Conglomerates

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.

Humpty Dumpty M&A sings song of excess

6 Aug 2015

Bill Ackman has taken a stake in the $75 bln Mondelez, seemingly predicated on the possibility of putting it back together again with Kraft. Meantime there’s talk of successful tech spinoff VMware absorbing its parent EMC. It’s fantasy season for all the Street’s men.

Toshiba crisis tightens the screws on Japan Inc

21 Jul 2015

A probe found $1.2 bln of phantom profits at the electronics giant. Corporate reforms mean firms in Japan are already under huge pressure to show they are better-run and more profitable. Now they will have to work even harder to prove that overhauls are not just cosmetic.

Agnellis nudging PartnerRe out of rival’s reach

20 Jul 2015

Exor, the Italian family’s investment vehicle, has a better offer for the Bermudan reinsurer than Axis. Common shareholders would get more money, in cash, and preferred stockholders extra assurances. A last-minute counter by Axis would hurt its and PartnerRe’s investors.

Samsung-Elliott showdown will shake up South Korea

13 Jul 2015

This week’s vote on Samsung’s $9 bln intergroup merger will be tight. Defeat at the hands of the U.S. hedge fund could usher in a new era of corporate governance. Even if the vote passes, big conglomerates will tread more carefully with independent shareholders in future.

Coty’s $12.5 bln P&G deal slaps on too much makeup

9 Jul 2015

The fragrance giant is touting $550 mln of cost cuts from buying its larger rival’s beauty business. But that overstates the financial benefits of a tie-up that will take time and money to consummate. Coty’s once over-enthusiastic investors are at least seeing through the gloss.

Elliott buys new stick to beat Samsung

7 Jul 2015

The activist fund has a new lever to oppose the South Korean group’s ruling Lee family over a $9 bln merger. Buying stakes in two more group firms probably ups Elliott’s total outlay on Samsung by more than a quarter. This makes the fight more complex – and perhaps uglier.

Asia’s M&A boom leaves old guard in charge

7 Jul 2015

Regional deals could be worth $1 trln this year. But the bonanza offers less than investors might hope. Backing from states and tycoons makes many companies bid-proof. That means fewer premium bids, less pressure on firms to shape up, and more stitch-ups of minority shareholders.

GE could yet pull cooking appliance deal from fire

1 Jul 2015

U.S. trustbusters sued to block Electrolux’s $3.3 bln purchase of the conglomerate’s oven business. The firms may be able to pull an American Air-US Airways and sell assets to save the deal, but market definition issues loom. Either way, Uncle Sam knows how to turn up the heat.

South Korean M&A quirks hold perils for investors

24 Jun 2015

A $9.2 bln merger led by Samsung’s holding company has cast a spotlight on the country’s peculiar stock market rules. The dealmaking shows the limits of measures designed to protect independent investors and how the wider system is stacked in favour of the chaebols.

How to tell if Japan’s shareholder love-in is real

15 Jun 2015

Japan Inc. faces unprecedented pressure to get leaner, better-run, and more profitable. Real success means higher returns on equity. First comes a tough AGM season that could embarrass the likes of Sony and Sharp. Then expect more buybacks, stake sales, activism and M&A.