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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CONSUMER CYCLICALS
In a Q&A Bosch mgmt;
- Q "do you expect to have additional acquisitions in near future and in which areas"
- A "this transaction is the focus for the next 12-months...that will use up all of our strength"
We are not exactly sure what whirlpool longs are eyeing...only catalyst for the tightening was the Robert Bosch bid rumours and associated 4-notch rating uplift. Bosch has moved +1-4bp wider today while WHR 27/28s are unch to -1...leaving the 27/28s within single digits of Bosch (i.e. pricing ~100% prob of being acquired by it). Based on the Q&A we would put the prob. on the other end...
We've included 1) higher rated comp. Electrolux (NR/BBB Neg) who, after 2 years of losses, is facing a better outlook than Whirlpool this year and 2) pre-Bosch headline levels (€IG is little changed since) - both for indication of downside. Risk-reward looks well skewed to favour shorts here, earnings on the
To reiterate other points re. the $8b acquisition (some corrections too);
- Rumours of Whirlpool bid emerged 3-weeks BEFORE Bloomberg leaked potentially Bosch acquiring Johnson control's HVAC assets.
- It's hard to see it as the same strategy; Whirlpool is not known for HVAC products.
- Cash use is significant; at $8b/€7.4b its the biggest transaction in Bosch history. It does run a healthy net/gross cash position of €5.3b/€7.4b (end of last year) and it said in the Q&A that it can fund from its "internal resources".
- It is onboarding €4b of revenue from the acquisition and strengthening its footprint in US and Asia.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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