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from Breakingviews:

General Mills may smother pricey organic target

By Kevin Allison

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

General Mills risks smothering its latest acquisition target. The $32 billion Cheerios maker has agreed to pay $46 per share, a 37 percent premium, for Annie’s, a California-based “natural” mac-n-cheese and organic snacks company. The $820 million deal is small relative to General Mills’ overall business, but there’s a risk of indigestion.

Like other consumer companies, General Mills has struggled to manufacture growth. Breakfast cereal is a mature market in developed economies, and emerging markets have proven hard to crack. Meanwhile smaller, more authentic-seeming brands like Chobani and Annie’s have generated growth with the likes of Greek yogurt and foods carrying the “natural” tag. Sales in the latter category have grown 12 percent per year over the past decade, General Mills says.

The company may feel it’s a better percentage option to pay a hefty premium for products that are succeeding than to attempt replicating them from scratch. The deal will add $200 million of sales to General Mills’ existing $330 million-a-year natural and organic foods portfolio, which includes Nature Valley granola bars.

from Breakingviews:

Henry Kravis cultivates private equity perennials

By Jeffrey Goldfarb

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

Henry Kravis is sowing the seeds of private equity perennials. U.S. buyout shops like his are selling companies to each other at a breakneck pace. It’s easy to be skeptical about these so-called secondaries. But KKR’s $1.6 billion acquisition of landscaper Brickman Group may turn out to be an example of how such deals can flourish.

from MacroScope:

Strong euro may be a monster Draghi can’t tame

Mario Draghi, President of the European Central Bank (ECB), addresses the media during his monthly news conference at the ECB headquarters in FrankfurtECB President Mario Draghi may have created a monster when he declared nearly two years ago that he will do “whatever it takes” to save the euro.

Given that Draghi has now openly pegged the outlook for monetary policy at least partly to the exchange rate, the prospect of both short-term and long-term investors buying the euro is a worrying obstacle for policy.

from Breakingviews:

JPMorgan commodities sale shows trading’s opacity

By Kevin Allison and Antony Currie

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

JPMorgan’s $3.5 billion sale of its physical commodities business is a perfect example of just how opaque trading is. The bank is selling what is probably a low-return business with regulatory headaches to Mercuria, a privately held firm that does not have to make its financials public. The dearth of details does make it hard to judge, but applying some statistics from both the industry and some rivals suggests Mercuria may be paying top whack.

from Breakingviews:

Vivendi’s SFR is top target for French cable king

By Quentin Webb

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

France’s cable king promised investors a slew of deals when he floated Altice, his investment vehicle. The biggest and best would be Vivendi’s mobile operator SFR.

from Breakingviews:

Turning suit deal inside out reveals silver lining

By Jeffrey Goldfarb
Thea author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Turning a suit deal inside out has revealed a silver lining. After fending off a hostile bid from Jos. A. Bank, Men’s Wearhouse is now proposing to buy its smaller rival for $1.2 billion. The estimated cost savings could cover nearly the entire purchase price and the combined company would be less indebted. Structured this way round, the transaction is financially more fashionable.

from Breakingviews:

Bayer can pay more for cancer blockbuster partner

By Olaf Storbeck

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

Bayer can pay more for Algeta. After a leak, the German pharma and plastics giant has admitted making a 336-crown-a-share, or 1.8 billion euro ($2.4 billion), takeover overture to its Norwegian partner. Shares in the smaller firm promptly rose above Bayer’s proposal. That looks appropriate: this opening gambit is not overly generous. Algeta’s flagship prostate cancer treatment, Xofigo, is promising. And the technology pioneered here could be used to treat other cancers.

from Breakingviews:

Blackstone’s $6 bln oil deal signals another peak

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

A $6 billion oil deal signals yet another Blackstone apex. The sale of private equity-backed GeoSouthern Energy to Devon Energy comes at a toppy price by one important measure. Blackstone also has an uncanny knack for timing. The glut of undeveloped land owned by oil companies suggests finding buyers will get tougher.

from Breakingviews:

DSM’s pill deal oddly blends carve-out and LBO

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

DSM has come up with an odd formulation to solve its drug-production headache. The world’s biggest vitamin maker is merging its DSM Pharmaceutical Products (DPP) business with a private equity-backed rival. DPP was a subscale distraction. But the precise benefits of the $2.6 billion tie-up are hard to fathom. And DSM cedes control of the unit without reducing its economic exposure.

from Breakingviews:

Shire adds to premium valuation with toppy deal

By Neil Unmack

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

Markets must like Shire’s boldness. Shares of the UK pharmaceutical firm jumped almost 4 percent on the news it would acquire ViroPharma, even though it agreed to pay an eye-watering nine times this year’s sales for the biotech group.

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