TheChek News Flow

After Hours Summary: ALCS -3.1% following earnings/guidance

After Hours Gainers: Companies trading higher in after hours in reaction to news: MIC +4.6% (announced entry into an agreement to acquire the 50% of International-Matex Tank Terminals it does not currently own for $910.0 mln in cash and $115.0 mln in stock; raiseed Q2 dividend 1.3% to $0.95 per share), BODY +3.7% (683 Capital Management disclosed 18.9% active stake in 13D filing), PHH +3.1% (completed divestiture of its Fleet Management Services Business; co intends to repurchase up to $450 mln in stock, redeem its 9.25% Sr. Notes due 2016; deploy up to $200 mln to re-engineer mortgage business; invest up to $150 mln in select growth initiatives), FSC +2.3% (increased monthly dividend by 10% to 9.17 cents per share from 8.33 cents per share), XONE +1.8% (Novel Century Ventures discloses 15.46% passive stake in 13G filing), LOV +1.5% (named Michael McConnell Chairman)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: ALCS -3.1%

Companies trading lower in after hours in reaction to news: BLUE -3.2% (announced proposed public offering of $100 mln in common stock), TAT -1.3% (co announced that net sales for the second quarter of 2014 are expected to be slightly lower than net production), WSTL -1.0% (co disclosed that its Chief Operating Officer has resigned)

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Qiagen Is Next Candidate for Health-Care Tax Deal Wave: Real M&A 2014-07-08 00:05:31.726 GMT

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

By Brooke Sutherland July 8 (Bloomberg) -- Qiagen NV investors are betting the busiest year for health-care deals in more than a decade will lure acquirers to one of the industry’s most expensive targets. Shares of the maker of diagnostic tools to tailor medical treatments have climbed three times as much as peers since June 15. That day, Medtronic Inc. became the biggest firm to announce an overseas acquisition that allows it to escape the U.S. tax system by shifting its incorporation abroad. While Qiagen now trades at one of the highest profit multiples for life-science equipment companies, Bryan, Garnier & Co. said its Dutch domicile could make it the next tax-inversion target, with potential buyers including Sigma-Aldrich Corp. and Illumina Inc. A takeover of Qiagen, valued at $5.7 billion, would add to almost $300 billion in health-care deals this year, the most since at least 2002, according to data compiled by Bloomberg. Qiagen’s growth prospects and lower tax rate may help attract companies such as Cepheid, JMP Securities said. General Electric Co. and Baxter International Inc. could also be potential buyers, according to Exane BNP Paribas. “Qiagen is basically the only independent company with critical mass in molecular diagnostics, which is one of the fastest growing markets in diagnostics,” Mathieu Chabert, a Paris-based analyst at Bryan Garnier, said in a phone interview. Plus, “the tax rate of Qiagen could be attractive to some U.S. company.” Representatives for Venlo, Netherlands-based Qiagen didn’t respond to an e-mail request for comment after normal business hours.

Rising Deals

Health-care transactions surged to more than $240 billion in the second quarter alone this year, fueled in part by the hunt for inversion deals that enable companies to reduce their tax bill by redomiciling in countries with lower rates. About $291 billion of acquisitions have been announced or proposed in all of 2014, including Medtronic’s more than $40 billion takeover bid for Covidien Plc. While the combination won’t change Medtronic’s tax rate much, a new Irish address will free up almost $14 billion in cash that the company currently keeps overseas. That deal marked the spread of major inversion-style acquisitions to the medical-device industry and helped fuel speculation that Qiagen could also be a target. Qiagen stock has climbed 4.5 percent since the Covidien takeover was announced, beating the 1.4 percent gain for the Stoxx 600 Health Care Index in the same period.

