|Bid||163.45 x 0|
|Ask||163.45 x 0|
|Day's range||162.90 - 163.80|
|52-week range||96.38 - 171.20|
|Beta (5Y Monthly)||0.20|
|PE ratio (TTM)||N/A|
|Forward dividend & yield||0.00 (0.25%)|
|1y target est||N/A|
(Bloomberg Opinion) -- To get Brooke Sutherland’s newsletter delivered directly to your inbox, sign up here.A once mighty engine of profit for Siemens AG and General Electric Co. isn’t dead just yet, but the business will remain a ghost of its former self. The market in question is gas turbines, equipment that sits at the heart of natural gas power plants and helps to generate electricity. A glut of capacity and the reduced cost of renewable energy tanked demand for these engines, sparking years of painful slides in profitability and massive rounds of cost-cutting. Recently, though, orders have started to perk up modestly; regions such as China are converting to gas from coal or nuclear power, while elsewhere there is a growing recognition that the flexibility and reliability of turbines gives them a role to play even in a world tilting increasingly toward alternatives. In what may be a nod to this recent improvement, Siemens CEO Joe Kaeser told Bloomberg News this week that the company may keep only a 25% stake in the struggling energy unit it plans to spin off. That would constitute a more extensive break than what was envisioned when Siemens announced the overhaul in May with the intention of retaining a “somewhat less than 50%” holding — seemingly a bet that the apparent bottoming in demand will entice more support from the public market.Indeed, Siemens saw a 9% increase in comparable orders in its gas-and-power division in the fiscal fourth quarter and said its market share in large gas turbines held roughly steady in 2019. Deutsche Bank AG analysts led by Gael de-Bray this week outlined a path for a 20% recovery in Siemens gas turbine orders to 10 gigawatts annually. The analysts acknowledge this is an out-of-consensus view, but even GE, the poster child for gas power woes, has seen business come in better than expected. Year to date, GE logged gas power orders of 12.8 GWs, compared with 7.2 GWs in the same period in 2018, Chief Financial Officer Jamie Miller said on the company’s third-quarter earnings call. That adds support to CEO Larry Culp’s optimism that overall market volume may exceed GE’s dire forecast of just 25 to 30 GWs at the beginning of the year. This recent stabilization in demand is encouraging, but the question isn’t just whether companies can attract orders, but whether they can deliver them and any associated maintenance work profitably. The Deutsche Bank analysts estimate the Siemens Energy spinoff (which includes a 59% stake in Siemens Gamesa Renewable Energy SA) can reach its goal of doubling its adjusted profit margin to about 8% by 2021, a reflection of growth in more profitable service work and targeted cost savings of 700 million euros. Progress is progress, but it should be noted that an 8% margin isn’t exactly blockbuster profitability, and that number reinforces the idea that there is a more structural shift in the power market that will keep a lid on further improvements.GE, for its part, has said fixed costs are down 9% year to date in the gas power business, although it has also pushed out some restructuring work, in part because negotiations in Europe are taking longer than expected. Its own gas-power service revenue has declined in the past three quarters. Even so, Melius Research analyst Scott Davis has argued there’s no structural reason that margins can’t return to the mid-teen levels of yesteryear. He bases this in part on the idea that Siemens, as its top competitor, cares deeply about boosting its own margins and that will help keep pricing rational. In response to that, I would point you to the other power market news making the headlines this week: Mitsubishi Heavy Industries CEO Seiji Izumisawa is leaving the door open to a combination or collaboration with Siemens’s power business once it’s carved out. Siemens had reportedly been in talks to merge the gas-turbine business with Mitsubishi before deciding to go ahead with the spinoff instead.(1) “We do have a good relationship with Siemens,” Izumisawa said in an interview at Bloomberg Headquarters this week. “I will not deny the possibility that we could possibly work with them.”Such a move would substantially shift the competitive landscape, and it’s far from clear that Mitsubishi would have the same discipline if it was in charge of the pricing for Siemens’s new units and service agreements. Asked whether market share or profitability was more important amid weak demand for turbines, Izumisawa said that the most important thing was for the business to make money and generate value for shareholders, but within that, there’s an understanding that after-market services are responsible for most of the profit in the gas turbine business. That gives the company an interest in making sure it’s delivering a consistent number of units, he said. While Izumisawa said the Siemens spinoff doesn’t directly affect Mitsubishi’s business strategy, he acknowledged competition is only getting tougher. Siemens’s Kaeser has spoken about the likelihood that China will want its own national champion to capitalize on an expected boom in gas power demand as the country converts from coal. To that end, Izumisawa touted the productivity and reliability benefits offered by Mitsubishi’s high-efficiency J-series turbines as a tool for luring customers. The company’s estimate of greater than 64% efficiency for that product exceeds the 62.2% for GE’s 9HA turbine, and