>>> Brokers Upgrades & Downgrades

>>> Up
*ARCADIS RAISED TO BUY VS HOLD AT ING
*MAUREL ET PROM RAISED TO BUY VS SELL AT SOCGEN
*RWE RAISED TO HOLD AT DEUTSCHE BANK
*SODEXO RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE
*ZOOPLUS RAISED TO BUY VS SELL AT BERENBERG

>>> Down
*LEJU CUT TO NEUTRAL VS BUY AT GOLDMAN
*NOBEL BIOCARE CUT TO UNDERPERFORM AT JEFFERIES

>>> PT Changes


>>> Initiation
*CARILLION RESUMED EQUALWEIGHT AT MORGAN STANLEY, PT 370P
*EDENRED RATED NEW NEUTRAL AT CREDIT SUISSE, PT EU24
*INFINEON RATED NEW OUTPERFORM AT CREDIT SUISSE, PT EU10.10
*OPERA SOFTWARE RATED NEW BUY AT BERENBERG; PT NOK124
*ROYAL MAIL RATED NEW BUY AT SARASIN
*STMICRO RATED NEW UNDERPERFORM AT CREDIT SUISSE, PT EU4.8

>>> Call
>> Stock
*BRENNTAG REMOVED FROM UBS LEAST PREFERRED LIST
*ENEL ADDED TO UBS KEY CALL LIST
*HAYS REMOVED FROM UBS MOST PREFERRED LIST

>>> What to look at today - 27/08/2014

5US Market closed higher, S&P above the 2,000, Russel leaded the move (+0.9%) but volume continue to be light @500mil shares traded. Energy & Financials continue to OP, US names followed good perf from European peers...Industrials settled in the red (-0.3%), BBY -6.9% after Earnings, DSW +9.2% on Earnings, overall Retailers OP...no concrete news from Minsk but clearly some descalation of the situation...VIX @ 11.63 -0.6%...After Hours TUBE +32.3%, VIMC +7.1%, ARUN +3.3%, SWHC -11.8%, DAEG -10.1%, SLH -1.7%, TIVO -1.4% following earnings/guidance...TIF is reporting today before the open...Asian mkt was quite traded in line with US mkt...China Telecom reported better numbers, Haier reported better sales but stock is down on margin contraction...Nikkei +0.01% Hang Seng +0.09% Shanghai +0.30%

Eur$ 1.3159 S&P +0.04% SX5E -0.22% FTSE -0.15% DAX -0.09% SMI -0.14%

Macro
- EuroStoxx 600 changes : take effect on the 22nd of Sept.
In : ABG/P SM , BPOST BB, ERF FP, EUROB GA, GAM SM, ISS DC , MOR GY, OUT1V FH, PHMX LN
Out :CGG FP, EBRO SM, LMI LN, OTE1V FH, POLY LN, PTC PL , SOW GY, TOD IM, WIN GY,
- *ITALY TO REVISE DOWN GDP FORECAST, PADOAN TELLS CORRIERE

Keep an eye on :
- AENA Aeropuertos : Banks Value Spain's Aena at EU4b at Least, Cinco Dias Reports
- AGFB BB :Reports Q2 Adj EBIT €46M v €36M y/y, Rev €651M v €732M y/y, Revenues hurt by weakness in emerging markets, negative currency effects
- ASC LN : Takeover rumors - eBay mentionned as potential acquirer @£50/share
- CU FP : Fosun won't rule out Club Med return, Vice chairman said Fosun they haven't give up
- EDF FP : EDF Picks Cos to Build 3M Smart Meters: Echos (Correct)
- ENEA SS : Enea 2Q Net 416.1m Zloty; Analysts Est. 279m Zloty
- GOGL NO : Reports Q2 Net profit $1M v loss $5Me, EBITDA $23.2M v $12.9Me, Op Rev $72.8M v $74.5M y/y
- GSK LN : GSK Gets FDA Approval of Added Promacta Indication
- INH FP : Granted EU orphan drug status for IPH4102 for the treatment of cutaneous T-cell lymphoma
- MHG NO : Marine Harvest Posts 2Q Net Loss; Declares NK1/Share Dividend
- REP SM : Repsol Said Stalled in Talks to Buy Talisman Energy Assets: WSJ
- RNO FP : Renault Says Ruble Fall Prompts Car-Price Increases in Russia
- RUSAL (486 HK) : Rusal 2Q Adjusted Ebitda $220m; Est. $258.7m
- SAP GY : SAP, China Telecom Joint Venture Opens Shanghai Data Center
- STCBV FH : Stockmann: Sudden departure of CEO could mean accelerated strategic changes -Kauppalehti
- TEF SM : Telefonica Faceoff in Brazil Portends GVT Bidding War {NSN NAXQ3K6VDKHT <go>}
- TFI FP : TF1 Wants to Be Able to Buy Newspapers, Radio Stations: Echos
- TTI GY : Tom Tailor : There is speculation that Fosun could raise stake from 23%