Matching Patients

Qiagen, which makes sampling tools for next-generation gene sequencing and technology that helps determine which patients respond the best to certain drugs, has a tax rate of about 20 percent based on 2014 estimates, according to Paul Knight, an analyst at Janney Montgomery Scott LLC. Even though that’s higher than Ireland’s 12.5 percent, a takeover may appeal to a company in the U.S., where the corporate tax rate is almost double Qiagen’s, he said. Sigma-Aldrich, the $12 billion life-science equipment company, is one of the main contenders for a tax-inversion deal with Qiagen, said Chabert of Bryan Garnier. Such transactions typically require the foreign company’s shareholders to end up with at least 20 percent of the stock of the combined firm. Sigma-Aldrich was among companies that expressed an interest in Life Technologies Corp., before the maker of DNA- sequencing equipment agreed last year to sell itself to Thermo Fisher Scientific Inc., people familiar with the matter said at the time.

Interesting Business

A takeover of Qiagen could also help Illumina and Cepheid lower their tax rates, while adding diagnostic businesses that would be complementary to their existing portfolios, said Jose Haresco, a San Francisco-based analyst at JMP Securities, a unit of JMP Group Inc. Illumina and Cepheid have market values of $23 billion and $3.3 billion, respectively. “With all the interest in that type of activity, it makes sense,” Haresco said in a phone interview. “And it’s growing. We’re not talking about a business that’s not interesting.” Qiagen is poised to boost sales by about 19 percent over the next three years, according to the average of analysts’ estimates compiled by Bloomberg. Revenue should rise as the company markets a new method for detecting latent tuberculosis, increases its foothold in tools for personalizing health care and expands its sequencing instruments, said Chabert of Bryan Garnier.

Conglomerate Interest

That means that Qiagen could still be an attractive target for companies that would have more trouble relocating to lower their tax rate, said Knight of Janney. Danaher Corp., a $55 billion industrial conglomerate, may be one of those companies, he said. Investors are antsy for the Washington-based company to make a big acquisition after its longest stretch without a deal of more than $500 million in 11 years. Qiagen has “a very strong distribution platform, and they’re in the right future growth markets,” the analyst said. “It is one of the more attractive acquisition targets in the industry.” GE or Baxter may also be potential suitors for Qiagen, Yohann Terry of Exane BNP wrote in a report last month that highlighted European companies that could be deal targets for U.S. firms seeking tax advantages, such as using overseas cash. Representatives for GE, Illumina, Sigma-Aldrich and Baxter said their companies don’t comment on speculation when asked whether they would be interested in Qiagen. Representatives for Danaher and Cepheid didn’t respond to requests for comment.

Expensive Implications

Qiagen will probably want more than $30 a share in a takeover, a 22 percent premium to yesterday’s U.S. close of $24.65, said Vijay Kumar, a New York-based analyst at International Strategy & Investment Group LLC. That may give it a valuation that dissuades some buyers, Kumar said. Qiagen already trades at about 20 times earnings before interest, taxes, depreciation and amortization in the last year. That’s a higher multiple than 77 percent of life-science equipment makers valued at more than $1 billion, according to data compiled by Bloomberg. “The ask price is just too high,” Kumar said in a phone interview. “The sense I get is they’re looking for north of $30. I think buyers can stretch to $30, but can they go to like $35? I’m not sure whether we have buyers at those levels.” Even so, Qiagen’s low tax rate and attractive businesses make it a potential target, said Haresco of JMP. “There’s lots of interesting synergies where you can see U.S.-based diagnostics companies taking an interest,” he said. “You wouldn’t be wrong to think about that.”

For Related News and Information: Tax-Inversion Takeovers Deliver Market-Beating Returns: Real M&A NSN N7A8IH6K50Y3 <GO> Qiagen Working on 15 Deals for Genetic Tests, CEO Schatz Says NSN N07TMM6TTDS3 <GO> Shire Snubbing AbbVie Makes It Latest Pharma Target: Real M&A NSN N7J78G6K50XS <GO> Qiagen deal news: QGEN US <Equity> TCNI MNA <GO> Real M&A columns: NI REALMNA <GO> Top deal news: DTOP <GO>

--With assistance from Jennifer Surane in New York.

