Industrials

Mercedes now biggest, but BMW is still better

9 Jan 2017

After 11 years, the offshoot of Germany’s Daimler recaptured its position as the world’s largest premium carmaker by volume. Rival BMW may have sold fewer cars in 2016. But it still beats Daimler in important ways, like meeting operating margin targets 26 quarters in a row.

GE’s succession path lit by dueling deals

29 Dec 2016

The $275 bln industrial giant has a long list of executives capable of taking over when Jeff Immelt retires. In addition to engines and turbines, GE manufactures CEOs. The progress of two major M&A transactions will give the board a clearer view in 2017 on who should get the job.

Praxair’s Linde generosity is a win-win

20 Dec 2016

The German industrial gases group has a smaller market cap and is less profitable. It will still get a 50 pct stake in the merged company. Yet despite the adverse exchange ratio, the tie-up can generate up to $13 bln in additional value for Praxair. It can afford to be generous.

Mega-merger market set for last gasp

20 Dec 2016

Cheap debt and falling hurdle rates will keep bosses on the hunt. Border-spanning acquisitions are harder to square with trustbusters, however, and big targets less affordable as an M&A cycle ends. That makes space for smaller deals, which in any case tend to create more value.

Iran needs friends beyond Boeing

12 Dec 2016

The U.S. aircraft-maker's order for $16.6 bln of planes may force U.S. President-elect Donald Trump to choose between jobs and his tough stance on the Islamic Republic. Iran is in a weak position. It can help itself a bit, starting by rebuilding bridges with near neighbours.

Starboard takes tricky tack with Rockwell deal

1 Dec 2016

The activist wants the aircraft-parts maker to consider ditching a $6.4 bln tie-up with B/E Aerospace. Grounding the merger has merit, but Carl Icahn and others have had mixed results agitating against M&A. A Trump-inspired rally in Rockwell's stock complicates Starboard's case.

ThyssenKrupp stumble strengthens case for breakup

24 Nov 2016

The German engineer's recovery is fizzling. Falling earnings reveal the weak case for combining elevators, car parts and submarines. CEO Heinrich Hiesinger wants to hive off steel but defends his eclectic collection of capital goods. It’s time for more radical ideas.

VW finally makes it to third gear

18 Nov 2016

The German carmaker has convinced unions to let it shed 30,000 jobs. That's a second big step, after settling a big emissions cheating case. Next comes the shift to electric and self-driving cars, and beating an overly modest 4 pct operating margin target for its flagship brand.

Rolls-Royce recovery mired in accounting fog

16 Nov 2016

Under new accounting rules, the engine-maker's operating profit in 2015 would have been less than half the reported figure. Cashflows are unaffected, but are nothing to write home about. Boss Warren East says performance is improving. Investors can only take his word for it.

Harman sale grooms stallion instead of unicorn

14 Nov 2016

Despite no stated savings, the 28 pct premium Samsung is paying for the connected-car supplier looks reasonable. The likes of Google are investing heavily to invent as GM and others bet on risky startups. This $8 bln deal suggests there are safer ways to play a mega-trend.

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.

Siemens gives itself chance to prove it can do M&A

10 Nov 2016

The engineer will spin off its healthcare unit, and probably retain a majority stake. The margin-rich business could be worth $40 bln, fetching a 38 pct premium. The increased M&A firepower will give Siemens a chance to correct a record on deals which is rather less impressive.

Mr. Market is way ahead of next U.S. president

9 Nov 2016

Donald Trump's economic plans have been sparse on detail. Investors are filling in the blanks themselves. Caterpillar and Vulcan leapt on an expected infrastructure boom. For-profit prisons and schools are back in vogue. Ford, Amazon, Whirlpool - firms Trump shamed - not so much.

Auto-industry hazards wreck parts-maker deal

3 Nov 2016

American Axle's stock fell 15 pct even though its $1.6 bln agreed acquisition of Metaldyne should diversify earnings and bring hefty cost savings. Debt will be high, but manageable absent a nasty recession. Investors have become understandably cautious when it comes to cars.

Viewsroom: What to watch for beyond Clinton-Trump

3 Nov 2016

Americans aren't just voting for the 45^th president. House and Senate elections affect everything from Wall Street to the Supreme Court. And marijuana and healthcare figure prominently in state ballots. Meanwhile, there's more brouhaha around Brexit. And GE is shaking itself up.

GE suggests bold new thinking with Baker Hughes

31 Oct 2016

The industrial behemoth is merging its energy arm with a rival to create a new public group. Synergies may justify the $7.4 bln dividend it's paying Baker shareholders. More significant is GE's implicit recognition that the sum of its parts could be more valuable than the whole.

Elliott’s cunning trap for GE risks backfiring

21 Oct 2016

The hedge fund has built up stakes in two 3D printing firms that the U.S. industrial giant wants to buy for a combined $1.4 bln. This gives Elliott enough leverage to extract a higher price. But GE is not budging. The deals are small and caving in to such tactics has its costs.

BASF’s caution beats Bayer’s chutzpah

12 Oct 2016

German chemical giant BASF stayed on the fence when rival Bayer splashed out $66 bln for Monsanto. Since May, BASF's value relative to the DAX index has risen, while Bayer has lost twice as much. Better-than-expected quarterly results make BASF look doubly smart.

Suzuki comes in from the cold with Toyota talks

12 Oct 2016

A potential "business partnership" acknowledges the sector's huge R&D bills are best shared. After a nasty split from VW, the smaller Suzuki stuck out as local peers Daihatsu, Mazda and Mitsubishi all grew closer to bigger rivals. An actual deal could come further down the road.

RWE beats E.ON in parallel power spin-offs

7 Oct 2016

The two German utilities took opposite approaches to splitting up their dirty energy assets from newer, clean ones. E.ON spun off the bits investors liked least, while RWE has floated its best parts in a 5 bln euro IPO. The latter path looks smarter in the near term.