After Hours Summary: BV +9.5%, GWRE +4.0%, MCHP +2.9%, ASNA +0.8%, BOBE -4.3%, OVTI -3.9% following earnings/guidance
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings: BV +9.5%, GWRE +4.0%, MCHP +2.9%, ASNA +0.8%
Companies trading higher in after hours in reaction to news: TCCO +18.5% (announced a $3.3 mln contract from the Government of Egypt for the company's DSD 72A-SP military bulk encryption systems, training and support), WPRT +6.4% (announced that it has acquired Netherlands based Prins Autogassystemen Holding B.V. for~$15.1 mln), IDRA +3.9% (announced new preclinical data: IMO-2055 and ipilimumab demonstrated potent and systemic anti-tumor activity in multiple preclinical cancer models), OFG +3.0% (to replace THS in the S&P SmallCap 600), IPGP +2.9% (to replace CPWR in the S&P MidCap 400), THS +1.3% (to replace CNVR in the S&P MidCap 400), POT +1.3% (Bloomberg reporting that co is conducting strategic review of equity investments worth ~$4.5 bln), WPX +1.2% (signed an agreement to sell oil and gas assets including ~46,700 net acres in northeast Pennsylvania to Southwestern Energy (SWN) for ~$300 mln)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings: BOBE -4.3%, OVTI -3.9%, OKE -0.3%
Companies trading lower in after hours in reaction to news: PBYI -17.8% (updated timeline of filing of NDA for the approval of PB272 (neratinib); intends to delay its proposed timeline for filing the NDA until the first quarter of 2016), MPLX -4.0% (announced public offering of 3 mln common units representing limited partner interests), CDW -3.5% (announced commencement of public offering by selling stockholders)
Oil’s Tumble Set to Make Tullow Takeover Talk Reality: Real M&A
2014-12-03 00:06:19.216 GMT
(For a Real M&A column news alert: {SALT REALMNA <GO>}.)
By Brooke Sutherland, Dinesh Nair and Matthew Campbell
Dec. 3 (Bloomberg) -- After almost a decade of deal
speculation, Tullow Oil Plc may finally be ripe for a takeover.
The plunge in oil prices has erased more than half of
Tullow’s market value since June. Management is now concerned
the $6 billion company could be vulnerable to an approach by a
larger oil and gas producer, according to people familiar with
the matter. Tullow’s shareholder roster has also changed. U.S.
funds that would probably be more receptive to a sale have taken
on a greater proportion of the stock, one of the people said.
The London-based explorer is responsible for some of
Africa’s largest oil discoveries, giving it enough production
potential to entice megabuyers. Total SA, Cnooc Ltd. and Exxon
Mobil Corp. would be among logical bidders since they’ve
expressed interest in African assets before, said Bank of
Montreal. And a buyer wouldn’t have to contend with obstacles
such as a poison pill or dual-class stock structure, according
to BMO.
Tullow offers “a significant operating position that would
not look out of place in the portfolio of a larger company,”
said David Mirzai, a London-based analyst at Societe Generale.
Tullow’s drop and the decline in oil prices
“would certainly make it a lot easier to win the investor base
around than in previous years.”
George Cazenove, head of media relations at Tullow,
declined to comment. Representatives for French producer Total
and Cnooc, China’s biggest offshore oil and gas producer,
didn’t respond to requests for comment. A representative for
Irving, Texas-based Exxon declined to comment.
Oil Frontiers
Tullow has been the subject of takeover speculation since
at least 2006. The company leapfrogged its peers with billions
of barrels of oil discoveries in African frontiers including
Ghana and Uganda.
“Ghana and Kenya and Uganda offer a big company material
production and enough reserves for it to move the needle,”
Brendan Warn, a London-based analyst at BMO, said in a phone
interview. “There’s a pretty low-risk upside. The oil in place
is there. You’ve just got to get the recovery, to get the oil
out of the ground.”
The company’s best takeover defense these past eight years
has been its lofty valuation. That may not be as strong of a
shield today.
Market Concern
Oil has slumped more than 30 percent since peaking in June,
dropping below $70 a barrel in recent days, as the U.S. pumps
oil at the fastest rate in three decades and global demand
growth slows. The Organization of Petroleum Exporting Countries’
failure to cut its production target last week has some
speculating crude could sink a lot lower.
