Kevin's Feed
Aug 21, 2014
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Hertz gears up for another financial spin

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By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Carl Icahn is just the latest financier to toy with Hertz Global. The activist investor reported an 8.5 percent stake on Wednesday, saying he planned to pressure the $14 billion car rental company over recent management stumbles. But Hertz has been an investor plaything for nearly a century. Automakers, an airline, a 1960s conglomerate, private equity and public investors have all owned the business.

Aug 18, 2014
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Dollar store bid battle leaves value on the table

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By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Dollar store mergers, it turns out, don’t come cheap. Dollar General – call it General – on Monday joined the fight for rival U.S. discount retailer Family Dollar with a $9.7 billion cash offer. That topped an earlier agreed acquisition of Family by the smaller Dollar Tree, which as wags have noted could result in a combination called Family Tree. Even above General’s $78.50 a share bid, though, both of Family’s suitors have room to lob in a few more singles.

Aug 15, 2014
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Coke investment reveals half-empty idea bottle

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By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Coca-Cola’s latest investment reveals its idea bottle to be half empty. The $180 billion soda giant is paying $2.2 billion for 17 percent of Monster Beverage, a maker of trendy energy drinks. It goes to show how even a global powerhouse with significant distribution and marketing advantages can struggle to keep ahead of upstart rivals. At least Coke got the deal formula right.

Aug 6, 2014
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Walgreen encounters uncommon inversion boundary

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By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Walgreen has encountered a limit to inversion logic. The drugstore chain will keep flying the American flag even after agreeing to buy the rest of Swiss-based Alliance Boots for about $15 billion. A backlash against corporate emigration may have affected Walgreen’s decision, but harder numbers probably mattered more.

Jul 28, 2014
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Discounters’ $20 bln deal may spark M&A price war

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By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Discount retailer Dollar Tree’s $8.5 billion pounce on rival Family Dollar could spark an M&A price war. The companies have identified more than enough cost savings in their $20 billion union to cover the 23 percent premium to be paid to Carl Icahn and other Family Dollar investors. As a percentage of revenue, though, synergies are relatively low. That may leave room for sector giant Dollar General to lob in a bid.

Jul 15, 2014
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Market has message for tobacco M&A trustbusters

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By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

American trustbusters deciding whether to approve Reynolds American’s $55 billion deal with Lorillard will want to heed the market’s message. The combined market cap of the No. 2 and No. 3 U.S. cigarette makers has jumped more than $10 billion since merger talk surfaced. Those gains can’t be justified by the cost savings on offer. Expectations of an increase in pricing power, through the creation of an effective tobacco duopoly, may best explain investors’ enthusiasm.

Jul 7, 2014
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ADM goes M&A wild – sort of

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By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Archer Daniels Midland is going merger wild – sort of. The $30 billion U.S. grain processor will pay about $3 billion for Wild Flavors, a Switzerland-based natural food flavoring and coloring specialist. Illinois-based ADM’s biggest-ever deal is a departure from its core milling and trading operation. Picking up a small add-on business with similar customers in a sexier part of the food chain makes sense, but it’s unlikely to change how investors see the firm any time soon.

Jun 26, 2014
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U.S. drought could spark economic water warfare

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By Kevin Allison and Antony Currie

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The withering drought afflicting California and the southwest United States could spark economic warfare over water. Scarce rains have left large swaths of the country dry for, in some areas, several years. That’s happening as industries from beverages to semiconductors grow concerned about whether they will have adequate access to water in the future. For cities and states situated around the Great Lakes, as well as water technology firms, it presents a flood of opportunities.

Jun 23, 2014
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Oracle deal provides partly cloudy forecast

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By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Oracle’s $5.3 billion deal for Micros Systems provides a cloudy forecast for shareholders in the database giant. Even if it’s the start of a new deal binge by Chief Executive Larry Ellison – which is possible – it’s not at a crazy valuation. But longtime partner Micros is more of an add-on than a way to supercharge Oracle’s effort in the cloud.

Jun 13, 2014

Breakingviews: China’s shale gas ramp-up may surprise skeptics

By Kevin Allison

CHICAGO (Reuters Breakingviews) – China’s shale gas ramp-up may surprise the skeptics. Beijing wants drillers to grow output from a standing start to a third of current U.S. levels – around 270 billion cubic meters (bcm) annually – by 2020. That’s a stretch. But on plausible assumptions, the People’s Republic could get there within a decade. New discoveries and further joint ventures with the likes of Texas-based FTS International would help.

The development of vast domestic shale resources has taken on fresh urgency as China attempts to shift power generation away from smog-producing coal towards cleaner-burning natural gas. The International Energy agency expects Chinese gas demand to nearly double to 315 bcm a year by the end of this decade. Shale could account for between a fifth and a third of that if drillers hit a government target of 60-100 bcm of production by 2020.