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☆ SAP ends pointless M&A roundtrip with Qualtrics
▼ + stars: | 2023-03-07 | by ( Karen Kwok | ) www.reuters.com time to read: +4 min

For SAP Chief Executive Christian Klein, an exit would cap a relatively pointless M&A roundtrip. In theory, SAP could have supercharged the groups’ combined revenue by offering its software to Qualtrics’ customers and vice versa. Silver Lake, a specialist in tech buyouts, is well-placed to keep that growing. One potential hiccup is that Qualtrics’ fairly paltry EBITDA limits how much debt Silver Lake can use. SAP paid $8 billion in cash for Qualtrics in 2018, and subsequently offloaded a minority stake through an initial public offering in 2021.

☆ Germany’s electricity headache has an M&A cure
▼ + stars: | 2023-03-06 | by ( George Hay | ) www.reuters.com time to read: +4 min

Sorting out a rickety power grid is an especially pressing issue in Germany, but luckily Scholz also has the means to act. Cutting carbon emissions means powering more cars and homes through zero-carbon electricity rather than fossil fuels. It has to transport electricity all the way from wind turbines in the northern regions to its southern industrial heartland, which means the power network is often overloaded. The German power network is also unusually complex. Germany’s historic dependence on Russian gas deepened its energy crisis last year, and underscored the risks of relying on foreign-owned critical assets.

☆ AXA’s fling with Monte Paschi ends on high note
▼ + stars: | 2023-02-28 | by ( ) www.reuters.com time to read: +2 min

With its 200-million-euro investment in Banca Monte dei Paschi di Siena (BMPS.MI), the French insurer was one of the largest backers of a crucial 2.5-billion-euro capital increase that the hard-beaten lender secured in November. For AXA, supporting the cash call was instrumental to protect its existing insurance distribution partnership with Monte Paschi. The French insurer said on Tuesday it had sold 100 million shares, nearly 8% of Monte Paschi’s total, at 2.33 euros each, pocketing 233 million euros. That’s a 17% gain from the 200 million euros it invested in the cash call. Monte Paschi’s recent strong share-price performance has in any case more to do with the improved economic outlook in Europe and rising interest rates than with any merit of its own.

☆ Abrdn turnaround is still a marathon, not sprint
▼ + stars: | 2023-02-28 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 28 (Reuters Breakingviews) - Abrdn (ABDN.L) still has one big problem. Chief Executive Stephen Bird’s turnaround at the $5 billion asset manager is gaining traction. Full-year results on Tuesday showed that interactive investor, the savings platform he acquired last year, grew revenue by 20%, despite lower trading volumes. Assets under management fell 19%, after factoring in falling markets and client outflows, to 376 billion pounds, while operating profit fell 55%. That may cost some 200 million pounds, nearly double the unit’s 2022 operating profit.

☆ Goldman doubles down on the wealthy, as it should
▼ + stars: | 2023-02-28 | by ( Lauren Silva Laughlin | ) www.reuters.com time to read: +7 min

Instead, he indicated that the wealth business would be a “key driver for growth." One key pillar of that plan is Goldman’s alternative assets business, which includes running buyout, private credit and real-estate investing funds. For example, Goldman plans to take $2 billion in management and other fees from the alternative business next year. Last year, of the $72 billion Goldman raised for alternative, a third of that came from its wealth business. Goldman has dabbled in this now-dubbed “One Goldman” concept before, and gave it significant airtime on Tuesday.

☆ Credit Suisse finds new genre of loose crisis talk
▼ + stars: | 2023-02-21 | by ( ) www.reuters.com time to read: +2 min

Reuters reported on Monday that financial regulator Finma is reviewing remarks the Credit Suisse (CSGN.S) chair made in a punishing period late last year. He said in early December that outflows during October, mainly in wealth management, had “completely flattened out”, “partially reversed” and “basically stopped”. He could argue that the outflows had indeed stabilised when he spoke, but then deteriorated again afterwards. Either way, the usual argument for speaking up is to counteract negative rumours, which in Credit Suisse’s case swirled on social media. Credit Suisse’s 6% share fall after the Reuters report suggests that silence might have been a better guard against both risks.

