Industrials

CRH’s $7.4 bln buy reveals M&A tolerance

2 Feb 2015

It’s a big bet. The Irish building group will increase leverage – even with a big equity issue – to buy surplus assets from Lafarge worth a third of its market cap. CRH got sucked into an auction too. Yet investors cheered. It’s how things work in a low-return, low-growth world.

Honeymoon really is over for Siemens boss

27 Jan 2015

Lacklustre quarterly results hit shares in Europe’s largest industrial group. After 18 months, CEO Joe Kaeser has not lived up to early hopes. He’s completed some smart disposals. But he’s also overspent on shale and, by centralising power, hobbled unit managers.

Siemens faces big oil deal debacle

23 Jan 2015

The collapsing oil price turns the German engineer’s dash for shale into a costly blunder. Its $7.6 bln September bid for U.S. oilfield kit maker Dresser-Rand will stain CEO Joe Kaeser’s reputation. With shares of Dresser’s peers clobbered, a major impairment is looming.

ASML shows benefits of market power

21 Jan 2015

Shares in the $46 bln chip equipment manufacturer hit record highs after full-year results showed soaring demand from memory chipmakers. At 25 times forward earnings, ASML’s valuation would be toppy in most sectors. But, like chip designer ARM, the Dutch firm dominates its market.

Clunky conglomerates put on high breakup alert

6 Jan 2015

Billionaire Carl Icahn wants to separate Manitowoc’s construction cranes from its ice machines. Companies with such head-scratching pairings make easy targets for freshly invigorated uppity investors. Pitney Bowes and JBT are among those that may want to keep vigilant guard.

RWE needs Plan B for 5.1 bln euro oil deal

13 Nov 2014

The German utility’s planned sale of oil and gas unit DEA to a group of Russian investors led by Mikhail Fridman has run into British government opposition. RWE needs the sale to cut debt and capital spending. Time to start looking for alternatives. 

Cable M&A wave washes over the Caribbean

6 Nov 2014

Cable & Wireless Communications is buying Barbados-based Columbus Intl for $3 bln with debt. As with many European cable deals, the high price must be offset with cost savings and growth. CWC shares dived. That’s not all down to a big share placing in a smallish stock.

BMW extends lead over Daimler

4 Nov 2014

Quarterly results show the Munich carmaker is growing profitably across the world. That makes life harder for arch-rival Daimler, which wants to overtake BMW as the top premium carmaker by 2020. BMW’s share price does not fully reflect that strength.

Edward Hadas: Robots can be our best friends

30 Oct 2014

If the cult of economic efficiency is not abandoned, then machines which can emulate and sometimes surpass human thinking are likely to bring lower wages and more unemployment. But robots provide a wonderful opportunity to combine low labour productivity with high prosperity.

Ferrari spinoff looks great but lacks oomph

29 Oct 2014

The hottest name in sports cars is joining the spinoff bandwagon. Fiat Chrysler will sell 10 pct of Ferrari and hand the rest to investors. Fiat shares zoomed up. Yet the split is largely symbolic. Ferrari needs to stay linked to Fiat, and the cash proceeds will be limited.

DuPont chief bobbles rebuttal to Peltz attack

28 Oct 2014

CEO Ellen Kullman touted the $62 bln chemical giant’s scale and research capabilities in opposing the activist’s call for a breakup. But she offered no hard numbers to counter Peltz’s claim that the company could lop off $4 bln in excess costs. That was a missed opportunity.

Most of the heavy lifting lies ahead for Volvo

24 Oct 2014

An unexpected earnings jump propelled shares in the Swedish truck maker up 10 pct. But Volvo is facing an uphill struggle. The outlook for its core European market is weak, and its new cost cutting targets are ambitious. 

Air-bag recall poses carmaker valuation challenge

23 Oct 2014

Supplier Takata’s faulty devices have sucked $6.5 bln from Honda’s market cap. Dodgy ignitions helped dent GM’s by $16 bln. Automakers can overcome such woes, as GM’s Q3 earnings imply. Increasing automation adds a new dimension to the risk, making it even harder to quantify.

Daimler can turbo-charge its cash return

23 Oct 2014

The German carmaker is boasting of record sales, rising margins and rich proceeds from asset disposals. But its dividend has not grown in line with a recovery in performance. After years of parsimony, Daimler can afford to be more generous to shareholders.

ABB switches into rehabilitation mode

22 Oct 2014

After a series of nasty surprises, the Swiss engineering giant’s recovery is charging up. ABB has made progress in fixing its stricken power systems unit, while strong orders highlight operational strengths. But slipping profitability and a wobbly macro outlook remain concerns.

Qualcomm signals $2.5 bln belief in Bluetooth

15 Oct 2014

The $120 bln U.S. chipmaker has bid for Britain’s CSR. It is betting the “Internet of things” will bring rapid growth in Bluetooth-linked cars, stereos and watches. But paying 27 times 2015 earnings looks rich, especially as rival suitor Microchip warns of industry weakness.

Giant fertiliser combo looks tough to cultivate

23 Sep 2014

Norway’s Yara is talking to U.S. rival CF Industries about a $27 bln tie-up. The two boast similar valuations and could reap sizeable synergies. Hence a near-$1 bln jump in Yara’s market cap. But a merger of equals is one of the trickiest deal varieties.

China data divides real and economic worlds

15 Sep 2014

Industrial and investment data for August were poor. Yet job creation, wages and retail spending – which matter most for ordinary people – look solid. While that justifies inaction for now, it is naïve to think the two realms can remain separate. Real estate is the vital link.

French carmaker teaches world about cheap autos

15 Aug 2014

Renault’s no-frills brand Dacia is Europe’s fastest growing carmaker. Quick gains in market share and rich margins are arousing the interest of rivals, including GM. But selling vehicles for as little as 5,995 pounds isn’t easy. It requires a rethink of all aspects of carmaking. 

AstraZeneca is not the UK science base

7 May 2014

UK politicians worry that a Pfizer takeover would erode British scientific competence. But if that foundation were strong, the deal would hardly matter. The drug industry has fundamental problems. That’s why Astra has been slashing R&D by itself, and cost-cutting is driving M&A.