(BFW) Stryker Bid for Smith & Nephew Has 80% Chance of Success: Exane

Stryker Bid for Smith & Nephew Has 80% Chance of Success: Exane
2014-06-25 10:14:25.768 GMT


By Allison Connolly
     June 25 (Bloomberg) -- Exane see clear strategic rationale
for merger while co. turnaround strategy remains valid,
according to note.
  * Ests. Smith & Nephew organic growth of at least 4% from 2015
    onwards vs current 2%-3%; cites focus on M&A, EMs for growth
  * Raises PT to 1,250p vs 1,000p (outperform)
  * NOTE: May 29, Stryker Denies Report It’s Planning Smith &
    Nephew Bid
  * NOTE: June 5, Stryker Retains Right to Smith & Nephew Bid If
    Medtronic Bids


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

To contact the reporter on this story:
Allison Connolly in London at +44-20-3525-7043 or
aconnolly4@bloomberg.net
To contact the editors responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net
Jurjen van de Pol

(CS) Vivendi - Added to Focus List - 2 notes attached (VIV & Global Music)

--> Add to Europe Focus List: We re-initiate on Vivendi (O/P, €24 price target) and add it to the Credit Suisse Europe Focus List. We argue Universal Music is the most valuable asset within the group, and include it at €10bn in our new SOTP valuation – significantly above consensus at €6.5bn. We argue the shift in music consumption towards paid streaming will have a positive impact on Universal's EBITDA growth, which we forecast at 13% CAGR 2013-2020. We elaborate on our thesis in our in-depth study of the Global Music industry

-> End-game could be two listed assets: While there could be synergies between the business units, we argue one logical way for Vivendi to fully shed its conglomerate status, and its resulting valuation discount, would be to sell GVT and spin-off Canal Plus or Universal Music into separate listed entities. We highlight that should the group's newly-installed management
team choose this route, it could yield a "Blue Sky" valuation of €28 per share.

--> Catalysts: Anti-trust clearance of the sale of SFR to Numéricable by the end of 2014; Vivendi reports Q2 results on 28 August.

--> Valuation: We value Vivendi at €24 per share, which assumes a €22.30 "base" SOTP valuation plus €1.80 per share accretion from a €5.5bn share buyback. We also highlight that if the company were to sell GVT for €8bn in cash and spin-off UMG (or Canal Plus) into a separate listed entity, this would yield a "Blue Sky" valuation of €28. Moreover, if we were to strip out Vivendi's cash, liabilities and listed assets, the media assets are trading at a 2014E EV/EBITDA multiple of 6.3x, which looks very low when compared with other content assets in Global Media, which trade at 12.1x.

--> GLOBAL MUSIC
Paid streaming will transform the music industry: In this report, we analyse how the rapid shift in music consumption towards paid streaming will drive a period of structural growth in the industry and refocus investors on the value of owning music content. Our key call is to buy Vivendi (OP, €24 price target, added to EUROPE FOCUS LIST), which owns the largest global label group, Universal Music. In a separate report (see Vivendi – Music: the forgotten content growth story) we raise our valuation of Universal to €10bn, materially ahead of consensus at around €6.5bn.

(Exane) Contrarian Calls : Playing Against the odds

* Contrarians: a new stock-picking angle to review our European SMC universe
We introduce a new product to complement our European Small & Mid Caps recommendation lists
(Strategic and Tactical) and our innovative weekly SMC Navigator tool. With this new product we
take a novel stock-picking approach: we highlight our deep contrarian calls vs consensus. Taking
both a quantitative and a qualitative approach, we grill our analysts to find out what they see that
the market doesn’t.

* Two contrarian Outperform calls: Faiveley, Vidrala
Our two positive convictions are on Faiveley (new management prioritising backlog execution, US
and China high-speed train opportunities, cheap relative valuation) and Vidrala (stronger FCF and
ROCE, better shareholder remuneration and M&A).

* Four contrarian Underperform calls: Booker, Clariant, EDP Renovaveis, N. Brown
Our Underperform calls are Booker (difficult environment, low earnings visibility for the current
multiple); Clariant (poor FCF generation, challenging 2015 targets, full valuation); EDP Renovaveis
(expensive valuation and weak management track record); and N Brown (new competition).

* We also highlight highly consensual calls which could revert
Overly consensual ideas are always a risk from an investment perspective. We have thus screened
for stocks on which consensus is strong but where several quantitative criteria suggest a potential
turning point for sentiment. Three of our consensual calls with an Outperform rating emerge on this
radar screen: ASM International, CFE and Sorin. Our conviction on these names remains
nevertheless positive.

>>> FCC investor George Soros offers Koplowitz EUR 1.5bn as capital injection

FCC investor George Soros offers Koplowitz EUR 1.5bn as capital injection 

George Soros has offered Esther Koplowitz EUR 1.5bn as capital injection in FCC and additional investment in B-1998, a vehicle through which the Koplowitz family holds a majority in the Spanish infrastructures group.

