BRUSSELS—European Union regulators said Tuesday they believe that tax deals granted to Apple Inc. AAPL -0.64% in Ireland constitute illegal state support for the U.S. company, in a letter to the Irish government that set out the reasoning behind the decision to open an in-depth investigation in June.
The European Commission, the 28-member bloc's central antitrust authority, said it had reached the "preliminary view" that tax deals struck in Ireland in 1991 and 2007 in favor of the Apple group constitute state aid.
"Through those rulings the Irish authorities confer an advantage on Apple" that is "granted in a selective manner," the commission wrote.
"That advantage is obtained every year and ongoing, when the annual tax liability is agreed upon by the tax authorities in view of that ruling," the letter said.
"The Commission has doubts about the compatibility of such state aid with the Internal market," it said.
Interested parties, including Apple, will have a month to comment once the notice is published in the EU's official journal in the next few weeks. From that point, state-aid cases usually take up to 18 months to reach a conclusion.
Special Situations: Yahoo (YHOO US)
It only took one week…
YHOO US: US$ 40.80
September 29, 2014
It only took one week to see a Yahoo shareholder becoming a vocal activist. While we disagree with Starboard Value’s idea (get Yahoo to buy AOL to achieve synergies), it just highlights the value in the stock and we re-iterate our buy recommendation on Yahoo. Moreover, we note that Alibaba can be shorted (stock borrowing costs around 8-10%) and that options started to trade today. It is therefore possible to hedge the stake in Alibaba (about 1 baba for 2 yhoo). One alternative recommended strategy would be to go long Yahoo and sell out of the money calls on Alibaba. For example Dec 100 calls can be sold for around $3.00 as of this writing. In other words, one could essentially collect the call premium, and only be effectively short BABA from 103 upward, or 15% higher than now. However, if Yahoo’s discount was to remain constant at the current level of 30-32%, the shares would need to rise to $44 or 7.5%. This does not take into account the fact that we believe that Yahoo’s discount should contract south of 20%.
FULL REPORT ATTACHED
WOLSELEY THOUGHTS –
EPS up 9.9%, dividend up 25%, new £250m buyback. Continued strong growth in the USA; Europe and Canada remained subdued. USA achieved a record 7.7 per cent trading margin. “We expect the Group's like-for-like revenue growth rate for the next six months to be about 5 per cent”(was 4.2% in results just announced). US (55% sales) did see price deflation (Price deflation was 0.7% principally due to falling commodity prices) whilst UK (15% sales) lfl were down 0.1% BUT price inflation of 0.7% as sought to protect margins. Inflation too in mixed Nordic and European markets. Plenty re-leverage scope x1-2 ND:ebitda targeted but prevailing just <x1. X16 prospective p/e, 2.5% dividend yield, 4%+ free cash flow. £32 -> £35 likley to remain the range shorter term
US regulators are monitoring trading and fund flows surrounding Pimco’s $223bn Total Return Bond fund and other products, in what could prove a test case in the debate over whether asset management groups contribute to systemic risk.
Officials at the Securities and Exchange Commission, the Federal Reserve and the US Treasury, among other bodies, have been talking to industry executives and other investors and warning they should contemplate unintended consequences of pulling their money from Pimco.
Meanwhile Morningstar, the influential mutual fund research group, stripped the Total Return fund of its “gold” analyst rating late on Monday, downgrading it to “bronze” because of the “uncertainty regarding outflows and the reshuffling of management responsibilities”.
California-based Pimco is trying to staunch outflows from its funds, including its flagship bond fund, following the acrimonious departure of its founder and star bond investor Bill Gross on Friday.
Many of the assets held by his Total Return fund have tumbled in price as traders anticipate that many Pimco investors will pull their money, and rivals report strong flows into their own products in recent days.
Regulators around the world are discussing new rules for large asset management firms and curbs on some of their activities, amid concern that the next “too big to fail” institutions may not be banks but asset managers.
US officials want to make sure that investors, including hedge funds and other investment managers, are not exacerbating risks if they contemplate moving their money from Pimco, people familiar with the efforts said.
Representatives from the agencies concerned are telling investors to be sure they understand the potential knock on effects of their actions.
