Industrials

It’s time investment banking had an easyJet

1 Jun 2016

The industry’s value destruction mirrors that of airlines, which a major study found made no economic profit over a 13-year period. Low-cost alternatives in aviation eventually shook up staid business models. Banks are different, but the no-frills approach offers useful pointers.

Keeping Kuka German may require going French

1 Jun 2016

Economic minister Sigmar Gabriel is trying to forge a counterbid for the robot maker. Yet Chinese Midea’s $5 bln offer is already frothy. Berlin would have to turn to industrial politics à la française, and maybe even take a direct stake. Better to let markets run their course.

Thermo Fisher’s FEI deal holds up under microscope

27 May 2016

But that’s only if the healthcare M&A machine can boost sales at its $4.2 bln quarry. Reducing taxes and cutting costs at the maker of electron microscopes only gets Thermo partway to justifying the price tag. Thermo’s track record gives investors some comfort it can do this.

Lockheed-Boeing rocket JV feels competitive heat

25 May 2016

Elon Musk’s SpaceX just broke the monopoly on military satellite launches enjoyed by the defense contractors’ alliance. Congress may help the pricey venture by allowing it to buy more sanctions-tainted Russian rocket engines. That’d be a strike against efficiency and innovation.

Deutsche Bank needs BASF to spare its M&A blushes

23 May 2016

Germany’s biggest bank has no role on potentially the country’s largest deal - the $62 bln offer by Bayer for agrochemicals peer Monsanto. Deutsche’s share of global and domestic dealmaking is down. It sorely needs BASF, its own advisory gig, to hatch a successful counterbid.

Agro giants will have to wait for Malthus boost

23 May 2016

Tougher U.S. laws on tax inversions are one reason why Dutch fertiliser group OCI’s merger with CF Industries is off. But with supply outstripping demand, fertiliser prices are also falling. That’s delaying the price hikes that should come from rising populations.

China’s $5 bln robot bid does not compute

18 May 2016

The 36 pct premium Midea may offer for German robot maker Kuka is frothy. There are no cost synergies, the suitor doesn’t seek control, and governance could be messy. Yet unless Kuka can find a white knight, minority shareholders have every reason to take the Chinese cash.

Labour costs drive China’s $5 bln march for robots

18 May 2016

Home appliance maker Midea is eyeing a takeover of German robot maker Kuka. Machines can replace domestic migrant workers as wages soar, and help push China up the manufacturing value chain. Government subsidies may aid the otherwise thin financial logic for the buyer.

Terex turns controversial M&A fight into group hug

16 May 2016

The crane maker scrapped its merger with Finland’s Konecranes after new U.S. tax rules killed the deal’s logic. Konecranes is now just buying the ports business, the unit that raised security fears about a rival bid from China’s Zoomlion. It’s now free to buy the rest of Terex.

Feeble margins could stall Alstom’s speed-up

11 May 2016

The French train maker boasts a strong balance sheet, record order intake and big mid-term growth ambitions. Yet a lacklustre operating margin of 5.3 pct leaves little room to cope with intensifying global competition. Sorting this quickly should be Alstom’s key focus.

Thyssen’s steel slump flags need for big bang

10 May 2016

Europe’s steel crisis is hitting even the most efficient players hard: German group ThyssenKrupp lowered its operating profit outlook by a fifth after a poor quarter. The ongoing slump increases the pressure on boss Heinrich Hiesinger to team up with Tata or another rival. 

VW’s activist exposes Bermuda Triangle of control

9 May 2016

Pay changes demanded by investor Chris Hohn would clearly be an improvement. So why did the Piech family and other large investors not introduce them already? Because their control of the German carmaker is illusory. Local politicians and trade unions have excessive influence. 

Brexit advocates: heed the tale of Herb Kelleher

6 May 2016

The co-founder of U.S. budget airline Southwest took the glamour out of air travel. But the increased connectivity has had unexpected benefits - like more scientific breakthroughs, a new study shows. Those who seek a British exit from the EU may be giving up more than they know.

Stupid names can’t hurt good companies

5 May 2016

Healthineers, Siemens’ new brand for its healthcare unit, is reminiscent of a hero in a 1950s science fiction comic. Users of its brain-scanners are unlikely to care. For investors the goofy name is, at the margin, a good thing: it shows a spin-off may have become more likely.

Siemens turns screw on rival ABB

4 May 2016

The German engineer has long trailed its more profitable and agile Swiss peer. But quarterly results suggest Siemens is closing the gap. It is growing faster while catching up on profitability, which makes a 28 pct price-to-earnings discount hard to justify.

Descending Peak Auto could be rocky road

28 Apr 2016

After selling a record 17.5 mln vehicles in the United States last year, the prospect of a downturn looms for Detroit manufacturers. Even a modest one could hit revenue hard. Ford, GM and Fiat Chrysler are fitter than they were in 2009, but have yet to navigate the downhill.

Losing bidder is indirect winner in Darty bid

27 Apr 2016

Furniture retailer Conforama has pulled out of a frenzied bidding war for the European electrical store. Their prudent approach that doesn’t count synergies made the price too high. Rival Fnac’s final bid is 70 pct above its original offer - but still looks like a good deal.

Caterpillar keeps on digging its credibility gap

22 Apr 2016

The $46 bln maker of earth-moving equipment added a fresh profit warning to a series of stumbles, including buying into mining at its peak and splurging on buybacks when stock prices were high. Boss Doug Oberhelman is turning out to be a poor judge of his own business cycle.

Daimler’s emissions snootiness grinds to a halt

22 Apr 2016

The German carmaker has vigorously refuted environmentalists’ accusations it is another VW. Now U.S. authorities have requested an emissions probe. It’s possible that any infringements are technical, relating to disclosure oversights. But shareholders have grounds to feel edgy.

GM investors may have learned lesson too well

21 Apr 2016

A price-to-earnings ratio below six makes no sense when profit is growing, even in a cyclical industry like cars. Old GM routinely under-delivered. Recently the $50 bln carmaker has beaten forecasts. Investors’ hard-earned skepticism may be a habit that proves hard to change.