Merger “synergies” can’t just be code for job cuts

June 8, 2016

Most mega-deals leave companies with fewer staff, and higher sales and profit per head, a Breakingviews analysis shows. That’s capitalism. But the mood is changing, at least in pro-market Britain. Synergies do exist, but those reliant on cutting jobs may get harder to realise.

Blackstone bets Indian IT can weather US election

April 5, 2016

The buyout firm’s $1.1 billion bid for Indian outsourcer Mphasis looks brave when U.S. presidential candidates are touting restrictions for skilled foreign workers. The low valuation and a long-term contract with seller Hewlett Packard Enterprise at least offers some protection.

Politics, not finance, is key question for Anbang

March 31, 2016

The ambitious Chinese group could probably buy U.S. hotelier Starwood for $14 bln without breaching limits on insurers’ overseas assets. Raising the necessary funding would be doable, too. The real issue is whether Anbang can keep China’s government onside.

Yum’s China growth goals face market reality check

March 24, 2016

The U.S. fast-food giant may sell up to 20 pct of its Chinese unit to private investors before spinning it off. On current trends the stake could fetch $2.4 bln, Breakingviews calculations suggest. To do better, Yum’s more ambitious targets will have to survive China’s slowdown.

HNA’s $6 bln Ingram bid has weird Chinese logic

February 18, 2016

There’s no clear rationale for the conglomerate to buy a U.S. electronics distributor and leave its management and business untouched. But like other recent outbound Chinese deals, the acquisition gives HNA diversification, political capital, and a hedge against the sliding yuan.

Facebook India row shows limit of tech favouritism

February 11, 2016

Regulators blocked the social network’s plan to offer free limited internet to the poor. Ill-judged comments from Facebook director Marc Andreessen highlight the gulf between Silicon Valley and the wider world. Big tech groups can no longer expect a free pass for bold plans.

Wall Street loses Iowa election kickoff

February 2, 2016

Ted Cruz beat Donald Trump while Hillary Clinton and Bernie Sanders were in a virtual tie in the first U.S. presidential balloting. The outcome partly reflects how bashing bankers resonates with voters. Goldman Sachs and its rivals can expect to keep hearing their names called.

Apple may be in for model-cycle purgatory

January 27, 2016

The $550 bln tech giant’s top line nearly flatlined as demand for its smartphones stalled in the last quarter of 2015. Sales are set to slide in the current period. A $216 bln cash hoard and a low valuation should offer solace, but investors could fixate on the next new iPhones.

Balance sheets will get more unbalanced in 2016

December 28, 2015

The lesson that too much debt is dangerous has sunk in, again. Amid volatile prices and currencies, dwindling cashflows can quickly make healthy firms turn sick. Miners, Brazil and buyback junkies are among those facing a reckoning. Cash-rich acquirers may have a field day.

Global smartphone brands face mass extinction

December 23, 2015

The industry’s growth has slipped below 10 pct for the first time. Apple and Samsung’s high-end phones are taking most of the spoils while upstarts like China’s Xiaomi pick up first-time buyers. Loss-making brands like HTC and Sony may be forced to conclude the game is over.