Mitsubishi is working to further expand that lead with its next generation turbine, Gordon Haskett analyst John Inch wrote in a June report. Here I will remind you that GE has cut R&D at its power unit substantially over the past few years. Point being, demand may be stabilizing, but the market is only getting more competitive. LEAKING FUELSome worrying signals for the aerospace market emanated from the Dubai Air Show this week. Emirates trimmed order commitments for both Boeing Co. and Airbus SE jets, with the reductions adding up to $24 billion at list prices. Big aircraft like Boeing’s 777X are falling out of favor as weakening demand and fare competition sparks concern about airlines’ ability to fill the planes profitably. Emirates will take 126 777X jets, including six orders for older models that were upgraded to the newest version, and 30 of Boeing’s smaller 787 Dreamliners. All in, that’s 40 fewer planes than planned. The airline upped its order for Airbus’s A350 wide-body jet, but seemingly scrapped a commitment for 40 A330neos that was part of the original deal, resulting in a net loss.A bright spot was Airbus’s longer-range A321 XLR model. Boeing’s counter to that, a potential new middle-market aircraft, remains a question mark amid the continuing crisis engulfing its 737 Max. The more orders Airbus is able to rack up in the meantime, the weaker the business case for that Boeing jet. Airbus is already moving on: The manufacturer talked about developing a narrow-body jet by the end of the 2020s if key technologies are available, likely kicking off a new front in the arms race with Boeing, notes Bloomberg Intelligence’s George Ferguson. The MCAS software system blamed for the Max’s two fatal crashes was installed to make up for the fact that the existing 737 model infrastructure was less adaptable to more fuel-efficient engines. Clean-sheet development programs like the one Airbus is contemplating won’t come cheap and the fact that the planemakers’ are considering them speaks to a potentially more structural shift away from wide-bodies in the current demand environment. DEALS, ACTIVISTS AND CORPORATE GOVERNANCE Thyssenkrupp AG’s plan to sell off its prized elevator division got more complicated this week. The company plunged the most since 2000 on Thursday after warning that a deepening cash crunch would force it to suspend dividend payments. Selling off the entire elevator business – whose exposure to the growing urbanization trend makes it a rare bright spot for Thyssenkrupp – would bring in much needed cash to fund restructuring for the remaining steel, submarines and industrial businesses. But that would also deprive Thyssenkrupp of its top source of cash flow should the turnaround plan fail to gain traction. Binding bids for the elevator unit are due in mid-January, people familiar with the matter told Bloomberg News. Rival Kone Oyj has partnered with private equity firm CVC Capital Partners for a bid and has reportedly offered a sizable breakup fee to help convince Thyssenkrupp to put aside antitrust concerns. Also in the running are a consortium of Blackstone Group Inc., Carlyle Group LP and Canada Pension Plan Investment Board; an Advent International, Cinven and Abu Dhabi Investment Authority team; Brookfield Asset Management; Asian private equity firm Hillhouse Capital, whose connection to China may also draw scrutiny; and 3G Capital, which is better known for its troubled food investments.Cobham Plc’s planned sale to Advent International advanced a step this week after the U.K. government said it was likely to accept remedies designed to address national security concerns over the $5 billion takeover of a military supplier. The deal still risks being caught in the political crossfire with a final ruling not expected to come until Dec. 17, five days after the U.K. general election. The opposition Labour Party has taken a dim view of the deal amid a spike in foreign acquirers taking advantage of the pound’s Brexit-fueled weakness. The deal has few benefits for Britain, but a block on purely protectionist grounds would set a bad precedent, as my colleague Chris Hughes has written. “If the U.K. merely rues that Cobham is worth more in U.S. hands, it should instead ask whether past industrial policy is to blame and learn the lessons,” Chris writes. Approval likely comes with some strings, though, including job commitments and potentially an agreement to keep Cobham’s headquarters in the U.K.BONUS READINGAmazon Has Become America’s CEO Factory The Inglorious End of the Airline Mile as a Unique Travel Reward Conoco's 2020s Plan Is to Embrace the FUD: Liam Denning Amtrak CEO Has a Plan for Profitability, and You Won’t Like It General Motors Declares Corporate War on Fiat: Chris Bryant Major TARP Survivor Sees Warning in Exuberant Florida Developers(1) That was likely a reflection of an unwillingness by Kaeser (who’s due to retire in 2021) to risk having another bruising fight with European antitrust regulators slow down his plans for a boosted valuation.To contact the author of this story: Brooke Sutherland at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The British Government has indicated it is likely to allow Advent's $5 billion purchase of defence company Cobham after the U.S. private equity group offered a number of commitments to address national security concerns. Britain's Business minister Andrea Leadsom had put the deal on hold while she established whether the sale of the air-to-air refuelling equipment maker posed a national security threat. Shares in Cobham were 3.9% higher at 160.8 pence by 0946 GMT.