FT : Nespresso smells opportunity in helping small coffee growers

The chief executive of Nespresso has high hopes for coffee from South Sudan, part of the area in east Africa from where the bean originates.
The farmers in the African nation are several years away from providing beans for the company’s coffee capsules. But after receiving the first export from the country, Jean-Marc Duvoisin wants consumers around the world to sample the brew from the “cradle of coffee”.

The head of the company – owned by Swiss food group Nestlé – will on Wednesday announce a SFr500m ($546m) six-year farmer welfare and environmental programme, which includes SFr15m of investment in South Sudan, Ethiopia and Kenya. The project will make contributions to a retirement fund for a coffee growing community in Colombia and provide funding to its aluminium capsule recycling programme.
It is part of a growing trend of large international agribusinesses and food companies that are increasing their involvement with smallholder growers. They regard these suppliers as important sources of commodities as well as potential customers.
Some 500m smallholder farmers – those who tend to work on farms of less than 10 hectares – produce about 70 per cent of the world’s food, and are a key source of commodities such as coffee and cocoa, the main ingredient for chocolate.
High quality coffee needs to be grown in high altitudes due to specific climate needs, making it uneconomical for the bigger landowners to cultivate.
With many of the world’s small growers concentrated in developing countries, where government support is often inadequate, an increasing number of multinational companies, many working with aid organisations and not-for-profit groups, are offering assistance to counter the effects of political risk, climate change and poverty.
Sir Gordon Conway, professor of international development at Imperial College, London, says there has been a realisation that unless these farmers feel they have a future in agriculture, the companies’ own strategies will be at risk.
“A lot of big businesses know that the risks of the food system are going to grow and grow,” he says. “They are finding a way forward and are having more involvement on the ground.”
In South Sudan, Nespresso is organising farmers from what was a pilot project into co-operatives, and is providing education and training with the assistance of not-for-profit group TechnoServe.
Supported by brand ambassador George Clooney, the programme envisages the farmers there will become part of Nespresso’s network of 60,000 smallholder suppliers around the world.
“Only 1-2 per cent of the world’s coffee meets the standards of the beans we need. We want to make sure that we get those supplies,” says Mr Duvoisin.
Other big coffee sellers such as Starbucks and Keurig Green Mountain are also providing assistance to growers, while large cocoa traders and chocolate companies this year agreed to collaborate on social welfare and farming aid initiatives for cocoa farmers in west Africa. In May, 12 companies, including Olam, Cargill, Mondelez, and Mars, announced they would align their individual social aid programmes and co-ordinate their efforts.
Meanwhile Sweden’s Hennes & Mauritz is investing in cotton farmers with Dutch NGO Solidaridad to ensure supplies of environmentally sound high quality cotton at a time when demand for food could lure growers away from cultivating the fibre.
Ray Jordan, chief executive of Self Help Africa, which helps farming communities negotiate with international businesses, says the companies’ willingness to engage with local farmers has grown over the past five years.
“Maybe before it was lip service about corporate social responsibility, but the reality is that the needs of the big international companies and small agricultural operations are converging.”
Adriana Mejia, European director of Colombia’s National Federation of Coffee Growers, says that businesses’ environmental and aid plans are under increasing scrutiny.
“You have the NGOs asking questions, and we, as a growers’ federation, also want to see impact,” she says. “If you’re saying you are transforming the lives of producers we want to see how that is being done.”
Some companies also regard the smallholder growers in developing countries as an important future customer base.
SABMiller, the brewer, for example, sees its production of cassava and sorghum beers for certain African markets as a way to boost smallholders as well as accessing new markets.
Mark Bowman, head of SABMiller’s African operations, says sourcing from smallholders leads to “local economic growth and empowerment, stability of supply and, ultimately, the ability to offer our beers to a wider low-income consumer base”.
For Nespresso, greater engagement with the growers can improve the relationship between the product and the customer, says Mr Duvoisin. By getting close to the farmers, Nespresso says it can relay to customers the conditions the beans were grown under, including the soil and the climate.
“The different stories we can tell of what is in their cup creates a strong link between the producer and the consumer,” says Mr Duvoisin.

