TheChek News Flow

CEO: Will continue to look for acquisitions to expand; have the ability to make a "sizable" deal if they right company is available

--> Croda ?

VOLKSWAGEN/FIAT RUMOURS: DOES IT MAKE SENSE? YES! BUT THERE ARE SOME OBSTACLES

(PERSONAL VIEW): Acc to Manager Magazin, VOW and F owners would be exploring a

possible takeover deal. We believe the main (obvious) reason for such a deal

would be for VOW to (finally) become a real player in the US market.

Furthermore, VOW made no secret of its interest in Alfa Romeo (90k cars p.a

only). As per the Fiat brand, one could think at first glance that there's a

big overlap with VOW's brands and that a combination makes little strategic

sense... it's actually not true, Fiat sales are mostly focused on small cars

such as Fiat Panda or Fiat 500, with little overlap with VOW's cars.

What would be the obstacles ?

i) VOW is currently working on the simplification of its brands... such a deal

would add 5 to 6 brands to its portfolio, not easy to manage

ii) Brazil: VOW and F are the 2 main players in this market with 20% market

share each: big antitrust issues to manage

The Volkswagen Group is facing the next big coup. On major shareholder level talks on a takeover by Fiat are already taking place. In an integration of Chrysler, Volkswagen sees a possible solution for their own U.S. problems.

Hamburg - The Volkswagen Group explores the chances of a takeover or partial takeover of the Italian-American competitors Fiat Chrysler. Volkswagen's major shareholders, Ferdinand Piëch, the families Elkann and Fiat Agnelli as principal owner and their negotiators had already led to various discussions, the manager magazine reported in its latest cover story (Release Date: Friday, July 18).

Fiat Chrysler had completely taken over in January. Volkswagen has big problems , VW models to successfully market in the USA. The group's top hope for from a Chrysler takeover a solution of VW's problems in North America. So much to gain, among other things, of Chrysler's close-meshed network of dealers as well as the successful SUVs and pick-ups of Americans VW.

However, an agreement still stood against various obstacles, says group circles.Thus, the price expectations have been even much apart, and Fiat CEO Sergio Marchionne pursuing parallel other strategic options. In addition, the Volkswagen-tip after considering the purchases of Scania and MAN medium term acquisitions of other truck manufacturers. Everything, however, was hardly the same time affordable, top managers report.

settlement has weighed on other French banks, notably SocGen. Not all banks may

be equally at risk. AQR-related concerns may also be rising; risks are manageable.

With French banks trading at 0.8x 2015E P/TBV for a c11%+ sustainable RoTE,

recent weakness represents an attractive buying opportunity. SocGen remains our

preferred bank trading at 0.7x 2015E TBV for 11-12% sustainable RoTE with

improving returns supported by provisioning normalisation as well as operational

gearing.

* French Retail Remains Cash Cow — Margins remain under pressure impacted by

low rate environment although partly offset by improving deposit mix, with further

25bps Livret A rate cut to 1.0% supportive for 2H14. At the same time, costs are

being managed while lower provisioning supporting high single-digit PBT growth.

SocGen best-positioned for provision ‘normalisation’ from 2013 levels of c60bps

* CIB Relative Resilience — French banks' corporate bias should allow for relative

FICC resilience. EUR-denominated issuance doubled in 2Q14 vs USDdenominated

up c14% yoy; disintermediation and improved periphery conditions are

at play. Although flow equity derivatives are likely to have been impacted by lower

volatility & activity, BNPP and SocGen's bias to structured products should hold

them in better stead

* International Retail 'J-Curve' — We would not rule out further AQR-related

coverage strengthening over 2Q-3Q14 although we expect manageable impact. For

example, SocGen's Romanian NPL coverage is already c70%. Beyond this, we

expect a significant provisioning 'normalisation' from International Retail which has

weighed disproportionately

The overall price increase of about 8 percent is aimed at tackling rising commodity costs, the company said on Tuesday.

The maker of Reese’s, Kit Kat and Ice Breakers candy expects 2014 sales growth to be at the lower end of its long-term target of 5 to 7 percent. It also expects diluted growth in adjusted earnings per share to be at the low end of its 9 to 11 percent target.

“Commodity spot prices for ingredients such as cocoa, dairy and nuts have increased meaningfully since the beginning of the year,” Hershey’s North America head Michele Buck said in a statement on Tuesday.

The price increases, which affect packaged candy and grocery products, would not have an effect on earnings until next year.

