(BFW) *ARNAULT WILL HOLD ABOUT 8.5% OF CAPITAL OF HERMÈS

BFW 09/03 06:50 *ARNAULT WILL HOLD ABOUT 8.5% OF CAPITAL OF HERMÈS
BN 09/03 06:50 *CORRECT: LVMH, DIOR, ARNAULT WON'T BUY HERMÈS SHRS FOR 5 YRS
BN 09/03 06:50 *LVMH DISTRIBUTION OF HERMES STOCK TO BE COMPLETED BY DEC 20
BN 09/03 06:50 *ARNAULT WILL HOLD ABOUT 8.5% OF CAPITAL OF HERMÈS
BN 09/03 06:49 *LVMH, DIOR, GROUPE ARNAULT WON'T BUY HERMES SHARES FOR 5 YEARS
BFW 09/03 06:48 *LVMH TO DISTRIBUTE HERMÈS STOCK TO ITS SHAREHOLDERS
BN 09/03 06:48 *LVMH TO DISTRIBUTE HERMÈS STOCK TO ITS SHAREHOLDERS
BN 09/03 06:47 *LVMH, HERMÈS END CONFLICT
BN 09/03 06:47 *LVMH AND HERMÈS HAVE BROUGHT TO END CONFLICT
BN 09/03 06:47 *LVMH: LVMH AND HERMÈS MEND RELATIONS
LVMH: LVMH and Hermès mend relations
2014-09-03 06:47:25.443 GMT

LVMH: LVMH and Hermès mend relations

PRESS RELEASE

Paris, September 3^rd 2014

The President of the Commercial Court of Paris, Mr. Franck Gentin, proposed to
LVMH and Hermès a conciliation in order to bring to an end the conflicts
between the two groups and restore a climate of positive relations between
them.

The two parties having reacted favorably to this proposal, signed an agreement
under which the LVMH Group will distribute all its Hermès shares to its
shareholders, on the understanding that LVMH's largest shareholder, Christian
Dior will in turn distribute the Hermès shares it receives to its own
shareholders. LVMH, Dior and Groupe Arnault have undertaken not to acquire any
shares in Hermès for the next five years. The distribution of Hermès shares,
approved by the boards of LVMH and Dior, will be completed no later than 20^th
December 2014. Following this distribution, Groupe Arnault will hold around
8.5% of the capital of Hermès International.

By virtue of the agreement reached today, LVMH and Hermès have brought to an
end the conflict, and all related actions, between them.

Mr. Axel Dumas and Mr. Bernard Arnault both express their satisfaction that
relations between the two groups, representatives of France's savoir-faire,
have now been restored.

LVMH
LVMH Moët Hennessy Louis Vuitton is represented in Wines and Spirits by a
portfolio of brands that includes Moët & Chandon, Dom Pérignon, Veuve Clicquot
Ponsardin, Krug, Ruinart, Mercier, Château d'Yquem, Domaine du Clos des
Lambrays, Château Cheval Blanc, Hennessy, Glenmorangie, Ardbeg, Wen Jun,
Belvedere, 10 Cane, Chandon, Cloudy Bay, Terrazas de los Andes, Cheval des
Andes, Cape Mentelle, Newton et Numanthia. Its Fashion and Leather Goods
division includes Louis Vuitton, Céline, Loewe, Kenzo, Givenchy, Thomas Pink,
Fendi, Emilio Pucci, Donna Karan, Marc Jacobs, Berluti, Nicholas Kirkwood and
Loro Piana. LVMH is present in the Perfumes and Cosmetics sector with Parfums
Christian Dior, Guerlain, Parfums Givenchy, Parfums Kenzo, Perfumes Loewe as
well as other promising cosmetic companies (BeneFit Cosmetics, Make Up For
Ever, Acqua di Parma and Fresh). LVMH is also active in selective retailing as
well as in other activities through DFS, Sephora, Le Bon Marché, la
Samaritaine and Royal Van Lent. LVMH's Watches and Jewelry division comprises
Bulgari, TAG Heuer, Chaumet, Dior Watches, Zenith, Fred, Hublot and De Beers
Diamond Jewellers Ltd, a joint venture created with the world's leading
diamond group.

