Month: October 2017

KKR sets a collision course with Elliott in Japan

12 Oct 2017

The buyout firm raised its bid for a Hitachi subsidiary, offering outside investors $1.3 bln. That price might not satisfy activist shareholder Elliott. KKR may need to sweeten the deal, within reason - its reputation in Tokyo for disciplined buying is worth preserving.

Italy’s new voting law gives illusion of stability

12 Oct 2017

Parliament is vetting new voting rules ahead of next year’s ballot. The system may encourage a coalition of left and right parties, and hurt the radical 5-Star Movement. Yet ideological strife is likely to weaken any future government, and the chance of meaningful reforms.

Coach name-change is more than a fashion statement

12 Oct 2017

The New York luxury handbag maker changed its corporate name to Tapestry. Expensive rebrands can help companies distance themselves from past scandal or capitalise on investor mania for certain industries. Coach’s new identity signals a more acquisitive future to shareholders.

Beijing’s closer embrace is bad news for Big Tech

12 Oct 2017

China wants stakes and board seats at web giants like Tencent, the WSJ says. Beijing is already influential behind the scenes in technology, and given its tightening grip elsewhere, a power grab in this vital sector was all but inevitable. This will nonetheless cost investors.

UBS no longer lonely in Hong Kong’s IPO sin bin

12 Oct 2017

The securities watchdog says it is probing shoddy work by 15 firms on Hong Kong listings. That takes some heat off UBS, the only active IPO bank named so far. A lot has changed in recent years, but the regulator’s zeal in cleaning up the market is nonetheless welcome.

CDO cousin thrives a decade after the crisis

11 Oct 2017

The subprime-mortgage fiasco killed the business of pooling debt securities but not its commercial-lending relative, the collateralized loan obligation. CLO issuance has surged on the back of solid credit and investors’ hunger for yield. The bonanza has plenty of life left.

Da Vinci bragging rights going cheap at $100 mln

11 Oct 2017

That’s the estimate on the only Leonardo painting today’s billionaires will ever be able to bid for. It’ll attract collectors and lovers of scarcity and quality, and perhaps science geeks: the pre-auction tour includes San Francisco. The old master could easily set a new bar.

Goldman necessity mothers M&A invention

11 Oct 2017

The Wall Street firm has set up a new team to cook up creative deals for big clients. Goldman is making a habit of trying new things, from retail banking to personality tests for interviewees. Given the drag in the trading business, it sounds like worthwhile experimentation.

EU bank plan exposes mutualisation mirage

11 Oct 2017

The euro zone is pushing a joint deposit insurance scheme to complete its banking union. But the revised backstop might only kick in if national banking systems pass an invasive health check. It’s a reminder of how far European countries are from underwriting each others’ debts.

Pharma firms gloss over hurricanes’ effects

11 Oct 2017

About 10 pct of drugs consumed by Americans are made in Puerto Rico. Companies from AbbVie to Zimmer state problems are manageable. Yet the FDA is warning of possible shortages - and intervening daily to ensure factories have fuel and oxygen to stay open. Earnings may be hit.

Trump’s hardline NAFTA stance could benefit Asia

11 Oct 2017

Canada and Mexico oppose a U.S. push to boost North American content for autos and impose a new 50 percent standard for U.S.-sourced parts. The White House says it will reduce the U.S. trade deficit. But the push could increase costs for automakers and force them to move abroad.

Hadas: Economists need more psychological abuse

11 Oct 2017

Insights from the study of the mind helped Richard Thaler win the Nobel Prize in economics. The dismal science would benefit from more thoughtful analysis. Rules of thumb could help with investments, statistics would become less alien, while ethics could illuminate big decisions.

Telecom Italia has least to gain in mogul truce

11 Oct 2017

Vivendi, chaired by Vincent Bolloré, wants to end a dispute with Silvio Berlusconi’s Mediaset. That may involve uniting the broadcaster’s TV unit with Telecom Italia, controlled by the French firm. The telco may end up with an unprofitable asset, with uncertain prospects.

Helping Santander helps UK bank competition

11 Oct 2017

Smaller lenders are angry that a state-aid funding pot set up by RBS to improve competition could help Santander, one of Europe’s largest banks. But it may be best for borrowers. Sharing funds between minnows would have done less to permanently reduce big lenders’ dominance.

Smith & Nephew could use surgical activism

11 Oct 2017

U.S. hedge fund Elliott is building a stake in the artificial knee and hip maker. Talk that the company could be taken over has surfaced more often than actual bids. Agitating for bigger profit margins and a breakup may be more rewarding than hopes for a bigger deal.