Soros' proposal has a discount of 40% on FCC's stock value, the Spanish-language report said, citing chief investment officer of Soros Fund Management, Scott Bessent.

Bessent is in charge of discussions with BBVA, Bankia and Koplowitz's advisers, Messier Maris & Associes.

Koplowitz and the lenders had initially rejected Soros' offer but talks continued, the report said. Without additional cash, B-1998 will default on 31 July on its EUR 1bn debt with BBVA and Bankia and the banks will execute loans to the Koplowitz family, which would lose control of FCC, the report said.


Source El Confidencial

>>> What to look at today - 25/06/2014

US Market closed lower, no much action , saw a reversal midday with market closing almost on lows, volume remains light @ 635mil shares...VIX @ 12.15 +10.47%...Still some tensions in Ukraine & Iraq weighting on sentiment...San Fran Fed Pres Williams: US is about 2 years away from full employment, economy is moving closer to normal, and nothing will stop the Fed from increasing interest rates when required. Williams, among the more dovish Fed presidents, is not a voting member on the FOMC...Japan press reporting PM Abe specifically targets the first reduction in corporate tax rate to 29% after the govt tax panel offered support for his corporate levy component agenda revealed by the "3rd Arrow" statement. Overnight, Abe's address indicated he is looking to cut corporate tax to below 30% in phases over the next several years beginning next April....Nikkei -0.62% HAng Seng +0.01% Shanghai -0.50%

Eur$ 1.3615 S&P -0.08% EuroStoxx -0.61% FTSE -0.59% DAX -0.71% SMI -0.46%

Macro
- INSEE: Sees 2014 French GDP at 0.7% (vs. 1% govt f/cast)
- ECB’s Nowotny Says Europe ‘Close’ to Deflationary Development
- German Consumer Confidence to Rise to Highest Since 2006: GfK

Keep an eye on :
- ACS SM : Alba Sells 11.6m ACS Shrs, 3.7% Stake, at EU34.17
- AF FP : Air France-KLM to Invest Total EU1B Overhauling Cabins: Echos
- AIR FP : Airbus Wants to Sell Cimpa Unit, Les Echos Says
- ALO FP : GE’s Immelt Confident on Alstom EU Backing After Honeywell Loss
- AZN LN : Lundbeck Evaluating AstraZeneca’s Alzheimer’s Disease Drug
- BALSN SW : Basilea Says FDA Requires More Data for Ceftobiprole Approval
- BCP PL : Banco Comercial Portugues Plans EU2.25b Capital Increase
- BNP FP : BNP Paribas Settlement to Come Next Week: Channel NewsAsia Link
- BNP FP : BNP Paribas May Move U.S. Compliance Office to NYC: Reuters
- EN FP : French Regulator Critical of Bouygues-SFR Network Plan: Echos
- FCC SM : Soros Offers EU1.5B to Support Koplowitz, FCC, Confidencial Says
- GSZ FP :France to Sell 3.1% GDF Suez Stake, Finance Minister Sapin Says,Priced @ €20.18 - closing @ 8:30
- GIMB BB : GIMV Offers Option to Take EU2.45/Shr Div. in Shares
- ISAT LN : Buy Inmarsat, Stock Could Have 80% Upside, Jefferies Says
- LG FP : Success of Lafarge-Holcim Merger Very Likely: Raymond James
- MC FP : LVMH, Constellation Brands May Bid for Treasury Wine: AFR
- MKS LN : Little Room for M&S to do a Buyback, Raise Div., Barclays Says
- ORA FP : Montebourg Says France Should Have 3 Telcom Companies Not 4 {NSN N7OLOH6S972H <go>}
- 1913 HK : Prada Rises Most in 3 Mos.; Big Trade 1.95m Shrs Crossed Pre-Mkt
- PMO LN : Premier Oil Appoints Tony Durrant at CEO With Immediate Effect
- SHP LN : Shire ‘Blue-Sky’ Theoretical Takeout Valuation GBP73/Shr: BofAML
- SOI FP : Soitec Seeks EU83M in Rights Offer to Strengthen Cash Position
- TCG LN : Overweight Thomas Cook, Tui Travel, Valuations Attractive: JPM
- TEF SM : Telefonica Deutschland Opens Network to Drillisch on E-Plus Deal
- TT/ LN : Overweight Thomas Cook, Tui Travel, Valuations Attractive: JPM
- VIV FP : French Regulator Critical of Bouygues-SFR Network Plan: Echos
- VIV FP : Vivendi Could Spinoff Canal Plus or Universal Music: C. Suisse
- VIV FP : Buy Exposure to Record Labels on Paid Streaming: Credit Suisse