>>> ASOS said to be eyed by Amazon and eBay; investor Bestseller rumoured to hav

ASOS said to be eyed by Amazon and eBay; investor Bestseller rumoured to have been approached

The share price of ASOS, the online fashion retailer, leapt 7.6% yesterday amid rumours of an approximately GBP 50 (USD 83)-per-share takeover bid, The Daily Mail reported. The market report said dealer chatter suggested Bestseller, a family owned Denmark-based clothing company, had been contacted by a North American group regarding the potential sale of its 27.4% stake.

The e-commerce giants Amazon, based in Seattle, Washington, and San Jose, California-headquartered eBay are thought to be interested in ASOS, the report said, noting that both are keen to expand their clothing offerings. A Daily Express market report which also named the two US prospective bidders said Bestseller might be interested in making an offer itself.

The Mail item reported that Nick Robertson, chief executive and founder of ASOS, is believed to be engaged in divorce proceedings with his estranged wife Janine and may be tempted to listen to highly priced bid offers, the report said. It stated that he is believed to have a fortune worth more than GBP 440m and owns 9.3% of ASOS.

A Times market report mentioned rumours that Robertson could be close to disposing of part, if not all, of his holding.

ASOS shares ended the day’s trading at 2348p yesterday, 26 August, the report said, noting that the share price hit a 7195p high five months ago. The company has a GBP 1.96bn market cap.




Source Daily Mail, Daily Express, The Times

>>> EuroStoxx 600 changes

*PORTUGAL TELECOM, SOFTWARE AG TO BE DELETED FROM STOXX 600
*WINCOR NIXDORF, TOD’S TO BE DELETED FROM STOXX 600
*POLYMETAL INTL, LONMIN, CGG, EBRO FOODS TO LEAVE STOXX 600
*EUROFINS SCIENTIFIC, GAMESA, BPOST TO JOIN STOXX 600
*EUROBANK ERGASIAS, ISS, ABENGOA TO JOIN STOXX EUROPE 600 INDEX

(MergerMarket) Fosun won't rule out Club Med return, to retain its stake

Fosun won't rule out Club Med return, to retain its stake - executives
 
Fosun International Limited, will keep a close watch on France's Club Mediterranee [EPA CU], and does not rule out the possibility of coming back to the fray, Vice Chairman Liang Xinjun said.

"The withdrawal of our first tender offer to take over Club Med doesn't mean we have given up on Club Med," Chairman Guo Guangchang added. Fosun will also retain its stake in Club Med, he said, even as reports state that Ardian, its French partner for its failed bid, will accept rival bidder Andrea Bonomi's takeover offer.

Fosun and Ardian announced last 14 August that they have withdrawn their USD 746m offer for Club Med, after French regulators allowed the USD 1bn rival bid. Fosun and Ardian each have 9% in Club Med. 

Given its relationship with Club Med and the resort chain's robust growth in China, Fosun is confident that Club Med could develop even further under the umbrella of Fosun Group, Liang said. 

