SYDNEY: A slide in the shares of Macquarie Group has rekindled calls for job cuts, share buybacks or a break up of Australia's top investment bank, with some speculation also emerging it could become a takeover target, Reuters reports on Monday, July 18.
Macquarie's shares have fallen 17 percent since June 1, to the lowest in more than two years, hurt largely by its investment bank and trading business as weak markets take a toll and on rising expectation it will cut its earnings forecast at its shareholders meet on July 28.
Since early June, the stock has seen nine price target cuts, three ratings downgrades and two ratings upgrades, Thomson Reuters I/B/E/S data showed.
Macquarie, which has for years topped or featured in the top three in Australia's M&A league table, does not feature in the top 10 of the T arget A nnounced M&A league table.
In equity underwriting, it stands third with a slightly higher market share albeit in a very low volume environment, Thomson Reuters data shows.
Citigroup in a report said cutting 1,000 staff, or 6.4 percent of its total, could help it restore returns to the industry standard , though job cuts may not be in chief executive Nicholas Moore's plan.
There has also been some speculation the group, which has a market capitalisation of $10.6 billion, could attract a friendly takeover.
CLSA in a note said Macquarie could become an attractive takeover target given the attractive break up value. CLSA added it also saw the potential for meaningful capital management.
CLSA said an opportunistic acquirer could buy Macquarie's Asian investment banking business below book value and then sell the funds management business and a stake in MAP Airports .
"With the Macquarie staff bonus pool leverage much reduced for the first time we believe such a transaction could be more easily executed on a friendly basis than ever was the case historically," CLSA analyst Brian Johnson said.
Adding some strength to the takeover talk is the fact Macquarie is trading cheaper than its global peers for the first time in recent years. It is trading at 8.9 times forward PE compared with 11.5 times for Goldman Sachs and Morgan Stanley .
A Macquarie spokeswoman could not be immediately reached for a comment.
CLSA did not suggest which firms could be interested but in the past speculation has centered around the likes of Barclays or other investment banks keen to expand in Asia.
Macquarie shares were trading 1.4 percent lower at A$28.58 by late morning, valuing the firm at $10.6 billion, compared to a 0.4 percent fall for the broader index .
Macquarie, which is moving to a traditional investment bank from a listed-funds model that it pioneered, unveiled its second annual profit fall in three years in April but said markets were showing signs of improvement.
But recently global events have taken a turn for the worse with European debt crisis, weak data from U.S. hurting investor sentiment. - Reuters
Macquarie's shares have fallen 17 percent since June 1, to the lowest in more than two years, hurt largely by its investment bank and trading business as weak markets take a toll and on rising expectation it will cut its earnings forecast at its shareholders meet on July 28.
Since early June, the stock has seen nine price target cuts, three ratings downgrades and two ratings upgrades, Thomson Reuters I/B/E/S data showed.
Macquarie, which has for years topped or featured in the top three in Australia's M&A league table, does not feature in the top 10 of the T arget A nnounced M&A league table.
In equity underwriting, it stands third with a slightly higher market share albeit in a very low volume environment, Thomson Reuters data shows.
Citigroup in a report said cutting 1,000 staff, or 6.4 percent of its total, could help it restore returns to the industry standard , though job cuts may not be in chief executive Nicholas Moore's plan.
There has also been some speculation the group, which has a market capitalisation of $10.6 billion, could attract a friendly takeover.
CLSA in a note said Macquarie could become an attractive takeover target given the attractive break up value. CLSA added it also saw the potential for meaningful capital management.
CLSA said an opportunistic acquirer could buy Macquarie's Asian investment banking business below book value and then sell the funds management business and a stake in MAP Airports .
"With the Macquarie staff bonus pool leverage much reduced for the first time we believe such a transaction could be more easily executed on a friendly basis than ever was the case historically," CLSA analyst Brian Johnson said.
Adding some strength to the takeover talk is the fact Macquarie is trading cheaper than its global peers for the first time in recent years. It is trading at 8.9 times forward PE compared with 11.5 times for Goldman Sachs and Morgan Stanley .
A Macquarie spokeswoman could not be immediately reached for a comment.
CLSA did not suggest which firms could be interested but in the past speculation has centered around the likes of Barclays or other investment banks keen to expand in Asia.
Macquarie shares were trading 1.4 percent lower at A$28.58 by late morning, valuing the firm at $10.6 billion, compared to a 0.4 percent fall for the broader index .
Macquarie, which is moving to a traditional investment bank from a listed-funds model that it pioneered, unveiled its second annual profit fall in three years in April but said markets were showing signs of improvement.
But recently global events have taken a turn for the worse with European debt crisis, weak data from U.S. hurting investor sentiment. - Reuters
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