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☆ EU debt fears hinder U.S. green subsidies riposte
▼ + stars: | 2023-01-24 | by ( Rebecca Christie | ) www.reuters.com time to read: +4 min

That ties von der Leyen’s hands. Since September, von der Leyen has been pushing a “solidarity fund” to offset the imbalances that could arise out of freer-flowing EU subsidies. To move ahead, von der Leyen will just have to scatter some seeds and see what grows. Follow @rebeccawire on TwitterCONTEXT NEWSEuropean Commission President Ursula von der Leyen gave a Jan. 17 speech at Davos on her forthcoming green technology strategy. Von der Leyen has since September been advocating for a “solidarity fund” to help smaller countries keep up with their bigger, richer peers.

☆ Cellnex takeover would disrupt key strategic pivot
▼ + stars: | 2023-01-20 | by ( ) www.reuters.com time to read: +2 min

LONDON, Jan 20 (Reuters Breakingviews) - A week after founder Tobias Martinez resigned from his chief executive role, Cellnex (CLNX.MC) could also lose its shareholders. Meanwhile the departure of Martinez was expected to herald a return to sobriety in a sector where low interest rates and high leverage boosted consolidation. In the age of higher interest rates, it may be time for the former predator to become prey. Okdiario hints that Cellnex’s main shareholders, led by Italy’s Benetton family with an 8% stake, are inclined to sell. Everything has a price, but the high premium needed to convince shareholders to change tack amid a strategic pivot could be hard to justify.

☆ “Angry Birds” buyout may have more levels to beat
▼ + stars: | 2023-01-20 | by ( ) www.reuters.com time to read: +2 min

LONDON, Jan 20 (Reuters Breakingviews) - Remember “Angry Birds”? Finland-listed Rovio Entertainment (ROVIO.HE) has used the round-headed creatures to create a long series of mobile games, two films, plush toys and more. That makes strong long-time brands like “Angry Birds” more attractive. Rovio’s share price was hovering around 7.50 euros on Friday morning, or 20% below Playtika’s bid. That’s probably because Rovio’s board, which said it learnt about the offer “nearly simultaneously” with its public release, sounded unimpressed.

As a result, investors have lowered their expectations for future interest rate hikes. Equities have recovered: the S&P 500 benchmark of leading stocks is up more than 5% in the past three months, boosting the paper wealth of many Davos executives and financiers. Companies typically cut back on investment in a downturn, but big groups have reasons to keep spending. Higher interest rates will prove more painful as households deplete savings built up during the pandemic. The Davos conflab has a well-deserved reputation for delivering a consensus which turns out to be wrong in the 12 months that follow.

☆ Snam rethink reflects Europe’s new energy reality
▼ + stars: | 2023-01-19 | by ( Lisa Jucca | ) www.reuters.com time to read: +4 min

MILAN, Jan 19 (Reuters Breakingviews) - Snam’s (SRG.MI) new business priorities highlight Europe’s revised energy needs. Indeed, Snam is reducing its investments in green projects like hydrogen and biomethane to 1 billion euros from 1.3 billion euros under the previous plan. That’s a 23% increase from the 8.1 billion euros unveiled under its previous 2021 to 2025 strategic plan. This compares with 1.3 billion euros under the previous plan. Snam said it targeted EBITDA growth of around 7% a year on average despite rising interest rates, up from 4.5% in the previous plan.

☆ Just Eat delivers right takeaway orders, finally
▼ + stars: | 2023-01-18 | by ( ) www.reuters.com time to read: +2 min

LONDON, Jan 18 (Reuters Breakingviews) - Food delivery boss Jitse Groen has started the new year with a glimpse of hope. Pleasing investors after a round of missteps, the Dutch company also forecast a higher-than-expected EBITDA of 225 million euros this year. The 5.6 billion euro ($6 billion) group’s results point to a brighter future than what Just Eat experienced in 2022. Less than a year after acquiring U.S. rival Grubhub, Groen made a U-turn by putting it up for sale and writing down the value of the division by 3 billion euros. All this happened while investors started to lose faith in the high-growth low-profit food delivery sector: Just Eat Takeaway lost 60% of its market value last year.