The conversations with executives do not signal imminent concern so much as an effort to understand the market dynamics when a large asset manager finds itself under pressure. Outflows have so far been managed in an orderly way, according to people familiar with the regulators’ efforts.
Pimco, which manages almost $2tn in total, has been trying to ease clients’ concerns in a series of calls and one-on-one meetings that included a conference call with Asian clients on Tuesday morning. Rival groups, meanwhile, are working to exploit the management upheaval and tempt Pimco clients to move at least some of their money.
A report commissioned by the US Financial Stability Oversight Council argued last year that the largest asset management firms are interconnected in complex ways through their various businesses and suggested that in a panic, counterparties might not distinguish between the firm and its funds, which could exacerbate stress in the markets.
It also warned that large funds might be subject to “runs” if investors believe there is an advantage to pulling their money first, and it suggested regulators gather more data to test the concerns.
Pimco and other large asset managers intensely and successfully lobbied against the idea that they should be designated as systemically important financial institutions, which would subject them to tougher oversight. In July, FSOC decided instead to focus on particular industry activities, such as lending securities or taking on leverage, and types of funds, rather than focusing on firms themselves.
*AFRICAN MINERALS, FERREXPO CUT TO SELL VS BUY AT INVESTEC
*ANGLO AMERICAN RAISED TO BUY VS HOLD AT INVESTEC
*GLENCORE RAISED TO BUY VS ADD AT INVESTEC
*LONMIN CUT TO SELL VS HOLD AT INVESTEC
*RANDGOLD RESOURCES RAISED TO BUY VS HOLD AT INVESTEC
Reforming GPIF Not Aimed at Boosting Stock Prices, Abe Says
2014-09-30 05:03:22.430 GMT
By Anna Kitanaka
Sept. 30 (Bloomberg) -- GPIF reform is for retirees and
pension savers, Japan Prime Minister Shinzo Abe says in
parliament in Tokyo in response to questions from opposition on
whether aim of overhaul is to prop up stock prices.
* Reviewing GPIF’s portfolio may also result in boost to
economy, Abe says
* NOTE: GPIF expected to announce new portfolio this fall with
greater allocation to risk assets
* Related story: Kaieda: Using GPIF to Raise Stock Prices
Would be Manipulation NSN NCP6D56S972L <GO>
Link to Company News:GPIVFZ JP <Equity> CN <GO>
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Anna Kitanaka in Tokyo at +81-3-3201-8140 or
akitanaka@bloomberg.net
To contact the editor responsible for this story:
Tom Redmond at +81-3-3201-3789 or
tredmond3@bloomberg.net
2014-09-30 05:03:22.430 GMT
By Anna Kitanaka
Sept. 30 (Bloomberg) -- GPIF reform is for retirees and
pension savers, Japan Prime Minister Shinzo Abe says in
parliament in Tokyo in response to questions from opposition on
whether aim of overhaul is to prop up stock prices.
* Reviewing GPIF’s portfolio may also result in boost to
economy, Abe says
* NOTE: GPIF expected to announce new portfolio this fall with
greater allocation to risk assets
* Related story: Kaieda: Using GPIF to Raise Stock Prices
Would be Manipulation NSN NCP6D56S972L <GO>
Link to Company News:GPIVFZ JP <Equity> CN <GO>
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Anna Kitanaka in Tokyo at +81-3-3201-8140 or
akitanaka@bloomberg.net
To contact the editor responsible for this story:
Tom Redmond at +81-3-3201-3789 or
tredmond3@bloomberg.net
PARIS — Foreshadowing a new strategy and brand architecture at Donna Karan International, parent LVMH Moët Hennessy Louis Vuitton has tapped Caroline Brown to become chief executive officer of the New York-based fashion house, effective Jan. 15.
This confirms a report in WWD on Sept. 25, and signals that the French luxury giant is stepping up efforts with its American brands.
“We find that the U.S. is a superinteresting market,” said Pierre-Yves Roussel, chairman and ceo of LVMH Fashion Group, who recently added Donna Karan to the roster of houses under his purview and who is to become its chairman. “It starts from having the right ceo’s and building a team around that so we can be as successful as we’ve been in Europe on a lot of projects.”
