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Reuters blog archive

from Breakingviews:

Treasury Wine resistance withers under KKR assault

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Treasury Wine has decided that a grape is worth more in the bottle than on the vine. The maker of Lindeman’s and Penfolds agreed to open its vaults after the buyout group raised a provisional cash offer to A$3.38 billion ($3.15 billion). Though the bid could yet sour, Treasury’s spell as a listed company looks like it will soon be coming to an end.

It’s unusual for private equity groups to come back after a rebuff. Treasury rejected KKR’s opening bid of A$4.70 per share in May, arguing that new chief executive Michael Clarke needed time to deliver his turnaround plan. Just over two months later, however, it has agreed to negotiate after KKR - now joined by co-investor Rhone Group – topped up its bid by an additional 50 cents per share. The latest proposal looks hard to resist. It’s at a 41 percent premium to Treasury’s share price before the first offer, and values the company at almost 24 times forecast earnings for the year to next June, according to Eikon.

There are risks to negotiating in public. Treasury will suffer if KKR finds something it does not like in due diligence and walks away. By keeping its discussions with KKR non-exclusive, Treasury can try to squeeze out a competing bid. But rival suitors have had plenty of opportunity to come forward since beer maker Foster’s decided to spin off the business in 2011.

from Breakingviews:

China’s old meat is a corporate health warning

By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Old meat in China’s fast-food chain brings a health warning for foreign companies doing business in the country. After getting fat on rapid growth, some are discovering nasties hidden within their ample folds.

from Breakingviews:

WH Group’s revived IPO shows one lesson learnt

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

WH Group’s revived initial public offering shows it has learnt at least one lesson. After an attempt to sell shares two months ago ended in disaster, the Chinese pork producer has returned, cheaper and with fewer banks working on the deal. But it’s not clear why it is rushing back to market at all.

from Breakingviews:

WH Group’s quick pork flip serves up meaty return

By Una Galani 

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

WH Group’s quick pork flip will serve up a meaty return. The Chinese pig producer hasn’t had much time to justify the 31 percent premium it paid for rival Smithfield less than seven months ago. Yet the planned relisting of the enlarged group in Hong Kong implies the value of the U.S. business has risen at least 21 percent.

from Breakingviews:

Asia is ripe for a brewers M&A brawl

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

It is a seller’s market in the last frontier for beer. Asia Pacific is the last region not dominated in profit terms by the world’s four biggest brewers – Anheuser-Busch InBev, SABMiller, Heineken and Carlsberg – according to Bernstein Research. Consumption of suds is growing fast, and for-sale assets are hard to find. The coming year may see new owners for Philippine brewer San Miguel and South Korea’s Oriental Brewery. The real prize may be in China, the world’s biggest beer market by far.

from Breakingviews:

Private equity taps happy hour at Oriental Brewery

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Oriental Brewery may produce a happy hour for its private equity investors. Belgium’s Anheuser-Busch InBev has started discussions over buying back the South Korean brewer, which it sold to Kohlberg Kravis Roberts in 2009 for $1.8 billion. A back-of-the-beer mat calculation suggests that would earn OB’s private equity backers a 34 percent annualized return.

from Breakingviews:

Aussie dairy battle needs cheap debt to stack up

By Ethan Bilby

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.

Australia’s dairy battle needs cheap debt to stack up. Three bids in as many days for Australia’s Warrnambool have lifted the price tag above A$500 million ($469 million). Local cost savings and projections of China’s thirst for foreign milk help justify the frenzy. But the investment case rests on low borrowing costs.

from Breakingviews:

China competition proves hard for Yum to swallow

By Ethan Bilby

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China is eating less KFC chicken, and that has hurt sales at the chain’s U.S. owner, Yum Brands. Revenue at the group’s comparable Chinese branches fell 11 percent in the third quarter, year on year. While last year’s fears of antibiotic-laced Zinger Burgers didn’t help, fierce competition has also made the company a less reliable bellwether of Chinese appetites.

from Breakingviews:

Suntory pays up to quench thirst for Japan escape

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Suntory is paying up to quench its thirst for overseas growth. The newly-listed Japanese firm wants to double its sales by 2020, partly through foreign acquisitions. To help achieve that goal, it’s paying GlaxoSmithKline 1.4 billion pounds ($2.1 billion) in cash for British brands Lucozade and Ribena. That’s a big premium to reduce its exposure to a tough domestic market.

from Breakingviews:

China price probes may be too much of a good thing

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s trustbusters have found their mojo. Last month, the National Development and Reform Commission fined six milk companies including Danone and Fonterra for fixing prices. Petroleum groups, telecom operators, banks and auto makers may be next to feel the heat. China needs stronger watchdogs, as long as what motivates them is a hunger for good, not a taste for glory.

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