Month: May 2017

Jack Ma’s buy-and-pay supremacy looks less certain

17 May 2017

The billionaire controls Alibaba and Ant, China's dominant e-commerce and payments outfits worth more than $350 bln. But users are increasingly turning to Tencent's messaging app WeChat to fulfill both functions. The shift is a significant threat to the core of Ma's empire.

Elliott leaves slim Citrix pickings for LBO shops

16 May 2017

Private equity has tons of cash and loves software. So targeting the $13 bln remote-desktop-access company seems smart. Yet activist Elliott’s push for cuts and new execs has already paid off. Making Citrix an acquisition machine may mark a return to an inglorious past.

TPG gets crafty on Etsy investment from buyout fund

16 May 2017

David Bonderman’s investment firm has taken a 4 pct stake in the $1.6 bln online marketplace. A few funds are poking around while Etsy shakes itself up. But passive equity stakes aren't TPG's core competence. With LBOs hard to find, managers will test their creativity.

IPO hopeful YayYo must think investors are on dope

16 May 2017

A ride-sharing aggregation firm touts itself as the next Uber in TV ads promoting its $50 mln stock sale. YayYo's lack of technology and experience, and its SEC-sanctioned boss, suggest dimmer prospects. Huckster tactics like this risk undermining confidence in public offerings.

Windy City’s two dailies better off under one roof

16 May 2017

Chicago Tribune owner Tronc wants to buy cross-town rival the Chicago Sun-Times, if U.S. watchdogs approve. The newspapers already share printing, and Tronc says the newsrooms would remain separate. The suboptimal deal might at least sustain the Sun-Times for a bit longer.

Labour’s risky UK manifesto requires Brexit context

16 May 2017

Britain’s opposition party has outlined tax rises for companies and the rich to pay for higher spending. Potential payers could get around them. Yet what Labour is proposing isn’t that much more risky than the “hard Brexit” the ruling Conservative party may deliver.

Western banks are a poor home for Asian billions

16 May 2017

If sovereign funds are meant to generate superior returns over generations, the sale of UBS shares by Singapore’s GIC is logical. Banks’ futures are clouded by technology, disintermediation and populism. Those still building stakes, like China’s HNA, may have other goals in mind.

Ford CEO chooses to appease investors over Trump

16 May 2017

Cutting a tenth of the $44 bln automaker’s salaried workforce is part of Mark Fields' broader goal to trim $3 bln of costs. That might seem rational to owners of Ford’s sagging stock. But it challenges a president fond of rhetorical claims that he is saving U.S. jobs.

ValueAct practices what it preaches on succession

16 May 2017

The $16 bln hedge fund has made governance a signature issue in its activist approach. In handing over investing duties to longtime deputy Mason Morfit, founder Jeffrey Ubben is showing he can walk the walk. Other hedgies who hold on too long might learn from this example.

Vodafone shapes up after corporate sprawl

16 May 2017

The UK mobile operator expects better growth after problems in India dragged it to a 6.1 bln euro loss. Rivals have made big bets on TV while Vodafone has grappled with past geographic expansion. It’s managing the spread, but may still be on the wrong side of industry trends.

BHP should take Elliott’s activism as a compliment

16 May 2017

The fund has renewed its call for the miner to break up. BHP isn’t the only one with portfolio clash – rivals Rio Tinto, Anglo American and Glencore all have bits that don’t fit. But BHP’s oil business is well suited to a spinoff. Resistance makes it look more desirable.

EasyJet gives lesson in counter-cyclical aviation

16 May 2017

As European airlines engage in a costly battle for market share, the UK no-frills carrier is buying ever-larger aircraft. EasyJet’s cost advantage and the impending demise of weak rivals suggest boss Carolyn McCall is right to look beyond the short-term clouds.

Vivendi’s Havas deal hangs on new media logic

16 May 2017

The French media group reckons the convergence of advertising, distribution and content justifies its 3.9 bln euro offer for the ad firm. Yet the numbers don’t add up without heroic assumptions, and Havas customers may not take kindly to the new arrangement.

GIC’s humbling retreat from UBS makes sense

16 May 2017

The Singaporean wealth fund is losing money by selling a chunk of the bank it helped rescue nearly a decade ago. Even long-term investors have limits to their patience. A bounce in global financial stocks could tempt others such as Temasek to sift the wheat from the chaff.

Chinese taxpayers have most to fear on Silk Road

16 May 2017

President Xi pledged $124 bln at an international summit to build a modern version of the ancient trading route. Huge global infrastructure spending will burnish Beijing's standing. But the hype could backfire if citizens of the People's Republic fail to reap tangible benefits.

