Morning Briefing Global Edition

The Fall IPO Lineup

IPOs in Germany slumped this year after reaching €7 billion in 2015. So all eyes are now on EON and RWE subsidiaries Uniper and Innogy, utilities with a combined value of €4.5 billion. These sales won’t just test the market’s appetite for the leftovers of Germany’s shattered energy industry – Uniper is coal, gas and water; Innogy is exclusively renewables. It will test whether investors post-Brexit still believe there is man-made light at the end of the tunnel.

 

A half a world away at a summit in China, Chancellor Angela Merkel finally confronted her party’s miserable showing yesterday in weekend elections in her home state. Merkel begrudgingly accepted some responsibility for voter anger over her refugee policies, but showed no intention of changing course. There are many ways to disrespect voters, and talking this way is one of them. Her own party wanted a change in direction, but got a “hold-the-line’’ speech instead.

 

And who says the ECB’s zero-interest policies aren’t helping anyone? Without the Frankfurt bank’s cheap-money fire extinguisher, Finance Minister Wolfgang Schäuble could never have delivered a balanced federal government budget for two years running. The ECB’s ultra-low rates helped Schäuble pare €122 billion in projected government interest payments from 2008 to 2015. Mario Draghi has a new secret admirer in Berlin.

 

Volkswagen today is expected to announce it is buying a 17-percent stake in U.S. truck maker Navistar worth about $200 million. VW’s truck brands have never found their way beyond European highways, leaving the North American market to the Americans and Daimler, the U.S. trucker’s good buddy. After Dieselgate soured Americans on VW cars, maybe it’s wise for the Wolfsburg behemoth to go stealth, slipping in on Navistar’s wake.

 

Bayer upped the ante again today on its bid for Monsanto, plunking down a whopping $65 billion for the U.S. agrochemicals giant. Our capital markets team says Bayer can easily afford the new offer; its credit line can cover even a €70 billion deal. New Bayer CEO Werner Baumann is showing himself to a savvy risk-taker, restrained and measured in his bidding tactics, and slowly closing in for the kill. You can almost see the whites in the eyes of his adversaries.

 

Image of the Day

Martin Heimeier_DPA
Architect Martin Heimeier has turned a former World War II bunker in Essen, Germany, into apartments, complete with visible bombing damage in the ceiling. Source: DPA
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