Breakingviews

Holcim can push for more in Lafarge tie-up

March 13, 2015

The Swiss cement group is outperforming its French rival, creating cracks in their $44 bln union. A special dividend or higher exchange ratio could fix matters. That is more likely to happen than deal failure, given that both sides would suffer if it fell apart.

CRH’s $7.4 bln buy reveals M&A tolerance

February 2, 2015

It’s a big bet. The Irish building group will increase leverage – even with a big equity issue – to buy surplus assets from Lafarge worth a third of its market cap. CRH got sucked into an auction too. Yet investors cheered. It’s how things work in a low-return, low-growth world.

Saint-Gobain’s deal cunning could backfire

December 8, 2014

The French materials group is seizing control of Swiss peer Sika by paying $2.8 bln for a minority family stake which has majority voting rights. Sika’s board is laudably indignant. And Saint-Gobain’s tactics have a hidden cost of upsetting other investors and the target’s staff.

Builder’s shaky foundations dent UAE’s credibility

June 27, 2014

Shares in Arabtec have lost more than half their value in six weeks. The abrupt resignation of its CEO, uncertainty over sovereign support and poor communication are to blame. It’s a warning to investors attracted to the country by its new emerging market status.

Blunt instrument is needed for global house bubble

June 16, 2014

The IMF is worried about the risk of a global house price bubble. Housing markets may be regional, but low supply and excess demand are common worldwide. Macroprudential tools and construction are part of the response. But anything other than an end to cheap money is tinkering.

from Changing China:

China’s pursuit of stability risks greater stress

By Ethan Devine
September 20, 2011

While Western economies wither, China is in an entirely different predicament. Beset by high inflation and a frothy real estate market, Chinese policymakers have been trying to cool their economy for going on two years.

Rumble in rock garden presages more hostile M&A

December 12, 2011

That’s one way to read the unsolicited $4.6 bln offer that Martin Marietta Materials made for larger rival Vulcan. The deal won’t succeed without a sweetener. But the lesson is clear: if profits can’t be mined from the ground, they can still be found by cutting costs.

Property slowdown leaves China on shaky ground

May 14, 2012

It has taken property developers a year of falling prices to rein in speculative behaviour. Now the message seems to be hitting home. If construction slows, growth will too. And if caution replaces speculation, the Chinese economy could end up with a painfully hard landing.

Caterpillar’s Chinese lesson: dig below top line

January 21, 2013

Getting stung by accounting fraud is unfortunate. But Caterpillar’s $580 mln write-down - three-quarters of the price it paid for ERA Mining just last year - suggests a bigger misjudgment. The Chinese machine maker’s potential was clear, but so was the low quality of its growth.

Feature: Nest-flyers are poised to supercharge U.S. economy

August 22, 2013

As jobs return, droves of 20-somethings will get their own places. They may rent not buy, but the effects still look deep. Between building and related activity like furniture sales, Breakingviews sees new households accounting for up to 30 pct of GDP growth through 2019.