Investors may impose a climate change upon Exxon

15 May 2017

Big pension funds are urging the oil giant to assess the impact of climate change on its reserves. Shareholders rejected the idea last year, but passage of a similar measure at Occidental Petroleum last week signaled a shifting tide that even mighty Exxon may not long resist.

Eddie Lampert’s enemies list sounds presidential

15 May 2017

The CEO threatened to sue a Chinese tool vendor, and blamed it and the “irresponsible” media for Sears’ woes. It’s a page from the playbook of President Trump, who has talked of slapping tariffs on China and often taunts the press. Investors aren’t buying Lampert’s line, though.

Sinclair programming the Trumpiest of all deals

15 May 2017

Buying rival broadcaster Tribune for $3.9 bln hinges on a regulatory rollback. Tiptoeing around synergies also means less attention on job cuts. And the merger befits the TV-watcher-in-chief. Not all M&A can achieve the Trump trifecta, but many will feature two key factors.

Moody’s pays A-level price for B-scale acquisition

15 May 2017

At $3.3 bln, the credit-rating agency is paying a whopping 21 times EBITDA for financial-data publisher Bureau van Dijk. It broadens the portfolio, but both the cost savings and potential revenue uplift are small. At least Moody’s has a plan to keep its own balance sheet intact.

Thermo Fisher experiment starts with pricey deal

15 May 2017

The maker of scientific instruments is paying $5.2 bln to buy Patheon, which produces drugs and the chemicals used in them. Cost savings don’t come close to covering the premium. Its quarry's industry may be ready for consolidation, but Thermo also has a lot to learn about it.

WannaCry exposes glitch in tech business model

15 May 2017

Britain’s health service was among users of Microsoft Windows hit by a virus because they hadn’t installed an update. This is, in theory, the user’s fault. But when customers are big, or the result of their negligence is grave, it’s the company that’s likely to end up bearing the cost.

Macron faces stronger Merkel after state election

15 May 2017

France’s new president needs German support for his euro zone reform ideas. Angela Merkel’s challenger Martin Schulz is more supportive of tighter fiscal integration and more investment. The triumph for Merkel’s party in a regional poll suggests any changes will need her consent.

Benettons bulldoze way into toll-road mega-league

15 May 2017

Atlantia, controlled by the Italian family, wants to buy Spanish infrastructure peer Abertis. The target’s main shareholder, Criteria, hasn’t yet backed the deal. Even so, the premium looks more than fair, a counterbid is unlikely, and holding out would leave Criteria stranded.

Britain gears up for immigration self-harm

15 May 2017

Theresa May is likely to stick with a vow to reduce annual net migration below 100,000, despite failing to hit it so far. The election gives the prime minister a golden opportunity to show the UK will keep growing post-Brexit. Renewing the pledge would apply an unhelpful brake.

India’s Narendra Modi has many stripes

15 May 2017

The prime minister enjoys huge support for his bid to clean up the country. But he now looks more populist than pro-market – and in no hurry to push through difficult reforms. Modi is unpredictable and it is not clear what tops his agenda: development, Hinduism, or power itself.

Chinese yogurt bid warrants dollop of skepticism

14 May 2017

Mainland dairy giant Yili is prepping a gut-busting $850 mln bid for Danone's Stonyfield business. The price is tempting, but many Chinese U.S. purchases have soured. And Yili was recently thwarted by regulators at home. Danone has bigger interests to consider here than cash.

Ford shareholders in confused tizzy over strategy

12 May 2017

A 37 pct drop in the share price since Mark Fields became CEO should have owners asking questions, even if the carmaker’s valuation raced ahead of rivals who are now catching up. Railing against the family’s supervoting stock feels good but won't fix Ford's immediate issues.

Texas regulators once bitten, twice shy with TXU

12 May 2017

NextEra wants another shot at Oncor after local officials blocked its $18 bln deal to buy the transmission group caught in a 2007 LBO that went under. The Lone Star state reasonably wants Oncor protected, but creditors including Elliott are antsy, and a deal is better than limbo.

It isn’t easy being Barclays’ Jes Staley

12 May 2017

The UK bank chief is yet again in the spotlight after falling for an email spoof. After recent controversies involving whistleblowers and the blurring of work and outside interests, he is no doubt walking on eggshells. Breakingviews imagines a typical day.

Review: Piketty is more stimulating when he’s wild

12 May 2017

Too much of the economist's bestseller on inequality was standard-issue theory. As a new anthology of essays on the book makes clear, much is wrong or missing in his reasoning. A critic’s call for "wild Piketty" rings true. The topic needs a broad, multi-disciplinary approach.