☆ Soccer’s new M&A binge will mostly benefit players
▼ + stars: | 2023-02-17 | by ( Streisand Neto | ) www.reuters.com time to read: +3 min

A Qatari consortium is set to make a $6 billion offer for Man Utd, home to stars including Marcus Rashford, Bloomberg reported on Thursday. The Financial Times reported that Iranian-American billionaire Jahm Najafi is preparing a $3.8 billion swoop on Harry Kane’s Tottenham Hotspur. The Qataris’ reported Man Utd offer of $6 billion would value the New York-listed club at 8.6 times trailing revenue. Man Utd, whose financial advisers are U.S. investment bank Raine Group, has set an initial Feb. 17 deadline for bids. The Financial Times on Feb. 15 reported that Iranian-American billionaire Jahm Najafi was preparing a $3.8 billion offer for Tottenham Hotspur.

☆ NatWest calls time on UK banks’ rate-hike party
▼ + stars: | 2023-02-17 | by ( ) www.reuters.com time to read: +2 min

But NatWest Chief Executive Alison Rose has brought that excitement to an end. It’s surprising that Rose thinks lending margins have maxed out already. Higher rates take a while to feed into revenue because so many borrowers have long-term or fixed-rate debt, which reprices slowly. That would be a cause for celebration among households and firms with spare cash, but it might bring the bank share-price party to an end. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ StanChart’s takeover defences are getting stronger
▼ + stars: | 2023-02-16 | by ( Liam Proud | ) www.reuters.com time to read: +4 min

This year, he reckons the bank will churn out a near-10% return, rising to more than 11% in 2024. But if Winters can convince investors his new targets are remotely plausible, he’ll have a stronger case for StanChart’s independence. A typical offer pitched 30% above the price before the latest takeover speculation would value StanChart at just three-quarters of forward tangible book value. StanChart’s stronger takeover defences may be a problem for its suitors. StanChart earned an 8% return on tangible equity (ROTE), excluding restructuring expenses and a writedown of goodwill on the bank’s balance sheet.

Unlike rivals Anglo American (AAL.L) and Rio Tinto (RIO.AX), (RIO.L), London-listed Glencore is still mining coal. Activist investor Bluebell Capital Partners last year argued that Glencore should spin off the coal division, following in the steps of Anglo American. His plan is to hang on to coal and keep annual production steady at around 110 million tonnes up to 2025. Over the longer term, he’ll then start shutting coal mines, with at least a dozen closures planned before 2035. EBITDA from Glencore’s coal operations rose to $17.9 billion from $5.2 billion the previous year due to increasing prices.

☆ Rothschild holdouts have little chance of a bump
▼ + stars: | 2023-02-14 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 14 (Reuters Breakingviews) - The dynasty behind famed investment bank Rothschild & Co (ROTH.PA) has sided with France’s business elite to buy out minority investors on the cheap. Any potential holdouts, though, have little hope. If they miss that threshold, the Rothschild family can keep whatever shares they get. That means they could just try the whole thing again next year – but starting from a higher ownership base. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Credit Suisse CEO tries to bail out a leaky ship
▼ + stars: | 2023-02-09 | by ( Liam Proud | ) www.reuters.com time to read: +4 min

LONDON, Feb 9 (Reuters Breakingviews) - Chief Executive Ulrich Körner is doing what he promised at Credit Suisse (CSGN.S). The goal is to focus Credit Suisse on its steadier wealth-management and retail banking units. Revenue from trading equities was just $15 million, down 96% year-on-year, partly because Credit Suisse clamped down on risk. Clients pulled a net 111 billion Swiss francs of assets from the group during the three-month period. Credit Suisse shares were down 9.7% at 2.94 Swiss francs as of 1041 GMT on Feb. 9.