>>> Brokers Upgrades & Downgrades - 25/06/2014

>>> Up
*ALSTOM RAISED TO BUY VS HOLD AT DEUTSCHE BANK
*AURUBIS RAISED TO NEUTRAL VS UNDERPERFORM AT BOFAML
*GREENE KING RAISED TO ADD VS HOLD AT NUMIS
*METRO RAISED TO NEUTRAL VS UNDERWEIGHT AT JPMORGAN
*TRANSMODE RAISED TO NEUTRAL VS SELL AT UBS
*TECHNIP RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE

>>> Down
*DEUTSCHE WOHNEN CUT TO NEUTRAL VS BUY AT BOFAML
*HEIDELBERGCEMENT CUT FROM OUTPERFORM AT RAYMOND JAMES
*MEGGITT CUT TO UNDERWEIGHT VS NEUTRAL AT JPMORGAN
*SOMFY CUT TO HOLD VS BUY AT SOCGEN
*TVN CUT TO SELL VS NEUTRAL AT UBS

>>> PT Change
*MEGGITT PT CUT TO 480P VS 540P AT JPMORGAN

>>> Initiation
*AKER SOLUTIONS RATED NEW MARKET PERFORM AT BERNSTEIN
*CARD FACTORY RATED NEW BUY AT NOMURA; PT 280P
*CARD FACTORY RATED NEW OVERWEIGHT AT MORGAN STANLEY; PT 260P
*CARD FACTORY RATED NEW BUY AT UBS, PT 260P
*ENQUEST RATED NEW NEUTRAL AT UBS, PT 144P
*FAURECIA REINSTATED UNDERPERFORM AT BOFAML, PT EU26
*PETROFAC RATED NEW OUTPERFORM AT BERNSTEIN
*SAIPEM RATED NEW UNDERPERFORM AT BERNSTEIN
*SBM OFFSHORE RATED NEW UNDERPERFORM AT BERNSTEIN
*SUBSEA 7 RATED NEW UNDERPERFORM AT BERNSTEIN
*TECHNIP RATED NEW OUTPERFORM AT BERNSTEIN
*TENARIS RATED NEW MARKET PERFORM AT BERNSTEIN
*VALLOUREC RATED NEW OUTPERFORM AT BERNSTEIN
*VIVENDI RE-INITIATED OUTPERFORM AT CREDIT SUISSE; PT EU24

>>> Call
>> Stock
* European Oil Services Initiated With Cautious View at Bernstein {NSN N7OKOV6S972E <go>}
* European Food/HPC Cos. Vulnerable to Earnings Risks: JPMorgan {NSN N7PAWK6TTDSA <go>}
* Buy Property Stocks on Dip, Sell-Off An Opportunity: JPM (Buy Land Sec., British Land St Modwen & Quintain) {NSN N7P9ZD6S972E <go>}
*VIVENDI ADDED TO EUROPEAN FOCUS LIST AT CREDIT SUISSE

>>> US After Hours

After Hours Summary: KEQU +2.7%, VMI -5.3% following earnings/guidance

After Hours Gainers: Companies trading higher in after hours in reaction to earnings: KEQU +2.7%

Companies trading higher in after hours in reaction to news: NSPH +12.7% (announced it has received FDA 510(k) clearance for the bacterial portion of its Verigene Enteric Pathogens Nucleic Acid Test), IMS +5.1% (to acquire Cegedim's Information Solutions and CRM businesses for $520 mln; As a result of the anticipated timing, IMS Health's 2014 full-year guidance provided during the co's Q1 earnings call is unchanged), PGH +4.9% (announced doubling of value of 2P reserves at Lindbergh from $1.0 bln to $2.2 bln), AMG +3.3% (to replace FRX in the S&P 500), SYRG +3.0% (to replace BDC in the S&P SmallCap 600), BMY +2.4% (announced that the Phase 3 first-line melanoma study of nivolumab, an investigational PD-1 checkpoint inhibitor, demonstrated superior overall survival compared to dacarbazine; study stopped early), SGNT +1.9% (to replace LHO in the S&P SmallCap 600), LHO +1.8% (to replace AMG in the S&P MidCap 400), POWR +1.3% (co announced it intends to vigorously defend against the claims made in securities class action lawsuits filed last month against the co and two of its officers)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: VMI -5.3%

Companies trading lower in after hours in reaction to news: ATNM -12.0% (announced proposed public offering of common shares), NURO -4.9% (announced $8 mln preferred stock placement), CVRR -4.3% (announced launch of public offering of 6 mln common units representing limited partner interests), ATEA -3.4% (announced $2 mln capital investment), GLNG -1.8% (announced commencement of registered offering of 11,000,000 shares of common stock), FNF -1.8% (replaced in the S&P MidCap 400; co is reclassifying its common stock into two tracking stocks), ESI -1.2% (co disclosed it will need to restate certain unaudited financial statements due to decision to consolidate the financial results of the PEAKS Trust)