Carlsberg talk of S&N bid smacks of sabre-rattling 10 Sep 2007 The Danish brewer s chairman suggested it could launch a bid for S&N. But doing so could be a mistake, financially and strategically. Carlsberg s real aim may be to scare off another bidder. If a big global rival snapped up S&N, the Danes could be on the back foot.
Nestle’s downgrade could mark end of credit trend 16 Aug 2007 The Swiss food company has lost its AAA rating leaving only six European and US nonfinancial groups sporting the top credit badge. The number of AAA companies has shrunk by 90% over 25 years. Yet credit market indigestion suggests the pendulum may soon swing back.
Investment banks find a way around commitment letters 16 Aug 2007 Banks have mostly given up on pledging money for buyouts. But that doesn t mean they will stop doing deals. One idea doing the rounds is for LBO clients to bid for a subsidiary, such as Kraft s Post cereal, and use the parent as a financier.
Campbell is right to put Godiva on the block 9 Aug 2007 Soup and sweets don t mix. Yet Campbell held onto Godiva for three decades because demand for luxury chocolate outstripped minestrone. Now, Chinese and Russian consumers have become the sweet spot for the soup company. Campbell s capital is better ladled out there.
Cadbury should spin-off drinks unit 1 Aug 2007 The UK confectioner wants to sell the US business, which makes 40% of revenues, to private equity. But buyers may have lost their appetite. Yet Cadbury can split in two whatever happens to equity markets. It might take longer but investors can sell later if a buyer returns.
Starbucks needs bigger jolt than price hike 27 Jul 2007 The coffee chain is taking advantage of its premium brand to pass along higher prices to its customers. But while a price hike is a good strategic move, the company may need a much bigger jolt to perk up its sluggish stock price.
Pepsi has no need for extra fizz 20 Jul 2007 The US drinks group is growing fast, and its margins are high. So why would it want to do a deal with a megarival like Nestle? It lacks more zeitgeisty involvement with health and emerging markets. But the former can be built, while the second may be overrated.
Danone goes mushy over Numico’s babyfood 9 Jul 2007 The French health consumer group is offering a generous E12.3bn for the Dutch babyfood maker. That s equivalent to a hefty 4.3 times sales. It is the highest multiple seen in recent nutrition deals Nestle was thought to have paid dearly for Novartis Gerber at just 2.8 times.
Danone shouldn’t fritter away E5.3bn windfall 3 Jul 2007 The company got a good price for the lagging 20% of its operations. Now it needs to find something to do with the money. Top of the list: mop up its sprawling minorities where it can. Then it should use its healthy aura and strong balance sheet to buy growth.
Kraft’s $7.2bn Danone deal looks like a binge 3 Jul 2007 Just like the cookie monster eats too many cookies, the US food giant looks to have paid too richly for Danone s biscuits business. The 13.7 times ebitda multiple suggests Kraft will need to double the amount of synergies on offer to reach its cost of capital.
Danone biscuit sale makes sense 2 Jul 2007 Selling its biscuits would leave the French consumer group focused on dairy and drinks the two fastest growing food categories. The business is in pretty good shape, too. That puts Danone in a position of negotiating strength. A deal could unlock value.
Danone’s woes in China are part of business life 15 Jun 2007 The French company s bitter dispute with its partner Zong Qinghou is more about profits than the clash of civilisations. Joint ventures often end up in court, especially in booming markets. But Danone may face a distinctly Chinese challenge its legal system.
Why China may yet produce a Prada 8 Jun 2007 Recent moves on the highend Chinese spirits sector suggest its fastgrowing luxury market needn t be a playground for Western brands alone. Capital and expertise are on offer for local competitors. The test is whether China too can commercialise tradition or at least fake it.
One cheer for Coke, two for Tata 25 May 2007 Coke s $4.1bn purchase of Glaceau Vitaminwater may look like a shocker. But it can make the deal work for shareholders. It will take a few years, even with super growth. The Tatas, meantime, walk off with $1.2bn on a $677m investment after a year.
Indian group stumps up for premium Scotch whisky 16 May 2007 The £595m sale of distiller Whyte & Mackay to India s United Spirits provides a juicy return for the investors that backed its 2001 buyout. It gives Mallya a Scotch to push through his Indian distribution network. That's a play on rising incomes and a hedge against Indian liquor.
Carlsberg gets ready to defend Russian crown jewel 30 Apr 2007 The Danish brewer s move to relax its rules on new shares looks like a defensive move rather than the prelude to a takeover of rival S&N. At stake is the Russian venture Carlsberg and S&N share. The Danes best bet might be to try to seize control of it now, or lose out later.
Drinks giants’ plans for S&N smack of bid froth 24 Apr 2007 A complex deal brewed up by advisors would have seen SABMiller and Diageo launch an £8.6bn offer for UKbased Scottish & Newcastle. Two things excite drinks companies: premium brands and emerging markets. S&N looks like an expensive way of getting not much of either.
Novartis casts off childish ways with Gerber sale 12 Apr 2007 The Swiss drugs group found a generous buyer for this slow growth business. Nestle is paying $5.5bn, a hefty 2.8 times sales. The sale will push the Novartis cash pile up to $15bn. Big share buybacks might make sense, but acquisitions may feel more grownup.
Coke’s stock still has plenty of fizz left 9 Apr 2007 It's been flat since Neville Isdell took the helm. But profit growth has remained steady and the company is bubbling with cash flow. Coke isn't likely to revisit its heady valuation of the late 1990s anytime soon, but it remains a solid longterm bet for investors.
Don’t bank on an Indian spirits binge 2 Apr 2007 The EU, US and Australia are now demanding action from the WTO. But the big winners may be cheap spirits from other developing countries. The Indian drinks market is potentially the largest and fastestgrowing in the world, but duties up to 550% are keeping foreign spirits out.