☆ SoftBank is paying for Son’s past exuberance
▼ + stars: | 2023-02-07 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 7 (Reuters Breakingviews) - Warren Buffett once advised investors to be fearful when others are greedy and greedy when others are fearful. In other words, Son and his dealmakers spent big when valuations were unsustainably high and then retreated as prices slumped. SoftBank’s family of startup-investing vehicles, including the two Vision Funds and a Latin America-focused one, have clocked up $6.6 billion of cumulative losses on their investments since 2017. In other words, Son is out of ammunition just when it would be the most useful. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ BP strategy is still caught between two stools
▼ + stars: | 2023-02-07 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 7 (Reuters Breakingviews) - BP (BP.L) is trying to stop the rot. The $108 billion UK oil group’s bumper 2022 results on Tuesday recorded a stellar 30.5% return on average capital employed. But fresh investment in oil and gas means he only plans to cut oil production by 25% by 2030, rather than 40%. The reason that probably won’t happen any time soon is that BP is still planning to cut oil production and hike non-fossil fuel investment more than American rivals. Otherwise, BP may remain too dirty for sustainable investors, and too clean for the rest.

☆ BNP investors deserve bigger slice of M&A windfall
▼ + stars: | 2023-02-07 | by ( Liam Proud | ) www.reuters.com time to read: +4 min

He’ll give 4 billion euros to investors through share buybacks, which roughly cancels out the hit to BNP’s earnings per share from ditching the U.S. division. The other 7.6 billion euros, or two-thirds of the total haul, will pay for increased lending, investments in technology systems, and small acquisitions. Follow @liamwardproud on TwitterloadingCONTEXT NEWSBNP Paribas on Feb. 7 said it generated 50.4 billion euros of revenue in 2022, up 9% from the previous year. The French bank generated a 10.2% return on tangible equity in the year, slightly above the previous year’s 10%. BNP in 2021 agreed to sell BancWest to Canada’s BMO Financial for $16.3 billion in cash (15.2 billion euros).

☆ Deutsche Bank turnaround victory is really a loss
▼ + stars: | 2023-02-02 | by ( Liam Proud | ) www.reuters.com time to read: +3 min

LONDON, Feb 2 (Reuters Breakingviews) - In many ways, Christian Sewing has successfully rejuvenated Deutsche Bank (DBKGn.DE). Counterparties no longer fret about the German lender’s solvency, and he’s axed 3 billion euros of costs since starting as chief executive in 2018. The centrepiece of Sewing’s turnaround, however, was an 8% return on tangible equity (ROTE) target for 2022, which he’s effectively missed. The main question now is whether Sewing’s 2022 miss makes his 2025 ambitions even more farfetched. Sewing wants to cut another 2 billion euros in the coming years by closing retail branches, merging IT systems and decommissioning old ones.

☆ Britain kicks crypto when it’s down
▼ + stars: | 2023-02-01 | by ( ) www.reuters.com time to read: +2 min

Britain’s answer, unveiled by Financial Services Minister Andrew Griffith on Wednesday, is that the existing framework suffices. The government intends to regulate the digital assets using the Financial Services and Markets Act of 2000, legislation applied to the City of London. The consultation also notes that the City and Wall Street typically segregate activity consolidated by crypto groups, such as being a broker, exchange, lender or custodian. Coming on the heels of last year’s collapse of Sam Bankman-Fried’s FTX means Britain’s kick lands when the industry is down. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ New Spotify release gives bull-market vibes
▼ + stars: | 2023-01-31 | by ( ) www.reuters.com time to read: +2 min

LONDON, Jan 31 (Reuters Breakingviews) - Just when it seemed like technology investors were done with “growth at all costs”, Spotify Technology (SPOT.N) has sent investors into a retro spin. The Swedish music-streaming company led by Daniel Ek on Tuesday said it ended 2022 with 205 million paid subscribers, a 14% year-on-year increase. The shares leapt almost 10%, boosting Spotify’s market capitalisation to roughly $21 billion. That means Spotify’s bull-market vibes are only relative. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Euro-banks have done their time in valuation jail
▼ + stars: | 2023-01-26 | by ( Liam Proud | ) www.reuters.com time to read: +7 min

Major euro zone and UK banks are trading at a 40% discount to the region’s wider benchmark index, using price to forward earnings multiples tracked by Refinitiv. The subsequent euro zone crisis in 2012 prompted a wave of bad debt that weighed down earnings. More recently, though, euro zone lenders have been facing up to their past sins, and offloading non-performing loans. There’s no evidence of a bank lending splurge, despite years of rock-bottom interest rates. Between November 2012 and November 2022, euro zone banks’ total lending to households and companies grew at an annual clip of under 2%, a fraction of its pre-2008 pace.

