Industrials

German airlines leave logic in the ejector seat

28 Sep 2016

In most sectors, a heavily loss-making company with liabilities that exceed its assets would disappear. Yet German carrier Air Berlin is still airborne, and Lufthansa may take on a chunk of its fleet. Aviation bosses continue to think they can defy financial gravity.

Shrink to greatness? It’s not always that simple

22 Sep 2016

Danish conglomerate Maersk just said it will break up. The shares barely moved. Carving up a complex corporate beast can make great sense - think HP. But some hybrid companies that resist being split, like Rolls-Royce, ABB and AB Foods, may have a point.

One equal merger evaporates as another takes root

12 Sep 2016

Gas producers Linde and Praxair gave up on a $60 bln-plus combination on the same day fertilizer producers Agrium and Potash Corp inked their nearly-$30 bln union. Both deals had strategic logic on their side. But geography, bosses' egos and other factors can win out.

Better to fly Europe’s airlines than buy them

12 Sep 2016

Fuel prices have fallen, but that has incentivised European carriers to keep too many planes airborne. Demand is too weak to meet the supply, which means ticket prices are set to fall, and with them airlines’ profitability.

Danaher returns to dealmaking with $4 bln dud

6 Sep 2016

Fresh from splitting off its industrial arm, the healthcare giant is buying molecular tester Cepheid. Cost cuts cover barely half the 54 pct premium and investors aren't buying promises of extra revenue. CEO Tom Joyce's claims of greater efficiency and growth are falling flat.

Mexico can build on its Enrique Ford moment

29 Aug 2016

An improving economy already has helped reverse a migration tide Donald Trump wants to stop with a wall. Higher factory wages - à la Henry Ford's wisdom - are boosting car sales at home and enlarging the middle class. That also benefits the United States in ways worth fostering.

Peugeot well positioned for yesterday’s car market

27 Jul 2016

Bumper half-year operating profit shows the French carmaker is cutting costs neatly. Yet a radical shakeup in the car industry means getting up to speed with fuzzier stuff like self-driving cars, electric vehicles and new mobility services. That's a big ask for smallish Peugeot.

Daimler’s European answer to Uber gains momentum

26 Jul 2016

The German carmaker is merging its ride-hailing app Mytaxi with UK-based rival Hailo. The all-share deal creates Europe’s strongest competitor to Uber while avoiding paying the sector’s frothy multiples. For now, Daimler’s digital first-mover advantage is paying off.

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.

Returns on Midea’s robot deal are far from bionic

18 Jul 2016

The Chinese appliance maker has spent about 3.3 bln euros on a majority stake in Kuka, while promising not to touch workers and management. The financial rewards look slim. Even if the German robot maker meets its targets, Midea's return on investment by 2020 will be just 5 pct.

Xerox-Donnelley deal would be epic paper shuffle

12 Jul 2016

Binding together the iconic photocopier maker and the printing group would create a $14 bln giant – which Xerox would then break up. That would increase integration risk and wouldn't necessarily solve each company's dilemma of being print-heavy in an ever-more digital world.

After Dieselgate, VW faces new big bad

28 Jun 2016

A $15 bln settlement with U.S. regulators all but buries the German carmaker’s emissions fraud. Now for the next crisis: falling sales. Since Britain plunged Europe into uncertainty, markets have priced in a 13 pct drop in 2017 earnings. That calls for zealous cost-cutting.

VW’s poor governance back on the spot

22 Jun 2016

Germany’s financial watchdog wants a probe into whether the carmaker’s former management manipulated the market. The legal bar for a conviction is high. But it adds to the pressure on chairman and former finance chief Hans Dieter Poetsch. VW really needs an outsider at the top.

Kion’s forklift deal assumes serious heavy lifting

21 Jun 2016

Europe’s largest forklift maker Kion is paying $3.3 billion for U.S. logistics tech company Dematic. That’s 20 times last year’s operating profit. To earn its cost of capital, the buyer might have to wait until 2020 and make rosy assumptions on revenues, margins and synergies.

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.

VW reform firing on only two and a half cylinders

16 Jun 2016

The stricken carmaker’s new strategy cuts costs and embraces disruptive technology. But properly addressing the flaws that led to Volkswagen’s emissions scandal requires less corporate complexity, and better governance. Boss Matthias Mueller needs to do more on these last two.

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.

Korean suitor could end U.S. chemical bid warfare

7 Jun 2016

Lotte has approached vinyl producer Axiall, which is fending off a hostile $3 bln advance from rival Westlake. Although the Asian interloper didn’t disclose specifics, Westlake is already offering an eye-popping 140 pct premium. The winning sweetener could involve more cash.

Bayer-Monsanto could be squeezed in hungry world

3 Jun 2016

Population growth and climate change will boost demand for seeds and agrichemicals. Bayer's strategic rationale for a $62 bln Monsanto bid looks sound. But if food shortages really bite, the merged group's pricing power may come under attack. There are precedents in pharma.

Life lessons from a German corporate failure

3 Jun 2016

With six profit warnings, four CEOs and its share price halving over two years, German industrial services group Bilfinger is a huge corporate disappointment. Now it is finally dismantling itself. Other companies can learn from some of Bilfinger's more glaring mistakes.