>>> Lorillard to be acquired by Reynolds American for $68.88/shr in cash and sto


Lorillard to be acquired by Reynolds American for $68.88/shr in cash and stock; total deal valued at $27.4B; Reynolds to Sell Five Brands to Imperial Tobacco for $7.1B in cash 

Reynolds American and Lorillard have entered into a definitive agreement in which RAI has agreed to acquire Lorillard in a cash-and-stock transaction currently valued at $68.88 per Lorillard share, or a total of $27.4 billion, including the assumption of net debt. Under the terms of the transaction, which has been approved by the boards of directors of both companies, Lorillard shareholders will receive, for each Lorillard share, $50.50 in cash and 0.2909 of a share in RAI stock at closing, representing $68.88 per share based on RAI's closing share price yesterday. That represents a premium of 40.4% to the stock price on February 28th, the last trading day prior to initial media speculation around a possible transaction, and a premium of 12.6% to the stock price on July 2nd, prior to more recent news reports. 

Following the transaction, RAI is projected to have over $11 billion in revenues and approximately $5 billion in operating income, and its operating companies will have growth pillars across key industry categories: Newport, Camel, Pall Mall and Natural American Spirit in combustible cigarettes; Grizzly in smokeless tobacco; and VUSE in the growing e-cigarette market. 

RAI also announced today that it has reached an agreement with Imperial under which Imperial has agreed to purchase the KOOL, Salem, Winston, Maverick and blu eCigs brands and other assets and liabilities for a total consideration of $7.1 billion in cash. RAI expects to receive net cash proceeds of approximately $4.4 billion after taxes. The addition of these brands to Imperial's U.S. operations will more than triple its share of the U.S. cigarette market, position it for long-term success in traditional tobacco products and the growing e-cigarette category, and elevate it to the status of a major U.S. competitor for the first time. As part of the divestiture, Imperial will acquire certain assets owned by Lorillard including its manufacturing and R&D facilities in Greensboro, N.C., and approximately 2,900 employees, including a national sales force. The closing of the sale of these assets to Imperial is conditioned upon, among other things, RAI's completion of the acquisition of Lorillard. 

BAT, RAI's largest shareholder, has reiterated its strong confidence in the prospects of RAI and is fully supportive of, and has agreed to vote its shares in favor of, the transaction. As part of the transaction, BAT will maintain its 42 percent ownership in RAI through an investment of approximately $4.7 billion (based on RAI's closing share price of $60.16 as of July 2, 2014, the same share price used to determine the stock component of Lorillard shareholders' consideration). In addition, RAI and BAT have agreed in principle to pursue an ongoing technology-sharing initiative for the development and commercialization of next-generation tobacco products, including heat-not-burn cigarettes and vapor products. 

RAI expects the transaction to be accretive to earnings in the first full year, with strong double-digit accretion in the second year and beyond (on a percentage basis). RAI plans to maintain its current dividend policy until the transaction closes and is committed to a strong dividend policy thereafter, targeting a dividend payout ratio of 75 percent going forward. Lorillard will continue its existing dividend policy until the deal closes. RAI will generate significant cash flows and expects to maintain its investment grade credit rating following the transaction. RAI has secured fully-committed bridge financing and expects to issue permanent financing for the transaction.

>>> JPMorgan Chase beats by $0.16, beats on revs (56.29 )

JPMorgan Chase beats by $0.16, beats on revs (56.29 )
Reports Q2 (Jun) earnings of $1.46 per share, $0.16 better than the Capital IQ Consensus Estimate of $1.30; revenues fell 3.0% year/year to $24.45 bln vs the $23.67 bln consensus. Q2 results included as a significant item $500 million after-tax Firmwide legal expense ($0.13 per share after-tax decrease in earnings; $669 million pretax expense).

