From Breakingviews: Bank of China pulls out of a takeover of Ireland’s Goodbody Stockbrokers; and Primark and John Lewis announce they're passing up state bonuses for retaining furloughed staff
GOOD BODY, BAD M&A. Ireland’s 140-year-old stockbroker has struck out again. Bank of China has pulled out of a 155 million euro takeover of Goodbody Stockbrokers, citing pandemic-related uncertainties. The setback, about 18 months after an earlier deal with a Chinese consortium fell through, adds to a growing list of global M&A casualties as companies retreat from bids due to Covid-19.
Somewhat ironically, and unlike the global real economy, stocks are in relatively fine form: European indexes have been steadily gaining since the mid-March pandemic dip and the S&P 500 is back close to its pre-virus levels. But other parts of the business, which include corporate finance, may be more challenged. As barriers to Chinese investment go up in multiple countries, Goodbody’s pain suggests state enterprises of the People’s Republic are still being picky about what they buy.
PANDEMIC PAYBACK. British retailers appear to be passing up the offer of state handouts. Primark has announced it is shunning its share of UK Chancellor Rishi Sunak’s Jobs Retention bonus, which promises companies a payment of 1,000 pounds for each staff member brought back from government-subsidised furloughs. John Lewis is doing the same. The rebuffs are costly. Primark’s 30,000 furloughed employees mean it would have been entitled to 30 million pounds.
Such displays of corporate strength are not unique. Flatpack furniture giant IKEA has said it plans to reimburse governments for furlough payments. Companies may be hoping that giving up handouts will win them favour in future. But it may also be a sign of vulnerability. John Lewis has already shut eight stores, while Primark could suffer in a second pandemic wave. Having wiggle room to shed staff may be more valuable than government cash.
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