Bonomi's Investindustrial has offered EUR 21 (USD 28.14) a share for all the shares of Club Med, while Fosun and Ardian, through their joint venture Gaillon Invest, had offered EUR 17.50 euros each.

Fosun and Ardian did not rule out "exploring any potential options which would serve Fosun's and Club Med's best interests," Fosun said in a filing to the Hong Kong Stock Exchange on 14 August.

by Ling Ya

>>> Asian Update

Asian Market Update: Fonterra reaches partnership in China; Putin, Poroshenko commit to political process


***Economic Data***
- (AU) AUSTRALIA Q2 CONSTRUCTION WORK DONE Q/Q: -1.2% V -0.5%E (largest decline in 5 quarters)
- (NZ) NEW ZEALAND JULY FOOD PRICES M/M: -0.7% V +1.4% PRIOR (first decline in 4 months)
- (KR) SOUTH KOREA AUG CONSUMER CONFIDENCE: 107 V 105 PRIOR

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.1%, S&P/ASX +0.2%, Kospi +0.4%, Shanghai Composite flat, Hang Seng flat, Sept S&P500 flat at 1,999

***Commodities/Fixed Income/Currencies***
- Dec gold flat at $1,284, Oct crude oil flat at $93.89/brl, Sept Copper flat at $3.18/lb
- (US) API PETROLEUM INVENTORIES: CRUDE: -1.3M v -1Me, GASOLINE: -3.2M v -1Me, DISTILLATE: +2.4M v -0.5Me
- (JP) BOJ offers to buy ¥400B in 5-10yr JGB, ¥100B in 10-25yr JGB and ¥30B in JGB with maturity over 25-yr
- (AU) Australia MoF (AOFM) sells A$600M in 3.25% 2029 Bonds; avg yield: 3.7184%; bid-to-cover: 3.46x

***Market Focal Points/Key Themes***
- NZD has clawed back some of the recent losses, rising about 30pips above $0.8360 after dairy cooperative Fonterra launched a partnership with the leading Chinese infant food manufacturer Beingmate. Fonterra also affirmed its FY14/15 payout of NZ$6/kg after the announcement, just as expectations were starting to build that it may have to lower the payout forecast once again. Separately, New Zealand July food prices fell m/m for the first time in 4 months.

- In China, local press speculated the top four banks have accelerated their lending in the past week relative to a rather subdued loans volume in the first half of the month. Recall this follows a very disappointing new yuan loans report for July. Banks were said to be increasingly concerned with rising NPL levels. Among notable earnings, China Telecom posted an over 10% increase in net profit as the growth in 3G subscribers accelerated. Earlier, Haier Electronics reported a 10% topline growth but shares fell 2% due to a 70bp gross margin contraction.

- After initial speculation that bilateral Putin-Poroshenko talks in Minsk could fall apart, the two leaders finally held a brief round of talks. Both spoke in favor of promoting peace in the East. Putin added the recently detained Russian soldiers were actually only patrolling the border, while Poroshenko promised to work on an urgent ceasefire plan.

***Equities***
US markets:
- TUBE: Reports Q2 $0.01 adj v -$0.15e, R$28.7M v $24.0Me (2 est); +33.4% afterhours
- ARUN: Reports Q4 $0.24 v $0.23e, R$203M v $195Me; cutting workforce by 4% (66 employees) as part of cost optimization plan; +4.2% afterhours
- ADI: Reports Q3 $0.63 v $0.63e, R$722.4M v $716Me; -0.4% afterhours
- TIVO: Reports Q2 $0.08 v $0.07e, R$111M v $106Me; Approves $350M buyback program (22% of market cap); -1.8% afterhours
- SWHC: Reports Q1 $0.26 v $0.25e, R$131.9M v $134Me; cuts FY15 guidance on high inventories; -11.2% afterhours