Consumer & Community Banking
  • Net income was $2.4 billion, a decrease of $646 million, or 21%, compared with the prior year, due to higher provision for credit losses and lower net revenue, partially offset by lower noninterest expense. Net revenue was $11.4 billion, a decrease of $584 million, or 5%, compared with the prior year. Net interest income was $7.0 billion, down $131 million, or 2%, driven by spread compression and lower mortgage warehouse balances, largely offset by higher deposit balances.
  • Return on equity was 19% on $51.0 billion of average allocated capital.
  • Auto originations were $7.1 billion, up 4% from the prior year and 6% from the prior quarter.
  • Mortgage originations were $16.8 billion, down 66% from the prior year and 1% from the prior quarter.
  • Consumer & Business Banking net income was $894 million, an increase of $196 million, or 28%, compared with the prior year, predominantly due to higher net revenue. Net revenue was $4.6 billion, up 7% compared with the prior year. Net interest income was $2.8 billion, up 6% compared with the prior year, driven by higher deposit balances, partially offset by deposit spread compression.
    • Deposit margin was 2.23%, compared with 2.31% in the prior year and 2.27% in the prior quarter.
  • Mortgage Banking net income was $709 million, a decrease of $433 million from the prior year, driven by lower net revenue and a lower benefit from the provision for credit losses, partially offset by lower noninterest expense. Net revenue was $2.3 billion, a decrease of $772 million compared with the prior year. Net interest income was $1.0 billion, a decrease of $125 million, or 11%, driven by lower warehouse balances as well as lower loan balances due to portfolio runoff.
    • Real Estate Portfolios pretax income was $626 million, down $540 million from the prior year, due to a lower benefit from the provision for credit losses and lower net revenue, partially offset by lower expense. Net revenue was $779 million, a decrease of $129 million, or 14%, from the prior year. This decrease was largely due to lower net interest income resulting from lower loan balances due to portfolio runoff.
  • Card, Merchant Services & Auto net income was $840 million, a decrease of $409 million, or 33%, compared with the prior year, driven by higher provision for credit losses, higher noninterest expense and lower net revenue. Net revenue was $4.6 billion, down $117 million, or 3%, compared with the prior year. Net interest income was $3.2 billion, down $162 million compared with the prior year, driven by spread compression....
Corporate & Investment Bank
  • Net income was $2.0 billion, down 31% compared with $2.8 billion in the prior year. These results primarily reflected lower revenue, as well as higher noninterest expense. Net revenue was $9.0 billion compared with $9.9 billion in the prior year. Excluding the impact of a DVA gain of $355 million in the prior year, net revenue was down 6% from $9.5 billion, and net income was down 25% from $2.6 billion.
  • Banking revenue was $3.1 billion, down 2% from the prior year.
  • Investment banking fees were $1.8 billion, up 3% from the prior year. The increase was driven by higher advisory fees of $397 million, up 31% from the prior year on strong wallet share of completed transactions, as well as higher equity underwriting fees of $477 million, up 4% from the prior year. These were partially offset by lower debt underwriting fees of $899 million, down 6% from a strong prior year.
  • Treasury Services revenue was $1.0 billion, down 4% compared with the prior year driven by lower trade finance revenue as well as the impact of business simplification initiatives.
  • Lending revenue was $297 million, down from $373 million in the prior year primarily due to lower net interest income.
  • Markets & Investor Services revenue was $5.9 billion, down 12% from the prior year.
  • Fixed Income Markets revenue of $3.5 billion was down 15% from the prior year on historically low levels of volatility and lower client activity across products.
    • Equity Markets revenue of $1.2 billion was down 10% compared with the prior year, primarily on lower derivatives revenue.
    • Securities Services revenue was $1.1 billion, up 5% from the prior year primarily driven by higher net interest income on increased deposits.
    • Return on equity was 13% on $61.0 billion of average allocated capital....
Other metrics of note:
  • Fortress balance sheet maintained Common Equity Tier of $161 billion, or ratio of 9.8%; Supplementary Leverage Ratio ("SLR") of 5.4%.
  • Tangible Book Value $43.17 compared to A.73 in Q1;Book Value $55.53 compared to $54.05 in Q1.
  • Return on tangible common equity (consolidated) 14% compared to 13% in Q1 and 17% in prior year.
  • Core loans up 8% compared.
  • Avg VaR at $55 mln compared to $42 mln in Q1 with the prior year.