With oil in freefall, investors have punished the stocks of
producers, particularly those such as Tullow that have sizeable
debt burdens and projects that are going to require more
funding. The company has lost about $7.5 billion in market
capitalization since oil prices peaked this year and is now
valued at just a quarter of its $23 billion high in 2012.
Tullow’s $3.1 billion in debt is 5.2 times its earnings
before interest, taxes, depreciation and amortization in the
past 12 months, according to data compiled by Bloomberg. That’s
a higher leverage ratio than 90 percent of peers, the data show.
That doesn’t mean the company is going to struggle to pay
its bills or needs to find a buyer, but “the share price
wouldn’t be where it was if the market wasn’t concerned,”
Stuart Amor, head of oil and gas research at RFC Ambrian Ltd. in
London, said in a phone interview.
‘Challenging Time’
Tullow last month said it will cut its exploration and
appraisal budget to $300 million from $1 billion amid what Chief
Executive Officer Aidan Heavey deemed a “challenging time for
the oil industry.”
The company’s own perception of its vulnerability stems in
part from the fact that it has assets that now need big-oil
development expertise and capital, and companies such as Total
and Royal Dutch Shell Plc are considering bulking up in Africa,
according to the people familiar with the matter, who asked not
to be identified because the information is private.
Even mining giant Glencore Plc could be a possible buyer.
“My left-field favorite is always Glencore,” Al Stanton,
an analyst at Royal Bank of Canada, said by phone. “They’ve got
a small oil business but they are a big company. They know how
to run big businesses.”
A representative for Baar, Switzerland-based Glencore said
the company doesn’t comment on speculation. The $66 billion
company in July bought Caracal Energy Inc. to take control of
oil and gas assets in Africa. Rio Tinto Group rebuffed a
Glencore merger offer earlier this year that would have created
the world’s largest miner.
Not Willing
Just because Tullow’s management feels vulnerable doesn’t
mean it would be a willing seller.
If CEO Heavey and his team think they can weather the
current weak environment, “the last thing they want to do is
roll over today,” Stanton said. “Tullow is no longer a darling
quite clearly but equally I don’t think it’s stumbling around
yet. I think there’s still a way to go before they are willing
to throw in the towel.”
It would probably take a bid of at least 700 pence or 800
pence a share, or as much as 7.3 billion pounds ($11.4 billion),
to get management to entertain a sale, said Warn of BMO. That
would be an 88 percent premium to the stock’s closing price
yesterday of 424.70 pence. The big oil producers will have to be
comfortable enough with the volatile commodity environment to
lay down that kind of cash, which may put a deal farther off, he
said.
No Obstacles
An $11 billion offer may not seem so steep considering that
the company was valued at twice that amount less than three
years ago. There’s little else standing in the way of a buyer
making an approach. Tullow doesn’t have a blocking shareholder,
poison pill or a dual-class structure, BMO’s Warn said.
Value-focused U.S. investors have been buying up Tullow
stock and would likely be receptive to an offer which makes
strategic sense, according to one of the people familiar with
the matter. Los Angeles-based Capital Group Cos., for example,
increased its Tullow stake this year to about 10 percent,
becoming the company’s biggest shareholder, data compiled by
Bloomberg show. A representative for Capital Group said the firm
doesn’t comment on individual holdings.
“A low oil-price environment is generally what stimulates
M&A,” Amor of RFC Ambrian said. “Tullow would like to stay
independent but it may not have the choice.”
For Related News and Information:
Oil at $40 Possible as Market Transforms Caracas to Tehran
Tullow Oil Cuts Exploration Budget to Focus on East Africa
OPEC Refusal Means Oil Industry’s Weakest Producers Left Behind
Oil Price Collapse Enables Buyers to Grab Top Targets: Real M&A
Tullow M&A News: TLW LN <EQUITY> TCNI MNA <GO>
Real M&A columns: NI REALMNA <GO>
Top deal news: DTOP <GO>
--With assistance from Will Kennedy in London.
