Buffett’s $37 bln Castparts deal lacks precision 10 Aug 2015 The Oracle’s Berkshire Hathaway is paying 19 times earnings for aircraft components maker Precision Castparts. The acquisition fits Buffett’s mold, but also coincides with cyclical highs in plane orders, stock valuations and M&A. Even for a long-term investor, the timing is odd.
Alibaba $4.6 bln retail deal dulls web-only charms 10 Aug 2015 Buying 20 pct of electronics chain Suning is a backward step for the Chinese e-commerce giant. Its motive may be gaining access to a delivery network. Yet Alibaba’s appeal has been its asset-light model. Defending its near-monopoly online will require more offline investment.
Li Ka-shing can pull more levers at CK Hutchison 7 Aug 2015 The Hong Kong tycoon fixed the last big problem in his telecoms empire with a $24 bln tie-up in Italy. With that transaction done, future dealmaking is likely to focus on other parts of his conglomerate. Reviving the listing of retail arm AS Watson is one way to release value.
Coca-Cola bottling deal targets irksome tax hiccup 6 Aug 2015 Merging three of the drinks giant’s bottlers could create savings worth around $2.8 billion. The new company may even sell a few more sodas. But an undeniable draw for Coca-Cola Enterprises owners is that after the deal the group will have less need to keep the U.S. taxman sweet.
Fertilizer deal offers investors bountiful harvest 6 Aug 2015 CF Industries’ $6.1 bln bid for most of rival OCI’s businesses comes with $500 mln of cost cuts that over time will virtually pay for the acquisition. The deal should also boost production capacity by 65 pct. Those are some powerful nutrients for shareholders to absorb.
An oligarch and a tycoon clean up Italian mobile 6 Aug 2015 That’s not the setup of a bad joke but a fair summation of a merger that may solve Italy’s ultra-competitive phone sector. Getting Vimpelcom’s Mikhail Fridman and Hutchison Whampoa’s Li Ka-shing to surrender control was a feat in itself. The result looks surprisingly clean.
Zurich can justify a swoop on RSA 6 Aug 2015 The Swiss insurer released disappointing results but thinks its UK peer remains a good fit. Zurich’s hurdle rate for investment is around 10 percent. Offering 600p a share for RSA, a 36 pct premium, should allow that without synergy assumptions being too ambitious.
Metro cashback would spice up slow-mo turnaround 6 Aug 2015 The German retailer needs pep. Growth is lacklustre, margins are thin and Russian woes mean the shares’ underperformance may persist. Metro has offloaded 5 bln euros in assets and lowered its debts. A special dividend would perk up a disappointing valuation.
Shire M&A machine stumbles on $30 bln Baxalta bid 4 Aug 2015 The onetime Irish target for AbbVie is planning a mega-deal of its own. Unlike the previous combination, Shire’s Baxalta purchase has industrial logic as well as tax benefits. Shareholders, though, might have preferred being bought out to assuming all the risks of a takeover.
Donnelley proves an old dog can learn new tricks 4 Aug 2015 The 150-year-old printer is splitting in three, spinning off fast-growing services from stodgier publishing. Investors like the deal and the better value it portends. So much so, the only vexing question is whether the firm keeps giving all employees its classic holiday books.
Agnellis rebalance portfolio – at a price 3 Aug 2015 The Italian family’s Exor vehicle has won the fight for PartnerRe with a $6.9 bln bid after the reinsurer’s board finally switched sides. Three months of bolshie resistance paid off, and Exor boss John Elkann is paying handsomely to diversify away from Fiat Chrysler Automobiles.
Bradesco bulking up is good for state-heavy Brazil 3 Aug 2015 Buying HSBC’s assets will allow the nation’s No. 2 private-sector bank to more effectively challenge rival Itaú. As state-owned institutions sack workers amid falling government largesse, a stronger and more competitive financial industry could benefit the sickly $2 trln economy.
Auto rivals carpool in $2.8 bln bid for map assets 31 Jul 2015 Daimler, BMW and Audi are offering 2.6 times revenue for HERE, Nokia’s investment-heavy digital maps unit. The price is high, but the German luxury carmakers’ strategic logic is solid. Map systems are scarce, and a good one will be a competitive advantage for driverless cars.
Airbnb may force innkeepers into M&A pillow talk 30 Jul 2015 Sheraton owner Starwood is looking for partners. A deal with IHG might help it boost prices and lower costs, but even with synergies, the merged firms would barely match Airbnb’s $25 bln valuation. As the home rental service’s clout grows, hotels will face some sleepless nights.
Delphi deal crudely hitches to connected-car hype 30 Jul 2015 The auto supplier is paying $1.7 bln for a UK maker of “bundle management solutions.” HellermannTyton may be a solid company whose cable ties and such are integral components, but there’s a whiff of dot-com fever in the rhetoric. That’s not enough to justify the 45 pct premium.
AB InBev and Diageo may have to drink alone 30 Jul 2015 Two of the world’s largest drinks companies – together worth $275 bln - posted OK-ish results on July 30. Investors might hope for transformational deals, perhaps a mega-merger of the two. Though it is harder to build standalone investment cases, they may be necessary.
Edward Hadas: Nikkei joins demographic denial cult 29 Jul 2015 Nikkei is the latest Japanese company to look for growth outside the shrinking domestic market. Its Financial Times purchase may work out, but the approach is flawed. Few companies can profitably escape their demographic destiny. It may be better to accept steady decline.
The Economist’s elite owners seek elite print run 28 Jul 2015 The Agnellis, the Rothschilds, et al may buy more as Pearson sells. A 6 pct dividend yield has appeal. If the valuation – recently 730 mln stg – and payout are to keep rising, however, the weekly has to succeed where other publications have failed and turn its top line around.
Zurich should look hard before it leaps at RSA 28 Jul 2015 The Swiss insurer wants to invest free capital rather than give it back to shareholders. UK-based RSA, at 5 bln stg, is an attainable target. But Zurich Insurance might first examine the disastrous 1996 deal that created the company formerly known as Royal & Sun Alliance.
Allergan turns itself into M&A lab experiment 27 Jul 2015 The pharma giant has since 2012 racked up over $100 bln in deals and changed its name twice and its tax HQ once. Selling its once core business to Teva for $41 bln leaves Allergan free to pursue even bigger targets. But too much reliance on M&A could leave the Petri dish exposed.