The British Government has indicated it is likely to allow Advent's $5 billion purchase of defence company Cobham after the U.S. private equity group offered a number of commitments to address national security concerns. Britain's Business minister Andrea Leadsom had put the deal on hold while she established whether the sale of the air-to-air refuelling equipment maker posed a national security threat. "We have worked closely with the Ministry of Defence to construct undertakings that would adequately mitigate against any potential national security risks," Shonnel Malani, partner at Advent, said.
U.S. private equity firm Advent International said it had won approval from European Union, U.S. and Finnish regulators for its $5 billion acquisition of British defence company Cobham, as it continues to wait for U.K. approval. Britain has intervened in the deal on national security grounds and its regulator, the Competition and Markets Authority, is due to give the results of its investigation on the matter to the business minister on Tuesday. Advent said in a statement that it continued to work to win government approval.
Britain plans to strengthen its powers to block or intervene in the foreign purchase of any company that could affect national security, it said on Monday. Currently the British state can intervene in the foreign takeover of any company that plays a role in national security, the provision of media plurality or the stability of the financial system. Under the plan, a notification system allowing businesses to flag to government a transaction with potential security concerns will be introduced.
U.S. private equity firm Thoma Bravo is adding Sophos Group to its cybersecurity stable, announcing on Monday a buyout deal that values the British maker of antivirus and encryption products at about $3.8 billion. The takeover price of 583 pence per share represented a 37% premium from Sophos's closing price on Friday and Sophos shares surged nearly 38% on news of the deal. Sophos, whose customers include Under Armour Inc, Ford Motor Co and Toshiba Corp, listed in 2015 at 225 pence per share and has seen its market value double since then, despite a tough 2018.
Britain will investigate the national security impact of the purchase of defence company Cobham by U.S. private equity firm Advent International, potentially delaying or even blocking the $5 billion deal. Business minister Andrea Leadsom's move on Wednesday is not unusual where there are potential security concerns, and follows British government intervention in the pending acquisition of satellite group Inmarsat by an international private equity consortium that includes U.S. firm Warburg Pincus. Leadsom has issued a European intervention notice, calling for a report from the Competition and Markets Authority (CMA) by Oct. 29 to determine whether Cobham, the maker of air-to-air refuelling equipment, should be sold.
London's main index see-sawed in early Wednesday trading as investors awaited the outcome of the U.S. Federal Reserve meeting to get a sense of how far policymakers in the world's largest economy will go to tackle a global slowdown. The Federal Reserve is set to conclude its latest policy meeting later in the session, with expectations that it will cut interest rates for the second time this year as it looks to cushion the economy from an ongoing trade war with China. "The question facing the market is how many more (rate cuts) there are to come," Markets.com analyst Neil Wilson wrote.
Britain will investigate the national security impact of the purchase of defence company Cobham by U.S. private equity firm Advent International, potentially delaying or even blocking the $5 billion deal. Business minister Andrea Leadsom's move on Wednesday is not unusual where there are potential security concerns and follows British government intervention in the pending acquisition of satellite group Inmarsat, by an international private equity consortium which includes U.S. firm Warburg Pincus. Leadsom has issued a European intervention notice, calling for a report from the Competition and Markets Authority (CMA) by Oct. 29 to determine whether Cobham, the maker of air-to-air refuelling equipment, should be sold.