☆ Breakingviews: Toyota without Toyoda takes a small step forward
▼ + stars: | 2023-01-26 | by ( ) www.reuters.com time to read: +2 min

HONG KONG, Jan 26 (Reuters Breakingviews) - Akio Toyoda, grandson of the founder of the world’s largest automaker, is handing over his title as Toyota (7203.T) president, which effectively means chief executive, to Koji Sato. The new boss is currently chief branding officer and president of the Lexus luxury unit. Sato’s role at Lexus might be more pleasing to climate activists who have lambasted Toyota for not transitioning to pure electric vehicles quickly enough. (By Pete Sweeney)Follow @Breakingviews on Twitter(The author is a Reuters Breakingviews columnist. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Diageo fortunes rest on reviving America’s thirst
▼ + stars: | 2023-01-26 | by ( ) www.reuters.com time to read: +2 min

LONDON, Jan 26 (Reuters Breakingviews) - Investors in Diageo (DGE.L) are suffering from fading animal spirits. The share price of the $97 billion drinks company, which makes Guinness and Baileys, slumped 6% on Thursday, even though its 9% net sales growth beat analysts’ expectations of 8%. It’s possible that drinkers are getting more cautious, fearing a possible recession, and tempering their purchases of pricier booze. Sales in North America grew by just 3% year-on-year in the most recent six-month spell, compared with 14% a year earlier. But if the dry spell continues, Diageo shareholders may be nursing a more lasting headache.

☆ Activist investing cries out for some pushback
▼ + stars: | 2023-01-18 | by ( ) www.reuters.com time to read: +2 min

The number of aggressive investing campaigns led by firms such as Paul Singer’s Elliott Management and Nelson Peltz’s Trian Fund Management swelled last year, including from a record arrival of rookie practitioners. It represents a 36% increase from 2021 and the busiest year since 2018, when there were 249. There were also 55 first-time activists last year, who initiated more than a third of the campaigns. If the result is no better than a coin flip, it gives shareholders and boards fresh reason to question an activist’s arrival. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ UK payments star can keep defying fintech slump
▼ + stars: | 2023-01-17 | by ( ) www.reuters.com time to read: +2 min

Volumes, a measure of the amount of currency that customers are changing, were 26.4 billion pounds - slightly lower than in the previous three-month stretch. Even after the selloff, Wise trades at a punchy 44 times forward earnings according to Refinitiv data. Volumes per retail customer indeed leapt to almost 4,000 pounds per quarter from April to September, before falling back to 3,500 pounds. Unlike other bombed-out fintech stocks, Wise’s revenue growth is strong, at 50% year-on-year in the most recent quarter, and it is highly profitable. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Valuing Michael Klein is a fascinating sideshow
▼ + stars: | 2023-01-13 | by ( Liam Proud | ) www.reuters.com time to read: +5 min

The two sides have discussed a deal where Credit Suisse would acquire M. Klein & Company with Klein getting a stake in First Boston. Putting a price on M. Klein & Co is hard from the outside because its accounts aren’t publicly available. The size of that holding depends therefore on the relative worth of First Boston and M. Klein & Co. A 9% stake would then be worth $320 million, implying a huge payday for M. Klein & Co shareholders. If Klein makes money, Credit Suisse shareholders would do very well too.

☆ Banks dress up for a business-casual recession
▼ + stars: | 2023-01-13 | by ( John Foley | ) www.reuters.com time to read: +4 min

NEW YORK, Jan 13 (Reuters Breakingviews) - A recession is coming for U.S. banks, but it’s wearing comfortable shoes. Bank of America is writing off 1.7% of its card loans, on an annualized basis, compared with an average of 2.7% since 2013. America’s collective credit card limit is growing at a 9% annual clip, according to the New York Federal Reserve, the fastest since 2008. Citi has put aside enough to cover 7.6% of its credit card loans going up in smoke - more than triple the current level. It said 1.7% of credit card loans had been written off, on an annualized basis, compared with a 2.7% average rate since 2013.

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