Roussel is also chairman of Marc Jacobs International, and recently moved Givenchy’s Sebastian Suhl, a rising star in the French luxury group, to helm that New York-based brand.
The executive noted Suhl and Brown — who is stepping down as president of Carolina Herrera at the end of the year — are American nationals with broad international experience.
He lauded Brown’s “understanding of fashion” and close connections to the young generation of American designers.
Roussel noted that her appointment dovetails with a new shareholding and management configuration at Marc Jacobs, with the designer now fully devoted to his signature house, setting the stage for that company “to move forward.”
“We’re looking at those two projects as being very important to us. We really want to get to the heart and the depth of what has made those brands successful….Yes, you have to have the right resources, but it’s more about having the time, the clarity and the direction,” he said. “We’re not going to replicate what we’ve been doing in Europe.”
Roussel has been spending about a third of his time in the U.S. recently to better familiarize himself with the market.
He said he intends to partner with Brown — and the founding designer — to find the right path to catapult Donna Karan International, including deciding “what we want to keep, and what we want to discontinue.
“We’re probably doing too many things in too many directions, and in my experience, it’s much better to do fewer things, but to do them really well....The brand architecture has to be looked at. I think it has to be clarified,” he said, alluding to the plethora of subbrands and capsules that have sprouted over the years.
He described Donna Karan and DKNY as “powerful” brands, their significant fragrance businesses with the Estée Lauder Cos. Inc. a testament to that. He highlighted that DKNY carries a lot of the licensed business, which is unusual, since it’s often the first line that does that at other fashion companies.
“We have a wonderful fragrance business from DKNY, a great eyewear business, a great watch business, all with great partners,” Roussel said. “So it is a very powerful brand and it captures the essence of New York. I think there are very few brands that can claim that.”
Roussel, who joined LVMH in 2004 from management consultancy McKinsey & Co., has a strong track record of igniting fashion excitement, and business traction, at the French group’s so-called second-tier brands, which often operate in the shadow of major names such as Louis Vuitton, Christian Dior and Fendi.
He was appointed head of the fashion division in 2007, signaling a commitment to grow LVMH’s smaller brands. Roussel famously recruited Phoebe Philo, who imposed a successful minimalist makeover at Céline, and Opening Ceremony duo Humberto Leon and Carol Lim to give a young, contemporary spin to Kenzo. He recently placed 30-year-old Jonathan Anderson at the creative helm of Spanish leather goods brand Loewe, and LVMH took a 46 percent stake in his London-based J.W. Anderson fashion house.
Other European fashion houses under Roussel’s purview include Givenchy, Emilio Pucci and Nicholas Kirkwood.
Brown is to succeed Mark Weber, who has been DKI’s chairman and ceo since 2006, with Weber becoming a consultant to LVMH.
While the luxury group intends to reinforce the “strong” and distinct identities of the Donna Karan and DKNY brands, Roussel said it’s too early to talk about any changes in creative leadership.
“We’ll be looking at everything,” he said. “We are challenging ourselves; there is nothing taboo, and each time we do projects, we are willing to change what needs to be changed. And we’re doing it openly with Donna, who has built an incredible brand.
“The brand carries her name, so she’s part of it, whatever shape and form it will take, there’s no question,” he continued. “Then in what creative configuration, we’ll see, but I think she can still bring a lot.”
Roussel acknowledged that LVMH has not maximized the expansion potential of DKI, since completing its acquisition in 2001. LVMH paid $243 million for all outstanding shares in DKI, plus $400 million for Gabrielle Studio Inc., the licensor of the Donna Karan trademarks.
“We’ve grown the brand nicely, we’ve invested, but we’ve not made a step change,” he said. “We make a step change when we feel we have the equation right, like we did with Céline or with others.”
The decision to close Karan’s Madison Avenue store should not be read as a sign of retrenchment, Roussel contended, noting that store closures have been part of rejuvenation efforts for Céline and Givenchy.
“We had to have a fresh start in a way, and sometimes a store that could have been a great store 10 years ago has lost its energy and so on,” he said, explaining that it’s sometimes more effective to embark on a new strategy with a new location.
At Jacobs, Roussel has said immediate projects would likely include ramping up e-commerce, expanding the brand’s retail footprint in the U.S. and developing the footwear category, recently taken in-house.