* European shares fall slightly, STOXX 600 down 0.2% * Defensive stocks outperform: healthcare, food & bev, utilities top risers * STOXX 600 slipped from 6-week high on Monday * Oil slightly lower after massive jump on Saudi attacks on Monday * Wall Street futures flat Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Danilo Masoni. Reach him on Messenger to share your thoughts on market moves: rm://firstname.lastname@example.org EU BANKS: VICIOUS CIRCLE WITH NEGATIVE RATES (1158 GMT) Five years on and no respite for euro-zone banks from negative interest rates and future looks no better with more rate cuts on the horizon.
* European shares fall slightly, STOXX 600 down 0.2% * STOXX 600 fell 0.7% from 6-week high on Monday * Oil slightly lower after massive jump on Saudi attacks on Monday Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Danilo Masoni. Reach him on Messenger to share your thoughts on market moves: rm://email@example.com UK INDUSTRIALS RIPE FOR M&A (0958 GMT) With sterling slowly recovering from multi-year lows, it could likely be one of the last opportunities for foreign buyers to snap up some UK companies at cheap prices and Berenberg believes the industrials sector is probably the next one to see a wave of M&A activity. Within industrials, Berenberg says automotive, distribution and paper, plastic and packaging are the most likely ones to consolidate.
U.S. private equity firm Advent International won its battle to buy Britain's Cobham for $5 billion on Monday, taking advantage of the weak pound to pounce on the defence and aerospace group that pioneered air-to-air refuelling. Chairman Jamie Pike told a shareholder meeting the management had "pushed as hard as they could push" and engaged in some "arm wrestling" before finally settling on a price that marked a 50% premium to the three-month average share price before the deal was announced. Cobham, based in Wimborne Minster, south-west England, is the latest European company to be bought by a private equity firm seeking a home for their bumper cash balances.
U.S. private equity firm Advent International won its battle to buy Britain's Cobham for $5 billion on Monday, taking advantage of the weak pound to pounce on the defence and aerospace group. Chairman Jamie Pike told a shareholder meeting the management had "pushed as hard as they could push" and engaged in some "arm wrestling" before finally settling on a price that marked a 50% premium to the three-month average share price before the deal was announced. Cobham, which employs 10,000 people to make its pioneering air-to-air refuelling system and communications for military vehicles, has a storied history but has faced difficulties in recent years.
U.S. private equity firm Advent International is set to clinch its 4 billion pound ($4.99 billion) takeover of defence and aerospace group Cobham Plc after Advent received support from more than 75% of shareholders, the Financial Times reported on Friday. Advent agreed to pay 4 billion pounds to buy the British defence and aerospace group known for its pioneering air-to-air refuelling technology in July. Advent offered 165 pence in cash for each Cobham share representing a 50% premium to the three-month average price at that time.
The tally is based on the number of proxy votes already cast ahead of a crucial shareholder vote on Monday, the FT reported, citing people familiar with the situation. Advent agreed to pay 4 billion pounds to buy the British defence and aerospace group known for its pioneering air-to-air refuelling technology in July. Advent offered 165 pence in cash for each Cobham share representing a 50% premium to the three-month average price at that time.
Private equity and foreign investors, including Hong Kong's richest man, have swooped on pub operators, brewers and some of Britain's most popular tourist attractions, as the pound has slipped. Hong Kong Exchanges and Clearing's $39 billion approach for the London Stock Exchange on Wednesday is the latest in a flurry of dealmaking, although acquirers have mainly targeted small- and mid-cap companies that make most of their revenue in sectors that have been hammered by Brexit.
The biggest investor in defence company Cobham , Silchester International Investors, said late Thursday that it did not consider a $5 billion offer for the company from private equity firm Advent International as 'compelling'. Silchester, which owns 11.8% of Cobham, said the company had a strong balance sheet that could be improved further, possibly through the sale of its Australian business. The London-based fund also called on Cobham's board to "seek and respond" to other potential bidders, and suggested the company would have strategic value to a buyer with significant North American interests.