Engineering

SoftBank’s $100 bln fund looms over satellite deal

18 May 2017

The Japanese telco's OneWeb unit is offering creditors in rival Intelsat slightly better terms, while giving its shareholders less. Boss Masayoshi Son had to find a way to get this merger done, without making it so costly it could not be folded into his new mega-fund.

Death of diesel will contaminate German carmakers

5 May 2017

Sales of new diesel cars are falling sharply in Europe, as talk of selective driving bans in polluted cities is unsettling drivers. Market pressure may force carmakers to phase out diesel much quicker than planned, with negative effects on VW, BMW and Daimler.

Time for Siemens investors to forget troubled past

4 May 2017

For decades, the German engineering group’s poor margins and talent for botching large-scale projects justified a persistent discount to peers. Quarterly results confirm turnaround CEO Joe Kaeser has fixed both issues. If shareholders agree, Siemens could be worth 9 pct more.

Safran can wiggle out of Zodiac mess in own time

28 Apr 2017

The French engine maker clearly needs to reduce or scrap its 8.2 billion euro bid for the plane-seat maker. The current offer, a third above Zodiac’s share price, is financially and politically daft. But there’s no rush to renegotiate. Clever timing might produce a better result.

Ducati is one VW trophy worth selling

27 Apr 2017

The German carmaker may offload the iconic Italian motorcycle brand. Few synergies, thin margins and VW’s need for cash are good reasons to ditch its former chairman’s vanity purchase. It’s a way for CEO Matthias Mueller to show he’s serious about simplifying the byzantine group.

Reinvention of Philips is on a healthy track

24 Apr 2017

The Dutch group’s transformation from a conglomerate into a focused maker of health kit is in its final stage. After carving out lighting, boss Frans van Houten is making headway in lifting poor margins. The surgery is needed to close the valuation gap with pure-play rivals.

SNC-Atkins implies more risk for buyer than seller

21 Apr 2017

Canadian engineering firm SNC-Lavalin is forking out 2.1 bln pounds for UK peer WS Atkins. Given that the synergy benefits cover the premium, it looks mutually beneficial. But while Atkins gets a 42 pct cash premium, SNC’s rich cost-saving targets are less set in concrete.

Star-crossed Zodiac deal works at half the price

15 Mar 2017

Engine maker Safran’s 8.2 billion euro offer for its plane-seat making compatriot looks a bit sick after Zodiac popped out a profit warning. It’s a chance for the buyer to renegotiate a poor deal. But the value at which it would make sense is far, far lower.

Atkins $4 bln merger would be fragile construction

30 Jan 2017

A mooted tie-up between the UK engineering consultancy and unlisted U.S. peer CH2M has some logic, ahead of a likely rise in infrastructure spending. Yet WS Atkins shareholders will need some persuading. CH2M's lackluster performance would make its value a bone of contention.

German pump bid lacks investor pressure

24 Jan 2017

Family-owned Busch has offered to buy the 73 pct of Pfeiffer Vacuum it doesn’t already own, valuing its rival at $1 bln. Paying a 12 pct premium to the three-month average share price is too stingy. Pfeiffer’s improving profitability and potential synergies merit a higher price.

Safran tries too hard to please Zodiac insiders

19 Jan 2017

The French group’s $10 bln offer for the plane-parts maker only flies if most shareholders take cash, leaving shares for Zodiac’s controlling families. There’s a wrinkle: the strategic logic, and Safran’s superior performance, make the stock alternative appealing to others too.

Philips brightens private equity’s gloomy corner

12 Dec 2016

Apollo has bought the Dutch company's LED and car lighting business for $2 bln. That's 40 pct below a Chinese bid that American regulators blocked on security grounds. Buyout firms can't easily outbid cash-rich Eastern investors. At least they can sometimes pick up the crumbs.

Siemens pays full price for extra pixels

14 Nov 2016

The German engineer is buying U.S. software maker Mentor Graphics for $4.5 bln including debt. Adding electronic design automation software to its digital offering makes sense. For the deal to add value, however, Siemens will have to outperform its own target for extra sales.

Hexagon CEO probe adds to Swedish governance murk

31 Oct 2016

Norwegian authorities have detained the $13 bln Swedish IT company's boss, Ola Rollen, for suspected insider trading. Rollen, who denies the charges, has grown Hexagon's market cap over 50-fold. After misdeeds at the likes of Swedbank, local scandals are no longer even a shock.

Coal dirties Komatsu’s bold bet on Joy Global

21 Jul 2016

The Japanese machinery-maker has agreed to buy the U.S. mining equipment firm for $3.7 bln including debt. Komatsu is brave in calling the bottom of the cycle. It is paying a rich price, may struggle to cut costs, and is adding a lot of exposure to the troubled coal sector.

SolarCity governance torched by bid mini-committee

28 Jun 2016

The clean-energy company could find only two directors independent enough to assess Tesla’s $2.8 bln takeover offer. And one of them is a venture capitalist whose firm has backed Elon Musk’s companies. This lack of proper board engineering shortchanges SolarCity shareholders.

Siemens’ M&A timing needs a spot of fine-tuning

20 Jun 2016

The German group overpaid for U.S. oil kit maker Dresser-Rand just before the oil price collapsed. Now it is to fork out $1.1 bln to team up with wind turbine rival Gamesa, whose shares have rallied in recent years. Had it got its timing better, Siemens could have saved $3 bln.

If Schneider wants Aveva, it should get real

15 Jun 2016

The French group has egg on its face after the UK software-maker snubbed a merger bid for the second time. Schneider’s decision to use a similarly over-complex deal structure hints at why. Given an Aveva tie-up still makes strategic sense, an all-cash offer is the way to go.

Keeping Kuka German may require going French

1 Jun 2016

Economic minister Sigmar Gabriel is trying to forge a counterbid for the robot maker. Yet Chinese Midea’s $5 bln offer is already frothy. Berlin would have to turn to industrial politics à la française, and maybe even take a direct stake. Better to let markets run their course.

China’s $5 bln robot bid does not compute

18 May 2016

The 36 pct premium Midea may offer for German robot maker Kuka is frothy. There are no cost synergies, the suitor doesn’t seek control, and governance could be messy. Yet unless Kuka can find a white knight, minority shareholders have every reason to take the Chinese cash.