Construction

M&A friction limits EU single-market opportunity

13 Dec 2017

Two Spanish ministries are interfering in a 16.5 bln euro Italian bid for local toll-road group Abertis. France and Italy similarly meddled in recent cross-border deals within the euro zone. Building scale isn’t proving as borderless as proponents of EU champions would like.

Carillion meltdown shows risk in return-free world

17 Nov 2017

Creditors of the UK construction group face losses in a looming restructuring. The company expanded too fast and took on risky contracts. Meanwhile, BBB-rated Veolia is borrowing at sub-zero yields. Investors should remember that even central banks can’t make default impossible.

China’s Belt and Road plan builds bridge to Canada

27 Oct 2017

Aecon is being sold to a Beijing construction titan for C$1.5 bln. The 42 pct premium should satisfy the target's investors and Canadian officials have little to squawk about. It's also a deal that can bypass China's M&A crackdown as it befits an infrastructure drive.

Political fiddles skirt UK housing market problem

2 Oct 2017

The Conservative government is putting up more cash to help homebuyers, while the Labour Party proposes rent controls. Both policies risk hurting those they are supposed to help. Lasting reform means pushing down house prices; no politicians seem ready to pay the political price.

CRH deal cements its U.S. infrastructure bet

21 Sep 2017

The building materials company is buying Kansas-based Ash Grove for $3.5 bln including debt. It’s a full price for a group which likes to buy cheap. Despite doubts over President Trump’s pledge to rebuild highways and bridges, pushing into its key market makes sense for CRH.

Kingfisher’s DIY skills show room for improvement

20 Sep 2017

The power drill-to-paint retailer’s first-half pre-tax profit beat expectations – welcome for a company that has lost a fifth of its value since May due to a messy business transformation. In a supposedly recession-proof sector, Kingfisher’s woes are largely self-inflicted.

Chinese are buying London’s skyline past its peak

7 Aug 2017

Hong Kong-based bidders have snapped up the Walkie Talkie and Cheesegrater skyscrapers for 1.3 bln and 1.2 bln pounds respectively. The sky-high prices mean lower yields at a time when Brexit is putting pressure on rents. Still, it’s better than buying real estate at home.

U.S. student debt dims home-ownership outlook

17 Jul 2017

Economic growth is supposed to lure millennials out of their parents’ basements. But a study from the New York Fed suggests that borrowing for surging college costs accounts for up to a third of the decline in home buying by 28-to-30-year-olds. That purchasing power won’t return.

Carillion needs high-speed balance sheet repair

17 Jul 2017

Despite winning a share of the UK’s 55 bln pound high-speed rail line, the distressed construction company’s situation is precarious. Its pressing task is to find investors to put in perhaps 500 mln pounds, before customers start cutting loose.

British property shows signs of wear and tear

17 May 2017

British Land’s full-year earnings increased 7.4 percent and leasing activity is surprisingly strong. Tweaks to the group’s portfolio should offset Brexit pressures. Still, shorter leases, lower values and a step-up in disposals are a better indicator of what’s to come.

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.

Australia hands U.S. timely infrastructure example

11 May 2017

An investor group is paying A$7.6 bln for 50.4 pct of Endeavour Energy, a New South Wales electricity distributor. It's an "asset recycling" model that raises private capital against established operations to fund new government investment. Trump's team should take note.

Cheap boss is a luxury Bovis can’t afford

2 May 2017

The troubled UK homebuilder's investors approved a hefty pay package for its new boss. He could earn over 100 times the average UK construction worker, up from 76 times for his predecessor. A politically incorrect salary is the price Bovis pays for a much-needed turnaround.

Saudi austerity U-turn highlights reform hurdles

24 Apr 2017

The kingdom has restored perks for public sector workers in an attempt to preserve its broader economic agenda. Though the unpopular measures helped cut the deficit the social costs outweighed the benefits. Riyadh is learning that austerity and reform rarely work in tandem.

Bovis Homes is a challenging fixer-upper

5 Apr 2017

The UK builder rejected a proposed merger with Galliford Try and instead hired the bidder’s former CEO to fix the business. Bovis has visibly lower returns and profitability than rivals. It’s not, though, a good time for the kind of cost cuts and land selloff that may be needed.

Bovis Homes suitors have good reasons to pitch low

13 Mar 2017

The UK homebuilder has attracted interest from two peers. The rival premiums of 5 pct and 7 pct appear underwhelming. But a takeover would be a quick fix for investors’ worries about management and building standards, and there are few justifications for a much sweeter offer.

UK housing policy may be answering wrong question

7 Feb 2017

The British government has some ideas to build 250,000 homes every year. But as real rents in England are below 2005 levels and the stock of surplus housing is higher, shortage of supply may not be the biggest issue. Managing rents, not house prices, should be the focus.

Markets well equipped for a post-truth world

23 Nov 2016

French builder Vinci's shares plunged after a hoax news release on Nov. 22, then mostly recovered. Markets have always been prey to the fake news and bogus rumours that now plague politics. The difference is that truth usually reasserts itself quickly in the world of money.

Aussie bet on U.S. building boom stacks up

21 Nov 2016

Building materials firm Boral is buying peer U.S. Headwaters for $2.6 bln. Savings easily cover the premium paid. The timing could prove savvy if president-elect Trump delivers an anticipated boost in infrastructure spending and a broader lift to the housing market.

Saint-Gobain loses either way in Sika fight

31 Oct 2016

The French materials group's two-year effort to sneak control of a $9 bln Swiss chemicals maker by buying a 16 pct super-voting family stake has hit a new legal setback. Saint-Gobain could keep trying or make a proper offer - but giving up would be better for its shareholders.