To contact the reporter on this story: Brooke Sutherland in New York at +1-212-617-0448 or bsutherland7@bloomberg.net To contact the editors responsible for this story: Beth Williams at +1-212-617-2307 or bewilliams@bloomberg.net Whitney Kisling, Elizabeth Wollman

--> stock trading +0,4%

Samsung Blames Weaker Demand For Disappointing Results

Smartphone Maker Says its Second-Quarter Operating Profit Likely Fell 22.3% to 26.5%

SEOUL— Samsung Electronics Co. 005930.SE +0.54% said its operating profit fell for the third consecutive quarter, hurt by weaker-than-expected demand for its products in China and Europe, and South Korea's strengthening currency.

Investors and brokerages are increasingly skeptical over the company's near-term growth prospects as smartphone adoption slows in advanced markets, while the rise of low-cost smartphone makers threaten Samsung's competitiveness in emerging markets. On those concerns, Samsung shares dropped to a more than three-month low Monday to 1,292,000 won, its lowest level since March 26.

WSJD is the Journal's home for tech news, analysis and product reviews.

Foreign Investors Put Pressure on Samsung Samsung Braces for Earnings Pain, Speaks Up Bandits Loot Samsung Plant in Brazil A Broader, More Collaborative Apple Emerges Under Cook Mims: Is Silicon Valley Pouring Money Into the Wrong Stuff? Critics Fault Court's Grip on Patent Appeals New Media Landscape in Sun Valley The world's largest smartphone maker by shipments said Tuesday its second-quarter operating profit likely fell 22.3% to 26.5% from a year earlier to between 7.0 trillion won ($6.9 billion) and 7.4 trillion won ($7.3 billion). A year earlier, Samsung reported an operating profit of 9.53 trillion won.

The disappointing results follow a 3.3% decline in operating profit in the first quarter compared with a year ago, and mark its first double-digit percentage decline since the third quarter of 2011. The company estimated its sales fell 7.8% to 11.2% from a year ago to a range of 51 trillion won to 53 trillion won.

The profit estimate fell short of market expectations. A poll of seven analysts expected Samsung's operating profit to come in at 7.85 trillion won on sales of 52.2 trillion won.

The company said in a statement that it "witnessed a slowdown in the overall smartphone market growth and saw increased competition in the Chinese and some European markets," which led to higher inventories for low-to mid-end smartphones. The company usually doesn't provide any explanation with its earnings forecasts.

Samsung, which makes everything from memory chips to televisions and smartphones, didn't disclose net profit estimates and final numbers are due later this month.

Local brokerage I'M Investment & Securities cut Samsung to "hold," this week, saying the company is likely to continue losing market share to Chinese brands, while sales of its latest Galaxy S5 smartphone is expected to quickly lose momentum this quarter. The brokerage forecasts sales of the S5 phone could be as little as 6 million units for the third quarter after selling an estimated 17 million units during the second quarter, which is poorer than the performance of its predecessor.

Analysts estimate Samsung shipped between 77 million and 79.5 million smartphones in the quarter ended June 30, which falls short of the 90 million units that many in the market had been anticipating earlier this year. The company doesn't disclose smartphone shipments.

Samsung is betting on a number of new mobile products this quarter to keep sales momentum going in the seasonally strong second half. This includes a new smartwatch powered by Tizen, which can operate independently, without having to link to a smartphone, people familiar with the matter told The Wall Street Journal in May. Samsung also began shipping a new line of high-end tablets earlier this month, hoping to take on Apple Inc. AAPL +2.06% in the competitive U.S. market.

"Samsung's earnings may bottom out in the second quarter, but the expected launch of iPhone 6 models will be a huge challenge for the company's high-end models in the second half," said Lee Seung-woo, an analyst with IBK Securities in Seoul. He noted that a lot lies on the anticipated launch of a succeeding model to Samsung's smartphone-tablet hybrid, the Galaxy Note 3, in the autumn, to propel mobile sales.

Samsung said it cautiously expects better results in the third quarter.

