Kevin's Feed
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.

Jun 4, 2014
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Voracious buyers find the meat on Sara Lee’s bones

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By Kevin Allison

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

Voracious buyers are finding the meat on Sara Lee’s bones. The old consumer conglomerate broke itself up into meat-focused Hillshire Brands and coffee-roaster D.E Master Blenders 1753 in 2012 after spurning takeover offers worth about $12 billion, according to press reports at the time. It looked like a raw deal – until now.

Jun 3, 2014
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Kellogg might make Heinz-style Buffett target

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By Kevin Allison

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

Kellogg looks like someone wants to eat it for breakfast. Takeover speculation has helped the U.S. company’s shares rise more than 8 percent since April, bestowing it with a $25 billion market value. Kellogg may be too big for a Hillshire-like takeover battle, and carries too much debt to make a traditional leveraged buyout palatable. But a deal like the one Warren Buffett and a group of Brazilian financiers struck for ketchup-maker Heinz last year might work.

Apr 21, 2014
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Barrick’s empire building deserves skeptical eye

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

Barrick Gold’s interest in a $33 billion merger with rival Newmont Mining deserves a skeptical eye. The world’s top gold miner by ounces produced is keen on a deal with the industry No. 2, according to news reports. Barrick’s outgoing founder and chairman, Peter Munk, admitted to “hubris” in past deals. Ex-Goldman Sachs banker John Thornton, who takes over next month, faces a considerable challenge convincing shareholders this won’t be another value-destroyer.

Apr 21, 2014
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Barrick’s empire building deserves skeptical eye

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

Barrick Gold’s interest in a $33 billion merger with rival Newmont Mining deserves a skeptical eye. The world’s top gold miner by ounces produced is keen on a deal with the industry No. 2, according to news reports. Barrick’s outgoing founder and chairman, Peter Munk, admitted to “hubris” in past deals. Ex-Goldman Sachs banker John Thornton, who takes over next month, faces a considerable challenge convincing shareholders this won’t be another value-destroyer.