Notable movers by sector:
- Consumer Discretionary: Guangzhou Automobile Group 2238.HK -3.5% (H1 results)
- Financials: Haitong Securities 6837.HK +0.8% (H1 results); New China Life 1336.HK +1.4% (H1 results); Steadfast Group SDF.AU +11.9% (FY14 results)
- Materials: St Barbara SBM.AU +2.5% (FY14 results)
- Industrials: Hafei Aviation Industry 600038.CN +2.7% (H1 results); United Co. RUSAL 486.HK -1.0% (Q2 results); Worley Parsons WOR.AU +3.4% (FY14 results); Austal ASB.AU +9.1% (FY14 results); Boral BLD.AU +4.5% (FY14 results)

(BN) Telefonica Faceoff in Brazil Portends GVT Bidding War: Real M&A


Telefonica Faceoff in Brazil Portends GVT Bidding War: Real M&A
2014-08-26 22:21:20.259 GMT


(For a Real M&A column news alert: {SALT REALMNA <GO>}.)

By Rodrigo Orihuela and Daniele Lepido
Aug. 27 (Bloomberg) -- The chance to gain control of one of
Brazil’s fastest-growing Internet providers has former European
phone allies Telefonica SA and Telecom Italia SpA preparing for
a bidding war.
Madrid-based Telefonica’s lower debt burden relative to
profit, higher credit rating, and larger market value may give
it more financial flexibility than Telecom Italia as it looks to
purchase Vivendi SA’s Brazilian broadband unit GVT. Telefonica,
which this month offered 6.7 billion euros ($8.8 billion) for
GVT, is now considering an even higher bid before a potential
counterproposal from Milan-based Telecom Italia, according to a
person with knowledge of the matter.
“It will be Telecom Italia that will have to give up if
Telefonica is aggressive enough to increase the bid,” Erhan
Gurses, an analyst at Bloomberg Intelligence, said in a phone
interview. Telecom Italia “has a really high debt level so
obviously they want to have a stock-based offer to avoid raising
so much debt.”
Telecom Italia is preparing a counterbid valued at as much
as 7 billion euros to merge GVT with Tim Participacoes SA, its
Brazilian division, people with knowledge of the plan said last
week. Telecom Italia’s board is scheduled to discuss its GVT bid
today.
Telefonica and Telecom Italia, which joined forces seven
years ago and have since grown estranged amid a management
fallout, are vying for GVT to strengthen their positions in one
of their biggest markets amid flagging revenue at home.
Telefonica’s improved offer could potentially value GVT at as
much as 8 billion euros, representing a premium to the average
profit multiple paid in comparable deals in the past five years,
according to data compiled by Bloomberg Intelligence.

‘Valuable Player’

“GVT is a valuable player,” said Cyrus Mewawalla,
director of research at London-based CM Research. “It offers
broadband, cable television and telephone services,” helping an
acquirer gain scale in a number of related markets.
Telefonica may present a revised bid for GVT ahead of
Vivendi’s scheduled board meeting tomorrow, said the person with
knowledge of the matter, asking not to be identified because the
deliberations are confidential. No final decision has been made,
and Telefonica’s board could decide to stick with its current
offer, the person said.
Representatives for Telefonica, Telecom Italia and Paris-
based Vivendi declined to comment.
Telefonica has an indirect stake in Telecom Italia through
its holdings in Telco SpA. The investment vehicle was formed in
2007 to take a stake in Telecom Italia, thwarting a takeover bid
from AT&T Inc. and Carlos Slim’s America Movil SAB.

GVT Bid

Telefonica, which has spent billions since 2000 in Latin
America, approached GVT in 2009 and lost out to Vivendi. This
month, it offered the French company 6.7 billion euros, mostly
cash, in a proposal to combine Telefonica’s Brazilian unit with
GVT.
Vivendi said on Aug. 5, after Telefonica’s bid, that none
of its units are for sale, though its board would consider
Telefonica’s offer.
The Spanish carrier’s offer followed an attempt to split
Telecom Italia’s Tim between three operators to address
regulatory concerns stemming from its stake in the Italian
carrier. Brazil’s antitrust watchdog has ordered Telefonica to
resolve the conflict of interest, either by reducing its own
local holdings, including through a sale of its Telecom Italia
stake, or by persuading Telecom Italia to divest its own
operations there.

