Mar 27, 2015 20:12 UTC

Dow Chemical tempts fate with $5 bln chlorine sale


Dow Chemical CEO Liveris speaks during the CERAWEEK energy conference in Houston

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

Dow Chemical is tempting fate with its $5 billion chlorine sale. The $54 billion company is offloading the bulk of its low-margin bleach and vinyl-related operations to smaller rival Olin using an esoteric structure known as a reverse Morris Trust. The valuation looks solid, especially considering the tax savings. Yet investors should remain wary given the history of such complex deals.

Mar 27, 2015 07:47 UTC

India’s boardroom diversity drive has weird result



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

India’s effort to break the old boys’ club is producing bizarre outcomes. Tycoons have responded to a requirement that they have at least one female board member by April 1 by appointing their wives and even stepmothers as directors. India’s corporate governance has room for improvement and gender diversity at the top can improve financial returns. But mandating change isn’t the answer.

Mar 26, 2015 22:00 UTC

Buffett-3G juggernaut can keep on truckin’


Financial investor Warren Buffett looks on during an announcement ceremony at Northwestern University in Evanston

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

Warren Buffett and 3G Capital have created a fearsome M&A machine. Wednesday’s deal to merge consumer food giants Kraft and H.J. Heinz, worth some $80 billion, marks the boldest collaboration yet between the Sage of Omaha and the investors behind AB InBev, after earlier swoops on Heinz and Tim Hortons. The only barrier to even bigger deals may be 3G’s capacity for new projects.

Mar 26, 2015 14:52 UTC

Rob Cox: Pirelli flirts with joke version of hell


Pirelli tyres are pictured in a tyre specialist center in Turin

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

In the old joke about a European version of hell, the cooks are British, the lovers Swiss and the mechanics French. With the $7.7 billion reshuffle of its ownership unveiled this week, Pirelli risks becoming the corporate equivalent: the management is Italian (as in the joke), its new owner will be a Chinese state enterprise, and other key partners are Russian. Minority investors won’t be laughing.

Mar 26, 2015 14:13 UTC

Bumper European share sales carry risk of excess


By Dominic Elliott

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

There is little doubt that Europe’s equity capital markets are in a euphoric state. That is fine for now. But there is a risk of excess.

Mar 25, 2015 21:07 UTC

Kraft investors bet Heinz can refill secret sauce


Variety of Heinz products are seen at convenience store in Golden

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

H.J. Heinz’s operating margins rocketed from 18 percent to 26 percent after 3G Capital and Warren Buffett’s Berkshire Hathaway took the ketchup maker private two years ago. In welcoming a merger that creates a company worth perhaps $80 billion, Kraft Foods investors are betting on more of the same.

Mar 25, 2015 16:46 UTC
Edward Hadas

Deutsche Bank’s long round trip


REUTERS/Kai Pfaffenbach

Deutsche Bank inserted two bold new financial targets into its annual report in 2000. Thanks to “the enhancement of our organisational structure”, the German bank committed itself to “planned annual growth in earnings per share of at least 15 percent” for the subsequent three years, and an average annual return on equity of “more than 15 percent”.

The plans did not pan out. Earnings per share in 2003 were just a quarter of what was achieved three years earlier. Deutsche did manage 6 percent annual EPS growth between 2000 and 2007, but then the financial crisis reset profitability at a much lower level. The firm eked out EPS of 1.31 euros last year, 85 percent less than in 2000. Return on equity over the past 15 years has averaged 7 percent, less than half the target level. The share price was as high as 91 euros in 2001. It closed on March 24 at barely more than a third of that, at 32.50 euros.

Mar 25, 2015 15:19 UTC

Hermes shares look too glossy


REUTERS/Mario Anzuoni

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

Hermes has won many a handbag fight. In the last two years its high-end leather goods found eager buyers in most markets, despite global economic weakness. On the home front the family controlled group has freed itself from the smothering embrace of Louis Vuitton owner LVMH.

Mar 24, 2015 19:58 UTC

Google’s CFO search should have it feeling lucky


"The Reuters Breakingviews 2015 Predictions panel moderated by Reuters Breakingviews Editor Rob Cox and featuring Founder & Executive Chairman at Evercore, Roger Altman, Chief Economist & Executive Director of Global Market Insight at General Electric, Mar

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

Google’s CFO search should have it feeling lucky. There’s a dearth of executives with the financial, tech and government know-how needed to help run a $400 billion company. Even fewer women fit the bill. Silicon Valley and Wall Street just can’t find people like Morgan Stanley Chief Financial Officer Ruth Porat fast enough. The challenge is to create more like her.

Mar 18, 2015 14:45 UTC

Inditex shares no longer a bargain


REUTERS/Andrew Winning

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

Inditex is back in fashion. The Zara owner’s shares have risen more than 20 percent this year, against 7 percent for rival H&M’s. The Spanish recovery, a weakening euro and the group’s nimble business model justify a premium valuation. But at more than 30 times forward earnings, the good news is already priced in.