☆ Bond spat is odd look for Melrose deal machine
▼ + stars: | 2023-01-18 | by ( ) www.reuters.com time to read: +2 min

That process will have to decide, for example, whether the demerger constitutes a transfer of “substantially all” the company’s assets or not. The relevant bonds only amount to 130 million pounds. Redeeming them at par, rather than the current traded price, would only cost just over 20 million pounds. For a company that specialises in dealmaking and careful use of leverage, it all seems more trouble than it's worth. 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.

☆ Investors sit on a plastic waste ticking bomb
▼ + stars: | 2023-01-13 | by ( Lisa Jucca | ) www.reuters.com time to read: +4 min

In the United States 73% of plastic waste ends up in landfills, where it takes up to 500 years to decompose. Using recycled plastic, while less energy-intensive than creating virgin plastic, can cost more overall. In March, 175 governments agreed to work out binding laws to end plastic pollution by end-2024. Reuters GraphicsFollow @LJucca on TwitterloadingCONTEXT NEWSRepresentatives of 175 countries endorsed in March a landmark resolution to develop international legally binding instruments to end plastic pollution. In 2008 the Netherlands introduced a packaging waste management levy.

☆ Gaming’s winter of discontent bolsters M&A logic
▼ + stars: | 2023-01-12 | by ( ) www.reuters.com time to read: +2 min

LONDON, Jan 12 (Reuters Breakingviews) - The holiday quarter is traditionally a bumper one for gaming groups, as punters stay home to play. As consumers and companies focus on “mega-brands”, smaller firms will struggle to attract staff, and match investment. Sony, for example, will need to bulk up in response to Microsoft’s (MSFT.O) $69 billion swoop on Activision Blizzard (ATVI.O). However, in a tougher environment, Guillemot will need to find some way to keep his hand on the joystick. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ EU’s frozen Russian assets plan is best put on ice
▼ + stars: | 2023-01-12 | by ( Pierre Briancon | ) www.reuters.com time to read: +4 min

The European Commission has launched a plan to try using billions of dollars and euros of frozen Russian assets to help finance the reconstruction of Ukraine. Then an estimated 165 billion euros of frozen Russian reserves sitting in euro zone central banks. The pipe dream of confiscating Russian assets can only be a diversion. CONTEXT NEWSEstonia is preparing a legal framework that would allow the government to seize Russian assets frozen after the EU slapped sanctions on Moscow, a foreign ministry spokesman said on Jan. 9. The European Commission put forward on Nov. 30 a plan to seize and manage frozen Russian assets and use the proceeds for the war-torn country.

First Abu Dhabi Bank (FAB) (FAB.AD), the $50 billion Gulf lender that the brother of the United Arab Emirates’ president chairs, last week said it had considered a bid for the $23 billion UK-listed bank. Half its revenues come from Hong Kong, China and other Asian countries, where much of Abu Dhabi’s oil goes. StanChart’s commodities trading strength fits with Abu Dhabi’s keenness to become an energy trading hub. CONTEXT NEWSFirst Abu Dhabi Bank (FAB) on Jan. 5 said it had considered a bid for London-listed Standard Chartered but was no longer doing so. The Abu Dhabi lender said it had been in "the very early stages of evaluating a possible offer".

☆ Smarter taxes could ease UK productivity crisis
▼ + stars: | 2023-01-09 | by ( Francesco Guerrera | ) www.reuters.com time to read: +4 min

Britain’s sluggish productivity – the amount of output per hour worked – deters investment and limits growth, in turn depressing wages. After keeping pace with other developed countries for decades, UK productivity has grown by 0.3% a year since 2008. That is a third of the 0.9% averaged by G7 members, and well below the 1.2% rate recorded by the United States, according to figures from the Organisation for Economic Co-operation and Development. In 2021, gross fixed capital formation, a measure of investment, accounted for 17% of UK GDP, compared to 24% in France and 21% in the United States, according to the World Bank. Despite a long-standing scheme for research and development, UK businesses still only fund 55% of total R&D spending, below the 63% of the United States, according to a Cambridge University study.

