Industrials

ThyssenKrupp takes second step to redemption

19 Jan 2018

Having pooled its steel assets with rival Tata, the German industrial group plans a further strategy shift. Just as well: margins even in the non-steel bits lag peers. The question is how far CEO Heinrich Hiesinger can follow the vogue for dismantling big, unwieldy conglomerates.

China’s battery champion will charge overseas

19 Jan 2018

A $2 billion IPO would give CATL a richer valuation than rivals such as Samsung SDI. To justify that price, the battery maker must thrive at home and abroad. Cracking global supply chains is hard. But where other Chinese giants have stumbled overseas, CATL might just succeed.

Ford stock’s staying power makes no sense

17 Jan 2018

The Motown automaker expects costs and currencies to impede its earnings recovery. It also trails GM on autonomous cars and is having to double its electric-vehicle investments. Yet Ford trades at a higher multiple than its Michigan rival. GM's prospects look brighter.

GKN only needs half-baked defence to beat Melrose

17 Jan 2018

The serial acquirer has launched a $10 bln hostile bid for the UK engineering group. Melrose promises to boost margins and give its target’s shareholders 57 pct of the enlarged group. However, an independent GKN could create the same value by lifting profitability half as much.

GE’s legacy losses reinforce case for breakup

16 Jan 2018

A $6.2 bln charge relating to reinsurance - a business the company exited over a decade ago - shows the challenge of managing a conglomerate. CEO John Flannery is struggling to shrug off the past and turn to the future. At least he’s open-minded enough to consider a GE carve-up.

Melrose can engineer a higher price for GKN

15 Jan 2018

The acquisitive engineering group has had its 7 billion pound bid for ailing GKN rejected. It could hike its offer by over 10 percent and still double its money, according to Breakingviews estimates. That would be an acceptable return, but will require precision execution.

GKN breakup defence is still on drawing board

12 Jan 2018

The UK engineer grappling with an accounting scandal rejected a $9.5 bln offer from serial acquirer Melrose. Its alternative plan of splitting itself in two makes sense and could deliver more value. But investors need more proof it can fix its business, and a clearer timetable.

German economic success lays trap for Merkel

11 Jan 2018

The strongest growth in six years and the rude health of public finances may tempt a weakened Chancellor Angela Merkel into budget giveaways. But low interest payments flatter the fiscal picture and won’t endure. Better to invest in infrastructure and education than to cut taxes.

Continental would move to higher gear with breakup

9 Jan 2018

The $57 bln auto supplier is reportedly considering a business overhaul, including listing its tyres unit. That fits with a trend for breakups at auto groups, and would boost its valuation. The Schaeffler family, Continental’s largest shareholder, is a potential roadblock.

Boeing’s stealthy Embraer approach has big aims

2 Jan 2018

The U.S. aerospace giant is considering joint ventures with the Brazilian planemaker rather than a takeover bid. That’s smart. A lower altitude should allow it to sidestep political and financial turbulence while forging more extensive links than rivals Airbus and Bombardier.

Wanted: Italian-American carmaker seeks new driver

29 Dec 2017

CEO Sergio Marchionne will soon head for FCA’s off ramp. A blizzard of well-timed deals helped spark stellar returns, but the group has low margins and big gaps. Marchionne also wears too many hats. Breakingviews imagines a consultant advising the board on picking his successor.

GE exits 3D-printing fight only slightly bruised

27 Dec 2017

The U.S. group ended a 15-month tussle for ownership of Sweden’s Arcam by buying hedge fund Elliott’s stake at a modest premium. GE should benefit from having full control of a technology critical to its aviation business, even if it nets Elliott’s Paul Singer a handsome profit.

Boeing’s tie-up with Embraer brings co-pilot risk

21 Dec 2017

The $177 bln aerospace giant is in talks to acquire the $3.7 bln Brazilian jetmaker. It makes strategic sense, given rival Airbus’s deal with Bombardier. But Embraer’s government shareholder means the deal may come with a high premium and low returns.

M&A deal finds Saudi diversity but few believers

18 Dec 2017

McDermott is barely paying a premium for CB&I. Yet the transaction reduces the energy-infrastructure firm’s reliance on the turbulent Middle Eastern kingdom, and should yield cost savings worth over $1.5 bln. Investors are skeptical any player can thrive given oil’s troubles.

Thales’ 4.8 bln euro Gemalto bid puts jobs first

18 Dec 2017

The French defence firm has crashed Atos’ tilt at Gemalto, offering a higher price. The deal brings modest returns and leaves Thales exposed to a struggling payments business. Its biggest shareholder, France’s government, may care more about the temporary pledge to spare workers.

Fortum’s Uniper bid has bigger issues than Elliott

13 Dec 2017

Hedge funds including Paul Singer’s group want the Finnish energy company to pay more for its German peer. Appeasing them would weaken Fortum’s rationale for buying fossil fuel-heavy Uniper. The shift to clean energy and the lapse of generous Russian subsidies may destroy it.

Ambani is programmed to punch through $100 bln

13 Dec 2017

Mukesh Ambani's Reliance Industries could be India's first mega-cap stock. His refineries are at the mercy of oil prices, but his bid to dominate Indians’ digital lives is generating excitement. A potential listing of his upstart telecoms business will add to the upward momentum.

Anti-LBO activist could benefit Toshiba investors

12 Dec 2017

A hedge fund says the Japanese conglomerate need no longer divest its $18 bln memory unit after raising $5 bln in equity. It has a point: the deal was a fire sale. A quick halt is unlikely, but a U-turn would be possible and desirable if the transaction doesn’t close by March.

Fossil-fuel slowdown spreads pain at GE and beyond

7 Dec 2017

The conglomerate is laying off 12,000 people in a power division that lights up 30 percent of the world. It blamed overcapacity amid a shift from coal and gas to renewables. Other divisions closely tied to fossil fuels are also ailing. GE’s woes suggest a wider shakeout ahead.

Elliott’s usual playbook is unsuited to Uniper

6 Dec 2017

Paul Singer’s activist fund has a 5.3 percent stake in the German energy group that is being targeted by Finland’s Fortum. Unusually, the buyer may be willing to live with less than full ownership for a while. That could reduce the scope for Elliott to hold the bidder to ransom.