Hong Kong’s new leader clears first hurdle

11 Oct 2017

In her maiden policy address, Carrie Lam unveiled lower taxes for small firms and more affordable housing for the middle class. Her proposals mark a decent start for tackling the city’s economic divide. If she follows through, Lam could earn support tackling more divisive issues.

Syngenta puts Beijing’s unspoken promises to test

10 Oct 2017

The Swiss seed company’s Chinese parent and its state backers disagree over whether they stand behind its legal bills. It’s a dynamic found across China’s financial system: implicit guarantees are common, and rarely tested. The government has good reason to keep things ambiguous.

Trump “coal first” drive is blowing smoke

10 Oct 2017

His environment agency aims to reverse Obama-era pollution rules, while the energy department wants regulatory changes that favor nuclear and coal power generation. Even if both happen, the closure of a Texas power plant shows the economic and social forces pushing the other way.

Wal-Mart gets into e-commerce groove

10 Oct 2017

The $250 bln grocer said U.S. online sales will jump 40 pct next year. Additions like Jet.com help and it is using its 5,000-plus stores well. The channel represents less than 4 pct of Wal-Mart revenue stateside, so there’s room to grow. Maybe even Amazon should watch its back.

Pfizer and Glaxo may find romance over the counter

10 Oct 2017

The $215 bln U.S. drugmaker is preparing to detach its consumer-goods unit, and its British rival is a logical owner. Folding the Advil maker into GlaxoSmithKline’s existing venture with Novartis would be logical, provided CEO Emma Walmsley can whip the business into shape.

Time for Barclays to sever its U.S. cards arm

10 Oct 2017

CEO Jes Staley has a conundrum: the UK bank’s market value is so depressed investors are essentially getting the U.S. credit card business for free, according to Breakingviews calculations. Spinning off the unit would make Barclays less complex and help it to a richer valuation.

P&G scores hollow victory over Nelson Peltz

10 Oct 2017

The $234 bln toiletries firm says the activist has lost his fight for a board seat. Peltz says the vote is too close to call. Either way, the narrow margin should be a wake-up call for P&G’s insular leaders, even if change comes hard for them. Expect Peltz to stick around.

Honeywell puts Dan Loeb in his place

10 Oct 2017

The conglomerate is spinning off two small, low-margin risky businesses rather than the aerospace unit the activist had targeted. It’s a smarter way for new CEO Darius Adamczyk to improve returns without much pain, especially on top of the better margins he’s already producing.

HelloFresh IPO belongs in the deep-freeze

10 Oct 2017

The German meal-kit service is planning a float before proving it can turn a profit. That’s premature. The flame-out of U.S. rival Blue Apron’s IPO in June offers an unhappy precedent. Both firms could go stale if Amazon or traditional retailers launch an assault on the sector.

Companies WACC central bankers on yields

10 Oct 2017

Rate-setters have engineered ultra-low borrowing costs and the risk premium on stocks is down. In theory, that lowers the bar for business investments. In practice, corporate hurdle rates have barely budged for decades. It’s a reality check for policymakers trying to fan growth.

IKEA digital surrender raises flicker of IPO hope

10 Oct 2017

The Swedish furniture firm has grown through its warren-like stores and without needing external capital. Yet it now plans to sell through websites like Amazon to reach new customers. With competitive pressures growing, IKEA might also revisit its aversion to selling stock.

Japan is developing a quality-control problem

10 Oct 2017

Kobe Steel admits it sold substandard metals to hundreds of clients. After Takata’s lethal airbags and testing scandals at various carmakers, this is yet another blemish on Japan’s reputation for product quality. Something is going badly wrong with corporate cultures.

Money-go-round is neat way to fix Indian banks

10 Oct 2017

New Delhi might issue "recapitalisation bonds" to stressed lenders and use the proceeds to bail them out, as it did in the 1990s. This makes sense: banks are flush with cash after Premier Narendra Modi banned big banknotes. It might also help to contain the fiscal deficit.

Breakdown: Xi and China’s leadership reshuffle

10 Oct 2017

President Xi Jinping may be China's strongest leader in decades, but reform has been slow on his watch. Some believe that if he can consolidate power at the Party Congress next week, he'll liberalise further. Four key benchmarks will help measure the strengthening of Xi's grip.

Disney chief’s priorities are out of whack

9 Oct 2017

The $155 bln media firm is wrestling with major industry changes as more consumers ditch pricey cable service. Yet Bob Iger is increasingly weighing in on political issues like gun control, sparking speculation he’ll run for office. That’s fine – but not on Disney’s time.