Separately, Apple may allow other companies to set up app marketplaces on its iPhone, Bloomberg reported. But that won’t trouble Amazon much: private-label sales were 1% of its total, founder Jeff Bezos told the Congress in 2020. Any offer from Apple to allow competing app stores carries a similar risk. Chief Executive Tim Cook could conceivably try the same trick with third-party iPhone app stores, for example by making users plug their device into a computer. These include allowing app stores operated by third parties on its iPhone, according to the report.

Foxconn, formally known as Hon Hai Precision Industry, is gearing up to supply cars, and the chips and batteries that go into them, to global marques. It sees automakers entrusting the company with production in Indonesia, Thailand, Saudi Arabia, the United States and beyond. Getting there requires Foxconn ditching a tried and tested business model. To make smartphones, the company relies on a few factories it owns in China and it has little say over the underlying supply chains and which components to use. Foxconn has also tied up with Ohio-based Lordstown Motors (RIDE.O) in the United States; its factory is already making electric pickup trucks and could start supplying to other American brands within a year.

☆ Soccer giants’ new owners may get tiny returns
▼ + stars: | 2022-12-30 | by ( Streisand Neto | ) www.reuters.com time to read: +3 min

The Financial Times reported that PSG’s Qatari owners wanted to offload 15% of the French champions. Recent deals valued the National Football League’s Denver Broncos and basketball’s Utah Jazz at over 9 times revenue, according to Forbes. Possible Man United, Liverpool and PSG owners might hope that the teams will eventually reach such valuation heights. Fenway Sports Group would consider new shareholders for Liverpool, having frequently received expressions of interest from third parties, the English Premier League club’s owners said on Nov. 7. The Financial Times reported on Nov. 28 that Paris Saint-Germain’s Qatari owners were considering selling 15% of the club.

As the cost of signing up new customers rises, “lifetime value” is set to become must-use jargon for technology executives, investors and analysts in 2023. The concept of lifetime value is not new, but a common definition remains elusive. The problem is that everyone seems to have a different definition of lifetime value. But lifetime value isn’t a silver bullet, as Gurley noted a decade ago. As with previous buzzwords, investors may find that references to lifetime value do more to confound than clarify.

If more female fans tune in, they will help Chief Executive Stefano Domenicali fuel revenue at his motor-racing division. Around 40% of F1 fans are now female, up 8% from 2017, and more women are attending races too, Domenicali said in November. One way to accelerate the trend could be featuring female drivers. She also boasts a fanbase of over half a million social media followers – more than the W Series itself. Unfortunately for Formula One, when financial pressures ended W Series 2022 early, she absconded to Andretti Autosport’s team for the U.S. IndyCar NXT races.

☆ Bulb bailout exposes UK’s pseudo power market
▼ + stars: | 2022-12-23 | by ( George Hay | ) www.reuters.com time to read: +4 min

Bulb is the biggest of dozens of flaky British power suppliers which opted not to hedge their future costs when energy prices were cheap. The Office for Budget Responsibility expects the saga to cost taxpayers 6.5 billion pounds. Octopus itself thinks the loan could be more like 2.4 billion pounds, as wholesale prices have recently fallen. If that’s correct, regular payments by Bulb customers will cover the cost. With retail power prices fixed and the government on the hook for higher wholesale costs, Britain’s privatised power industry is operating in anything but a free market.