To contact the reporters on this story:
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net;
Dinesh Nair in London at +44-20-3525-3212 or
dnair5@bloomberg.net;
Matthew Campbell in London at +44-20-3525-8684 or
mcampbell39@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net;
Aaron Kirchfeld at +44-20-3525-8830 or
akirchfeld@bloomberg.net
2014-12-03 00:06:19.216 GMT
(For a Real M&A column news alert: {SALT REALMNA <GO>}.)
By Brooke Sutherland, Dinesh Nair and Matthew Campbell
Dec. 3 (Bloomberg) -- After almost a decade of deal
speculation, Tullow Oil Plc may finally be ripe for a takeover.
The plunge in oil prices has erased more than half of
Tullow’s market value since June. Management is now concerned
the $6 billion company could be vulnerable to an approach by a
larger oil and gas producer, according to people familiar with
the matter. Tullow’s shareholder roster has also changed. U.S.
funds that would probably be more receptive to a sale have taken
on a greater proportion of the stock, one of the people said.
The London-based explorer is responsible for some of
Africa’s largest oil discoveries, giving it enough production
potential to entice megabuyers. Total SA, Cnooc Ltd. and Exxon
Mobil Corp. would be among logical bidders since they’ve
expressed interest in African assets before, said Bank of
Montreal. And a buyer wouldn’t have to contend with obstacles
such as a poison pill or dual-class stock structure, according
to BMO.
Tullow offers “a significant operating position that would
not look out of place in the portfolio of a larger company,”
said David Mirzai, a London-based analyst at Societe Generale.
Tullow’s drop and the decline in oil prices
“would certainly make it a lot easier to win the investor base
around than in previous years.”
George Cazenove, head of media relations at Tullow,
declined to comment. Representatives for French producer Total
and Cnooc, China’s biggest offshore oil and gas producer,
didn’t respond to requests for comment. A representative for
Irving, Texas-based Exxon declined to comment.
Oil Frontiers
Tullow has been the subject of takeover speculation since
at least 2006. The company leapfrogged its peers with billions
of barrels of oil discoveries in African frontiers including
Ghana and Uganda.
“Ghana and Kenya and Uganda offer a big company material
production and enough reserves for it to move the needle,”
Brendan Warn, a London-based analyst at BMO, said in a phone
interview. “There’s a pretty low-risk upside. The oil in place
is there. You’ve just got to get the recovery, to get the oil
out of the ground.”
The company’s best takeover defense these past eight years
has been its lofty valuation. That may not be as strong of a
shield today.
Market Concern
Oil has slumped more than 30 percent since peaking in June,
dropping below $70 a barrel in recent days, as the U.S. pumps
oil at the fastest rate in three decades and global demand
growth slows. The Organization of Petroleum Exporting Countries’
failure to cut its production target last week has some
speculating crude could sink a lot lower.
With oil in freefall, investors have punished the stocks of
producers, particularly those such as Tullow that have sizeable
debt burdens and projects that are going to require more
funding. The company has lost about $7.5 billion in market
capitalization since oil prices peaked this year and is now
valued at just a quarter of its $23 billion high in 2012.
Tullow’s $3.1 billion in debt is 5.2 times its earnings
before interest, taxes, depreciation and amortization in the
past 12 months, according to data compiled by Bloomberg. That’s
a higher leverage ratio than 90 percent of peers, the data show.
That doesn’t mean the company is going to struggle to pay
its bills or needs to find a buyer, but “the share price
wouldn’t be where it was if the market wasn’t concerned,”
Stuart Amor, head of oil and gas research at RFC Ambrian Ltd. in
London, said in a phone interview.
‘Challenging Time’
Tullow last month said it will cut its exploration and
appraisal budget to $300 million from $1 billion amid what Chief
Executive Officer Aidan Heavey deemed a “challenging time for
the oil industry.”
The company’s own perception of its vulnerability stems in
part from the fact that it has assets that now need big-oil
development expertise and capital, and companies such as Total
and Royal Dutch Shell Plc are considering bulking up in Africa,
according to the people familiar with the matter, who asked not
to be identified because the information is private.
Even mining giant Glencore Plc could be a possible buyer.
“My left-field favorite is always Glencore,” Al Stanton,
an analyst at Royal Bank of Canada, said by phone. “They’ve got
a small oil business but they are a big company. They know how
to run big businesses.”
