FT : Pfizer scrambles to keep Astra bid alive

Pfizer scrambles to keep Astra bid alive

CAMBRIDGE, CAMBRIDGESHIRE - MAY 07: Packets of prescription drugs made by the pharmaceutical firms AstraZeneca and Pfizer on May 7, 2014 in Cambridge, England. The proposed takeover by American pharmaceutical giant Pfizer of its British rival AstraZeneca has led to the UK Business Secretary Vince Cable addressing Parliament to affirm the government's commitment to securing British science jobs. (Photo by Oli Scarff/Getty Images)©Getty
Pfizer is scrambling to keep alive its £69.4bn offer for AstraZeneca as the two sides vie for shareholder support in the battle to control the UK drugmaker.
AstraZeneca sought to bring a definitive end to Pfizer’s pursuit by issuing a statement saying there was no chance of renewed talks leading to an increased bid after it rejected the US company’s £55-per-share “final” offer on Monday.

But Pfizer continued to press its target to return to the table, saying: “The fate of the deal is now up to AstraZeneca’s shareholders. We believe our final proposal represents compelling and full value for AstraZeneca shareholders.”
Since AstraZeneca’s rejection the two companies have sought to blame each other for the way the bid process has been handled, and feuded over the correct interpretation of UK takeover rules.
Big investors staked out opposing positions in the dispute as the two companies lobbied for backing with just four days remaining before a May 26 deadline for Pfizer to lodge a firm bid or walk away.
Schroders, which owns 2.1 per cent of AstraZeneca, said it was disappointed with the “quick rejection” of an offer that represented a 45 per cent premium over the share price before news of Pfizer’s interest was first reported last month.
“We would encourage the AstraZeneca management to recommence their engagement with Pfizer,” the fund manager said.
But the chief investment officer of Fidelity, which owns 1.4 per cent, said AstraZeneca’s board “did the right thing” by rejecting the offer. “I don’t think that Pfizer was a suitable partner. It was motivated by tax and finance considerations,” said Dominic Ross.
The companies earlier traded rival statements on the situation, with Pfizer appearing to leave open the possibility of a higher offer while AstraZeneca ruled this out.
Under UK takeover rules, Pfizer is not allowed to increase its offer or launch a hostile bid because it declared its £55 proposal final and said it would proceed only if the bid was recommended by AstraZeneca’s board. However, in its statement late on Monday, Pfizer “reserved the right subsequently to increase its offer at any time”.
Q&A: Pfizer clarifies its bid intentions

Pfizer has put out a statement clarifying Monday’s announcement setting out its final proposal to AstraZeneca. Here is a Q&A on what it means
Some shareholders took this to mean that the two companies could agree a recommended £55-per-share deal as a first step towards a higher price. The May 26 deadline could be extended at AstraZeneca’s request, if it agreed to resume negotiations.
People close to AstraZeneca say the UK company saw Pfizer’s statement as an attempt to sow confusion and foment rebellion against its board.
AstraZeneca issued its own statement, saying: “Pfizer’s final proposal, which the board rejected, is not capable under the Takeover Panel rules of being increased or even suggested at being increased, privately or publicly.”
One of the principles of the Takeover Code is that parties are held to what they publicly say, in order to protect investors who may have bought or sold based on company statements. Under its rules, Pfizer would be barred from approaching AstraZeneca for six months if a deal or extension is not agreed by Monday.
However, AstraZeneca could reopen talks after three months and one big shareholder said on Tuesday it would push the company to take up that option.
Other big shareholders to have voiced support for AstraZeneca’s go-it-alone stance include Investor of Sweden, which owns 4 per cent, and M&G, a top 30 investor. Jupiter and Schafer Cullen Capital Management have joined Schroders in criticising the board.

Besides Investor, AstraZeneca’s other top 10 shareholders have so far remained silent, at least in public. One told the Financial Times that the board had made “a gross miscalculation” but declined to be named.
AstraZeneca’s top 10 shareholders include BlackRock, which with a 7.8 per cent stake is the largest; Axa, which has a 5.5 per cent stake, the second-largest; Vanguard, which holds 4.7 per cent; and Invesco, with 3.6 per cent.
AstraZeneca has argued it can deliver more value in the long term as an independent company, pointing to its rich pipeline of new drugs in development for cancer, asthma and diabetes.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: PETM -8%, AEO -5.1%, INTU -4.6%, HRL -3.9%, DY -2.9%, VSAT -2.8%, MMYT -0.9%, CRM -0.5%, .