Customers who buy directly from the company will be able to buy at the pre-increase prices until Aug. 12.

Analysts said Hershey’s price increase announcement will likely trigger a flurry of similar announcements from rivals such as Nestle SA and Kraft Foods Group Inc. Price increases are often done quietly, analysts said.

Hershey last raised wholesale prices in 2011 by roughly 9.7 percent in the United States, a company spokesman said.

Hershey publicly announced price hikes in 2008 and 2011, said Erin Lash, senior equity analyst for Morningstar Inc. in Chicago.

“Usually it’s followed by their competitors announcing price increases as well,” Lash said.

Hershey owns the Cadbury license in the US but didn’t specify if its prices will be affected.

The cost of cocoa butter, a byproduct of the cocoa bean that gives chocolate its melt-in-the-mouth texture, has been high since late 2013. The cocoa butter ratio over the price of the bean now sits around 2.65 times, bringing the price above $8,200 per ton for nearby needs.

Some analysts said they see this as the main driver in the price hike.

The move also comes a year after cocoa futures started their meteoric march to near-three-year highs earlier this month as traders worried that demand would outpace supply from the world’s top-growing region of West Africa.

UBS’s decision to focus on wealth management paid off last year as the Swiss bank retained its position as the world leader in the sector and saw assets under management jump 15.4 per cent to $1.96tn.

The bank benefited from strong market conditions that drove growth across the sector. Overall the largest 25 wealth companies saw their assets grow 11 per cent on average, according to Scorpio Partnership, a wealth management-focused research group.

UBS did especially well because of its expanding emerging market client base, which accounted for a quarter of the £37bn of inflows it received last year.

Sebastian Dovey, managing partner at Scorpio, said: “UBS is a multi-onshore global private bank and its brand, franchise and business reach pays. Anecdotally in [the Asia Pacific region], most banks point to UBS as a machine that is collecting the most assets.”

UBS’s growth comes after Switzerland’s largest bank by most measures decided almost two years ago to refocus on its core wealth management business while cutting back its troubled fixed-income trading arm.

Bank of America, which sold its international wealth management operations to Swiss private bank Julius Baer two years ago, remained in second place after seeing its assets increase 12.5 per cent to $1.9tn.

“The rising tide in markets helps all institutions as their asset base will grow whether clients are satisfied or not,” Mr Dovey said.

The only wealth manager in the top 20 to have seen its assets fall was HSBC. The UK bank fell two places in the ranking to eighth after its assets shrank 4 per cent to $382bn.

The decline is largely because of HSBC’s decision to pull out of non-core markets, which analysts said has been triggered by its efforts to reduce risks from money laundering and tax evasion.

“They have shed a lot of assets as they want to know all their customers. They are de-risking the book,” said James Chappell, analyst at Berenberg.

HSBC has disposed of operations in Luxembourg, wound down its Irish private banking arm and took a writedown on the goodwill of its business in Monaco. This year, it also sold a $12.5bn portfolio of Swiss private banking assets to Liechtenstein’s LGT Group.

HSBC said the reshaping of the private bank was now “largely complete” and that the focus was shifting back to growth.

Mr Dovey said there was scope for higher growth levels across the sector in 2014. Scorpio estimates that wealth managers have only penetrated 40 per cent of the total available opportunities. Roughly 60 per cent of potential wealth assets still sat with retail banks and asset managers, Mr Dovey estimated.

Although the average cost to income ratio across the largest 25 wealth groups increased 3 per cent year on year to 83 per cent, profits were up 2 per cent.

Costs have increased in part because of new regulation, as well as consistently high salaries for private bankers, according to Mr Dovey.

“It is an open question [as to whether there are] too many private bankers for the scale of these businesses,” he said.

Founded by Shervin Pishevar, a former managing director of Menlo Ventures, and Scott Stanford, a former managing director of Goldman Sachs, Sherpa, in many ways, is representative of a new class of boutique firms: young, city-based, and striving to differentiate themselves from earlier generations.

Located in the heart of San Francisco’s downtown — many miles from the famed Sand Hill Road where many venture firms reside — Sherpa’s office of roughly a dozen employees is filled with plush Herman Miller chairs and black-and-white murals by local artists.

