Karen Kwok

Arm seems to have morphed into the artificial intelligence equivalent of a meme stock. Shares of the SoftBank Group-backed chip designer have doubled since the UK-headquartered, U.S.-listed group announced strong earnings last Wednesday, valuing the company at $153 billion. That level is both hyper-inflated and arguably durable.

Duncan Wanblad ought to look to his predecessor for ideas. The CEO of $30 billion Anglo American has seen the miner's share price more than halve since taking over in April 2022, with another 21% off since December after the miner disappointed on production volumes. Former Anglo boss Mark Cutifani's latest job at Brazilian miner Vale may offer some inspiration for how to stop the rot.

So-so house. Ron Burkle reckons Soho House is a fundamentally profitable business, if only investors could look at it in the right way.

So-so house. Ron Burkle reckons Soho House is a fundamentally profitable business, if only investors could look at it in the right way. The company’s executive chairman might in theory have a point, but only if the group’s newer private members’ clubs become as popular as the older ones.The equity value of the $1.1 billion London-based group has more than halved since its 2021 New York listing. A recent short-seller report hasn’t helped. Billionaire investor Burkle, who bought a controlling stake in 2012, last month said that the public market misunderstands the business. He could potentially support a take-private with the help of outside money. Board members and their affiliates own about 75% of the stock, and would keep control.At first glance, Burkle’s profitability argument seems odd given Soho House’s consistent historic losses. His point, however, is that the red ink is down to growth. Soho House now has 43 clubs in 18 countries, compared with just 11 in four countries a decade ago. Newer additions, like Mexico City, seldom make a meaningful profit until they’ve been up and running for a few years.Eventually, once the number of fee-paying members rises and the restaurants fill up, the money flows. The so-called “house-level contribution margin”, effectively the gross profit margin for an individual club, averages 35% for sites that are five or more years old, according to Burkle. Many of the most established clubs are well above that level.It’s possible to imagine what the income statement might look like if all the new locations become as profitable as the mature ones, like the original London Greek Street site. The overall gross margin for the global chain of members’ clubs might then be in the region of 40%. Analysts reckon that, in 2026, Soho House’s general and administrative expenses and depreciation and amortisation could together swallow up roughly 20% of total revenue. Deduct those costs from the gross profit, and the group’s network of private clubs might be able to turn something like 20% of overall sales into operating profit, if all goes to plan.That’s a big “if”. This scenario effectively asks Burkle’s would-be buyout partners to believe that Soho Houses in Bangkok, São Paulo, Manchester, Nashville, Portland and Stockholm will be as busy and profitable as the most established clubs. There’s no obvious reason why that should be the case. The newer cities are often less wealthy than London or New York, and tend to be places where Soho House has less cultural cachet. If the global sprawl ends up contributing little to the wider group’s earnings, the hoped-for profit might never materialise. Any backers of a Burkle-blessed buyout may then wish they’d never come to the party.

Reverse plumbing. Abu Dhabi is flipping the script. In recent years, the United Arab Emirates' leading light has blazed a trail by offloading minority

LONDON, April 9 (Reuters Breakingviews) - Young companies in the European Union have traditionally lagged US rivals in both value and numbers.

For any ambitious M&A adviser, there's obvious appeal in pitching clients on a potential takeover of BP . The $110 billion energy group is cheap relative to rivals, and its new CEO is still learning the ropes. It also has assets that may appeal to cash-rich buyers like Abu Dhabi National Oil Company (ADNOC), which recently pondered a swoop on the British company, Reuters reported on Thursday citin

Not a FAB idea. First Abu Dhabi Bank seems to have the M&A bug. After a short-lived pursuit of London-listed Standard Chartered last year, the $40 billion Gulf lender has recently been eyeing possible targets in Turkey, Bloomberg reported. FAB Chief Executive Hana al-Rostamani has some good reasons to do so, but she’d be better off growing slowly at home instead.From the perspective of Western investment bankers dying to get a cut of the Gulf petrodollar boom, FAB seems to be sitting on a goldmine. It has deep links into local energy giants like Abu Dhabi National Oil Company and cash-rich sovereign wealth funds like Mubadala Investment Company, which is also its largest shareholder with about two-fifths of the stock.The downside, which may partly explain al-Rostamani’s apparent dealmaking zeal, is that FAB looks lopsided. More than two-thirds of its revenue came from the typically volatile divisions of corporate and investment banking last year, while it does relatively little of the traditional banking business of lending out deposits. It’s also overwhelmingly dependent on its home market, whose fortunes tend to rise and fall with the oil price.One way to build a more balanced bank would be to do a deal in the United Arab Emirates. But smaller lenders wouldn’t be big enough to move the needle. Meanwhile, clubbing with other UAE-based banks in Dubai, like $30 billion Emirates NBD, looks impossible: the respective royal families would be reluctant to lose control of their home lender.Hence FAB’s overseas interest. Al-Rostamani’s corporate customers are typically government-linked entities, who export energy to fast-growing economies in Asia and the Middle East. Buying a bank like StanChart, which does a lot of business in these markets, could allow al-Rostamani to cross-sell products. She’d also get her hands on a collection of retail deposit-focused franchises, lowering FAB’s funding costs. A similar logic, though on a smaller scale, applies to the Turkish interest: trade flows between the country and the UAE have soared.The problem, however, is that cross-border tie-ups tend to be light on concrete cost savings. That means FAB might not have a sound justification for offering a premium over the target’s share price. Nor is it obvious that al-Rostamani could pay in cash: FAB’s common equity Tier 1 ratio of 13.8% is just above her target of 13.5%, giving her minimal wiggle room. The upshot is that she’d have to pay in shares, which is probably unpalatable for foreign targets’ investors, or call on Mubadala for cash.It might be simpler to grow at home instead. Lending in the consumer-banking business rose by 9% last year, compared with 1% and 7% respectively for corporate and investment banking. That suggests there’s room for al-Rostamani to re-balance the units slowly over time. It might be less fun than a flashy deal, but it would also be less scary for shareholders.Context NewsFirst Abu Dhabi Bank is studying potential acquisition targets in Turkey, including Yapi Kredi, Bloomberg reported on April 5 citing people familiar with the matter.

The United Arab Emirates likes to think of itself as a sort of Switzerland of the Gulf. Microsoft’s $1.5 billion stake in Abu Dhabi artificial intelligence company G42, announced on Tuesday, shows the limits of remaining a neutral counterparty of the United States and China, especially when it comes to AI. While nominally a private sector deal, the main upshot is to shove the UAE firmly into the U

BHP boss Mike Henry is far from done with Anglo American . The chief executive of the Australian mining giant is mulling an improved offer for his London-listed rival after it rejected his first proposal last week, a source familiar with the situation told Breakingviews. But the costs associated with getting at the bits of Anglo he covets limit his ability to be generous.