Other news: MEIL -20.8% (announced proposed public offering of common stock; size not disclosed), ELY -4.2% (cont weakness), NBL -2.3% (announces termination of Leviathan MoU with Woodside), IPCI -2% (filed for $100 mln mixed securities shelf offering), ARCP -1.9% (launches an offering of 100 mln shares of its common stock; intends to sell multi-tenant shopping center portfolio to Blackstone (BX)), CNMD -1.3% (following late move lower on scepticism surrounding sale process), ST -1.3% (announced offering of 11.5 mln ordinary shares by selling shareholder and repurchase of its ordinary shares).

Analyst comments: NUVA -1.4% (downgraded to Hold from Buy at Needham), DKS -0.7% (downgraded to Neutral from Buy at Goldman; removed from Conviction Buy list, downgraded to Hold from Buy at Canaccord Genuity), POT -0.6% (downgraded to Mkt Perform from Outperform at Raymond James)
.

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: MY +15.4%, QIWI +8.9%, TSL +8.5%, TIF +6.6%, CTRN +5%, LQ +1.7%, ADI +1.4%.

M&A news: RIOM +6.1% (Co and Sulliden to combine their respective businesses),AZN +2.5% (cont M&A speculation with Pfizer (PFE).

Select solar stocks trading higher following Digitimes report suggesting Solar PV module shipments to grow by 30%, also in sympathy with TSL earnings: YGE +5.3%, SOL +3.9%, JKS +3.3%, JASO +2%, CSIQ +1.9%, FSLR +1%.

Select oil/gas related names showing strength: TOT +1.4%, STO +1.1%, BP +1%, RDS.A +0.7%.

Other news: NEWL +21.1% (continued momentum), LIQD +13.3% (cont strength, signed marketing agreement with ConvergEX, initiated with OP at JMP Securities, CEO insider buying), ADMS +8.6% (received $25 mln milestone payment from Forest Laboratories), HERO +5% (announces five year drilling contract for newbuild jackup rig with Maersk Oil; Total contract value is approximately $420 million ), WAVX +4.8% (still checking), CYTK +3.4% (announces three publications relating to tirasemtiv and the impact of skeletal muscle activation on respiratory function and muscle strength), FEYE +3.2% (today is expiration of lock-up agreements in connection with Secondary), CMRX +2.7% (prices 7.3 mln shares of common stock at $14.22 per share), NUAN +1.6% (signs agreement with Oracle (ORCL) to add voice capabilities to wide range of Oracle mobile apps), ITMN +1.3% (announced additional pirfenidone data in idiopathic pulmonary fibrosis: Long-term Safety Outcomes Published in the Journal of Respirology), ALU +1% (still checking, opened a new Bell Labs office near Tel Aviv), ARIA +0.9% (still checking), BHP +0.9% (provides update on towage services at Port Hedland), CPF +0.7% (announced $30 mln stock repurchase program), NFLX +0.5% (plans to significantly expand in Europe later this year).

Analyst comments: ICPT +4.3% (defended at Oppenheimer), QSII +3.3% (upgraded to Outperform at RBC Capital Mkts), NOK +2.9% (upgraded to Buy from Hold at Jefferies), ADC +2.2% (upgraded to Buy at Wunderlich), AIG +1.7% (upgraded to Buy from Neutral at Goldman), AINV +1.5% (upgraded to Mkt Outperform from Mkt Perform at JMP Securities), OIS +1% (upgraded to Outperform from Mkt Perform at Raymond James)

>>> American Eagle beats by $0.02, reports revs in-line, comps below guidance; g

American Eagle beats by $0.02, reports revs in-line, comps below guidance; guides Q2 EPS/comps below consensus

Reports Q1 (Apr) earnings of $0.02 per share, $0.02 better than the Capital IQ Consensus Estimate of ($0.00); revenues fell 4.8% year/year to $646.1 mln vs the $648.92 mln consensus and Q1 comps -10% vs HSD decline guidance and -8% estimate.
  • Margin: Co reports Q1 gross profit rate 34.9% vs ~34.5% estimate. Gross margin reflected the de-leverage of rent on negative comparable sales and increased markdowns, partially offset by favorability in merchandise and design costs.
  • Guidance: Co issues downside guidance for Q2, sees EPS of ~$0.00, excluding non-recurring items, vs. $0.04 Capital IQ Consensus Estimate; guidance is based on Q2 comps high single-digit decline vs -3% estimate.
  • Expenses/Inventory: In the first quarter, capital expenditures totaled $72 mln. For fiscal 2014, co continues to expect capital expenditures of ~$230 million. Total merchandise inventories at the end of the first quarter declined 3% to $329 mln compared to $341 mlnlast year. At cost per foot, inventory decreased 7%.
  • Additional Closures: Following a comprehensive fleet review, the company has identified an additional 150 stores to close in North America over the next three years, including nearly 100 AE stores. For 2014, co is planning to close approximately 50 AE and 20 aerie stores in North America. Beginning in 2015, the company anticipates annualized after-tax savings of ~$10-$15 million related to these store closures. For additional first quarter 2014 actual and fiscal 2014 projected real estate information, see the accompanying table.
  • "Results were consistent with our expectations. The quarter reflected weak sales and increased markdowns. We are committed to improved profitability and are working hard to implement our plan to strengthen our brands, channels and operations. Specific actions underway include continuing to build strong omni-channel capabilities, rationalizing our store fleet, reducing expenses, growing international licensed stores, and most importantly, delivering great merchandise and customer experience across our brands. Our focus is on leveraging our strong brands and talented team in order to deliver long-term profitable growth and enhanced value for our shareholders."

