Features

The five megadeals to expect in 2019

Matthew Lynn’s crystal ball is in pretty good nick. Here, he makes five predictions for the year ahead.

929_MW_P17_City-View

Will Apple take a bite of the car market?

As Niels Bohr, the father of the atom bomb, famously pointed out, "predictions are difficult, especially about the future". But this column isn't bad at it. At the start of January last year, I suggested that Amazon might buy Waterstones, Barclays might buy Worldpay, Philip Green might sell Top Shop, and Facebook might buy WPP. None of those predictions came to pass exactly, but they were in the right territory. Waterstones was indeed sold, to the private- equity firm Elliot Advisers. Worldpay was sold to Vantiv. Green was reported to have tried to sell his flagship fashion chain. WPP was in enough trouble to get rid of its long-serving CEO Martin Sorrell. So, keeping in mind that none of them might actually happen, here are five potential deals that might shake things up in the year ahead.

1. M&S demerges

The connection between a struggling, slightly dowdy clothes chain, and an upmarket food and convenience store chain has always been mysterious. But with every year that passes, and with more and more standalone Simply Food outlets opening up, M&S looks more of a mess than usual.The shares have halved in the last three years. The solution? Split the company up. The clothing chain would probably remain in genteel and possibly terminal decline, but the food unit could thrive in a world where we're all obsessed with what we eat.

2. Metro buys NatWest

With its bright blue and red storefronts and snazzy customer service, Metro Bank is reinventing high street financial services and proving there is still demand for retail branches. But like many start-ups before it, it may soon find it needs genuine scale to make a real success of consumer banking. The only way to get that is to make an acquisition. The most plausible candidate? NatWest looks lost within a state-run Royal Bank of Scotland, and the government is desperate to cash in on some of the assets it took control of during the crisis. Why not let Metro inject some life into the chain? RBS can pocket the money, and return to the domestic Scottish market it should probably never have abandoned in the first place.

3. HSBC buys Deutsche Bank

Probably no financial institution has fallen quite so far in the decade since the financial crisis without actually collapsing as Germany's biggest bank. Its shares have fallen by more than 90% in the last decade. Yet for all its problems, it still has a fantastic franchise in Europe's largest economy, and its strength among mid-sized German firms exporting to China and the rest of Asia would be a perfect fit for HSBC. At €15bn, it would be a bargain, HSBC could easily afford it, and it would certainly fix any problems HSBC might have with Brexit.

4. Apple buys Jaguar Land Rover

With sales of the iPhone stalling, Apple needs to find another huge industry to disrupt. It has been playing around with cars for at least five years, but building a brand from scratch would be tough. Buying one would be far easier. Jaguar Land Rover probably has the best design heritage in the car industry, and Apple is a company that prizes great looks above anything else. Put the two together, and they could prove a formidable combination and with $280bn in the bank, it is not as if the tech giant couldn't easily afford the car maker.

5. Facebook buys The Times

The social-media giant has had a terrible year, losing trust, and being accused of manipulating its users' data and spreading fake news. It needs to do something to smarten up its image. At the same time, with Rupert Murdoch fading from day-to-day management, his company's commitment to a tough and barely profitable British newspaper market grows ever more tenuous. The Times remains one of the great global newspaper brands, and one that comes with a ready-made reputation for fairness and accuracy. Facebook could easily integrate it into its news operation owning a prestige paper would do a lot to restore its reputation.

Recommended

The US Federal Reserve is about to rein in its money-printing – what does that mean for markets?
US Economy

The US Federal Reserve is about to rein in its money-printing – what does that mean for markets?

America’s central bank is talking surprisingly tough about tightening monetary policy. And it’s not the only one. John Stepek looks at what it all mea…
23 Sep 2021
I wish I knew what contagion was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what contagion was, but I’m too embarrassed to ask

Most of us probably know what “contagion” is in a biological sense. But it also crops up in financial markets. Here's what it means.
21 Sep 2021
The end of the bond bull market, and how to invest for it
Investment strategy

The end of the bond bull market, and how to invest for it

The great bond bull market looks to be over, and you probably don’t want to be holding government bonds, says Merryn Somerset Webb. Here’s what you sh…
21 Sep 2021
The charts that matter: more pain for goldbugs
Economy

The charts that matter: more pain for goldbugs

Gold investors saw more disappointment this week as the yellow metal took a tumble. Here’s what’s happened to the charts that matter most to the globa…
18 Sep 2021

Most Popular

The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021