Kiwi rate rise shows cows beating central bankers 13 Mar 2014 New Zealand is the latest developed country to exit record-low interest rates. Rivals in Europe, Japan and the U.S. will be envious. While they milk cheap money for rare droplets of inflation, dairy herds of the South Pacific are producing price pressures with effortless ease.
Parmalat sours cream of Italian governance 11 Mar 2014 The French owner of Parmalat wants to change its bylaws amid a fierce battle with minority investors. The statutes were put in place to prevent a repetition of the kind of abuse that almost destroyed the Italian dairy group in 2003. Scrapping them looks like a backward step.
Fyffes and Chiquita deal ripe for scrutiny 10 Mar 2014 It’s not AOL/Time Warner, but when it comes to fresh fruit, the $1 bln merger of Fyffes and Chiquita is big bananas. Dublin tax rates will help the new company, as will logistical savings. The biggest potential banana skin is antitrust concern.
Wal-Mart puts collar on Cerberus price for Safeway 7 Mar 2014 Based on the 2007 A&P-Pathmark merger, synergies could be worth more than half the $9.4 bln Cerberus’s Albertsons is paying for its rival U.S. grocer. In theory that leaves room for a higher offer. But competition means cost savings may need to go to shoppers, not investors.
Safeway shopping cart comes up short at checkout 7 Mar 2014 In the Cerberus-led takeover, new equity and debt, cash, a stock distribution, future sales and even a tax break in theory get to $40 a share, or $9.4 bln. But investors marked Safeway shares down. Goes to show getting to knockout prices is tough for private equity these days.
Peltz, Pepsi breakup arguments both a bit flat 5 Mar 2014 The soda maker reckons losing shared costs would offset gains from the activist’s plan to split the company. That’s not quite true. A breakup would generate more value. But only a rapid uptick in profitability would justify drastic surgery. That’s a tougher argument to make.
AB InBev deserves premium-strength rating 26 Feb 2014 The Budweiser brewer seems to pump as much cash as beer out of the business. Latest results suggest its key markets may be improving too. Its well-oiled M&A machinery may flatter the underlying long-term reality. But it is hard to see why investors’ taste for the stock will wane.
Tesco trains its big gun on supermarket price war 25 Feb 2014 Britain’s biggest grocer has buried its old profit-margin ambitions. Though it will cut capex, Tesco now promises to “sharpen” prices. Scale and operational efficiency might see it maintain profitability advantages over peers. The risk is that the price war now gets bloody.
Lenta IPO is suitably competitive on price 14 Feb 2014 The Russian hypermarket retailer is asking for a $4.1 to $5 bln equity valuation for its London share listing. That implies a lower valuation than sector leader Magnit, which looks apt. Lenta is growing fast but smaller and less established, and the backdrop is tough.
Pepsi cash fountain won’t quench skeptics’ thirst 13 Feb 2014 The soft-drink giant’s promise to boost payouts by 35 pct could put fizz in investors’ step. But a decision to rule out big changes in struggling North American beverages leaves the company playing catch-up with Coke. Activists like Nelson Peltz will probably be looking for more.
Cross-border arbitrage is expansive Bimbo’s yeast 12 Feb 2014 The acquisitive Mexican breadmaker Grupo Bimbo is paying $1.8 bln to buy Canada Bread. Paying 20 times earnings to move into a mature market may seem questionable. But Bimbo’s earnings fetch an even higher multiple at home – and the deal should lower its average cost of capital.
Coke and David Einhorn sing in perfect disharmony 7 Feb 2014 To feel good spending $1.3 bln for a minority stake in Green Mountain Coffee, the soft drink giant must have answered some nagging questions posed by the hedge fund manager in 2011. Investors seem to reckon Coca-Cola did its diligence. P&G and HP have shown how much it matters.
Morrisons split is the right idea at the wrong time 7 Feb 2014 The UK grocer has property assets worth more than its enterprise value. That’s why hedge funds want to split its operations from its real estate. Sadly, such “opco-propco” structures require a stability that Morrisons currently lacks.
Green Mountain puts Coke in home brewed soda race 6 Feb 2014 Partnering with the single-serve coffee maker gives Coca-Cola a way into a fizzy new market. Sales of traditional soda are down, but upstart SodaStream proved some thirsty customers want to make their own. Coke syrup in Green Mountain capsules could be a profitable mix.
TPG’s bitter coffee should wake up private equity 4 Feb 2014 David Bonderman’s shop and Israel’s Strauss family are feuding over their java joint venture. Buyout firms prefer control for good reason, though it isn’t always possible. While the payoffs from different ownership structures can be big, the risks are often commensurate.
Diageo’s sober ambitions are yet to find favour 30 Jan 2014 Shares in the global spirits giant fell sharply on Jan. 30 as it outlined the impact of exposure to weakening emerging markets. Diageo’s bigger challenge is to convince investors it can generate attractive long-term growth without recourse to big-ticket acquisitions.
Sainsbury’s succession scepticism is overdone 29 Jan 2014 Justin King could have gone on for longer as the retailer’s CEO. But a decade is the natural point to be stepping down. New market dynamics call for fresh leadership; internal succession makes sense in a company that isn’t broken. The negative market reaction looks knee-jerk.
India deal leaves Diageo with a long hangover 23 Jan 2014 The UK drinks group is fighting to hang on to some of the United Spirits shares it bought from Indian tycoon Vijay Mallya. Defeat in court could see Diageo’s stake fall below 20 pct. Though it still has options to reach a majority, its Indian adventure is getting riskier.
Unilever washes off emerging-market uncertainties 21 Jan 2014 Currencies and slowing growth are working against the consumer staples giant. But forex aside, the trends in developing economies remain firmly positive. For Unilever, the declines in developed markets’ revenues and profits are more worrying.
AB InBev plays safe with $5.8 bln Korean reunion 20 Jan 2014 South Korea may be Asia’s least frothy beer market. But the giant is paying only 11 times EBITDA to buy back Oriental Brewery after five years. That’s low enough to justify a less than heart-thumping deal – and eases the shame of writing a big cheque to its private equity owners.