Breakingviews

Dixon: Vote to quit EU could tip UK into recession

April 18, 2016

A victory for Brexit will trigger political turmoil and acrimonious divorce talks. Investment will grind to a halt as firms wait for the fog to clear. That could cause a recession.

Brexit job risk threatens more than just bankers

April 15, 2016

The UK might miss out on 100,000 finance roles by 2020 if it quits Europe, a trade group says. The reason those outside the City should be concerned is that the real impact could be wider and more prolonged. The trouble is, immediate job losses elsewhere may seem a bigger risk.

Pensions not steel are Tata’s big UK headache

March 31, 2016

The Indian group’s British plants have issues, but could be rendered profitable. The bigger challenge is funding shortfalls in its pension scheme for 130,000 members. If a new acquirer could find a workaround and new investment, British steelmaking could still work.

British retailers need more age-appropriate attire

March 24, 2016

Next’s same-store revenue is falling and inventory is taking a week longer to clear than a year ago. Yet it plans to grow its selling space by 8 pct. Other retailers too are expanding even when shrinking looks smarter. The maths of such strategies can quickly turn unattractive.

IHS-Markit $13 bln merger is long on hope

March 21, 2016

A bigger, diverse data company could cross-sell to different clients, the theory goes. Markit’s shareholders could end up roughly 10 pct better off. But extra revenue of $100 mln looks aspirational. Big share buybacks and high debts could hobble investment in new products.

Li Ka-shing brings funding finesse to telco M&A

March 18, 2016

The tycoon may sell 20 pct of his UK mobile unit to outsiders. That could raise 1 bln pounds to help buy Telefonica’s O2, on top of the 3.1 bln pounds sovereign funds are already chipping in. That would let Li complete the 9 bln pound deal with no fresh investment.

Sainsbury can open its wallet wider for Argos

March 15, 2016

The UK grocer’s like-for-like sales have turned positive, but prices are still falling. A proposed 1.4 bln pound merger with rival Home Retail is a decent coping strategy, if Sainsbury can beat rival bidder Steinhoff. A boost of 10 pct would still just about make financial sense.

Burberry bid would be an extravagance

March 8, 2016

The trench-coat maker is the subject of takeover speculation but a deal, which could cost 8 bln pounds, doesn’t stack up. Its stock isn’t particularly cheap and costs are already lean. With the luxury sector deteriorating, it’s not clear a new owner could halt slowing sales.

Being a UK bank boss is now just scary enough

March 7, 2016

Senior bankers now face censure for their own or subordinates’ misdeeds. Even where job titles don’t imply responsibility, regulators may be able to argue that institutional culture does. This fuzziness aside, the new regime should rein in brash boards, bosses and risk-takers.

LSE merger of equal-ness is a red herring

March 4, 2016

Is it a merger? Are they really equals? It matters not. Deutsche Boerse’s approach for its UK rival could leave London Stock Exchange shareholders 16 pct better off. If a spoiler comes from U.S. peer ICE, value not format is what should guide LSE’s board and boss Xavier Rolet.