Contacts:
Analysts and investors: Chris Hollis + 33 1.4413.2122
LVMH
Media:
France : Michel Calzaroni/Olivier Labesse/ + 33 1.4070.1189
Sonia Fellmann/Hugues Schmitt
DGM Conseil
Steele & Holt - Sylvain Fort +33 6. 21.89.11.05
UK: Hugh Morrison + 44.773.965 5492
Italy: Michele Calcaterra/Mateo Steinbach +39 02.8905.5101
Carlo Bruno&Associati
US: James Fingeroth/Molly Morse/ +1 212.521.4800
Anntal Silver
Kekst & Company

LVMH Press Release

WWD : Kering to Assume Control of Eyewear Business

PARIS — Are brand stewards starting to look beyond the classic eyewear license?

Spying “significant” growth potential for frames and sunglasses in the luxury and sport segments, Kering plans to take back control of its eyewear business, allowing it to squeeze extra margin in a promising product universe.

The French group said Tuesday it would “evolve” its 20-year partnership with Italian manufacturer Safilo Group SpA, terminating the current license for the cash-cow Gucci brand at the end of 2016, two years earlier than planned, in exchange for compensation of 90 million euros, or $118.2 million at current exchange, to be paid in three installments.

Kering said it plans to take advantage of Safilo’s “expertise and production capabilities” for Gucci via a product partnership for four years starting in 2017, renewable after that.

This “new business model” is to allow Kering to “fully control the eyewear value chain, from design to product development and supply chain, and from branding and marketing to sales,” the company said.

The development turns on its head the usual practice of licensing eyewear to a manufacturing and distribution specialist, and comes against a backdrop of turbulence in the segment in Italy, with a changing of the guard earlier this week at Luxottica Group SpA.

Kering hinted at a big project in the eyewear space in November 2013 when it tapped Roberto Vedovotto, formerly chief executive officer at Safilo, to review the luxury group’s eyewear strategy across all brands. On Tuesday, the company said Vedovotto would become ceo of Kering Eyewear, and that he and his team would become co-shareholders of this new entity.

Financial terms and the size of Kering’s stake in the new business were not disclosed.

Vedovotto characterized eyewear as a “strategic” category for Kering brands, and this “innovative project” would help them “fulfill their full growth potential.”

Kering said the new setup would give it full control over external manufacturers, while ramping up distribution in its own store network.

The French conglomerate controlled by the Pinault family joins a select cache of luxury brands that operate eyewear in-house, with Louis Vuitton and Cartier among the few to control production, and Vuitton limiting distribution to within its own store network.

At Kering, design, product development and sales are to be handled internally, with the design process controlled by each brand’s respective creative director, the company noted.

At present, its Saint Laurent, Bottega Veneta, Alexander McQueen and McQ brands have licensing pacts with Safilo. Eleven of the group’s brands are active in the eyewear category, nine via licensing agreements with five different partners, generating royalty revenues of about 50 million euros, or $65.6 million.

Kering bills itself as one of the top five players in the premium high-end segment, with business of about 350 million euros, or $459.6 million, suggesting it currently receives royalties, and contributions for advertising, of about 14.3 percent of sales.

The French group pegs global growth in the segment at double digits.

The company hinted that it would gradually bring all brands under the Kering Eyewear umbrella, but did not elaborate on plans for individual labels. Its stable of names includes Puma, Volcom, Boucheron, Stella McCartney, Christopher Kane and Volcom.

It is understood Kering also holds eyewear agreements with Marcolin, Luxottica, Gold & Wood and Charmant.

Safilo was sanguine about the new twist in its business relationship.

“We are satisfied with furthering our partnership in a way that leverages the heart of Safilo’s strengths in eyewear product excellence,” said Luisa Delgado, ceo of Safilo Group, which celebrates its 80th anniversary this year. “We have a unique tradition in the market as strategic partner for those brands that consider eyewear a strategic category. Through this agreement we confirm our capabilities as trusted partner.”

