Companies in the news ... and how they were assessed
L’oréal/nestle : new makeover?
The death of the L’oréal heiress Liliane Bettencourt has made her daughter, Françoise Bettencourt-meyers, the richest woman in the world, said Forbes. As of last Friday morning, her net worth was $46.3bn – just a nudge ahead of Walmart heiress Alice Walton. But what does the transition mean for the future of the French cosmetics giant? Bettencourt-meyers steps into the spotlight amid growing speculation about the future of the family’s 33% stake in L’oréal – as well as the 23% stake held in it by the Swiss food giant Nestlé. She has signalled little will change. But analysts have floated a variety of scenarios, including L’oréal buying stock back from Nestlé, or the latter staging a full-on takeover bid for the former. “All these permutations pre-suppose a pressing need to do anything,” said Lex in the FT. Yet neither company is “financially stretched” and both would be better off sitting tight for the moment. “Agitators complain about inefficient balance sheets and non-core assets,” but they’re “surely preferable to valuedestroying deals or buybacks that give investors a bigger piece of a smaller pie”. In fact, L’oréal has done rather well of late, despite the scandal surrounding its founding family. Shares are up by nearly 20% this year, taking its market value above s100bn.
Aldi/lidl: Teutonic thrust
There’s no stopping the Germans in Britain’s supermarket stakes, said Neil Craven in The Mail on Sunday. “After more than doubling in size in just four years,” discounter Aldi’s UK and Irish sales “soared past £8bn” in 2016 for the first time, according to figures released this week. A study last month by the industry magazine The Grocer indicated that Aldi was 15% cheaper than Asda and 28% cheaper than Waitrose. Aldi majors on a limited assortment of products in smaller neighbourhood stores, and shoppers are clearly finding “virtue in that simplicity”, said George Wallace of MHE Retail. It took Aldi and its German competitor Lidl “two decades of persistent wooing to convince the British public to give them a chance”, said Adam Gale in Management Today. Both have now blossomed into “genuine rivals” of the established Big Four, and they’re building new stores “at a dizzying pace”. That sort of growth “doesn’t come without risks”. The Germans wouldn’t be the first “to expand too fast, only to fall victim to a sudden change in consumer tastes”. And there’s an “obvious danger” online, where “neither have meaningfully contended”. If the arrival of Amazon accelerates “the drift to online grocery shopping”, Aldi and Lidl could be left “with serious egg on their face”.
Dyson: will its electric car clean up?
The electric car market is growing rapidly, but it’s about to become “a lot more crowded”, said Theo Leggett on BBC News online. The latest to join the fray is Dyson, the engineering company best known for its vacuum cleaners and fans, which is planning to spend £2bn developing what founder Sir James Dyson called a “radical and different” model. “Dyson clearly sees an opportunity here.” But can he “muscle in on territory” already staked out by the major manufacturers and deep-pocketed newcomers like Google? “Tesla was able to build a new car brand from scratch, but only by producing a design which changed people’s expectations of what an electric car can provide.” If Dyson “wants to play with the big boys, it may have to pull off a similar trick”.