A representative for Baar, Switzerland-based Glencore said
the company doesn’t comment on speculation. The $66 billion
company in July bought Caracal Energy Inc. to take control of
oil and gas assets in Africa. Rio Tinto Group rebuffed a
Glencore merger offer earlier this year that would have created
the world’s largest miner.
Not Willing
Just because Tullow’s management feels vulnerable doesn’t
mean it would be a willing seller.
If CEO Heavey and his team think they can weather the
current weak environment, “the last thing they want to do is
roll over today,” Stanton said. “Tullow is no longer a darling
quite clearly but equally I don’t think it’s stumbling around
yet. I think there’s still a way to go before they are willing
to throw in the towel.”
It would probably take a bid of at least 700 pence or 800
pence a share, or as much as 7.3 billion pounds ($11.4 billion),
to get management to entertain a sale, said Warn of BMO. That
would be an 88 percent premium to the stock’s closing price
yesterday of 424.70 pence. The big oil producers will have to be
comfortable enough with the volatile commodity environment to
lay down that kind of cash, which may put a deal farther off, he
said.
No Obstacles
An $11 billion offer may not seem so steep considering that
the company was valued at twice that amount less than three
years ago. There’s little else standing in the way of a buyer
making an approach. Tullow doesn’t have a blocking shareholder,
poison pill or a dual-class structure, BMO’s Warn said.
Value-focused U.S. investors have been buying up Tullow
stock and would likely be receptive to an offer which makes
strategic sense, according to one of the people familiar with
the matter. Los Angeles-based Capital Group Cos., for example,
increased its Tullow stake this year to about 10 percent,
becoming the company’s biggest shareholder, data compiled by
Bloomberg show. A representative for Capital Group said the firm
doesn’t comment on individual holdings.
“A low oil-price environment is generally what stimulates
M&A,” Amor of RFC Ambrian said. “Tullow would like to stay
independent but it may not have the choice.”
For Related News and Information:
Oil at $40 Possible as Market Transforms Caracas to Tehran
Tullow Oil Cuts Exploration Budget to Focus on East Africa
OPEC Refusal Means Oil Industry’s Weakest Producers Left Behind
Oil Price Collapse Enables Buyers to Grab Top Targets: Real M&A
Tullow M&A News: TLW LN <EQUITY> TCNI MNA <GO>
Real M&A columns: NI REALMNA <GO>
Top deal news: DTOP <GO>
--With assistance from Will Kennedy in London.
To contact the reporters on this story:
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net;
Dinesh Nair in London at +44-20-3525-3212 or
dnair5@bloomberg.net;
Matthew Campbell in London at +44-20-3525-8684 or
mcampbell39@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net;
Aaron Kirchfeld at +44-20-3525-8830 or
akirchfeld@bloomberg.net
Semiconductor Industry Association (SIA): Oct global semiconductor sales rose +9.6% y/y, +1.5% m/m, to $29.7B
Sales in the Americas increased 12.2 percent year-over-year in October, leading all regions
- SIA Pres: "Year-over-year global semiconductor sales increased for the eighteenth straight month in October, and the industry is well-positioned for a strong close to 201... Sales continue to be strong across the board, with nearly all regions and product categories exhibiting increases. We expect nearly double-digit growth in 2014, followed by moderate growth in 2015 and 2016."
Closing Market Summary: Small Caps Pace Broad Rebound
The stock market enjoyed a broad rebound on Tuesday after starting the week with a Monday retreat. The S&P 500 settled higher by 0.6% while the Russell 2000 (+1.2%) displayed relative strength. Despite today's outperformance, the small-cap index could only narrow its weekly decline to 0.4% while the S&P 500 reclaimed most of its loss from Monday.
The benchmark index spent the day in a steady advance with M&A news from this morning acting as a supportive factor. In the technology sector (+0.3%), Cypress Semiconductor (CY 11.92, +1.48) agreed to a $4 billion merger of equals with Spansion (CODE 27.86, +5.01) while health care component (+1.1%) Avanir Pharmaceuticals (AVNR 16.92, +1.92) agreed to be acquired by Otsuka Pharmaceuticals for $3.5 billion in cash. Also of note, insurer Aviva (AV 15.64, -0.09) announced its acquisition of Friends Life Group.
