Industrials

Tricky Renault-Nissan deal would be rewarding

29 Mar 2018

The French and Japanese groups chaired by Carlos Ghosn may merge to create a carmaker that trades as a single stock. The Gallic state, which owns 15 pct of Renault, would put up roadblocks. But after 19 years of cooperation, margins are low enough to make the union worth a try.

Carlyle’s $12.6 bln Akzo deal has good chemistry

27 Mar 2018

The U.S. private equity group is buying a speciality chemical unit that the Dutch company put on the block after a failed PPG bid. Carlyle knows the industry and has slashed costs at Axalta. While there may be less scope for huge cuts this time, decent returns are still on offer.

Dana keeps GKN defence hopes alive

26 Mar 2018

The U.S. car parts maker raised its cash and shares offer for GKN’s auto unit by $140 million to thwart Melrose’s bid for the whole UK engineering group. The extra cash only compensates for recent falls in Dana’s share price. But given how tight the race is, any increase helps.

Smurfit Kappa is boxed in by sweetened bid

26 Mar 2018

The Irish packaging group rejected International Paper’s improved 8.9 bln euro approach. A heftier cash component is largely offset by the U.S. bidder’s falling share price. That makes the offer easier to snub but adds to pressure on Smurfit to cut costs and roll out automation.

GKN owners should stick with the devil they know

23 Mar 2018

The UK engineer’s shareholders must choose whether to accept Melrose Industries’ $11 bln hostile cash-and-share bid. The buyer has a record for turnarounds, while GKN has missed targets. But Melrose’s plans are vague and riskier. GKN deserves the benefit of the doubt.

Michelin’s $1.7 bln UK rubber deal stretches logic

20 Mar 2018

The French tyre maker is buying conveyor-belt group Fenner, whose clients include miners. Michelin should be able to flog more products in Asia and South America, and drive harder bargains with suppliers. Even then, it will struggle to earn an acceptable financial return.

Defense M&A fight pits poor David against Goliath

19 Mar 2018

CACI’s $7.2 bln bid for CSRA is 8 pct higher than the agreed deal General Dynamics struck last month. Neither offer stacks up financially, relying instead on rising U.S. defense spending. General Dynamics, though, has deep pockets and is paying all cash. Felling it will be hard.

Wesfarmers supermarket spinoff is a good start

16 Mar 2018

The sprawling A$50 bln Australian conglomerate plans to list Coles separately and under a new boss. Pushing out the slow-growth, capital-draining company should make Wesfarmers more appealing to investors. A broader carve-up including Britain's Homebase would also make sense.

Melrose can afford to hike GKN offer by a tenth

9 Mar 2018

The acquisitive UK engineer must raise its 7 bln pound bid to stand a chance of success. On past deals it has more than doubled its investment in five years. It could pay 10 pct more for GKN and just about clear that hurdle – if growth is robust and performance precise.

Revamped ENRC should set its sights low

8 Mar 2018

The colourful Kazakh miner, renamed ERG after it delisted under a cloud in 2013, is testing a recovering commodities market. A fresh IPO sounds a non-starter, but selling a stake in one of its operations could fly. If so, it would help the group trim almost $6 bln of debt.

Smurfit Kappa can get better mix of paper and pulp

7 Mar 2018

The Irish packaging group rejected International Paper’s approach despite a 27 pct premium. The U.S. suitor will need to offer more cash to tempt investors, but is restrained by high debt. With targets scarce at home, though, the lure of a European foothold may be worth the risk.

Smurfit Kappa takeover is difficult to repackage

6 Mar 2018

The Irish company rejected an unspecified cash-and-stock approach from U.S. rival International Paper. Similar deals suggest the buyer may have to pay up to 40 euros per share to get a hearing. But a cash deal would stretch leverage, while Smurfit investors are wary of U.S. stock.

Cowed LafargeHolcim sets sights appropriately low

2 Mar 2018

The new boss of the world’s largest cement maker has scrapped a share buyback and set the group’s EBITDA growth target at 5 pct. Jan Jenisch can probably do better. Still, given LafargeHolcim’s various headaches since its merger the conservatism is understandable.

General Electric brings more bad things to light

26 Feb 2018

The $125 bln conglomerate keeps finding skeletons in its closets. A $4.2 bln charge to better account for service contracts was expected; less so are revelations GE Capital inflated its earnings. CEO John Flannery’s overdue cleanup is exposing flaws throughout the weakened giant.

Siemens’ $50 bln IPO may be first step to breakup

19 Feb 2018

The German industrial giant’s shares could be worth 25 pct more if a sale of its healthcare unit lifts a conglomerate discount. But investors may still balk at owning a company with listed stakes in disparate sectors like wind and rail. In that case, calls for a breakup may grow.

Airbus’s sunnier skies still contain clouds

15 Feb 2018

Shares in the aerospace giant jumped by one-tenth on Thursday following an 8 percent rise in operating profit, higher than analysts expected. But its operating margin still lags those of U.S. rival Boeing. Closing the gap could be complicated by a fresh stateside corruption probe.

Boeing in-sourcing idea fires on two engines

8 Feb 2018

Even as it negotiates with Embraer, the $207 bln company is in talks to buy parts supplier Woodward, the WSJ reports. With a seven-year backlog of plane orders, Boeing could raise profitability by bringing more work in-house. Plus, it could throw sand in rival Airbus’s engines.

Hadas: Tesla’s $60 billion mistake on pay

31 Jan 2018

The loss-making electric-car maker could hand founding genius Elon Musk that much if all goes miraculously well. The hero-worship approach to compensation made some sense when Tesla was more concept than manufacturer. What it needs now is more boring and bureaucratic competence.

Bull market lets activists see virtue in passivity

26 Jan 2018

Bill Ackman, who lost his fight with ADP, has taken a stake in Nike but isn’t pushing for change. Dan Loeb sat back as Honeywell’s new boss ignored his advice and beat his targets anyway. Even pushy hedge funds can be tempted to simply ride the waves when a rally lifts all boats.

U.S. tax cuts pile on pressure for GE to shrink

24 Jan 2018

They should help, long term. But a big charge contributed to a whopping $9.8 bln fourth-quarter loss at the conglomerate, whose top line also declined. Cost cuts and cash-flow gains buy CEO John Flannery breathing room, but the breakup option is looming increasingly large.