>>> US Early premarket gappers

Early premarket gappers
Gapping up: CDXS +84.4%, PLUG +10%, CMA +7.8%, WWW +6.1%, LGF +4.5%, GRH +3.2%, FCEL +2.8%, PPHM +2.3%, JPM +2.1%, GLUU +1.7%, AMAT +1.4%, GOLD +1.4%, TWTR +0.9%, SAVE +0.8%, SABA +0.8%

Gapping down: LO -3.7%, APOL -3.6%, TRGT -2.7%, OPTT -2%, KORS -2%, LEDS -2%, CPB -1.9%, ADHD -1.8%, IRT -1.7%, BH -1.6%, SAN -0.8%

Cnbc Cramer

Stocks with favorable mention: AAPL, APA, BA, BK, BMRN, C, FB, MTW, TSCO, WLL

Stocks with unfavorable mention: FDO, LL, PBYI, TCS, WFM

Airbus’s Leahy Sees ‘Over A Thousand Orders Easily’ for A330neo

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Airbus’s Leahy Sees ‘Over A Thousand Orders Easily’ for A330neo 2014-07-15 08:35:45.191 GMT

By Anna Edwards and Brian Lysaght July 15 (Bloomberg) -- Airbus COO Leahy expects more than 200 a330 in China. * To meet Airasia’s Fernandes before end of week * Says a lot of Qatar’s A380 delay, complaints are ‘cosmetics’ * Says euro will become another reserve currency * Euro strength is issue * Airbus’s John Leahy speaks at Farnborough Air Show * See earlier: Airbus $21b Jet-Sales Blitz Tops Boeing as Air Show Opens {NSN N8Q4SJ6KLVRL <go>} * Yday: Qatar Air CEO Moves Toward Boeing 777X, Slams A380 {NSN N8PNQS6K50YA <go>} * July 1: AirAsia CEO Pushing Airbus to Commit to ‘Killer’ A330 Upgrade {NSN N80VP96S972D <go>}

Link to Company News:{BA US <Equity> CN <GO>} Link to Company News:{AIR FP <Equity> CN <GO>}

For Related News and Information: First Word scrolling panel: {FIRST<GO>} First Word newswire: {NH BFW<GO>}

To contact the editor responsible for this story: Brian Lysaght at +44-20-7330-7908 or blysaght@bloomberg.net

EU Autos Have Limited Upside in 2H, Credit Suisse Says

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EU Autos Have Limited Upside in 2H, Credit Suisse Says 2014-07-15 08:11:54.6 GMT

By Brian Lysaght July 15 (Bloomberg) -- European auto sales growth is slowing; 1H SAAR up 3.3%, implies flat mkt in 2H, says Credit Suisse in note. See risk to 3% 2014 sales growth forecast. * “Cautious” on 2Q earnings for automakers given continuing headwinds: FX, emerging mkts, pricing * Reiterates underperforms on BMW, Peugeot as dependent on 2H Europe volume recovery * Prefer VW on exposure to stronger German, UK mkts; Renault on budget brand Dacia (both outperform) * Daimler (outperform) may report strong y/y group Ebit growth, Mercedes Ebit margin may disappoint again on FX, costs: Credit Suisse * NOTE: ACEA reports June EU car sales on July 17 * Earlier: Peugeot Upgraded to Overweight at JPMorgan on 1H Cash, Earnings

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

To contact the reporter on this story: Brian Lysaght in London at +44-20-7330-7908 or blysaght@bloomberg.net To contact the editors responsible for this story: James Ludden at +44-20-7673-2645 or jludden@bloomberg.net Gaurav Panchal

(BoA-ML) Global Fund Manager Survey

* July FMS investment conclusion
July FMS cash levels remain stubbornly high at 4.5% driven by (as yet unrealized) fears of inflation/interest rates, geopolitics & valuation. But investor sentiment is beginning to “melt-up”: equity allocation hit their 2nd highest level in 13 years. The summer “melt-up” is likely to be followed by an autumn correction.

* Inflation, tail risks & crowded trades
Global growth expectations stable but big jump in China growth optimism; more than 7/10 now expect inflation and short-term rates to rise next 12 months; biggest tail risks = geopolitics & China debt defaults; most "crowded trade" = US High Yield (taking over from EU periphery debt).

* FX & equity valuation extremes
Investors say US dollar the cheapest in 10 years, British pound most expensive since Lehman collapse; stocks most expensive since May 2000! July rotation from telecoms, pharma, Eurozone to tech, banks, Japan, and investors close 18-month UW of materials. But overall positions (Chart 1) far less extreme than 6 months ago.

* July FMS contrarian trades
Based solely on sentiment extremes within the July FMS four contrarian pair trades stand out for coming weeks: long bonds-short stocks, long US dollar-short sterling, long telcos-short energy, long Emerging Markets-short Eurozone.