Engineering

Capital Calls: Elon Musk, LeBron James

1 Apr 2021

Concise views on global finance in the Covid-19 era: Endeavor, Ari Emanuel’s entertainment group, is hoping the Tesla boss’s stardust will help a second attempt at an IPO; the basketball star’s stake in the Red Sox is a foil to Steve Cohen’s Mets deal.

UK engineer bets that buyers will pay dual premium

2 Mar 2021

Renishaw’s two octogenarian creators want to use their 53% stake to sell to an entity that keeps its “heritage and culture”. That might deter private equity, while the engineer’s 5 bln pound-plus valuation is beyond domestic trade buyers. That could mean a pretty short shortlist.

Corona Capital: Music deals

26 Jan 2021

Concise views on the pandemic’s corporate and financial fallout: Warner Music may take a stake in the music business owned by Saudi Arabian Prince Alwaleed bin Talal.

Corona Capital: M&A boost, Purell

22 Jan 2021

Concise views on the pandemic’s corporate and financial fallout: Goldman Sachs, JPMorgan and other banks collectively reaped billions in fees related to advice on transactions with the expectation the money will keep rolling in; hand sanitizer makers hope good habits linger.

UK plc puts its money where Rolls-Royce’s mouth is

1 Oct 2020

Boris Johnson’s government is backstopping the struggling jet-engine maker with nearly 1 bln pounds in loan guarantees. Yet the support hinges on shareholders coughing up double that. It’s a reasonable way to prop up a vital British business while minimising taxpayers’ exposure.

Rolls-Royce repair job has 18-month warranty

29 Sep 2020

The UK jet engine maker wants to raise 2.5 bln pounds from existing and new investors, including sovereign funds. That should keep it aloft even if the airlines that use its kit have a bad 2021. Beyond that, a slow recovery could mean more financial warning lights.

Nordic industrial M&A gets all passive-aggressive

29 Sep 2020

Finnish paper group Valmet has proposed a share-based merger with valve maker Neles but not yet informed its target of any terms. That’s a bit cheeky given the latter already has a decent $2 bln cash bid from Swedish engineer Alfa Laval. Valmet needs to show its hand or go away.

Siemens energy spinoff emits faint value pulse

24 Sep 2020

The 96 bln euro engineer’s energy carve-out is a curious mix of wind and hydrocarbons. Worth perhaps 17 bln euros, it will barely dent Siemens’ chunky conglomerate discount. For that, CEO-in-waiting Roland Busch needs to take a bigger knife to the remaining corporate sprawl.

Rolls-Royce self-harms by selling family silver

27 Aug 2020

The British jet-engine maker wants to offload its Spanish turbine-blade unit to patch up its Covid-hit balance sheet. Creditors will be as gleeful as shareholders are glum. If Rolls survives the crisis – and that’s an increasingly big if – it will be with a permanent limp.

Continental spinoff can trigger overdue auto M&A

5 Aug 2020

The $20 bln Frankfurt-listed mobility company wants to separate its engine division, which might be worth $4 bln. That may hasten a union with Schaeffler, in which the eponymous German family also holds a big stake. Faced with a downturn, rivals like Valeo could soon follow suit.

Melrose will need more than cost cuts to cut debt

22 Jul 2020

The $7 bln UK engineer’s shares fell 15% after quarterly sales slumped. CEO Simon Peckham plans $126 mln in savings. But net debt is worth 3 times 2019 operating profit and the aerospace arm is struggling. A sale of its Nortek air conditioning systems unit is even more urgent.

Rolls-Royce takeoff requires disbelief suspension

28 Feb 2020

The engineer made a $1 bln operating loss after issues in its aerospace arm. Shares rose after CEO Warren East said charges related to the Trent 1000 engine were now mostly over. To hit a $1.3 bln free cash flow target, investors used to bruising one-offs must take his word.

Schneider puts hefty price tag on green M&A

13 Feb 2020

The French industrial company has offered $1.5 bln for Germany's RIB Software, which tracks builders' power usage. The deal taps into the growing value of energy efficiency. But without cost savings, CEO Jean-Pascal Tricoire needs punchy sales growth to justify a high premium.

Alstom-Bombardier rail M&A would face faulty track

22 Jan 2020

The $11 bln French train maker and its Canadian rival are discussing a deal, Bloomberg reported. The former’s failed deal with Siemens posed more obvious EU antitrust issues, but Brussels may still balk. And synergies that rely on big job cuts in France will be politically toxic.

CEO exit puts ABB overhaul on firmer footing

17 Apr 2019

The Swiss-Swedish group has abruptly parted company with boss Ulrich Spiesshofer – who presented ABB’s revamped strategy only two months ago. There’s no immediate replacement. Still, a 5 pct share bump suggests even if investors like the new direction, they fancy a new helmsman.

Melrose’s latest deal is missing its magic touch

7 Mar 2019

The UK engineer, which swallowed 8 billion pound rival GKN last year, boosted sales and margins without slashing investment. Still, the sluggish car industry could challenge Melrose’s “buy, improve and sell” model. Investors will need to see more evidence of improvement.

ABB belatedly succumbs to industrial revolution

19 Oct 2018

While European heavyweights like Thyssenkrupp and Siemens restructure, the $45 bln Swiss-Swedish group still sits on a largely unrelated power business. Now CEO Ulrich Spiesshofer is finally mulling action, he should opt for a full spinoff rather than a half-hearted partial sale.

Thyssenkrupp gets half a breakup

27 Sep 2018

The German conglomerate’s shares surged on plans to split the company in two. Thyssenkrupp’s businesses are probably worth more apart than together. But the separation will take time, and one of the units will still have a stake in the other.

Smiths wobble fortifies case for more surgery

21 Sep 2018

The $8 bln engineer reported its first sales growth in five years, but the shares fell due to a weaker-than-expected outlook. After rejecting a sale of its medical unit, CEO Andy Reynolds is pruning assets and investing. That may not be enough to close a steep valuation discount.

ThyssenKrupp can forge better steel deal with Tata

14 Jun 2018

The German group has outperformed its Indian rival since they agreed a European steel joint venture last year, and now produces more than twice as much EBITDA. Tata could pay cash or give up dividends to close the gap. Walking away from the hefty synergies would be too painful.