A Safilo spokeswoman said the deal further accents the Italian company’s expertise and specific know-how, which is “what makes the difference in the path from a design to a product.”

A well-placed source said Safilo’s management feels covered from an economic point of view: “The [90 million euro] compensation and the combination of sales in addition to the reduction of costs contribute to a sense of protection for the future, also in light of an agreement that will last until 2020, and that can be further extended.”

Asked if Kering’s strategy could be replicated by other groups and affect the eyewear market, a Safilo spokeswoman said there is an increasing market demand for the company’s “fully integrated capabilities of unique quality and trust in eyewear design and product creation, manufacturing and logistics, as well as worldwide distribution in 130 countries across all channels. The brand builders who seek us out consider eyewear as a strategic category of sophisticated craftsmanship and commercial channel breadth.

“What we see is changing is perhaps the type of brands that are looking for an expansion in eyewear. They tend to represent new consumer segments, and also new geographies, with new growth potential,” she added.

Safilo did not break out sales derived by the brands under the Kering group.

The company, which produces prescription and sunglass frames for licensed brands including Fendi, Dior, Jimmy Choo and Marc Jacobs, as well as for own brands including Safilo, Carrera and Polaroid, in July reported that adjusted net profit in the first half of the year jumped 23 percent to 31.5 million euros, or $43.2 million, on the back of strong sales, especially in the second quarter, and a big drop in net financial expenses. In the period, the firm recorded an increase of 1.3 percent in sales to 606.3 million euros, or $830.6 million, boosted by consumer demand in the company’s leading European market, where turnover increased by 5.8 percent. Europe represented almost 43 percent of group net sales in the January to June period.

Another Italian eyewear powerhouse, Marcolin Group, which produces for brands including Tom Ford and Roberto Cavalli, has been investing in an international expansion, especially targeting the American market and developing the middle segment of the market through the acquisition of Viva International, and the production and distribution of some of the most popular eyewear labels in the American market, including Gant, Timberland, Cover Girl, Skechers and Guess.

Analysts were intrigued by Tuesday’s development.

Luca Solca, head of luxury goods at Exane BNP Paribas, said if Kering’s gamble pays off, it could spell trouble for other eyewear manufacturers down the road.

“But I have serious doubt this will in the end work for Kering to produce an overall higher amount of profit in absolute euro terms,” he said. “The challenge for Kering is to service a customer base that has no overlap with its own. Sales, marketing, after-sales service — all of these would be new areas for Kering to be familiar with, and without the know-how and scale of a specialist eyewear manufacturer.”

Antoine Belge, analyst at HSBC in Paris, agreed that “building a sales force able to visit hundreds of points of sale from scratch will be costly.”

He predicted some brands would try to emulate Kering, “but not all as Luxottica is doing a very good job.” He noted that the licensed business accounts for less than 15 percent of Luxottica’s total earnings before interest and taxes, Oakley being twice as profitable as Prada for Luxottica due to the absence of royalties.

Luxottica produces under license for firms including the Giorgio Armani Group, Bulgari, Burberry, Chanel, Coach, Prada and Versace, and controls its own brands including Ray-Ban and Persol.

>>> Tesco and Sainsbury see talk of GBP 26bn merger

Tesco and Sainsbury see talk of GBP 26bn merger 

The listed British supermarket chains Tesco and Sainsbury were linked yesterday by merger rumours, The Daily Mail reported. The market report described the deal chatter as “very vague”, and was skeptical of any truth in the rumoured GBP 26bn (USD 43bn) merger.

The report noted that both retailers are facing increasingly strong competition from the German-owned bargain supermarkets Lidl and Aldi.

Sainsbury is 26% owned by Qatar, which is believed to be more likely to attempt its own buyout of the chain than back a deal with Tesco, the item stated. It also noted that Tesco has a newly appointed chief executive, Dave Lewis, who is reportedly anxious to prove himself.


