Breakingviews

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.

Valeant may strain to engineer way out the in door

June 6, 2016

As the embattled drugmaker prepares to report its first results under a new CEO, it’s also seeking a new business model beyond acquisitions and price hikes. Financial razzmatazz sometimes works both ways, but Valeant’s debt and possible suitors could make it hard science.

Bayer’s Monsanto bid yields poor financial harvest

May 27, 2016

The German chemicals group’s rejected $62 bln offer for the seed maker already appeared to violate one of its key principles: stick to projects whose returns beat the cost of capital. Upping the price to win over Monsanto would take heroic sales-growth assumptions to stack up.

Apple may find it harder saying “no” to bad ideas

May 26, 2016

An executive at the tech giant reportedly proposed a bid for Time Warner. That seems contrary to founder Steve Jobs’ recipe for success: reject “1,000 ideas” and focus only on the few good ones. But an aging iPhone, a tepid stock price and a cash pile risk making the mediocre tempting.

Meg Whitman sullies good deal with fuzzy math

May 25, 2016

The HP Enterprise CEO is merging its services unit with Computer Sciences. It’s a decent way to salvage an awful 2008 acquisition. At best shareholders might manage to get half the $14 bln value implied by the cost and other benefits HPE is touting. But even that’s a stretch.

Tribune twists governance to wager investors’ cash

May 24, 2016

The board turned down Gannett again and sold stock to an L.A. billionaire, now the publisher’s second-largest owner. The move could draw a higher offer. But a poison pill and other blocking tactics mean shareholders could easily be stuck, powerless, with a declining asset.

Medical firms’ $18 bln merger lacks clear logic

May 3, 2016

Healthcare data miner IMS is uniting with Quintiles, a manager of drug trials. Each will own about half the combined company, and other than some cost savings, the reasons for combining are a bit nebulous. The presence of buyout firm TPG on both sides may offer some clues.

Halliburton-Baker blowup reverberates beyond oil

May 2, 2016

The $35 bln oil-services deal is the latest to buckle under regulatory pressure this year, after Pfizer’s bid for Allergan. Baker Hughes pockets a $3.5 bln break fee at Halliburton owners’ expense. Punishing the boss and board would yield a more enduring lesson in M&A hubris.

Abbott’s $25 bln buy inspires little investor hope

April 28, 2016

It’s buying medical-device maker St. Jude at a $6.5 bln premium. Cost cuts cover less than half that, and earnings accretion doesn’t make it a good deal. Abbott’s value tumbled over $5 bln. Shareholders may recall that the target’s namesake is the patron saint of lost causes.

Carly Fiorina signs up to another doomed merger

April 27, 2016

Presidential candidate Ted Cruz tapped the former Hewlett-Packard boss to be his running mate if he can somehow win the Republican nomination. The math, after a five-state sweep by front-runner Donald Trump, is about as compelling as Fiorina’s calculus for HP’s purchase of Compaq.