Chinese M&A lessons could go to waste 2 Nov 2018 Buyers, in general, underperformed the market from 2013 to 2017, a new report suggests. But the country’s most acquisitive companies, such as Tencent and Ping An, delivered better returns for shareholders. Showing off those new skills will be harder in the current environment.
Wagamama may give Frankie & Benny’s indigestion 30 Oct 2018 Restaurant Group is splashing out 559 mln pounds – near its market value – on the noodle chain. With its Frankie & Benny’s chain struggling, it could use Wagamama’s growth. But even if the UK doesn’t capsize post-Brexit, it looks hard for the buyer to make a tasty return.
IBM overpays for relevance with $34 bln cloud deal 29 Oct 2018 Big Blue’s grab bag of businesses has mostly shrunk for years, and returning cash to investors reached its limit. IBM hopes paying 10 times sales for Red Hat can make it the Switzerland of cloud neutrality. But it will be hard to cut costs and grow sales enough for a good return.
Car parts M&A starts looking more compelling 26 Oct 2018 France’s Valeo is the latest in the auto sector to issue a profit warning, sending its shares down by a fifth. Crashing valuations might help deals make more financial sense. Rival Faurecia’s purchase of Japanese peer Clarion shows how the fleetest can exploit the opportunity.
WPP’s broken financial model is hard to fix 25 Oct 2018 The ad group’s old strategy of modest growth supplemented by M&A and share buybacks no longer works. New CEO Mark Read faces shrinking sales and a big debt pile. Given how long it will take to streamline the business and invest in new technologies, investors will be unforgiving.
Altaba offers half a map to Naspers’ future 22 Oct 2018 The former Yahoo’s $55 bln holding in Alibaba eclipsed its other businesses, finally leaving only a planned unwind to do. Naspers’ $110 bln Tencent stake likewise far outweighs the South African group’s operations. Investors like the huge gains, but want to minimize the tax, too.
KKR throws autos shareholders into a spin 22 Oct 2018 The buyout group is paying $7.1 billion for a Fiat Chrysler-owned supplier. The double-digit earnings multiple is a coup for new FCA CEO Mike Manley. The big premium to where the industry trades needs some justifying. But regular investors may also be too gloomy about the sector.
ABB belatedly succumbs to industrial revolution 19 Oct 2018 While European heavyweights like Thyssenkrupp and Siemens restructure, the $45 bln Swiss-Swedish group still sits on a largely unrelated power business. Now CEO Ulrich Spiesshofer is finally mulling action, he should opt for a full spinoff rather than a half-hearted partial sale.
There’s method in Saudi’s Man Utd soccer madness 15 Oct 2018 The kingdom’s crown prince may back a tilt at the UK soccer club, reports the Sun. It sounds barmy, and a convenient distraction from the international storm over a journalist’s disappearance. Yet Saudi backing for a new elite club tournament means it could make financial sense.
$34 bln U.S. defense deal covers all bases but two 15 Oct 2018 The planned combination of Harris and L3 is a real merger of more-or-less equals with little overlap and CEO succession set in advance. The U.S. government even comes off better. Yet for most stakeholders to win, someone must lose. In this case, it’s suppliers and employees.
Chinese battery drive hits amber light in Chile 12 Oct 2018 To clinch a $4.1 bln stake in lithium giant SQM, China's Tianqi has agreed with antitrust officials to limit access to sensitive information. A hostile shareholder may yet thwart the deal but as Beijing's clout in the industry grows, such acquisitions will only get tougher.
Natixis tries on ill-fitting fintech clothes 11 Oct 2018 The French investment bank may merge its small payments arm with $4.5 bln compatriot Ingenico. That could help its lowly valuation since the sector is rated more highly by investors. Yet struggling Ingenico, whose shares have plummeted on growth concerns, looks an odd partner.
Barbarians pushing boundaries at Asian gates 11 Oct 2018 Buyout shops PAG and Blackstone are being uncharacteristically aggressive in separate property bids in Hong Kong and Sydney. Abundant cash seeking deals may lead to more such hostilities. It also risks undoing private equity’s carefully managed reputation for takeover civility.
U.S. deal review could be new stick to beat China 10 Oct 2018 Minority stakes in U.S. tech firms will be under tougher scrutiny starting next month. That’s reasonable, and the Treasury, which will oversee reviews, has a rational approach. The risk is that hardliners co-opt the process to hurt Beijing once tariffs reach their limit.
Essar deal dilemma sums up investing in India 10 Oct 2018 To buy the steelmaker out of bankruptcy, suitors first must pay off any debt of defaulters in their orbit, a court has ruled. For ArcelorMittal, that’s a $1 bln auction entry fee. India’s unpredictable business and legal environment makes such a decision especially difficult.
The Exchange: Jeff Lacker 9 Oct 2018 The presidency of the Richmond Fed, whose territory included two top U.S. banks, offered a unique window on the financial crisis. Wachovia needed rescuing and BofA’s deal to buy Merrill Lynch nearly collapsed. Lacker reflects on what went down and where finance is headed.
Wealth tie-up can crack Lloyds’ top-line conundrum 8 Oct 2018 The UK bank is in talks to create a wealth management joint venture with Schroders. Boss Antonio Horta-Osorio needs to boost revenue to comfortably hit his 2020 targets. Flogging more savings products will boost fee income which has halved since 2012, while avoiding costly M&A.
Casino owner stacks deck in Philippines deal 5 Oct 2018 Lawrence Ho’s $11 bln gambling empire has offered to buy the rest of its Manila resort operator. The valuation methods are creative and Melco is trying to bully minority holders. Prospective investors in a planned New York IPO should take note of this treatment, however distant.
Blackstone tries small dose of new growth drug 4 Oct 2018 Buying Clarus, which finances biotech and pharma trials, is outside the buyout giant’s comfort zone. It’s riskier than taking over mature businesses with steady cash flows. The deal is modest in size, though, and as drugmakers look to outsource, could be a useful petri dish.
M&A bankers better off hunting pheasant than elk 3 Oct 2018 The value of deals above $10 bln popped by 150 pct in the first nine months of the year. Some, like Comcast’s purchase of Sky, come with chunky financing fees. Still, the glory is spread less thinly on smaller deals, which are also growing quickly, and are easier to close.