Stage Set

While Telefonica pressured Telecom Italia to consider the
latter option, Chief Executive Officer Marco Patuano prefers to
keep Tim and expand it by combining with GVT, people familiar
with the matter said in May. Now the stage is set for the two
companies to go head to head in the quest for control of GVT.
As part of its GVT bid, Telefonica offered Vivendi a right
to buy a stake of about 8 percent in Telecom Italia, which would
bring Telefonica’s holding in the company close to zero.
Telecom Italia and Vivendi also have an indirect link,
through Vivendi Chairman Vincent Bollore. The magnate also heads
France’s Bollore Group, a stakeholder in Mediobanca SpA, which
in turn is one of the four partners in Telecom Italia’s largest
investor group Telco.

Debt Load

Telecom Italia’s 3.56 ratio of net debt to earnings before
interest, taxes, depreciation and amortization is the highest
among Western European peers with a market value greater than
$10 billion. Telefonica by contrast has a leverage ratio of
about 2.6 and is assigned a credit rating of Baa2 by Moody’s
Investors Service, two levels above Telecom Italia at Ba1.
Given its debt level, Telecom Italia will be pushed to
finance an offer with its own stock, while Telefonica has cash
available to pay for the deal, according to Daniel Isidori, a
fund manager at Threadneedle Asset Management Ltd.
“I think that what will happen is that Telefonica will
look at Telecom Italia’s balance sheet and based on that decide
how much to offer,” Isidori said in a phone interview. Isidori
said the fund doesn’t currently hold Brazilian phone operators.
Acquiring GVT would offer Telefonica a larger stake in the
fixed-line broadband market in Brazil and strengthen its ability
to compete with America Movil and Oi SA in so called bundle
packages -- subscription packages that include fixed- and
mobile-phone, pay-TV and Internet.

Other Bidders

GVT also could attract interest from AT&T after the U.S.
carrier agreed to acquire DirecTV in May, Deutsche Bank AG
analysts said in a note in May. DirecTV has more than 5 million
pay-TV subscribers in Brazil.
Even as the Brazilian broadband market booms, competition
there is also intensifying, meaning an acquirer paying too much
will fail to earn a return for the investment. Seeking a deal in
Brazil through a bidding war is part of an aggressive strategy
that may not be in investors’ best interests, said Daniel
Lacalle, a senior portfolio manager at Ecofin Ltd.
“Sometimes companies become obsessed with being present in
a market just to position themselves and grab income,” Lacalle
said in a phone interview from London. “This can be risky.”
Still, a Telefonica acquisition would shield it from
renewed competition with Telecom Italia, which doesn’t have a
broadband presence in the sector currently even though it is the
second-largest mobile-phone operator in Brazil.
“Brazil offers growth perspectives, it’s an emerging
market,” said Gurses of Bloomberg Intelligence. “If the market
moves to convergence, whereby you sell products in bundles, then
this will be bad” for Telecom Italia.

For Related News and Information:
Telefonica Board Said to Discuss Improving GVT Offer This Week
NSN NAX2QI6S9729 <GO>
Telefonica Offers $9 Billion for Vivendi Brazilian Unit GVT
NSN N9UCSF6TTDSH <GO>
Telecom Italia Said to Prepare GVT Bid of Up to $9.4 Billion
NSN NAIUIL6S972D <GO>
Goldman, Credit Suisse Said to Work With GVT on Sale Process
NSN NAEUZY6K50XS <GO>
Brazil deal news: TNI BRAZIL MNA <GO>
Top deal news: DTOP <GO>
Real M&A columns: NI REALMNA <GO>

--With assistance from Manuel Baigorri in London and Brooke
Sutherland in New York.

To contact the reporters on this story:
Rodrigo Orihuela in Madrid at +34-91-700-9647 or
rorihuela@bloomberg.net;
Daniele Lepido in Milan at +39-02-8064-4266 or
dlepido1@bloomberg.net
To contact the editors responsible for this story:
Kenneth Wong at +49-30-70010-6215 or
kwong11@bloomberg.net;
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Beth Williams