Philippe Fortunato, most recently president and ceo of Vuitton’s North Asia region, succeeded Suhl at the management helm of Givenchy.
Brown’s successor at Herrera has yet to be named. Before Herrera, Brown was ceo of Akris U.S., and before that, senior vice president of marketing and communications, U.S., for Giorgio Armani.
Coty Inc. is seeing another change in top management.
Michele Scannavini, who brought stability to the group as chief executive officer after its failed attempt to buy Avon Products Inc. in 2012 and took the beauty firm public a year later, is leaving the company for personal reasons.
Bart Becht, chairman of Coty, will become interim ceo and the search for Scannavini’s successor will begin immediately, the company said. Becht will remain chairman after the ceo search is completed.
Scannavini has relinquished his seat on Coty’s board.
The departure of Scannavini, a 12-year veteran of the beauty company, follows the exit of longtime Coty ceo Bernd Beetz in July 2012. Scannavini, who was president of Coty Prestige at the time, took over from Beetz as group ceo. Beetz stepped down only eight months after Becht arrived as Coty’s chairman and became deeply involved in the Avon bid, taking on the role of public face of Coty, one that Beetz had held for years.
Shares of Coty fell 1.1 percent Monday to $16.74 in New York Stock Exchange trading on the news of another change in ceo within 26 months.
Scannavini, a Procter & Gamble alumnus, worked in executive sales and marketing posts with Ferrari and Maserati and later served as ceo of Italy’s Fila Holding SpA before joining Coty.
“It has been a fantastic ride,” Scannavini wrote in a note sent to business contacts. “Over the last 12 years Coty, developed from being a regional challenger in fragrances to be a global leader in beauty, this thanks to great brands and exceptional people. I feel honored of having been part of it and proud of the contribution I gave all those years to grow Coty bigger and stronger.”
He disclosed no details about the factors behind his decision or his future plans. Sources said his departure wasn’t related to his health.
In a brief conference call to discuss the changes, Patrice de Talhouët, chief financial officer, emphasized the move “is not indicative of any kind of unforeseen problem or financial issue at Coty. We are not revisiting our fiscal 2015 earnings outlook provided in our fourth-quarter earnings release as a result of this event.” He added that no change in strategy is contemplated.
When fourth-quarter results were released on Aug. 28, the company said it was “targeting to return to revenue growth in fiscal 2015 through a competitive innovation program, continuous expansion of the emerging-market business and the progressive recovery in the nail business in North America.” A global efficiency program is expected to deliver annual savings of more than $200 million within the next three years.
In the year ended June 30, revenues fell 2.1 percent, to $4.55 billion from $4.65 billion, with an 11 percent decline in the Americas region, to $1.7 billion, offsetting a gain of 5.2 percent in Europe, the Middle East and Africa, to $2.3 billion, and a virtually flat performance in the Asia-Pacific region, where sales totaled $544.9 million. The firm incurred a net loss of $97.4 million, versus net income of $168 million in the prior year. However, excluding asset impairment and other charges, the company posted a non-GAAP profit of $316.2 million, down 2.2 percent from $323.2 million in the prior year.
“Michele has been a material part and key contributor to Coty’s success of the past decade,” Becht said. “We would like to thank him in particular for taking Coty public through a listing on the New York Stock Exchange and developing a clear strategy for Coty’s future.”
The company derived 55 percent of its sales last year, or $2.5 billion, from fragrances, with color cosmetics accounting for 30 percent and skin and body care for 15 percent. During his tenure, Beetz orchestrated acquisitions, including Philosophy and OPI, which helped lessen the company’s dependence on fragrances, which accounted for 60 percent of sales in 2009.
Becht, also a P&G veteran, joined Coty’s board as chairman in 2011. For 12 years prior to that, he was ceo of Reckitt Benckiser plc, a global consumer goods company. JAB Holdings II BV, the investment vehicle of Germany’s billionaire Reimann family, was a leading seller of shares in Coty’s IPO. It retains an interest in Reckitt Benckiser and owns Jimmy Choo, Bally and Belstaff. Jimmy Choo is preparing for an October IPO of about a quarter of its shares that would value the British footwear brand at more than 700 million pounds, or $1.14 billion at current exchange.