Industrials

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.

Review: GE’s decline is the story of corporate BS

25 Sep 2020

This is the main lesson from “Lights Out”, an account of how America’s once-admired industrial conglomerate lost its way. GE bosses from Jeff Immelt on down believed they, and the company they worked for, were infallible. Mistaking a story for a strategy is how companies die.

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.

Budging a little can win Veolia its trash crown

4 Sep 2020

Suez’s biggest shareholder Engie wants a higher offer from its waste rival. Veolia’s debt concerns give it only limited leeway. Still, a hike to 17 euros a share would give Suez investors a premium over pre-pandemic levels and still leave the buyer with an acceptable return.

UK LBO jalopy offers buyout barons last wild ride

14 Aug 2020

Roadside repair group AA is drawing interest from private equity again. It’s still crippled by a 2.7 billion pound debt load from past takeovers. With a cash injection and thorough service, a new driver could make a decent return, but it would still be a risky journey.

GE’s recovery is stuck in the slow lane

29 Jul 2020

It burned less cash than boss Larry Culp feared in the second quarter – with help from the Pentagon – and while revenue fell 20%, its industrial customers are slowly regrouping. GE is chasing savings and lay-offs, but still seems to be shying away from more dramatic maneuvers.

The depth of Boeing’s problems is still sinking in

29 Jul 2020

The $96 bln aviation giant reported another dismal quarter as struggling airlines ordered few planes. The recovery from the 737 MAX grounding and the pandemic are also edging further into the future. The outlook for the plane maker may still be catching up with the grim reality.

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.

Alfa Laval’s $2 bln Finnish deal assumes a lot

13 Jul 2020

The Swedish industrial group’s cash offer for valve maker Neles raises its exposure to carbon-heavy markets. In the absence of as-yet-unquantified synergies, the return on investment looks paltry at less than 4%. Alfa investors who hailed the purchase are taking a lot on trust.

German lift LBO hits ceiling on lax lending

29 Jun 2020

Advent and Cinven, who paid $19 bln for Thyssenkrupp’s elevator unit, had to tweak terms for the deal’s funding after an investor revolt. Rock-bottom interest rates give buyout groups a strong hand with creditors. After the Covid-19 crisis, however, lenders’ tolerance has limits.

Samsung’s M&A controversy will have a final act

9 Jun 2020

Seoul is stepping up a probe into a 2015 group merger led by scion Jay Y. Lee. That might help U.S. fund Elliott which opposed the $8 bln deal and wants payback. Samsung went to great lengths to only narrowly win the first time around. Pressure on the conglomerate is building.

Big Elevator faces a cable-free race to the top

26 May 2020

Social distancing is accelerating the ascent of next-generation lifts from Otis, Thyssen, Kone and Schindler. Powered by magnets, cars will whizz round a circuit like a vertical bullet train rather than shuttling passengers up and down a rope. Eat your heart out, Roald Dahl.

Thyssenkrupp’s ‘bad bank’ needs speedy euthanasia

19 May 2020

The ailing German conglomerate is carving out loss-making units it can either sell or shut down. Such frank self-assessment is a solid step towards recovery. But with 2020 losses set to dwarf last year’s 400 mln euros, the quicker they’re put out of their misery the better.

China’s chip giant serves nationalism and reform

18 May 2020

The $13 bln SMIC received a $2 bln boost from state funds ahead of a debut on Shanghai’s new STAR board. The firepower reinforces Beijing’s push for tech self-sufficiency. SMIC’s Cayman Islands structure will also test new listing rules that overseas-listed peers could use.

ArcelorMittal spring clean has dark hint of winter

12 May 2020

Shares in the world’s largest steelmaker slumped after it said it would raise $2 bln of shares and equity-linked debt. Cutting borrowing is prudent with lockdowns sapping demand. The unexpected nature of the move, and partial take-up by the Mittal family, are less reassuring.

Saudi’s $69 bln asset rejig collides with reality

11 May 2020

Giant Aramco is trying to cut the price of last year’s deal to buy 70% of chemicals firm SABIC. A discount would give Riyadh’s Public Investment Fund less cash to pivot Saudi’s economy away from oil. Budget concerns make helping the kingdom’s corporate cash cow more important.

Thyssenkrupp lift deal becomes $18 bln albatross

7 May 2020

Advent and Cinven paid up for the German group’s elevator unit because it looked virus-proof. Sadly for the buyout barons, a possible 10% revenue drop this year means it may be anything but. The duo could be stuck with a low-return asset, a level below private equity’s top floor.

Corona Capital: Small biz bankruptcies, NFL

27 Apr 2020

Concise views on the pandemic’s corporate and financial fallout. Small businesses get time but not money; the NFL’s draft viewership does a victory dance.

Japan tilts at self-sufficiency windmill

24 Apr 2020

Prime Minister Shinzo Abe is subsidising firms to bring production back from China. Others may copy the idea. His $9 bln budget for the drive suggests the push is tentative. Reshoring has a bad track record. Duplicate chains and more inventory are the answer but will be costly.