Breakingviews

Sinking rouble puts debt squeeze on Russia Inc

By Pierre Briancon
December 3, 2014

Most of Russia’s external debt is owed by the country’s banks and corporates. About $138 bln comes due in the next eighteen months. With the currency down 40 percent against the dollar this year, that will put a major strain on enterprises’ cashflows. Expect the state to step in.

If Vodafone wants Liberty it has to get creative

December 1, 2014

The mobile giant is eyeing cable group Liberty Global for a $90 bln-plus takeover. The strategic case is easier to make than the financial one. Regulators may be persuadable. Investors and Liberty Chairman John Malone could be colder. Vodafone has to be resourceful.

E.ON’s “bad power” spinoff promises little upside

December 1, 2014

Germany’s largest utility is exiting conventional generation, bundling unwanted risk into a new company to be handed to shareholders. E.ON can concentrate on distribution and clean electricity. Both managements will benefit from focus. Still, the new entity’s prospects are bleak.

Market too bearish on European oil services

November 28, 2014

Petrofac has fared especially badly, falling 30 pct in a week. Sub-$75 oil is rattling explorers’ and producers’ nerves. As projects are shelved, oil service companies are being hurt. Share ratings reflect the pain and much depends on oil prices. But some stocks now look cheap.

SABMiller’s Coca-Cola push is Africa buy signal

November 27, 2014

The UK brewer and the U.S. drinks giant are merging assets in southern and eastern Africa to create a soft-drinks bottler with $3 bln of sales. SAB gets control and gains market access. The move points to the continent’s strategic potential, and similar consolidation could follow.

Private equity shows signs of pre-crisis brio

By Chris Hughes
November 25, 2014

Canada’s Onex has bought Swiss packager SIG for up to $4.7 bln in a secondary buyout. It’s one of Europe’s biggest LBOs in five years and deploys pre-crisis levels of leverage. Private equity restlessness and a shortage of big targets created the conditions for a landmark deal.

Uber is one startup that needs to grow up fast

November 19, 2014

The taxi app’s disregard for rules has spurred it toward a $30 bln valuation. But execs who threaten to “dig up dirt” on critics, employ unsavory tactics against rivals and post stats on clients’ one-night stands pose an existential risk. Such laddishness is bad for business.

Deutsche’s CoCo buyers are not totally irrational

November 19, 2014

Bank debt that turns into equity when shares are losing value hardly sounds appealing, but the German lender has sold a $1.5 bln tranche of it at a relatively low spread. Why? There’s a 7.5 pct yield, and ECB bond-buying creates scarcity while EU stress tests give comfort.

AstraZeneca struggles to advance value defence

November 18, 2014

The UK pharma group fought Pfizer’s $120 bln bid in May by promising growth. It’s now reiterating punchy sales targets and casting oncology as a new growth driver. In fact, the Astra story has only inched forward. Its defence has been aided most by U.S. curbs on tax-driven M&A.

Valeant’s activist deal too clever by half

November 18, 2014

The $45 bln drug company’s tilt at Allergan alongside Bill Ackman’s Pershing Square leaves it with just a modest windfall to show for a seven-month campaign that risked legally questionable tactics. Valeant boss Michael Pearson’s M&A experiment is not one to repeat.