M&A bird in hand not always better than nothing 14 Feb 2020 Education software company Instructure’s board recommended a $1.8 bln buyout shareholders are unlikely to support, after initially backing a lower one. The board now looks hasty and out of touch. It shows why some bid targets, like printer-maker HP, prefer to play hard-to-get.
Renault stuck tinkering with clunky Nissan tie-up 14 Feb 2020 The Japanese car giant disappointed again, logging its first quarterly loss since 2009 and cutting its profit forecast by 43% as the coronavirus hit sales and suppliers. With a merger shelved for now, recent tweaks to an alliance with Renault will need to pay quick dividends.
Alibaba’s virus response is as much VC as ESG 13 Feb 2020 The Chinese e-commerce company is waiving merchant fees and slashing logistics costs. It’s just the sort of relief that local businesses need during a debilitating outbreak. And the startup-like use of cash-burning subsidies should help Alibaba keep customers and find new ones.
Accord is within reach for SoftBank and Elliott 12 Feb 2020 Tech boss Masayoshi Son is unlikely to support the kind of radical steps the pushy investor often advocates. Yet a $20 bln buyback would help achieve a common goal, and Son has used the approach before. The modest trade-off would be more debt and less cash for Vision Fund 2.
Tech deal review puts VCs in regulatory purgatory 11 Feb 2020 Alphabet, Amazon and Facebook are among firms that will be providing data on tiny acquisitions to the FTC under new orders. Transformative deals are also worrying, though the ad hoc scrutiny of tech seems biased. It is the next impediment to VCs exiting investments.
China’s carmakers could drive well in India 11 Feb 2020 Great Wall Motor will invest $1 bln in the country, others will also follow the road west searching for growth. Although sales are stalling in India too, and the likes of GM have retreated, Chinese carmakers will have an edge as consumers look beyond small, affordable rides.
Equifax hack shows China aims wide as well as high 10 Feb 2020 The U.S. government blamed China’s military for 2017’s giant credit-reporting breach. It contends Beijing seeks not just kompromat and trade secrets, but also material to hone its own AI tools. That potentially makes any company with large data troves an espionage target.
Higher Xerox bid sharpens contrast for HP board 10 Feb 2020 Pushing up the offer to $35 billion removes a big excuse for its larger rival refusing to negotiate. Xerox is even closer to the debt-fueled limit of what it can afford. But the 9% bump makes the price more interesting for HP’s owners. The company's directors need to open up.
IPhones will display China’s back-to-work power 10 Feb 2020 The $38 bln Apple supplier Foxconn is re-opening a key Chinese plant as officials ease curbs. But the handset-maker and others face labour shortages as workers struggle to return home and travel with ongoing contagion fears. The complexities of restarting supply chains run deep.
Chinese phone brands credibly challenge Google 10 Feb 2020 Handset makers from Oppo to Xiaomi are building a shared platform to rival the Play store. Washington’s clumsy embargo on Huawei forced them to seek an alternative, which could threaten 5% of easy revenue at parent Alphabet, and the de-facto U.S. dominance of Android.
Uncle Sam’s 5G telecom fantasy is M&A nightmare 7 Feb 2020 Attorney General William Barr thinks the U.S. could buy Nokia or Ericsson to counter China’s Huawei. But making private firms do the state’s bidding is not how America works. Wrapping suppliers in the flag would also destroy value. Selling shareholders would be the only winners.
Peloton model has gone down this road before 6 Feb 2020 The at-home gym company’s stock dropped more than 10% after quarterly growth slowed. Its use of tech and astronomical growth makes comparisons to tech disruptors tempting. But Peloton’s business model is more like language company Rosetta Stone’s. That’s a less exciting story.
Elliott’s hard nose meets with Son’s SoftBank 6 Feb 2020 It’s logical Paul Singer's activist firm should take a swipe at Masayoshi Son’s undervalued $90 bln empire. Debt, bold – or foolhardy – tech investments like WeWork, and one man’s concentrated influence all make SoftBank a target. It’s a test of the scope to rein in a visionary.
Twitter stock drama is just so immature 6 Feb 2020 The social network grew its user base over 20% in the fourth quarter sending shares up 15%. Yet revenue growth lagged. Considering the U.S. election, the Olympics and a possible pandemic, the Twittersphere could keep it going. But that’s not a grown-up business.
China virus may fast-track drone flight 6 Feb 2020 Contagion fears and quarantines have made it costly and tricky for Alibaba and others in e-commerce and food delivery. Reducing human contact might help. Just as past Asian crises were catalysts for the likes of JD and Line, the new outbreak will give flying robots a push.
Google is a sitting duck for U.S. antitrust 5 Feb 2020 Regulators are ramping up their probe of the Alphabet unit. It is at a disadvantage because it lacks a Trump ally like entrepreneur Peter Thiel, who is on Facebook’s board. Critics like Rupert Murdoch are close to the White House. Its hefty D.C. spending still falls short.
Dealmaker exit reflects SoftBank’s humbler vision 5 Feb 2020 The investor behind the world's largest tech fund has lost U.S. partner Michael Ronen. Without big Gulf backers, its second Vision Fund may mostly manage the Japanese group’s money. CEO Masayoshi Son will focus more on wringing cash from existing investments than making new ones.
ICE-eBay deal would signal return of merger mania 4 Feb 2020 The $52 bln NYSE owner may want to buy the $30 bln online-commerce firm. There’s little benefit to the combo. But it is the kind of tie-up that frothy markets and a lack of savvy alternatives throw up. Investors’ withering reaction should warn ICE boss Jeffrey Sprecher off a bid.
Democratic caucus mess is crying for an activist 4 Feb 2020 The party’s first test in Iowa to narrow the field of U.S. presidential candidates was a disaster. The confusing and undemocratic process aside, it couldn’t even deliver a result. If this were corporate America, a restive shareholder would quickly rattle the cage for change.
UK M&A machine lifts veil on dealmaking’s dangers 4 Feb 2020 Micro Focus released a brutal assessment of its disastrous $9 bln purchase of HP’s old software business, once called Autonomy. The lesson is that back office IT transitions can be decisive. That’s worrying for investors, who typically have no way to assess such humdrum details.