Industrials

Immelt’s SIFI escape route is tough to follow

10 Apr 2015

The $280 bln GE is offloading most of its finance unit and should be able to ditch the systemic tag imposed by watchdogs. That will free CEO Jeff Immelt’s remaining empire from onerous rules. Big U.S. banks might fancy similar liberty, but they are more tightly hemmed in.

GE shows way by ending wait for tax Godot

10 Apr 2015

The U.S. conglomerate is bringing home $36 bln and will pay $6 bln in taxes on it. The move helps GE deliver a capital return plan with sufficient heft to make a mark. It also should be big enough to be noticed by other companies paying a price for leaving some $2 trln overseas.

France becomes Renault activist – to stop activism

8 Apr 2015

The state is temporarily hiking its stake in the carmaker to prevent other investors opting out from a law to double government voting rights. The reform is meant to protect long-term investors. As it is, Paris is using activist-style techniques to safeguard its own interests.

Dow Chemical tempts fate with $5 bln chlorine sale

27 Mar 2015

The company is offloading its bleach and vinyl-related chemicals to smaller rival Olin using the esoteric reverse Morris Trust structure. The valuation looks solid, especially considering the tax savings. Yet investors should remain wary given the history of such complex deals.

China may finally end Pirelli’s stock market spins

20 Mar 2015

State-owned China National Chemical is buying into the listed tyremaker, run by Marco Tronchetti Provera. It’s the third big capital shift since 2013, each with control moving through a complex web of holding firms. But this one could be the last, if it leads to a full buyout.

Holcim scores clear victory in Lafarge deal

20 Mar 2015

The Swiss cement maker has reset deal terms with its French partner. That’s fair – the new exchange ratio keeps the tie-up a merger of equals. But Holcim has also managed to veto Lafarge’s Bruno Lafont as CEO. Lafarge’s concession suggests its shareholders are anxious for a deal.

Rob Cox: If only GE had an activist who cared

17 Mar 2015

The problem with Jeff Immelt’s conglomerate isn’t inertia, bad managers or crummy assets. GE faces a harder nut to crack: Investors don’t seem to give a damn. As Microsoft’s experience before Satya Nadella suggests, the perception of a stock as dead money is hard to shake off.

Lafarge-Holcim merger can be rescued as takeover

16 Mar 2015

The European cement makers disagree about the financial terms and governance of their planned tie-up. A “merger of equals” has foundered yet again. To keep the deal’s benefits, the way forward would be for Lafarge to agree to be bought for a suitable premium.

Holcim can push for more in Lafarge tie-up

13 Mar 2015

The Swiss cement group is outperforming its French rival, creating cracks in their $44 bln union. A special dividend or higher exchange ratio could fix matters. That is more likely to happen than deal failure, given that both sides would suffer if it fell apart.

VW’s stingy dividend may presage more M&A

12 Mar 2015

Europe’s biggest carmaker has upped its payout to shareholders by 20 pct. But the dividend is only around one-fifth of earnings, well short of Volkswagen’s own target ratio. Yet it has nearly 18 billion euros of cash. That suggests there could be a big acquisition on the cards.

Maersk definitively casts off conglomerate past

25 Feb 2015

The shipping giant has already streamlined and grown more open. Now it is shedding 20 pct of Danske Bank, the clearest break yet with history. Shares rose 6 pct. Transforming conglomerates can be like reorienting a super-tanker. But with focus in fashion, it’s worth the slog.

Hitachi’s $2 bln deal signals Italy open for M&A

24 Feb 2015

The Japanese firm is buying Finmeccanica’s rail units. In Italy and across Europe, sales of high-end industrial assets to the Far East can be unpopular. But Hitachi is a credible buyer paying a full price. It helps too that the seller is eager to slim down and cut debt.

Armstrong flooring spin suggests breakup ceiling

23 Feb 2015

Investors typically roll out the welcome mat for corporate splits. Yet the $3 bln building materials group’s shares were nearly as flat as hardwood boards after it revealed plans to house its two units under separate roofs. Financial engineering can’t cover up every crack.

GM agitators run into union roadblock

23 Feb 2015

Dennis Williams, boss of 8.7 pct shareholder UAW, calls an $8 bln stock buyback demand from hedgie-backed Harry Wilson premature. GM may have loads of cash, but also investment needs and $26 bln of retiree costs. A smaller repurchase would be smarter and may avoid a bigger clash.

Dividend shocker puts Lufthansa aerobatics to test

20 Feb 2015

The airline is scrapping payouts for the second time in three years - after two profit warnings and a long-running labour dispute. And new CEO Carsten Spohr has a worrying appetite for growth in a challenged industry. He needs some successes before his credibility is grounded.

Drinks can merger may yet get flattened

19 Feb 2015

U.S. drinks can maker Ball agreed to pay 4.3 bln stg in cash for British rival Rexam. Ball also pledged to pay a chunky 302 mln stg fee if it is blocked. Rexam’s share price suggests the merger may still fall foul of trustbusters. 

Rusty Peugeot’s restoration has further to go

18 Feb 2015

Carlos Tavares has beaten most of his goals in his first year as boss of the French carmaker. Shares are up 52 pct too. The company is debt free, cashflow positive and more cost efficient. A 2018 operating profit margin target of 2 pct looks modest. Peugeot may gain speed more quickly. 

Loeb’s Fanuc bet may test strength of bionic arm

13 Feb 2015

The U.S. activist has bought into another Japanese company. Unlike with Sony, Dan Loeb’s hedge fund is only demanding a share buyback, not a tricky restructuring. A bigger risk to the investment case may be the challenge to Fanuc’s scary, big robots from cheaper, gentler rivals.

Renault’s turn of speed needs careful handling

12 Feb 2015

The French carmaker has beaten expectations for 2014 by a mile. A 30 pct jump in operating profit, plus an optimistic outlook, pushed the shares up 9 pct. Europe’s recovery should keep Renault on the road. But worsening woes in Russia are a big worry.

Can maker dons tin hat to reveal $6.6 bln approach

5 Feb 2015

Shares in London-listed Rexam jumped 20 pct on news it might sell itself to U.S. rival Ball. A deal isn’t even inked, and the antitrust concerns are substantial. The British company’s decision to publicise the price under discussion looks brave – or designed to force Ball’s hand.