Asian Market Update: Asia stock markets pause ahead of earnings; Samsung Electronics preliminary results miss with cautiously positive outlook

***Notable Economic Data*** - (AU) AUSTRALIA JUN NAB BUSINESS CONFIDENCE: 8 V 7 PRIOR; NAB BUSINESS CONDITIONS: +2 V -1 PRIOR - (JP) JAPAN MAY BOP CURRENT ACCOUNT BALANCE: ¥523B (4th consecutive surplus) V ¥418BE; BOP ADJUSTED CURRENT ACCOUNT: ¥385B V ¥158BE; TRADE BALANCE BOP BASIS: -¥676B V -¥823BE - (JP) JAPAN JUN BANK LENDING INCL TRUSTS: 2.3% V 2.2%E; BANK LENDING EX-TRUSTS: 2.5% V 2.4% PRIOR - (NZ) NEW ZEALAND Q2 NZIER BUSINESS CONFIDENCE: 32 V 52 PRIOR (largest decline since Q4 2011) - (CN) China H1 new foreign investment $130.1B, +23.8% y/y - People's Daily - (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 105.1 v 105.4 prior - (TW) TAIWAN JUN CPI Y/Y: 1.6% V 1.6%E; WPI Y/Y: 0.8% V 1.1%E

***Index Snapshot (as of 02:30 GMT)*** - Nikkei225 -0.5%, S&P/ASX -0.2%, Kospi -0.3%, Shanghai Composite -0.5%, Hang Seng -0.3%, Sept S&P500 -0.1% at 1,968

***Commodities/Fixed Income/Currencies*** Aug gold +0.2% at $1,319, Aug crude oil -0.2% at $103.39/brl, Sept Copper -0.2% at $3.25/lb - (CN) PBoC to drain CNY20B in 28-day repos (3rd consecutive drain) - (CN) PBoC sets yuan mid-point at 6.1626 v 6.1658 prior setting (strongest setting since July 2nd) - (AU) Australia MoF (AOFM) sells A$300M in 1% indexed bonds due 2018; Avg yield: 0.5971%; Bid-to-cover: 3.07x - (JP) Japan MoF sells ¥400B in 10-year CPI-linked Bonds; Bid-to-cover ratio 2.54x v 2.89x prior - (CN) Morgan Stanley: Sees China iron ore mines shutting; Cuts 2015 thermal coal price forecast by 16% to $74/t - financial press - (US) USDA weekly crop progress report

***Market Focal Points/Key Themes*** - Taking its cues from Wall Street the Asian stock markets were trading lower with the Nikkei225 down 0.8% in early trading as the yen strengthened against the dollar. Investors will now be focused on earnings out of the US, the Fed's position on monetary policy, as well as Chinese economic data including the trade inflation data and GDP.

- Japan's current account balance had a surplus for the fourth consecutive at ¥523B; imports sliding for the first time in 19 months with the consumption tax increase cooling domestic demand.

- South Korea's largest electronics firm Samsung released preliminary Q2 results with operating profits declining to a two-year low of KRW7.2T -24% y/y. Despite the weak results share price initially jumped by over 2%before settling to 0.5% in early trading as a drop in profits were widely expected and as it cautiously expects a more positive outlook for the next quarter with the release of its new smartphone lineup and improving mobile business.

- The June NAB business confidence index increased to 8 from 7 as confidence strengthened in nearly all the industries. The AUD recovered from its early lows against the major currency pairs, with the AUD/USD trading higher by 10pips above 0.9390-level following the confidence data.

- Iran Supreme Leader Khamenei was reported to have said Iran required additional centrifuge capacity, higher than the amount acceptable to the western governments. The leader stated that they were being offered 10k SWU when 190k SWU is needed. These comments have changed course from those reported on July 3rd where Iran said it would ease its nuclear capacity demands during Vienna talks.

