports 31 Mar 2014 Congress is debating speeding up U.S. gas exports to curb Russia’s sway over its former satellite. A cheaper solution lies closer to home. Ukraine is the world’s second most wasteful energy user. Merely matching Romania’s efficiency would slash Ukraine’s gas bill by two-thirds.
Venezuela’s oil diplomacy is past its sell-by date 27 Mar 2014 The Bolivarian Republic still gives about $9 bln a year in free crude to the likes of Cuba. Even ignoring domestic shortages of staples, that’s enough to cover, say, a year of debt service. With economic cracks widening, President Maduro could start by cutting off this largess.
UK energy watchdog supercharges breakup option 27 Mar 2014 The possibility of a radical restructuring of energy companies based in Britain just became a probability. A wide-ranging competition inquiry may eventually lead to splitting generation from supply, in line with the original privatisation plan. Centrica is in the crosshairs.
Exxon finally warms to climate change disclosure 24 Mar 2014 Investors fear that a crackdown on carbon emissions could make much of the energy giant’s crude reserves all but worthless. The company has agreed to reveal its assessment of that risk. The move could put Exxon ahead of rivals in weathering - and accounting for - global warming.