Let the Food-Deal Frenzy Begin | Bloomberg Gadfly


The buyout firm’s typical playbook has been to target companies with weak margins and then slash costs like crazy to boost profitability. But even a cost-cutter extraordinaire like 3G needs to eventually find revenue growth.

Sale gains at Unilever’s personal-care business slowed in the most recent quarter, but that industry is certainly growing faster than the staid cereal and sandwich-spreads markets.

These companies might be better off trying to mimic the 3G model: merge with other packaged goods companies in order to cut costs even further.

Should their own growth efforts fail, don’t be surprised if more activists start showing up, seeking to shake up management teams or lean on packaged-goods companies to change their strategies.

Source: Let the Food-Deal Frenzy Begin – Bloomberg Gadfly

How one Chinese region shows risks of relying on heavy borrowing | Reuters


Liaoning highlights the risks of relying on repeated borrowing to invest in infrastructure and fuel economic activity – a regular fall-back policy China has used when GDP risks missing annual targets, including in 2016.

Traditionally, state-raised investment funds have been channeled through state-owned enterprises (SOEs) because they are big tax payers and employers. This has provided a life support mechanism for many dying state industries while crowding out the private sector on which China is staking its future.

Liaoning, Heilongjiang and Jilin were once powerful industrial bases responsible for much of the coal, steel and heavy industry that underpinned China’s economy in the 1960s and 1970s.

Source: How one Chinese region shows risks of relying on heavy borrowing | Reuters

Airbus seeks new talks with European nations over A400M costs | Reuters


Hailed at the time as an innovative, fixed-price deal, the contract foundered over problems with the West’s largest turboprop engines and an over-ambitious schedule for ground-hugging navigation and other military capabilities.

Tom Enders, who is said to privately regret not canceling the project before the bailout in 2010, declined to say if Airbus would threaten to stop building the plane. He described the new penalties as “inappropriate” given that the A400M was already deployed in Africa and elsewhere.

Source: Airbus seeks new talks with European nations over A400M costs | Reuters

Switzerland’s ABB hit by $100 million South Korean fraud | Reuters


The Swiss company said the alleged theft was limited to South Korea, where it employs around 800 people and generated sales of $525 million in 2015.

“The treasurer of the South Korean unit is suspected of forging documentation and colluding with third parties to steal from the company,” ABB said.

The treasurer, named by a source in Korea as Oh Myeong-se, disappeared on Feb. 7 and ABB subsequently discovered significant financial irregularities.

Source: Switzerland’s ABB hit by $100 million South Korean fraud | Reuters

Fresh from fending off Kraft, Unilever to review strategy | Reuters


Kraft, which is backed by Warren Buffett and the private equity firm 3G, had wanted to buy Unilever as part of its strategy of buying competitors and cutting costs to drive profits.

Unilever, the ice cream-to-shampoo producer, flatly rejected the approach on Friday (Feb 17), saying it saw no financial or strategic merit in a deal.

But investors have called on the firm to review its costs and structures to see if it could do more to deliver the profit that Kraft had seen. Unilever’s operating profit margin falls well short of Kraft Heinz and other rivals.

Source: Fresh from fending off Kraft, Unilever to review strategy | Reuters

Deleting Uber is the least you can do | Medium


Uber is what you get when you take Silicon Valley’s most toxic values, add billions of dollars in venture capital, and spice it with endless adoration from a fawning tech press. The resulting cocktail has turned as putrid as it’s been potent.

And the inebriated corporate culture of Uber is acting as reckless and callous as a dangerous drunk.

I’m sure it didn’t start out this way. It never does. They were up against entrenched interests keen to keep a shoddy on-demand transportation system in place for another century.

There are simply too many people who have either actual money at stake, or correlated investments on the line, to expect much internal pressure from Silicon Valley for Uber to change its ways.

Source: Deleting Uber is the least you can do – Medium

Reliance Jio to offer bargain rates, crosses 100 million customers | Reuters

[India]


The price war resulting from Jio’s entry has also spurred consolidation in the sector with Idea and Vodafone Plc’s Indian unit, the market’s No.2 player, beginning talks for a merger of their operations.

Jio’s launch came after years of delay and Reliance Industries has already invested more than $20 billion into the venture.

Source: Reliance Jio to offer bargain rates, crosses 100 million customers | Reuters

Where Crony Capitalism Rose and Prosperity Fell (and Vice Versa) | Bloomberg View


With populists emulating autocrats from Azerbaijan to Zimbabwe, free markets are being forced to confront crony capitalism.

One response is visible in the reversal of fortunes of Malaysia and Indonesia. The two nations still wrestle with the politics of ethnicity and religion at odds with the capitalism of market competition.

Malaysia’s embrace of an ideology of Malay supremacy and the low interest rates that invite a debt bubble are impediments to a dynamic economy.

Source: Where Crony Capitalism Rose and Prosperity Fell (and Vice Versa) – Bloomberg View

7 key players in the GOP’s border tax fight | TheHill


The border-adjusted tax was included in a tax blueprint House Republicans released in June, which is a starting point for upcoming legislation.

Supporters say the border tax is a critical way to raise revenue to pay for tax rate cuts in the package and to boost American manufacturers.

But the border tax proposal is facing mounting opposition from business groups and many GOP lawmakers worried that consumers will be hit with higher prices for goods.That opposition could imperil GOP plans to pass tax reform, one of their top agenda items for 2017.

Here are some key players in the debate …

Source: 7 key players in the GOP’s border tax fight | TheHill

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Toshiba seeks $8.8 billion for chip unit stake as banks fret over risks | Reuters


Its willingness to relinquish so much of the unit underscores not only the depths of its financial woes but also resignation on the part of management to becoming a much smaller company.

The sale “is the best and the only way Toshiba can raise a large amount of funds and wipe out concerns about its credit risk,” said the source, adding that the sale should be completed by the end of March next year.

Source: Toshiba seeks $8.8 billion for chip unit stake as banks fret over risks | Reuters