Mr. Pishevar is an Iranian immigrant and former tech entrepreneur who regularly hobnobs with the elite of Washington D.C. and Hollywood. Meanwhile, Mr. Stanford, who helped lead Goldman’s investments in Facebook FB +0.74% and Uber, is part of a new wave of bankers turned techies. One of Sherpa’s anchor investors is TPG, a private equity firm that like several of its peers has recently become very active in venture investments, having led Uber’s funding round last year.

The co-founders bristle if you call SherpaVentures “another venture capital firm” — they call it an investment firm that is more akin to a concierge for entrepreneurs. Half of the group is an investment vehicle, SherpaVentures, and the other half is SherpaFoundry, a vehicle to incubate new companies and to connect their portfolio companies with larger, often public, companies.

“We felt like there was an opportunity to create a guild-like model,” says Stanford. “It’s our name. We like to be in the background making magic happen–hauling the bags up the mountain, enabling great success, the ones behind the camera at the summit.”

In its bid to be different, Sherpa is also part of a larger trend transforming venture-capital firms into full-service auto body shops. Many, including some of the largest such as Andreessen Horowitz and Google Ventures, now employ several specialists, such as designers and brand marketers, to help portfolio companies. It’s a way to do more than throw money at a startup– and more importantly, a way to stand out in a crowded field where even individual investors, through sites like AngelList, can write multi-million dollar checks.

Sherpa’s network of contacts is essentially made up of the Rolodexes of Stanford, Pishevar, and Tina Sharkey, the foundry’s CEO and a former Johnson & Johnson JNJ -1.03% executive. Through them, it is possible to meet celebrities like Ed Norton or Olivia Munn to test out your service (both of which, not coincidentally, are Uber shareholders) or get a call with lawmakers. The foundry, meanwhile, exists, in part to help broker partnerships with big brands, according to Sharkey.

Sherpa’s model is heavily influenced by its co-founders’ most prominent investment: Uber.

Mr. Pishevar, through Menlo Ventures, led Uber’s Series B round of funding in 2011, which also included Goldman Sachs, led by Mr. Stanford. Separately, the men both assisted Uber with projects ranging from small to strange, from helping to recruit top executives to bringing in influential investors. Mr. Pishevar, for example, brought in a cadre of celebrity investors in the Series B round, including Mr. Norton, Ms. Munn, the musician Jay-Z, and actor Will Smith. In 2012, the two met in person at the All Things Digital conference, a conference formerly run by the Wall Street Journal. A year later, they decided to start Sherpa in the hopes that they could replicate their success with Uber with other companies.

The pair often speak of tasks in Uber-language. In discussing a job opening at one of their startups, Mr. Pishevar says they need a “Ryan Graves of Uber,” an executive at Uber who didn’t know anything about the market when he started but learned quick and is now the company’s head of operations.

So far, Sherpa’s portfolio includes Munchery, a food delivery startup (Uber for food), Shyp (Uber for shipping), and Storehouse (a visual blogging platform).

In terms of thesis, Sherpa is looking in the consumer space and is stage agnostic – which means it could make a big investment at a later stage if the company was compelling. Asked whether Sherpa’s broad mandate and willingness to invest in at big valuations could lead to Sherpa overpaying for startups, Mr. Pishevar says he is impervious to such a notion.

“When I did the Uber deal at $290 million (valuation), I got a lot of that kind of feedback – we’ve seen how that worked out,” he says, referring to Uber’s latest $18.2 billion valuation.

Meggitt refused to comment on talk that listed Hartford, Connecticut-based rival United Technologies was mulling an offer for listed UK-based aerospace engineering company, the Financial Times reported. The newspaper’s market report quoted Meggitt, which said it never comments on what the company descried as “market speculation.”

A market report in The Daily Mail yesterday, 16 July, mentioned gossip that United Technologies could pitch an offer valuing Meggitt’s shares at 625p, valuing the company at GBP 5bn (EUR 6.33bn).

A market report in The Times noted that some people doubted the bid rumour. Some sceptics said the UK Takeover Panel would have forced Meggitt to issue a statement if there was any substance to the speculation, according to the report.

The doubters attributed Meggit’s share price rise yesterday to a substantial short position in the company. In excess of 15m Meggitt shares have been loaned to short investors who were betting that the company’s share price would fall, the item said. Closing out the short positions would drive Meggitt’s share price up, the item added. Most of the other speculative buyers had not held Meggitt shares before the bid rumour began circulating, according to the report.

Meggitt’s share price closed 46.9p up at 537p in London yesterday, giving the company a market capitalisation of GBP 4.32bn.

Source Financial Times, Daily Mail, The Times