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from Breakingviews:
ABB takes a shine to solar
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
ABB’s contrarian push into solar energy looks smart. The Swiss group is buying Nasdaq-listed Power-One for $1 billion in cash - a fully priced deal, given the solar industry’s current financial misery. But ABB insists Power-One occupies a sweet spot. That sounds plausible, and long term, the deal should add up.
The backdrop is gruesome. A glut of cheap Chinese kit has bankrupted firms from Germany’s Q-Cells to China’s own Suntech. Power-One does not make solar panels themselves, but solar inverters, which convert solar power to grid-ready electricity. But even here the picture is grim, especially in Europe, thanks to huge subsidy cuts and tariffs on Chinese imports. So bigger rival SMA Solar Technology warns the global inverter market will shrivel 19 percent in 2013.
The turmoil makes valuation tricky. ABB trumpets a reasonable-looking enterprise value (EV) of 6.4 times 2012 EBITDA, once net cash of $266 million is included. But analysts polled by Starmine forecast EBITDA will plunge from $120 million last year to about $70 million this year - a pretty rich current-year EV/EBITDA multiple of 10.7 times.
from Breakingviews:
Weaker yen won’t halt Japan Inc’s overseas spree
By Peter Thal Larsen
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
A weaker yen won’t reverse Japan Inc’s overseas M&A drive. While a strong currency, low interest rates and a stagnant home market fuelled an international shopping spree in 2012, the promise of a domestic revival under new Prime Minister Shinzo Abe has caused buyers to temporarily put away their wallets. But even so-called Abenomics can’t cure Japan’s ageing and shrinking population.
from Breakingviews:
Target shortage feeds desperate Mideast telco M&A
By Una Galani
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
A scarcity of takeover targets is feeding a desperate scramble in Middle East telecoms M&A. Bahrain’s incumbent operator Batelco is eyeing a stake in the enterprise unit of India’s Reliance Communications. It comes just months after agreeing a deal worth $1 billion to buy assets spanning 12 markets, including Monaco and the Channel Islands, from Cable & Wireless. Batelco’s pick-and-mix takeovers are symptomatic of a market where too many big telcos are chasing too few assets.
from Breakingviews:
Mining saga highlights pitfalls of Chinese M&A
By Peter Thal Larsen
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
Sundance Resources is a case study in what ails Chinese-led takeovers. The Australian miner’s deal to sell itself to Hanlong Mining for $1.4 billion is under pressure after its suitor’s chairman was apparently arrested. The 18-month saga highlights the hurdles facing Chinese bidders, and explains why suitors are often met with scepticism.
from Breakingviews:
AB InBev moves fast to keep Mexico prize
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Anheuser-Busch InBev is moving fast to save its Mexican ambitions. The world’s biggest brewer has rejigged its $20 billion buyout of Grupo Modelo two weeks after regulators objected, worrying that U.S. drinkers would suffer. In response, AB InBev is relinquishing any claim to Modelo’s beers stateside. That could prevent a long legal fight, while keeping the deal’s rationale largely intact.
from Breakingviews:
Japan tensions rewrite China shopping lists
By Katrina Hamlin
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
China’s buying habits have taken on an air of the patriotic, at least where Japan is concerned. As tensions rose last year over who owns a group of remote islands, sales of Japanese cars and arrivals of Chinese tourists showed a marked slowdown. Even Chinese acquisitions of Japanese companies fell in the last quarter of 2012.
from Breakingviews:
AB InBev setback may hasten last round of beer M&A
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
A deal setback for Anheuser-Busch InBev may ironically hasten a last round of consolidation in beer. The U.S. Department of Justice opposes AB InBev’s $20 billion plan to buy out the other half of Grupo Modelo, the Mexican group behind Corona. The world’s largest brewer may yet find a workable compromise. But if not, an obvious plan B exists: the long-rumoured takeout of SABMiller.
from Breakingviews:
Europe brings the pain for UPS and TNT
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Acquisitive companies beware: Joaquin Almunia is not always interested in the bigger picture. The European competition commissioner has nixed his second transatlantic mega-merger in a year, signalling he would block TNT’s 5.2 billion euro takeover by U.S. rival UPS. He had consigned the Deutsche Boerse - NYSE deal to the scrapheap in February, 2012. Both times, the companies argued fruitlessly that they were subject to wider competitive forces than those considered in the commission’s analysis, which defined the markets in question rather narrowly. Both times, the EU competition czar failed to be impressed.
from Breakingviews:
Penguin in bondage hides real risks in media M&A
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own
Three deals from 2012 will reshape the book, music and film industries in 2013: Penguin's merger with Random House, Universal's $1.9 billion purchase of EMI's recorded-music business, and Walt Disney's $4.1 billion takeover of Lucasfilm. There are sound business reasons for all three. There are also reasons for artists and consumers to fret.
from Breakingviews:
India’s Jet a better bet than Kingfisher for Etihad
By Andy Mukherjee and Una Galani
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
Abu Dhabi’s Etihad Airways is spoilt for choice in India: It could decide to be a white knight to billionaire Vijay Mallya’s beleaguered Kingfisher Airlines. Or the Gulf carrier could snap up a smaller stake in Jet Airways, which controls a quarter of the domestic Indian market. The latter looks the better bet.
