Betway, US banks, vaccine feud – Breakingviews

Concise information on global finance.


– SPAC online betting offer

– American banks

– European Union / AstraZeneca

Bet on SPAC. First DraftKings, then Golden Nugget Online Gaming, now Betway. The latest owner of the global online sports betting brand, Super Group, is merge with a special purpose acquisition company for a post-trade valuation of approximately $ 4.6 billion.

Super Group is also buying Digital Gaming, which will give it access to 10 US states. The American market, which is gradually opening up, is the jackpot for sports groups and online casinos. The acquisition of Super Group SPAC, Sports Entertainment Acquisition, is led by former executives of the National Football League.

As the U.S. securities watchdog steps up its review of PSPCs, the Super Group buyer hedges its bets with seven pages risk factors in its presentation. These warnings may receive little attention, however, given the good performance of previous game mergers. PSPCs typically trade at around $ 10 a share before identifying targets. DraftKings shares are now trading at $ 58. GNOG is now trading at $ 14 and changing. Genius Sports, the SPAC sports data merger that closed last week, is over $ 21. Prospective owners should keep in mind that insiders always have the edge. (By Richard Beales)

Somehow free lunch. US banks are finding it increasingly difficult to grow, so many are looking for ways to cut costs. Help comes from American depositors, whose willingness to lend money for little or nothing drives them to rush to the buffet of retail banks.

Take the merger between two lenders announced on Monday. New York Community Bancorp Offer For $ 2.5 billion, Flagstar Bancorp is driven in part by the small bank’s interest-free deposits, which are cheaper than its own funds. These balances will represent 21% of the liabilities of the combined company, compared to 10% in the New York Community currently.

The chief executive of the biggest bank, Thomas Cangemi, isn’t the only one looking for a nearly free lunch. Goldman Sachs and Morgan Stanley have both stocked up on low-cost customer balances, through their retail banking and brokerage businesses, respectively, with happy results for profitability.

The sweet spot arises when a company trades expensive finance for cheaper finance. For banks already inundated with retail balances, entries bring new headaches, such as deciding where to invest everything. But with thousands of small banks in the United States and big retail franchises to sell, there’s a feast for those whose plates aren’t already full. (By John Foley)

Jab jostle. Europe’s legal battle with AstraZeneca may be more about politics than money. The European Commission said on Monday that it had launched legal action against the $ 138 billion drug giant for failing to honor its Covid-19 vaccine supply contract and not having a “reliable plan” to ensure delivery. AstraZeneca says the claim is without merit.

The case can take years and rack up significant legal bills. The fact that the British group sells vaccines at cost, rather than for profit, may weaken Brussels’ case. The move also seems odd given Europe’s growing preference for mRNA injections, such as those developed by Pfizer and BioNTech, for which it is set to get up to 1.8 billion new doses. . Member States are wary of AstraZeneca inoculation following cases of blood clots. But with Europe again dragging UK and US in its vaccination schedule, denigrating AstraZeneca could keep other drugmakers in line and show EU citizens that the commission supports them. (By Aimee Donnellan)

Treat the cops. $ 2.6 billion from New York Community Bancorp acquisition Flagstar Bancorp isn’t usually the kind of deal that gets attention in Washington. But Senate Speaker Sherrod Brown is part of a group of Democrats who want regulators to crack down on consolidation. This gives a break to the multitude of regional banks that have been in M&A mode.

These offers often make financial sense. Bancorp and Flagstar are among the mid-sized companies that have struggled in a near zero interest rate environment. The combined company, with $ 87 billion in assets, would help them better compete with giants like JPMorgan or upstarts in fintech.

This is why there was a wave of pullouts after a hiatus after the 2008 financial crisis. Last year, First Citizens BancShares announced a $ 2.2 billion acquisition of CIT Group while PNC Financial Services buys BBVA’s American activity in Spain for 11.6 billion dollars.

Last September, the Donald Trump-led Justice Department signaled it may relax bank merger reviews. With Democrats now in the driver’s seat, regional lenders can expect more time under the microscope. (By Gina Chon)

Man-made disaster. Force majeure is generally reserved for cases of force majeure or other unforeseen events. For Total in Mozambique, the reasons are unfortunately predictable. The French energy giant on Monday invoked the legal clause, which frees it from its contractual obligations, on the deterioration of security in the North, where it is building a 20 billion dollar liquefied natural gas plant. Activists linked to the Islamic State invaded the nearby city of Palma last month.