Source Daily Mail

>>> Foot Locker rumoured to be in line for USD 70-per-share cash bid from PE gro

Foot Locker rumoured to be in line for USD 70-per-share cash bid from PE group

Foot Locker, the New York-based listed sportswear retailer, is rumoured to be in the sights of a private-equity consortium, The Daily Mail reported. The market report said unattributed chatter suggested a cash bid of USD 70 per share is being prepared.

A new management team would then kickstart a plan for significant expansion in Europe, especially in the UK, where Foot Locker’s current 23 sites would be doubled, as per the unattributed chatter, the report said.

The report noted that such a deal might threaten the dominance of the UK-based listed sporting-goods retailer Sports Direct International.

The Times also noted the rumours of a PE approach for Foot Locker but said traders were skeptical of the gossip.


Source Daily Mail

>>> GVT sale to Telefonica only likely to be cleared once Telefonica exits Telec

GVT sale to Telefonica only likely to be cleared once Telefonica exits Telecom Italia 

Telefonica, the Spanish telco, is only likely to be given clearance from antitrust regulators to acquire Brazilian fixed line telco GVT from French media group Vivendi once it exits Telecom Italia (TI). A report in Italian language daily Il Sole 24 Ore cited well informed local sources as saying that Cade, the Brazilian antitrust regulator, will only consider allowing the sale of GVT to Telefonica once the Spanish telco has fully exited from TI.

The report noted that Telefonica is presently TI's largest shareholder. TI owns TIM Brasil, the Brazilian mobile phone company, the report added.

The report added that Telefonica could find itself in the position of having to take over GVT when exclusive negotiations end in three months without having received approval from Cade. The item said that it is unlikely that Cade will have given clearance in that time, as it has not even given notice that it is examining the offer and will have up to a year from the announcement that it is looking at the dossier before it has to make any decision.

The report said that Telefonica will also need approval from Anatel, Brazil's telecom regulator.


Source Il Sole 24 Ore

>>> What to look at today - 03/09/2014

US Market closed on a mixed note, The financial (+0.3%), industrial (+0.2%), and consumer discretionary (+0.2%) sectors all exhibited relative strength and helped keep losses in check, information technology sector (+0.1%) also outperformed helped by Apple, Losses in Chevron and Exxon weighed heavily on the energy sector (-1.3%), which was the worst-performing sector in the S&P 500. It was followed by the utilities sector (-1.0%), which traded lower as Treasury yields moved higher. volum were still light @ 578mil shares, VIX @ 12,25 +2,25%...US after Hours : TERP +4.7%, HELE -9.1%, GWRE -4.5%, AVNW -3.9% following earnings/guidance...PMI prints out of the far east has also been mixed, HSBC chief economist warned the "economy still faces downside risks to growth in the second half of the year from the property sector slowdown. We think policy makers should use further easing measures to help support the recovery." In Japan, LDP Sec Gen reiterated PM Aso may look to raise sales tax to 10% in principle, despite more cautiously oriented urging by his economic advisor. JPY
remains under pressure, with USD/JPY topping 105.20...Nikkei +0.65% Hang Seng +1.58% Shanghai +0.80%

Eur$ 1.3132 S&P +0.13% EuroStoxx +0.19% FTSE +0.23% DAX +0.14% SMI +0.32%

Macro
- HSBC India Aug. Composite PMI 51.6 vs 53 in July
- HSBC China Aug. Services PMI 54.1 vs 50 in July
- Renzi Won't Drop EU80 Rebate, Eyes EU20b in Cuts: Sole Interview