Outside of corporate deals, the Tuesday session was very quiet, but somewhat surprisingly, trading volume surpassed recent averages with 795 million shares changing hands at the NYSE.
Nine of ten sectors were able to register gains with energy (+1.3%) ending in the lead for the second day in a row. The sector spent the bulk of the session ahead of other groups even as crude oil fell 3.0% to $66.97/bbl. Dow components Chevron (CVX 114.02, +2.29) and ExxonMobil (XOM 94.19, +1.84) both gained near 2.0% while Royal Dutch Shell (RDS.A 69.30, +1.81) surged 2.7% amid press reports the company may be interested in acquiring BP (BP 40.72, +0.89).
Elsewhere, financials (+1.0%) and industrials (+0.8%) were the only other outperformers among cyclical sectors. The industrial space rallied behind transport stocks with their strength sending the Dow Jones Transportation Average higher by 1.2%.
Meanwhile on the countercyclical side, the health care sector (+1.1%) held a solid gain throughout the session with biotechnology providing support. The iShares Nasdaq Biotechnology ETF (IBB 306.87, +6.25) jumped 2.1% to a fresh record high. As for the remaining defensively-oriented groups, consumer staples (+0.4%) and telecom services (-1.8%) lagged while the utilities sector (+0.7%) ended just ahead of the broader market.
Treasuries finished on their lows with the 10-yr yield up five basis points at 2.29%.
Economic data was limited to the Construction Spending report for October, which increased 1.1% while the consensus expected an increase of 0.5%. The value of construction put in place increased 0.9%, which will be a positive factor in Q4 GDP computations.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the ADP Employment Change report for November will cross the wires at 8:15 ET (consensus 225K). Third quarter Productivity (consensus 2.4%) and Unit Labor Costs data (expected 0.0%) will be reported at 8:30 ET while the November ISM Services report (consensus 57.5) will be released at 10:00 ET. Also of note, the Federal Reserve will release its December Beige Book at 14:00 ET.
- Nasdaq Composite +13.9% YTD
- S&P 500 +11.8% YTD
- Dow Jones Industrial Average +7.9% YTD
- Russell 2000 +0.4% YTD
Said to have entered the bidding for Stuart Weitzman holdings - financial press - Coach also said to be interested
AUTO SALES WRAP: Nov. SAAR Tops Est.
2014-12-02 20:34:40.788 GMT
By Libby Sallaberry McGowan
Dec. 2 (Bloomberg) -- November U.S. SAAR was 17.2m,
Autodata says; est. 16.8m, average of 13 ests. compiled by
Bloomberg.
* RBC: Incentives “flattish” y/y, though down m/m
* JPMorgan: Ford’s softer F-Series performance not surprising
as co. prioritizes pricing; downtime at plants will
constrain capacity, inventory over next few qtrs
Big 3:
* Chrysler Nov. U.S. Sales Gain 20.1%, Beat Est.
* GM Nov. U.S. Sales Beat Est.; Sees Industry Nov. SAAR 17.1m
* Ford U.S. Light-Vehicle Nov. Sales Fell Less Than Est.
Big 3 Japan:
* Honda Motor U.S. Nov. Sales Up 4.6%, Est. Up 4.3%
* Toyota November U.S. Auto Sales Up 3%, Est. Up 2.1%
* Nissan U.S. Nov. Auto Sales Fell 3.1%, Less Than Est.
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Libby Sallaberry McGowan in New York at +1-212-617-8044 or
lsallaberry@bloomberg.net
To contact the editors responsible for this story:
Brad Skillman at +1-212-617-2763 or
bskillman1@bloomberg.net
Libby Sallaberry McGowan
2014-12-02 20:34:40.788 GMT
By Libby Sallaberry McGowan
Dec. 2 (Bloomberg) -- November U.S. SAAR was 17.2m,
Autodata says; est. 16.8m, average of 13 ests. compiled by
Bloomberg.
* RBC: Incentives “flattish” y/y, though down m/m
* JPMorgan: Ford’s softer F-Series performance not surprising
as co. prioritizes pricing; downtime at plants will
constrain capacity, inventory over next few qtrs
Big 3:
* Chrysler Nov. U.S. Sales Gain 20.1%, Beat Est.
