Conglomerates

Asian conglomerates lose plot in $10bln CITIC deal

20 Jan 2015

That’s what Japan’s Itochu and Thailand’s CP Group are spending to buy 20 pct of the state-controlled Chinese giant. Only then will the three decide how they can work together to create value. The back-to-front deal allows CITIC to tick a “reform” box while giving up very little.

Cheap oil lubricates Li Ka-shing’s corporate rejig

12 Jan 2015

Asia’s richest man is shifting a 6 pct stake in Canada’s Husky Energy to his holding company as part of a broader shake-up. The move is vital to keeping Li’s grip on the telco-to-property empire. Though shareholders may object, the falling oil price has worked in their favour.

Clunky conglomerates put on high breakup alert

6 Jan 2015

Billionaire Carl Icahn wants to separate Manitowoc’s construction cranes from its ice machines. Companies with such head-scratching pairings make easy targets for freshly invigorated uppity investors. Pitney Bowes and JBT are among those that may want to keep vigilant guard.

Alibaba in 2016: an imagined letter to investors

29 Dec 2014

The e-commerce group’s first year as a listed company brought growth and change, departing chairman Jack Ma writes in a hypothetical memo. Profitability is falling, regulators circling, and new projects have uncertain returns. Even a thoroughbred is tested on a long journey.

Goodbye tech conglomerates, hello "ecosystems"

19 Dec 2014

Companies have been using that word to justify building internet-based empires out of a mish-mash of assets with hard-to-identify synergies. Asian players like China’s Alibaba and Japan’s Softbank are amongst biggest fans of this unhelpful jargon.

United Tech shows way for other company boards

8 Dec 2014

The U.S. defense firm’s directors unexpectedly ousted the chairman-CEO after deciding his mind wasn’t fully on the job. They had a strong in-house replacement at hand, ensuring that investors barely blinked. Even boards with separate chairmen aren’t usually so on the ball.

Samsung IPO offers ringside seat for restructuring

26 Nov 2014

The South Korean conglomerate’s de facto holding company is an odd mix. Cheil Industries operates theme parks but most of its value is in a stake in an insurer. For those seeking exposure to Samsung’s wider shake-up, the $1.4 bln IPO is a way to get close to its heir apparent.

Buffett’s $4.7 bln Duracell deal a double positive

13 Nov 2014

Berkshire Hathaway is trading its Procter & Gamble stake for the consumer stalwart’s battery unit. Swapping a reliable staple for a declining business looks odd. But it’s tax-efficient and P&G’s injecting $1.8 bln of cash. Even with that, the seller’s getting a decent price.

Review: No bets on Berkshire after Warren Buffett

31 Oct 2014

Lawrence Cunningham’s “Berkshire Beyond Buffett” argues the Oracle of Omaha has built a corporate culture that will ensure success after his departure. The book does a good job of cataloging Buffett’s portfolio. But it doesn’t make a strong enough case for investors to follow.

Frothy M&A talk will worsen San Miguel’s hangover

26 Sep 2014

The Philippine conglomerate is eyeing an overseas oil and gas deal and says it remains interested in Britain’s United Biscuits. With a mixed track record in its recent deal-making, all the chatter will only weigh on the group’s already underperforming shares.

Aggressive M&A puts focus on Thai tycoon’s empire

27 Aug 2014

Charoen Sirivadhanabhakdi is eyeing more deals on top of the $3.3 bln his drinks-to-property group has spent this year. Investors have given a poor reception to his recent transformative acquisitions. A pick ‘n’ mix approach to public markets may explain some of the doubts.

GE scores a Pyrrhic victory in France

20 Jun 2014

The U.S. conglomerate has won the battle for Alstom’s energy businesses. It saw off nemesis Siemens and reached a truce with a hostile French state. Yet here’s a paradox: this is a clearer victory for Paris and Alstom than for GE itself. And it’s not all bad for Siemens either.

Rob Cox: ITT’s ghost hangs over Silicon Valley

20 May 2014

As Amazon, Facebook, Alibaba and Google have become the new conglomerates, it’s instructive to consider the experience of Harold Geneen, who turned ITT into the original M&A machine. The internet approach may be different, but the driver is the same: a fear of obsolescence.

GE’s Immelt sets powerful stage for his successor

30 Apr 2014

He’s not leaving any time soon. But the $13.5 bln Alstom asset purchase puts him on track to ensure industrial earnings account for 75 pct of the business in five years’ time. And though it will take precise execution, the deal even promises a return above GE’s cost of capital.

Energizer split leaves biggest problem intact

30 Apr 2014

The struggling $7 bln batteries-to-tampons group plans to separate into household and personal care companies. That may improve focus, but it’s hard to see how it addresses Energizer’s main challenge: mustering more resources to take on industry gorilla Procter & Gamble.

CITIC’s $37 bln merger hints at SOE reform task

16 Apr 2014

The union of the Chinese giant with its Hong Kong-listed subsidiary offers rare visibility into China’s sprawling state conglomerates. CITIC Pacific shareholders get mostly listed assets at a discount – and if all goes well, a potentially profitable ringside seat in the cleanup.

Rob Cox: GE should put itself up for sale

1 Apr 2014

April Fools’ Day joke? Nope. It’s a shareholder proposal on the ballot at GE’s annual meeting. Setting aside the absence of buyers for a $260 bln company, it illustrates the kind of shareholder democracy gone wild that many boards and an SEC commissioner would like to squelch.

United Tech activist defenses look mostly robust

11 Feb 2014

Talk of the $100 bln conglomerate selling chopper-maker Sikorsky raises questions about whether a breakup could unlock value. A Breakingviews analysis suggests the pieces are worth just 8 pct more than the whole. But a performance slip could weaken the ramparts to an attack.

India deal leaves Diageo with a long hangover

23 Jan 2014

The UK drinks group is fighting to hang on to some of the United Spirits shares it bought from Indian tycoon Vijay Mallya. Defeat in court could see Diageo’s stake fall below 20 pct. Though it still has options to reach a majority, its Indian adventure is getting riskier.

China’s Fosun pivots from mining to mantelpiece

22 Jan 2014

The mainland conglomerate started out in property and steel, but really wants to be an investment giant. JPMorgan’s downtown New York offices were a recent trophy; Forbes magazine may be next. What fuels Fosun is what drives China: growing wealth, ambition and easy leverage.