Conglomerates

ABB’s soul-searching is dragging on too long

20 Apr 2016

The Swiss engineer says it needs until October to decide what to do with its Power Grids unit, under review since the autumn. CEO Ulrich Spiesshofer deserves credit for improving the division’s operational performance. But the decision to sell the unit looks clear enough now. 

Li Ka-shing brings funding finesse to telco M&A

18 Mar 2016

The tycoon may sell 20 pct of his UK mobile unit to outsiders. That could raise 1 bln pounds to help buy Telefonica’s O2, on top of the 3.1 bln pounds sovereign funds are already chipping in. That would let Li complete the 9 bln pound deal with no fresh investment.

M&A cycle reaches "running out of ideas" phase

23 Feb 2016

Time Inc’s interest in Yahoo’s bits, a Deutsche Boerse-LSE marriage and merger talks - however unlikely – between Honeywell and United Technologies are all variations of deals that have been tried but failed for regulatory and other reasons. They may fare no better this time.

Samsung investors schooled on restructuring bets

29 Jan 2016

The heir to South Korea’s top conglomerate is selling part of his stake in Samsung SDS. That’s a disappointment for shareholders hoping for a merger between the IT services company and flagship Samsung Electronics. Guessing what Jay Y. Lee will do next is risky business.

U.S. companies off-key singing strong-dollar blues

27 Jan 2016

Apple, DuPont, J&J and P&G blame the greenback’s rising value for lowering quarterly sales. They have a point, but a robust currency helps consumers, importers, service providers, real-estate sellers and others. That’s reason enough for Americans to whistle while they work.

GE making wicked smaht HQ move to Boston

13 Jan 2016

Despite being the capital of a state once derided as Taxachusetts, Beantown ticks boxes for a hulking global company. Relocating from a sleepy part of Connecticut to a university town with a startup and engineering culture, and solid infrastructure, should advance GE’s makeover.

Worst CEO job in America for 2016? P&G

29 Dec 2015

David Taylor will struggle to make his mark on the lumbering $200 bln giant. His predecessor-turned-Chairman A.G. Lafley already axed weaker brands, leaving Taylor to sort out growth. He may be forced to break up the Tide-to-Pampers icon or spend the year fighting calls to do so.

Newell Rubbermaid overworks M&A machine

14 Dec 2015

The serial-acquiring owner of Sharpie markers and Graco baby gear is buying Jarden’s motley collection of candles, camping gear and more for over $15 bln. The value of the proposed cost savings more than covers the $2.7 bln premium, but the scale and debt strain conglomerate logic.

DowDuPont tests limits of ambitious M&A

11 Dec 2015

A $130 bln union of the U.S. chemical titans is really four deals in one, given a planned three-way breakup to follow. The $30 bln of estimated value creation from cost savings is aggressive. Mergers of equals often become strained. At least the strategic rationale makes sense.

Goldman and Morgan Stanley cement M&A oligopoly

11 Dec 2015

Both banks landed advisory roles on either side of the $130 bln DowDuPont merger, extending their league-table leads in a record year of dealmaking. They also held the one and two spots during the 2007 and 2000 peaks. Cracking the top tier can be done, but it’s exceedingly rare.

Li Ka-shing concession gives investors power boost

8 Oct 2015

The tycoon’s Cheung Kong Infrastructure unit has slightly sweetened its $12.4 bln offer for affiliate Power Assets. The move is designed to pre-empt a public showdown with minority shareholders. But it risks emboldening them to hold out for even more - and resist future deals.

Monsanto plants seeds for weathering rough times

7 Oct 2015

Weak grain prices and forex swings battered the crop giant’s earnings, bringing a lower 2016 forecast just weeks after its Syngenta bid collapsed. The whole sector is down, though, and a faster stock buyback and $300 mln of cost cuts will help the company through a lean period.

GE is overdue Nelson Peltz’s kid-glove activism

5 Oct 2015

His investment firm now owns 1 pct of the slimmed-down $266 bln U.S. conglomerate. But the usually forceful activist is playing nice. That’s because CEO Jeff Immelt’s plan to ditch most of GE’s finance unit should work. Any fumbling, though, will create an easy target for Peltz.

One easy cost cut for Caterpillar is executive pay

24 Sep 2015

CEO Doug Oberhelman bet big on mining in 2011, just as commodity prices peaked. Now the $42 bln equipment maker plans to slash up to 10,000 jobs. Investors aren’t impressed. Maybe with his chairman’s hat on, Oberhelman could ensure he and his team share the pain.

SoftBank’s stock market discount is here to stay

15 Sep 2015

Investors value Masayoshi Son’s tech conglomerate at around 36 percent less than the sum of its parts. Following Alibaba’s IPO, most of SoftBank’s worth is in shares of companies listed elsewhere. It’s hard to see what its billionaire founder and CEO can do to close the gap.

Rob Cox: Immelt pins GE colors to Alstom’s mast

10 Sep 2015

If the revised math actually works, buying the French energy provider is a steal of a deal. GE’s big acquisition also serves as a symbol of its shrewd refocus on industry over finance. On this 14th anniversary of being at the helm, Jeff Immelt is staking his legacy on Alstom.

Bombardier steers clear of China turbulence

9 Sep 2015

The Canadian plane maker rejected an $8 bln offer for its rail unit from a state-controlled Beijing firm. Listing a minority stake is a politically easier way to reduce some balance sheet strain. Bombardier is in the wrong business, though, to be playing it financially safe.

Goldman’s bank deal swaps one risk for another

14 Aug 2015

Snapping up $16 bln of deposits from GE Capital helps cut the firm’s costs and reliance on bond market financing. Regulators may be happy, but the more deposits it has, the more Goldman, like Morgan Stanley, can use them to fund some trading. That poses systemic issues, too.

Google learns ABCs of conglomerate life

10 Aug 2015

The web search giant is separating cars, balloons and such from its main ad businesses under a new Berkshire Hathaway-like structure called Alphabet. The move suggests Google sees how its sprawl spells trouble. It’s an easy way to erase some, but not all, the valuation discount.

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.