* GM Nov. U.S. Sales Beat Est.; Sees Industry Nov. SAAR 17.1m
* Ford U.S. Light-Vehicle Nov. Sales Fell Less Than Est.
Big 3 Japan:
* Honda Motor U.S. Nov. Sales Up 4.6%, Est. Up 4.3%
* Toyota November U.S. Auto Sales Up 3%, Est. Up 2.1%
* Nissan U.S. Nov. Auto Sales Fell 3.1%, Less Than Est.
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Libby Sallaberry McGowan in New York at +1-212-617-8044 or
lsallaberry@bloomberg.net
To contact the editors responsible for this story:
Brad Skillman at +1-212-617-2763 or
bskillman1@bloomberg.net
Libby Sallaberry McGowan
Steve Schwarzman’s Blackstone Group said it would sell its US industrial platform IndCor Properties to affiliates of Singapore sovereign wealth fund GIC for $8.1 billion.
As a result of the deal, IndCor will no longer pursue an initial public offering filed in September, Blackstone said in a statement.
Reuters reported in November that GIC was leading a consortium to buy IndCor from Blackstone in a deal valued at about $8 billion including debt.
Chicago-based IndCor was formed in 2010 as a portfolio company of Blackstone. It owns about 117 million square feet of buildings in 29 markets, according to Bloomberg News, which said the deal enables Blackstone to exit a major investment at a profit as it invests a new series of property funds.
GIC has stepped up its real-estate purchases in recent months, buying office buildings in Tokyo and investing in Australian student accommodation as a way to diversify its portfolio and secure better yields.
GIC is estimated by the Sovereign Wealth Fund Institute to manage around $320 billion in assets. Real estate accounted for 7 percent of its portfolio in the financial year to April 1, according to its annual report.
The deal is expected to close in the first quarter of 2015. Eastdil Secured, a unit of Wells Fargo, Citigroup, Barclays and RBC Capital Markets acted as advisers to Blackstone.
Fed's Dudley (dove, FOMC voter): Hopeful Fed can raise interest rates in 2015; Sees US GDP around 2.5-3.0% through 2015
- Reasonably optimistic on economic outlook; Lower oil prices are a benefit.
- Fed is still falling short on jobs and inflation targets.
Aviva agrees £5bn takeover of Friends Life
Alistair Gray, David Oakley and Arash MassoudiAuthor alerts
The chief executive of Aviva has pledged to assimilate its takeover target Friends Life with “almost surgical precision” after the two FTSE 100 insurers agreed on the largest deal between UK companies in more than six years.
Leading institutional investors in both companies have signalled qualified support for the tie-up, which is set to result in hundreds of job losses as Aviva plans £225m of annual cost savings at the enlarged group within three years.
In a sign of the scale of the ambition of Mark Wilson, Aviva’s chief executive, people familiar with the matter said the insurer would eye an even larger transaction once the Friends Life acquisition had bedded down.
Based on Aviva’s share price on Tuesday, the all-stock bid values Friends Life – whose shareholders will own 26 per cent of the enlarged company – at 370p a share, or £5.2bn.
“The only concern is integration of technology and people, but that should not be insurmountable and is a problem that is faced by any company looking to merge,” said a fund manager at one of Friends Life’s largest ten shareholders.
Some bankers are predicting more deals in the sector as a series of regulatory changes put life assurers’ business models under pressure.
Friends Life’s prospects have been damaged by UK chancellor George Osborne’s pensions reforms, which have led to a sharp drop in sales of annuities – among the industry’s most lucrative products.
“The combined forces of Aviva and Friends will be better placed to tackle the problems in a shrinking market once buying an annuity becomes optional,” said a top 10 investor in Aviva.
The deal is set to net £220m for Clive Cowdery, founder of Friends Life, and his partners including John Tiner, the former Financial Services Authority chief. They hold a “value share” in the business, a private equity-style incentive structure.
Aviva is planning to cut more costs – totalling £1.8bn – than some analysts had expected.
However, Eamonn Flanagan, at Shore Capital, said he was disappointed about the timeframe to deliver them. He suggested the takeover may be a “camouflage for issues within [Aviva’s] own internal restructuring and turnround story”.
Integration costs are expected to total £350m, of which £200m will be incurred next year.