☆ Putin’s Russia will look more like North Korea
▼ + stars: | 2022-12-22 | by ( Pierre Briancon | ) www.reuters.com time to read: +3 min

LONDON, Dec 22 (Reuters Breakingviews) - The Western sanctions that followed the invasion of Ukraine have made it impossible for Russia to import what it needs. Foreign investors are staying away, thousands of the country’s elite have emigrated, and the price of its main export has sunk. The great shut-off of its economy will accelerate in 2023, as Moscow moves closer to the North Korean economic model. The invasion of Ukraine has inflicted damage on Russia, which depends heavily on the export of oil and gas. As a result, the Russian economy will take a hit.

☆ Bowling Green, Kentucky is the next big U.S. city
▼ + stars: | 2022-12-22 | by ( Lauren Silva Laughlin | ) www.reuters.com time to read: +3 min

Biden solidified his push to reverse the tide of globalization in August 2022 with two major pieces of legislation. The CHIPS and Science Act provided $53 billion to bring semiconductor manufacturing and development to the United States. But Rust Belt states - once manufacturing powerhouses that slumped in the era of deindustrialization - also stand to win big. Hourly wages in the United States are 12 times higher than those in India, according to data from NationMaster. For the United States, though, Biden’s actions will be a boon to parts of the country left behind by the rapid economic growth of high-flier states on the coasts.

☆ UAE gets ducks in a row with chemicals reshuffle
▼ + stars: | 2022-12-21 | by ( ) www.reuters.com time to read: +2 min

LONDON, Dec 21 (Reuters Breakingviews) - The United Arab Emirates seems to have done a $4 billion deal with itself. The Abu Dhabi National Oil Company on Wednesday acquired a 25% stake in $16 billion Austrian oil group OMV (OMVV.VI) from Mubadala, the UAE’s wealth fund. The UAE wants to pump more oil and list its gas business. But it also wants to sharpen its focus on petrochemicals, which forecasters have long singled out for its growth potential. At some point, ADNOC might consider using this clout to consolidate these various chemicals businesses even more closely together.

HONG KONG, Dec 21 (Reuters Breakingviews) - China has become a headache for Western executives. The good news is that the dilemma need not require drastic action from U.S. and European chief executives, since local Chinese partners could solve the problem by relocating themselves. Foreign executives have had a hard time dealing with China’s zero-Covid policy, rising labour costs and U.S. tariffs. On the other hand, existing economic interests plus Beijing’s renewed push to attract foreign investment both argue for staying put. But if Chinese suppliers now start boosting foreign investment to keep hold of key customers, the government may have little choice but to give its blessing.

☆ Big Pharma will find right formula for M&A binge
▼ + stars: | 2022-12-20 | by ( Aimee Donnellan | ) www.reuters.com time to read: +3 min

The year 2022 was relatively thin for pharma M&A, with deals worth nearly $66 billion being announced by early December – 60% below the 9-year average, according to Refinitiv data; 2023 will be better. It helps that drug companies are relatively healthy, with debt around just 1.6 times forecast EBITDA in 2023, according to Berenberg analysts. Seagen (SGEN.O), for example, worth $22 billion in early December, has fought off Merck & Co (MRK.N). That puts Big Pharma in an ideal negotiating position. CONTEXT NEWSGlobal pharmaceutical companies spent nearly $66 billion on takeovers in 2022, according to data from Refinitiv as of Dec. 7.

☆ Brenntag M&A gambit may prompt its own breakup
▼ + stars: | 2022-12-20 | by ( ) www.reuters.com time to read: +2 min

LONDON, Dec 20 (Reuters Breakingviews) - Chemicals group Brenntag’s (BNRGn.DE) bold dealmaking foray has attracted the attentions of an activist. PrimeStone Capital is calling on the 9 billion euro German group to scrap a potential merger with U.S. peer Univar Solutions (UNVR.N). Brenntag’s other shareholders hardly seem enamoured of the deal: its shares lost some 10% on the day it was announced. The problem is that PrimeStone’s other idea, a breakup of Brenntag, also looks viable. Brenntag meshes together the humdrum business of transporting chemicals with one that serves customers in more specialised sectors like pharmaceuticals and nutrition.

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