Keep an eye on :
- AAL LN : Glencore May Bid for Anglo American in 2015, Jefferies Says
- BN FP : Danone to Separate Chairman/CEO Roles, Names Faber CEO
- BIM FP : BioMerieux 1H Rev. Up 3.6%; Net Down 34%; Confirms 2015 Forecast
- BOSS GY : Permira’s Red & Black to Sell 7.9m Shrs of Hugo Boss
- BSLN SW : Basilea niche antifungal focus hurts sale prospects 
- CSGN VX : Credit Suisse Probes Alleged Misconduct on Trading Desk: WSJ
- AM FP : Dassault Aviation May Buy 10% of Its Shares From Airbus: Echos
- ENEL IM : Italy PM Renzi: Not a priority to sell govt stakes in Eni and Enel
- ENI IM : Italy PM Renzi: Not a priority to sell govt stakes in Eni and Enel
- GBBT FP : Bourbon Swings to 1H Loss on Project Delays, Cost Cuts
- GBT FP : Guerbet's Lipiodol Approved by French Medicine Agency
- GLEN LN : Glencore, Vale Break Off Talks on Combining Nickel Assets: Rtrs
- GLEN LN : Glencore Makes Formal Offer for BHP Nickel West Unit, West Says
- ICAP LN : ICAP Said to Seek Buyer for Brazil Brokerage for Individuals
- INGA NA : Voya Financial Enters Buyback Pact With ING for $300m
- ITX SM/ HMB SS : Fast Retailing(9983 JP) +2.9% on Uniqlo Aug SSS
- KER FP : Kering Plans to Take Back Control of Eyewear Ops Value Chain --> -ve for Safilo & LUX
- MEO GY : Metro AG to Sell 156.6m Shrs in Booker (BOK GY), Raises About GBP196m Gross
- NATN SW : Nationale Suisse 1H Profit, Gross Premiums Rise
- NOVN VX : Novartis Says Gilenya Data Shows Redefining MS Treatment Goals
- ORA FP : Orange’s Richard Says French Market Doesn’t Justify 4 Operators
- PUB FP : Advertising Tech M&A Likely, CRTO Top Target: Goldman
- SAN FP : Sanofi Dengue Vaccine Works on All Four Types in Clinical Trial
- SBRY LN : Rumors of Qatari interest again
- TEF SM : Telefonica Plans Capital Increase in Spain, Valente Says
- TSCO LN : potential target for Walmrt
- TUNG LN : Tungsten to Raise ~GBP12m W/New Shrs Offer
- VOD LN : could be a target for Softbank after they walked away from Tmobilw
- VTW GY : United Internet to Buy 74.9% of Versatel Shrs for EU586m

>>> Brokers Upgrades & Downgrades - 03/09/2014

>>> Up
*AFREN RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE
*AVEVA RAISED TO BUY VS NEUTRAL AT UBS
*ENAGAS RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*ING RAISED TO BUY VS REDUCE AT KEPLER CHEUVREUX
*NATIONAL EXPRESS RAISED TO BUY VS NEUTRAL AT GOLDMAN
*REN RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*STAGECOACH GROUP RAISED TO NEUTRAL VS SELL AT GOLDMAN

>>> Down
*ADMIRAL CUT TO UNDERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*BALOISE CUT TO HOLD VS BUY AT BERENBERG
*PGS CUT TO UNDERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
*PKN ORLEN CUT TO NEUTRAL VS BUY AT BOFAML
*RED ELECTRICA CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
*SAFILO CUT TO UNDERPERFORM VS NEUTRAL AT BOFAML
*SAFILO CUT TO REDUCE VS HOLD AT KEPLER CHEUVREUX
*SAP CUT TO UNDERPERFORM FROM NEUTRAL AT EXANE
*SISTEMA CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*SWISS LIFE CUT TO HOLD VS BUY AT BERENBERG
*TDC CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE

>>> PT Changes


>>> Initiation
*ALROSA REINITIATED AT SELL AT RENAISSANCE CAPITAL; PT RUB35
*BBVA RATED NEW OUTPERFORM AT BERNSTEIN, PT EU10.7
*BNP PARIBAS RATED NEW OUTPERFORM AT BERNSTEIN, PT EU62.2
*CREDIT AGRICOLE RATED NEW MARKETPERFORM AT BERNSTEIN, PT EU10.9
*DIRECT LINE RATED NEW EQUALWEIGHT AT BARCLAYS, PT 296P
*ESURE RATED NEW UNDERWEIGHT AT BARCLAYS, PT 235P
*INTESA SANPAOLO RATED NEW OUTPERFORM AT BERNSTEIN, PT EU2.9
*JUST EAT RATED NEW BUY AT JEFFERIES; PT 450P
*SANTANDER RATED NEW MARKET PERFORM AT BERNSTEIN, PT EU7.6
*SOCGEN RATED NEW OUTPERFORM AT BERNSTEIN, PT EU45.7
*UNICREDIT RATED NEW OUTPERFORM AT BERNSTEIN, PT EU7.4
*URALKALI REINITIATED AT HOLD AT RENAISSANCE; PT $21/GDR

