Construction

Europe’s lock on hostile M&A faces rare exception

14 Oct 2016

Frankfurt-listed construction group Braas Monier is under siege from U.S. rival Standard Industries. The offered 12 pct premium looks stingy, and hostile takeovers in Europe rarely succeed. Yet by targeting a Luxembourg-based group, the family-owned bidder may have a workaround.

Saudi faces choice of austerity over indulgence

7 Sep 2016

Falling oil prices may lead Riyadh to cut up to $20 bln of infrastructure projects. The risk is it might trigger a construction slump. Of course, Saudi could just increase borrowing and continue building in the desert. Restraint is perilous but would make more financial sense.

UK housing crisis jars with builders’ fat returns

24 Aug 2016

In a normal market, Persimmon’s 36 pct return on capital would get competed away. Instead, sclerotic planning and smaller rivals’ limited access to finance act as barriers to entry. Builders’ fat returns could be vulnerable if the new UK government decides to take bold action.

China SOE merger is tiny step dressed as a big one

23 Aug 2016

Construction giants Sinoma and CNBM are being crunched together, following similar mergers in moribund sectors like steel and shipping. It’s unlikely to create job cuts and closures on the scale an investor might want, but streamlining the bureaucracy could generate small gains.

Saudi building bust may demolish prince’s reforms

17 Aug 2016

Low oil prices have left thousands of foreign construction workers stranded without pay, and some building companies in financial trouble. Saudi is trying to diversify away from oil, make economic reforms and avoid disrupting the social order. It’s not easy to do all three.

U.S. housing rebound still under construction

18 Aug 2016

The number of units being built is steadily climbing and should top the 1 mln mark this year. That's fewer than are needed to compensate for population growth and lost homes, however. Nearly a decade of subdued building means there's a solid foundation for a boom.

Caterpillar gets harsh M&A lesson in Japanese

25 Jul 2016

The earth-moving giant made a badly timed push into mining with the near $9 bln takeover of Bucyrus in 2011. Now Japanese rival Komatsu has snared counterpart Joy Global for less than half that. Komatsu's longer-term view gives its dealmaking more chance of unearthing treasure.

Review: Trump foretold his own grander artifice

22 Jul 2016

Despite recent misgivings by its ghostwriter, "Art of the Deal" is a useful volume to revisit as the Republican convention points to the November election. The blustery façade even in 1987 masked a dearth of substance. Potemkin showmanship was, and is, Trump's greatest skill.

Elliott shows Pulte founder how activism is done

21 Jul 2016

The pushy investor has convinced the $7 bln U.S. homebuilder to add three board members, cut investment in new land and buy back shares. Elliott's constructive engagement is in stark contrast to founder William Pulte's ham-fisted campaign against his company's soon-to-depart CEO.

Putin is slipping into Crimean economic sinkhole

14 Jun 2016

Russia’s struggle to build a bridge link to Crimea is a microcosm of President Vladimir Putin’s problem: his annexation carries high costs but is yielding meagre benefits. Public discontent risks flaring before September’s parliamentary elections and may spur a new crackdown.

Zoomlion deals fresh blow to China M&A credibility

27 May 2016

The Chinese machinery-maker has walked away from a bid for U.S. rival Terex. After other high-profile failed deals, this further dents the prospects for other mainland bidders eyeing Western targets. At least Zoomlion’s own finances will be a bit more robust.

Chernobyl is symbol of shaky EU-Ukraine ties

26 Apr 2016

Thirty years after the disaster at the nuclear power station, EU money has helped build a structure to contain further reactor fallout. But Ukraine will have to sort any future issues by itself. Efforts to bring Kiev and Brussels closer suffer from a similar risky dynamic.

Homebuilder spat highlights founder-activism risk

12 Apr 2016

The push by Pulte’s founder and largest shareholder to oust the CEO is backfiring. His case looks odd, and the board and investors support the boss. Some poor judgment on corporate governance isn’t helping Pulte’s cause either. Such fights are best left to professionals.

Buying Terex could make Zoomlion too big to fail

4 Apr 2016

As China’s construction boom has turned to bust, the machinery-maker’s profit hit a 15-year low. Sealing the $3.4 bln purchase of its U.S. rival looks designed to raise Zoomlion’s national profile and secure access to credit that may allow it to muddle through the downturn. 

Zoomlion’s U.S. tilt shows power of state support

28 Jan 2016

The Chinese machinery maker’s $3.3 bln approach to rival Terex defies financial logic, but could make political sense. Beijing makes no secret of its desire to build global brands. Giving Zoomlion the green light suggests it has official backing to be one of China’s flagbearers.

Wolseley follows Glencore into equity market funk

29 Sep 2015

Shares in the 10 bln stg UK-listed building products group sank 11 pct, just one day after the miner-cum-trader’s stock fell 30 pct. Each company has its challenges, but the stock moves look exaggerated. For both, the most serious threat looks to be skittish investors.

Finns seize the moment in $6.2 bln crane deal

11 Aug 2015

Finland’s crane maker Konecranes is joining forces with U.S. peer Terex in an all-share merger. The deal stacks up strategically, but the timing is opportunistic for Konecranes. Its shares are up 23 percent in a year, while much bigger Terex has lost 40 percent. 

Chicago toll road owners may avoid highway to hell

21 Jul 2015

Macquarie and Ferrovial are shopping the fee-charging U.S. turnpike, a decade after buying it for $1.8 bln. The high debt and low earnings mean it’ll take a big valuation multiple to recoup the investment. Recent infrastructure deals suggest they could get one.

U.S. homebuilders pour $5 bln slab of common sense

16 Jun 2015

Standard Pacific and Ryland have unveiled a purported merger of equals that actually approximates one. Investors even pushed both stocks up over 5 pct on Monday. The new group needs help from housing markets – but if it’s approved, the deal looks like a solid foundation.

Cockroaches scuttle out from Lumber Liquidators

29 Apr 2015

The flooring retailer says the U.S. government will seek criminal charges for importing illegally sourced wood, its chief financial officer is leaving and preliminary tests showed high levels of formaldehyde in its products. More nasty surprises may lurk beneath the floorboards.