Total paid $ 3.9 billion for a 26.5% stake in the project in 2019, as the Islamist insurgency was in its infancy. So far, it has probably only spent a small portion of its $ 14.9 billion in funding. And with force majeure in place, he no longer has to pay contractors. But the statement suggests that the French group now fears a long delay before authorities regain control. Meanwhile, investments in gas are increasingly monitored by investors and face competition from renewables. The longer the project remains on the ice, the less likely it is that Total will recover its expenses. (By Ed Cropley)

The nose knows. Jessica Alba’s eco-diaper start-up Honest Co has lost some of its shine and hasn’t even gone public yet. The consumer goods company launched its IPO price scale at $ 14 to $ 17 per share on Mondays. At the high end, Honest is worth around $ 1.5 billion, a valuation that’s more carpet than red carpet.

Last year, Honest achieved a turnover of $ 301 million. At the high end of the price range offered for the IPO, the enterprise value of the company is around 5 times the revenue. Procter & Gamble, supplier of Giant Pampers, is attached to the same multiple. But that doesn’t give Honest any credit for its rapid growth: its revenue grew 28% last year compared to P&G’s 6%.

Breakingviews expected a higher rating, perhaps in the $ 3 billion area. Past issues over misleading labeling remain a shadow over Alba’s brand. Perhaps even a possible deal with Unilever that never happened in 2017 still weighs in, given that a sale to an industry giant is a way for incoming investors to profit later. Or maybe Honest sets expectations in a refreshing way. (By Jennifer Saba)

Aberdeen anguish. When a company is already called Standard Life Aberdeen, it’s hard to find a worse brand. So hats off to the £ 6 billion asset manager for belatedly following the “unravelThe track really took off over a decade ago by tech startups like Tumblr and Flickr as well as rock band MGMT. The British group plans rename itself as “Abrdn”.

An obvious problem: how is it pronounced? The company seems to assume customers will know it should be “Aberdeen,” but that implies the pseudo-cool, avant-garde new brand will need a clumsy parenthesis to say it. Otherwise, it could all too easily turn into something like “A burden”.

All of this seems to distract from CEO Stephen Bird’s desire to focus the asset manager more on investment advice. Perhaps this is intentional: the former Citigroup executive, who will presumably now be known as Stphn Brd, recently cut the dividend by nearly a third. The consolation for embarrassed employees is that it spurs them on to achieve their goals, prompting suitors to launch a takeover – and another name change. (By George Hay)

Pill-popping. The CEO of Nestlé, Mark Schneider, doubles his desire for well-being. The $ 340 billion maker of Kit Kat chocolate bars and Nescafe coffee confirmed on Monday that it in talks to buy The Bountiful Company, maker of Nature’s Bounty vitamins and supplements. Bountiful’s current owner KKR was preparing it for an initial public offering that could value the company at over $ 6 billion, Bloomberg reported in January.

The Long Island-based company has emerged from the pandemic with rude health. It posted sales of $ 2.1 billion for the year to last September, 10% more than the previous 12 months. However, in the last quarter of 2020, revenue jumped almost 28%, mainly thanks to online sales in the United States, its largest market. Schneider previously signaled his desire to use the financial strength of the Swiss company to expand into health food. He is likely to pay the highest price. (By Ed Cropley)

Fall cleaning. Westpac is tidying up before the big scrub. A week ahead of its half-year results, as investors expect hear the details on a three-year cost-cutting plan, the Australian Bank on Monday warned that after-tax cash profit would suffer a blow of A $ 282 million ($ 219 million) despite a windfall in the value of its stake in the recently listed cryptocurrency exchange Coinbase Global. Customer refunds and litigation costs piled up as Westpac also cut back on capitalized software.

The announcement omitted any mention of restructuring costs, which could be onerous given the scope of possible regulatory, policy and technology fixes, as well as the potential sale of its New Zealand business. A 72% increase in Westpac’s market capitalization over the past year, to A $ 92 billion, and a valuation of 1.3 times the expected book value over the next 12 months, suggests some optimism about CEO Peter King’s next financial update. One warning, however, can still spawn another. (By Jeffrey Goldfarb)

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