Corona Capital, March 17: AMS, IPOs, Exxon and oil

Unidata SpA

17/03/2020 12:09

(The authors are Reuters Breakingviews columnists.  The
opinions expressed are their own.)
    By Breakingviews columnists
    LONDON, March 17 (Reuters Breakingviews) - Concise views on
the pandemic’s financial fallout from Breakingviews columnists
across the globe.
    
    LATEST
    – Virus infects AMS’ M&A rights issue
    – IPOs for virus winners in Italy
    – Exxon Mobil wakes up to oil’s scary new world
    
    FLOUNDERING AMS  AMS.VI  RIGHTS ISSUE PUTS UBS  UBSG.S  AND
HSBC  HSBA.L  IN THE FIRING LINE. The Austrian sensor maker’s
4.6 billion euro takeover of Germany’s Osram Licht  OSRn.DE  has
entered another circle of financial hell. With AMS shares
trading at around 9 Swiss francs on Tuesday, below the 9.2 Swiss
francs offer price for a 1.7 billion euro rights issue meant to
pay for the deal, there’s every chance of the deal imploding.
    That points to two outcomes. If underwriters UBS and HSBC
stick to the script, AMS will get its cash. But the banks will
then be 46% owners of the enlarged AMS. The alternative is the
duo pulling the ripcord, citing market turmoil. Coronavirus
certainly ticks that box. Less certain is how AMS would then
repay the 4.4 billion euro bridging loan to Bank of America –
and UBS and HSBC.
    By Ed Cropley
    
    ITALIAN IPO SHOWS FLIP SIDE OF LOCKDOWN ECONOMY. Europe’s
virus quarantines are suffocating sectors including travel,
tourism and hospitality. But the pandemic is a business
opportunity for some. Tiny broadband provider Unidata  UD.MI 
defied a market rout by listing in Milan on Monday and saw its
stock rise nearly 7% on Tuesday. Manufacturer GVS, which
produces masks and kits to protect against biohazards like
viruses, is also going ahead with a market debut.
    Such listings benefit from a lockdown-induced surge in
demand for internet and health services. This may be temporary.
But while the war-footing economy won’t last forever, more
widespread flexible working and a need for better health
equipment to fight future diseases may stay.
    By Lisa Jucca
    
    EXXON MOBIL  XOM.N  WAKES UP TO OIL'S SCARY NEW WORLD. The
biggest U.S. crude producer on Monday said it will make
“significant” cuts to spending, after oil prices dropped below
$30 a barrel for the first time since 2016. One analyst told
Breakingviews that the hit to oil demand could in April be as
high as 10% – a drop to around 90 million barrels per day.
    Exxon had planned on investing $30 billion to $33 billion in
new projects this year, even more than the much-bigger Saudi
Aramco  2222.SE . The latter has in part prompted the current
slump by pledging to pump at full capacity, sending global oil
supply way above 100 million barrels per day. Something had to
give.
    By George Hay    
    On Twitter https://twitter.com/breakingviews 
    
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    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Exxon pledges 'significant' spending cuts amid coronavirus, oil
slide     urn:newsml:reuters.com:*:nL1N2B968L
AMS falls below rights issue price in fresh challenge to Osram
takeover     urn:newsml:reuters.com:*:nL8N2B97HM
Italian broadband company Unidata bucks Milan virus rout with
IPO     urn:newsml:reuters.com:*:nL8N2B94HD
Graphic: Wrong issue     https://tmsnrt.rs/2IRBrlL
Graphic: Wrong issue    https://tmsnrt.rs/39YOIVs 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Editing by Rob Cox, Karen Kwok and Oliver Taslic)