***Equities*** US markets: - MIC: To acquire remaining 50% of International-Matex Tank Terminals (IMTT) for $910.0M in cash, $115.0M in stock; raises quarterly dividend by 1.3% to $0.95/shr; +5.4% afterhours - CRMB: 07/07/2014 19:45:26 CRMB: Reportedly to cease operations, close all stores; considers filing for bankruptcy - financial press

Notable movers by sector: - Financials: Evergrande Real Estate 3333.HK +0.9% (June sales results); Guotai Junan 1788.HK +1.4% (H1 guidance); Gemdale Properties and Investment Corp 535.HK -3.1% (Jun sales results) - Materials: Zhejiang Kaier New Materials 300234.CN +5.0% (H1 results) - Energy: Datang International Power Generation 991.HK +16.2% (announces restructure; shares resume trading) - Industrials: Anhui Heli 600761.CN -2.5% (H1 guidance); Daiwa House Industry 1925.JP -0.1% (revenue target); Elders ELD.AU +8.9% (may receive bid) - Technology: TCL Corp 000100.CN +1.3% (H1 guidance); Samsung Electronics 005930.KR +0.4% (Q2 prelim results) - Healthcare: Pharmaxis PXS.AU -16.9% (updates on pre-clinical projects) - Utilities: Leshan Electric Power 600644.CN +2.9% (H1 guidance)

Closing Market Summary: Small Caps Lead Stocks Lower

The stock market began the first full week of July on a cautious note with small caps pacing the retreat. The Russell 2000 and Nasdaq Composite posted respective losses of 1.7% and 0.8%, while the S&P 500 fell 0.4% with seven sectors ending in the red.

Equities spent the duration of the trading day in negative territory with the opening weakness taking place amid cautious action in Europe. A disappointing Industrial Production report from Germany (-1.8% versus expected 0.2%) weighed on sentiment, which contributed to the profit-taking.

Back in the U.S., profit-taking was also the theme of the day with some of the recent leaders seeing larger losses than the broader market. Specifically, the Nasdaq and Russell 2000 led the slide after entering the session with respective gains of 9.9% and 6.3% over the last three months.

The tech-heavy Nasdaq underperformed even as its top-weighted component—Apple (AAPL 95.97, +1.94)—rallied throughout the session. Chipmakers, however, pressured the index with the PHLX Semiconductor Index falling 0.7%. Similarly, biotechnology proved to be a drag on the index as the iShares Nasdaq Biotechnology ETF (IBB 259.09, -6.93) lost 2.6%.

In turn, the relative weakness of the biotech space pressured the health care sector (-0.8%), while the remaining countercyclical groups fared a bit better than the broader market. Telecom services (+0.3%) and utilities (+0.4%) held gains throughout the session, while the consumer staples sector (+0.1%) climbed out of the red during the afternoon.

Meanwhile, just about every cyclical sector struggled to keep pace with the market. The technology sector (unch) was the lone outperformer, while the other five registered losses between 0.5% and 0.8%.

Notably, the industrial sector (-0.7%) was pressured by widespread losses among transportation stocks. Airlines like Delta Air Lines (DAL 36.90, -1.70) and United Continental (UAL 38.62, -1.26) registered respective losses of 4.4% and 3.2%, while the Dow Jones Transportation Average (-1.0%) surrendered its July gain.

With stocks ending on their lows, participants did show some increased demand for volatility protection, which sent the CBOE Volatility Index (VIX 11.43, +1.11) from seven-year lows into the middle of its range from June.

Treasuries saw overnight losses, but a daylong rally resulted in the 10-yr note adding five ticks to send its yield lower by two basis points to 2.61%.

Participation was well below average with less than 600 million shares changing hands at the NYSE.

Tomorrow, the Job Openings and Labor Turnover Survey will be released at 10:00 ET, while the May Consumer Credit report will cross the wires at 15:00 ET (consensus $16.20 billion).

* S&P 500 +7.0% YTD  * Nasdaq Composite +6.6% YTD  * Dow Jones Industrial Average +2.7% YTD  * Russell 2000 +2.1% YTD