Rolls-Royce investors wisely keep the seat belt on 15 Jun 2018 The plane engine-maker aims to generate 1 pound of cash per share over the mid-term, quadruple this year’s estimate. Despite the bullish new target, shareholders don’t look to be pricing it in fully. A distant horizon and history of one-off costs explain why.
Rolls-Royce has partial flight plan to destination 14 Jun 2018 The UK engine maker announced plans to cut 4,600 jobs ahead of its investor day in London. The resulting cost savings are welcome. The bigger question for investors is how CEO Warren East can more than double free cash flow in under two years to hit his 1 billion pound target.
Deutsche Bank’s misleading CDS hide a wider truth 12 Jun 2018 The cost of insuring the German bank’s debt has doubled this year and unlike peers stayed elevated after recent Italian tensions. In the short term this doesn’t affect Deutsche’s funding as much as it might look. But it still highlights the weakness of the lender’s outlook.
Fixing Deutsche’s retail bank is the easier part 30 May 2018 New boss Christian Sewing wants the German lender’s domestic unit to earn an economic return by 2021. That’s doable as long as Postbank delivers promised savings of 900 mln euros a year and higher interest rates help. It’s less daunting than turning around the investment bank.
Deutsche Bank de-flabbing cuts to the bone 24 May 2018 The German lender plans to cut more than 7,000 jobs by 2019, including a one-quarter reduction in equities trading headcount. It’s a bold move by boss Christian Sewing to get costs to 22 billion euros. It could also end up damaging Deutsche’s more profitable investment banking businesses.
Latest M&S overhaul lacks a clear price tag 23 May 2018 The UK retailer will close 100 stores in an attempt to reverse falling like-for-like food and clothing sales. The revamp, sped up by new Chairman Archie Norman, set the group back half a billion pounds last year. With few details about future costs, investors can shop elsewhere.
Deutsche fightback begins with legacy asset reveal 21 May 2018 The German lender’s balance sheet includes about 50 billion euros of unprofitable trades which drag down its investment bank’s return on equity. Reporting them separately would attract attention to past mistakes – but also offer a clearer picture of the bank’s recovery.
Vivendi music IPO rests on chart-topping valuation 17 May 2018 The French media group is deciding whether to float Universal Music. A $40 bln valuation suggested by CEO Arnaud de Puyfontaine could boost its shares by 40 pct. Yet a more realistic price tag would create little value, and give shareholders less reason to own Vivendi stock.
Cox: Gun taint prods a corporate restructuring 1 May 2018 Vista Outdoor is jettisoning products like Bell helmets and paddle boards from its core sports-shooting business after REI and other retailers blacklisted brands associated with the AR-15 rifle-maker. After Parkland, gunsmiths are rightly being confined to finance’s fringes.
TPG’s Baidu deal plays with Chinese fintech fire 30 Apr 2018 The U.S. buyout shop is leading a $1 bln investment in the search giant's payments, lending and wealth management business. It frees up resources for Baidu and helps it focus. For TPG's group, it's a big gamble on a laggard in a cutthroat industry facing tougher oversight.
Whitbread’s coffee spinoff is too slow 25 Apr 2018 The UK company is planning to hive off its Costa cafes less than two weeks after activist Elliott disclosed a 6 percent stake. That may lift the group’s undervalued shares and make the chain a bid target. But a 24-month timeline is too long for investors to wait for the takeaway.
Hyundai agitator gets overly ambitious 24 Apr 2018 U.S. hedge fund Elliott wants better governance from the South Korean auto conglomerate, $11 bln returned to investors and higher dividends. Fair enough. As for structural changes, though, limitations on financial subsidiaries mean Hyundai is less likely to alter course.
Ericsson rebirth as much made in China as Sweden 20 Apr 2018 The Swedish telecom-kit maker’s shares soared 15 pct after quicker-than-expected cost cuts. That adds credibility to boss Borje Ekholm’s previously unimpressive rescue effort. An even bigger boost could come from anti-Chinese sentiment harming rivals like Huawei and ZTE.
Samsung share sale heralds a humbler chaebol 12 Apr 2018 A unit of the South Korean conglomerate sold a $500 mln stake in an affiliate to comply with new rules. More deals like this could loosen heir Jay Y. Lee's grip on the Samsung group. Investors in the $300 bln Samsung Electronics can hope for better governance as a result.
Cerberus Alitalia carve-up would not fly with Rome 11 Apr 2018 The private equity firm is reported to be plotting a three-headed bid for the Italian airline. It would see easyJet take short-haul routes and Air France-KLM long ones, while Cerberus puts up the cash. But a breakup plan will not pass muster with a new nationalist government.
Swiss treasure helps AXA pay for XL folly 10 Apr 2018 The French insurer is restructuring its Swiss life insurance business, freeing up $2.6 bln of capital. The move provides some extra funding for its $15 bln takeover of Bermuda reinsurer XL. Reduced financial risk is welcome, but doesn’t help justify what remains a pricey deal.
Private equity’s retail fix risks landlord revolt 5 Apr 2018 Ailing UK food and fashion chains like private equity-owned New Look or Prezzo increasingly use fast-track insolvency tools to scotch costly leases. The fad gives companies a shot at recovery, while avoiding a risky administration. But property groups may tire of taking the pain.
Italian bank recap requires M&A faith 19 Feb 2018 Mid-sized lender Creval is raising 700 mln euros from shareholders to repair its balance sheet. Pruning bad loans will require even more capital, and projected returns are slim. The hope is that the cleaned-up bank will become a target once domestic consolidation kicks off.
Cox: Wall Street’s antisocial role in selling guns 15 Feb 2018 Lazard advised AR-15 maker Remington days before Wednesday’s school shooting, perpetrated with a similar rifle. Yet its asset managers talk about responsibility. So does the boss of BlackRock, the top owner of firearms shares. They could be helping reduce American carnage.
Ares tax switcheroo may attract few copycats 15 Feb 2018 The manager of $106 bln in alternative assets is going to pay U.S. corporate tax rather than elect for partnership treatment. That should boost its investment appeal – and, for Ares, the numbers add up. The likes of Blackstone, with lumpier earnings, probably have less to gain.