Aviva also said the acquisition would be “broadly neutral” to its operating earnings only “once full run-rate synergies are achieved”, which is not expected until the end of 2017.
Aviva to review external managers of Friends Life funds
Aviva will review management of Friends Life funds outsourced to Axa Investment Managers and Schroders when it takes over its fellow insurer, said Euan Munro, chief executive of Aviva’s asset management arm.
Read more
Mr Wilson would not be drawn on the number of job cuts. “It’s inevitable that when you put two organisations together, there may be some reduction in headcount. But we are going to talk to our people first,” he said.
Asked what the bidder’s shareholders made of the acquisition, Mr Wilson said: “Some people say it’s too cheap, some people say it’s too expensive. So I figure we’ve got it about right.”
Shares in Aviva closed little changed at 500p. They were supported by the separate disclosure that the insurance group plans to pay a final dividend for 2014 of 12.25p a share – 30 per cent higher than a year ago.
Friends Life shares rallied 3.9 per cent to 380.51p. Under the terms unveiled on Tuesday, its shareholders will receive a full-year dividend of 31.15p a share – 10p more than they had been in line for – if the deal goes ahead.
Andy Briggs, Friends Life’s group chief executive, will become chief executive of Aviva’s enlarged UK life business and join the Aviva board. He said he was “excited” by the tie-up, which “brings together complementary strengths”.
Sir Malcolm Williamson, Friends Life’s chairman, will become senior independent director.
Both sets of shareholders need to approve the deal, the biggest in UK insurance since the merger of CGU and Norwich Union in 2000, which created Aviva.
The combined group will have 16m UK customers – equivalent to about one in four households – and £340bn of assets under management.
Aviva was advised by Morgan Stanley, JPMorgan Cazenove and Robey Warshaw while Friends Life was advised by Goldman Sachs, Barclays and RBC Capital Markets.
French Documentary Says Gabrielle Chanel Was Nazi Spy
SECRET AGENT WOMAN: Gabrielle “Coco” Chanel worked as a Nazi spy during World War II, according to a documentary broadcast on French state television channel France 3 on Monday.
The program titled “L’ombre d’un doute” (“The Shadow of a Doubt” in English) examines the roles of French celebrities including Chanel, Maurice Chevalier and Edith Piaf during the Occupation.
It features a previously unseen declassified document from the French secret service showing that Chanel operated under the code name “Westminster” — a reference to her affair with the Duke of Westminster — and was registered as agent number F. 7124 with the German military intelligence organization Abwehr.
However, writer Yann Kerlan was quoted as saying that it would be wrong to portray Chanel as “the Mata Hari of the Third Reich,” saying she likely served as a contact officer for German officials.
The fashion house said in a statement the documentary did not present any new insights into the company’s founder.
“This report, even though it comes up with a document from the French archives, adds nothing new to what is already known on the subject and has been addressed by different biographers,” the company said.
“More than 70 works have been written about Gabrielle Chanel. Not all biographers agree, to say the least, which is proof that it is difficult to interpret history 70 years after the fact,” it added.
Chanel had an affair with Nazi spy Hanz Günther von Dincklage during the war, which almost certainly helped her secure the release of her nephew André Palasse in 1941, the TV documentary contended. “This obviously was not the best of times to have an affair with a German,” the Chanel company noted in its reaction to the broadcast.
The documentary also claims that the designer attempted to reclaim her perfume business from the Jewish Wertheimer family under Occupation-era laws that prohibited Jews from owning companies in France. This move failed, as the Wertheimers had pre-emptively sold the business to a non-Jewish associate who handed it back to them after the war.
Chanel’s role in a failed peace accord was also evoked.
“It seems that Gabrielle Chanel was able to communicate with [British Prime Minister Winston] Churchill and offered to act as an intermediary between the Allies and the Germans to help with a peace accord. The documentary confirms this version. What role did she want to play? Accounts differ,” the fashion house said.
“Some historians describe Mademoiselle Chanel as a rather naïve woman in the political field, easily manipulated by those close to her. Others see her as a top level spy, whereas, others see her as an intermediary attempting to negotiate a peace agreement. Although Mademoiselle Chanel was a visionary artist and a fashion innovator, her life has its grey areas and undeniably still some mystery today,” the company concluded.