Breakingviews

Shell/BG vote is a bet on oil prices bouncing back

January 27, 2016

More than 80 percent of Shell shareholders approved the tie-up with gas group BG on Jan. 27. That implies they think oil will recover to $60 a barrel, twice its current level. Cost savings help support the deal, but it still requires an optimistic frame of mind.

Shire’s merger with Baxalta looks a little peaky

January 11, 2016

The drugmaker’s Chief Executive Flemming Ornskov has clinched his deal to buy haematology specialist Baxalta for $35 billion. The deal brings Shire scale in rare diseases, but offers few cost synergies, plenty of risk and relies on revenue growth that may be optimistic.

Viacom, Time Warner among 2016 merger wannabes

December 31, 2015

U.S. media distributors such as cable outfit Comcast have bulked up, and Apple, Amazon and the like have built new streaming models. The giants have 12-digit valuations. With the exception of Disney, traditional content makers are looking puny. They’ll feel the urge to merge.

Rail mega-deal holds ticket to runaway M&A train

December 29, 2015

Canadian Pacific’s $28 bln bid for Norfolk Southern involves an industrial buyer facing low growth and an aggressive investor. The offer is unsolicited, cross-border and legally messy. After a record year of mergers, this one transaction foretells much of what to expect in 2016.

Valeant’s latest fix reinforces its challenges

December 28, 2015

The $38 bln drug company is handing the reins to three execs while CEO Mike Pearson is on medical leave. And three directors will “oversee and support” them. The double triumvirate shows how reliant on one man Valeant now is as debt, R&D and strategy issues take center stage.

Contortions make rail deal tough sell for Ackman

December 8, 2015

A revised offer from Canadian Pacific for Norfolk Southern, together worth nearly $50 bln, included an interim trust, less cash and finger-in-the-air merger math. The activist contributed 23 pages of slides. NS was too quick to rebuff it. Investors, though, may just be confused.

Rail deal’s logic loses steam under legal scrutiny

December 4, 2015

Norfolk Southern rejected a $28 bln bid from Canadian Pacific, which could probably afford up to $33 bln. Regulatory approval is a bigger issue, though. The bar is high for railroad mergers, and this one likely falls short. It may be one deal that shouldn’t have left the station.

Cox: Two signs of M&A bacchanal’s last hurrah

December 1, 2015

The boom just topped $4 trln, helped along by one telltale massive deal and another much smaller one. Pfizer’s takeover of Allergan is clearly predicated on exploiting tax loopholes while a U.S. retailer is getting into the pizza racket. Both indicate a cycle well past its peak.

Pfizer-Allergan gets no support from scaredy arbs

November 24, 2015

The drugmakers’ shares are trading far below the prices implied by Pfizer’s all-stock offer - as if the merger were going to create no value. Arbitrageurs who used to exploit such gaps have little taste for massive deals – especially ones that have politicians on the warpath.

C&W deal exposes John Malone’s paper-thin trackers

November 20, 2015

The Latam and Caribbean cable operator’s $8 bln sale to the media mogul’s Liberty Global presents shareholders with three forms of payment. The C&W board is recommending the one without a tracking stock. That partly undercuts the reason for creating such shadow shares.