>>> Call
>> Stock
*GO‐AHEAD GROUP ADDED TO CONVICTION BUY LIST AT GOLDMAN
*CELEBI HAVA SERVISI EXITS GOLDMAN CEEMEA FOCUS LIST, STAYS BUY

(GS)European Banks : Stress Test

* capital shortfalls are most likely to be identified at BMPS (48%), Commerzbank (43%), BCP (34%), BAPO
(33%), Piraeus (33%), PMI (32%), Eurobank (30%), Raiffeisen (29%), Alpha Bank (28%) and POP (28%).

*Key changes to market expectations:
- Compared with our previous survey (October 14,
2013), we note:
(1) Credibility has risen: 89% of investors expect
the AQR/test to be credible (previously 70%).
(2) A €23 bn increase to recap expectations. Our
previous survey called for €75 bn of cap hikes.
With €47 bn raised since, a residual of €28 bn
remains. The current expectation (€51 bn)
therefore implies a c.€23 bn increase to aggregate
recap expectations.
(3) Among the ten banks perceived as most
likely to fail, seven remain the same – despite six
of them having raised capital already. Unicredit is
the sole bank to have substantially improved
investor perceptions without having raised capital.
(4) Market perceptions of the likelihood of
failing have increased most for Greek, CEE and
Austrian banks. Conversely, perceptions have
improved the most for Spanish banks.
(5) The average expectation is for banks to
outperform (75%) the broader market, once the
results are announced.

(GS) Strastegy - QE : A look back at the US, UK and Japanese exp

Europe
Strategy Matters: QE: A look back at the US, UK and Japanese experiences

Our economists do not expect the ECB to announce sovereign QE at the September meeting; however weak activity and inflation data in Europe combined with Mr. Draghi’s recent comments highlight the potential of QE as a policy tool. We look at how equities have responded to QE in the past. In the US and UK, equities were up strongly with the impact accumulating over time and cyclicals outperforming. Japan, where the market was expensive and QE less effectual, provides a counter-example. For Europe this time much depends on whether policy can kick-start demand.


QE in the US and UK saw equities respond well...
Judging by the US and UK experiences quantitative easing has generally been good for equities; performance one year after announcement has been consistently positive, up on average c.20% in price terms.


...even though it took up to a year for earnings to start to grow...
Furthermore, the policy stimulus and signaling provided by QE seem to be sufficient a catalyst to buoy equities at least in the initial months. Earnings growth did not turn positive until a year after the initial announcement (and in the case of the first ‘rounds’ of QE even longer).


...although performance had been weaker and valuations lower
However, both the US and UK markets had fallen substantially going into QE1 and valuation at the outset was considerably lower. When QE1 was announced by the Fed the forward P/E on the S&P 500 was 10.1x; STOXX Europe currently trades on 14.0x.


The experience of Japan is far less sanguine...
Arguably the BoJ asset purchases in the early 2000s represent a more comparable case study – especially from the perspective of deflation fears in Europe. In this case while the initial announcement of JGB purchases was greeted with optimism (Topix +8% in a week) it was not sustained.


...For Europe much depends on the growth outcome
However, the Topix at the outset of QE was trading at over 23x forward P/E. And QE proved insufficient to combat Japan’s structural problems. For Europe given that equity valuations are not stretched in the same way much depends on growth. Speculation regarding QE has pushed down both the Euro and bond yields and if this proves ultimately positive for growth – our economists argue that financial conditions have eased in recent weeks – then it ought to continue to support European equities.