>>> Target misses by $0.01, reports revs in-line; guides Q2 EPS below consensus;

--> TGT US : trading flat pre-market

Target misses by $0.01, reports revs in-line; guides Q2 EPS below consensus; lowers FY15 EPS guidance

Reports Q1 (Apr) earnings of $0.70 per share, $0.01 worse than the Capital IQ Consensus Estimate of $0.71; revenues rose 2.1% year/year to $17.05 bln vs the $17.01 bln consensus.
  • Rev increase reflects the contribution from new stores partially offset by a (0.3%) decrease in comparable sales vs. (2)-0% guidance.
    • Segment earnings before interest expense and income taxes (EBIT) were $1,072 million in first quarter 2014, a decrease of 13.5 percent from $1,239 million in 2013.
  • Canadian Segment Results
    • In Q1, the Canadian Segment generated sales of $393 million, compared with $86 million in first quarter 2013 when Target opened its first 24 Canadian stores.
    • Segment EBIT was $(211) million in the first quarter 2014 compared with $(205) million in 2013. First quarter 2014 gross margin rate of 18.7 percent reflects the continued impact of efforts to clear excess inventory, including long lead-time receipts. This compares to first quarter 2013 gross margin rate of 38.4 percent, which benefitted from a lack of clearance markdowns due to the short time stores had been open. SG&A expense rate of 55.4 percent in first quarter 2014 compares with 223.9 percent last year, reflecting increased scale in the Canadian Segment and pre-opening costs in last year's results.
Co issues downside guidance for Q2, sees EPS of $0.85-1.00 vs. $1.03 Capital IQ Consensus.

Co issues downside guidance for FY15, lowers EPS to $3.60-3.90 from $3.85-4.15 vs. $4.00 Capital IQ Consensus.

(BFW) Threadneedle Investments Says Supports AstraZeneca Board...

 BN 05/21 11:48 *THREADNEEDLE INVESTMENTS IS SUPPORTIVE OF ASTRAZENECA BOARD
 BN 05/21 11:48 *THREADNEEDLE'S IAIN RICHARDS COMMENTS VIA SPOKESWOMAN JEFFERIS
Threadneedle Investments Says Supports AstraZeneca Board
2014-05-21 11:53:31.727 GMT


By Makiko Kitamura
     May 21 (Bloomberg) -- “As long-term shareholders we
continue to be supportive of the AstraZeneca board,” says Iain
Richards, head of governance and responsible investment at
Threadneedle Asset Management.
  * Comment via spokeswoman Alison Jefferis, citing Richards
  * Threadneedle Investments owns 1.54% of AstraZeneca:
    Bloomberg data
  * Earlier: L&G’s Zinkula Says ‘Talked to Both Sides’ in
    Pfizer-AstraZeneca  {NSN N5X8LM6K50YQ <go>}


Link to Company News:{AZN LN <Equity> CN <GO>}
Link to Company News:{PFE US <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:
Makiko Kitamura in London at +44-20-3525-8467 or
mkitamura1@bloomberg.net

To contact the editor responsible for this story:
Gaurav Panchal at +44-20-7392-0511 or
gpanchal2@bloomberg.net

FT : Russian shareholder eyes Lafarge and Holcim disposals

Russian shareholder eyes Lafarge and Holcim disposals

The second largest shareholder in cement group Holcim agreed to support the $40bn merger with France’s Lafarge on the understanding that he could bid to add some of the divested assets to his existing cement portfolio.
Filaret Galchev, one of Russia’s richest men, accepted the deal to create the world’s largest cement company as it could allow him to pick up some of the €5bn worth of assets set to be divested, according to sources close to the deal.

Last month Holcim and Lafarge agreed to a “merger of equals” to create a global cement group with combined sales of $40bn. The deal will have to be cleared by up to 15 national regulators and is expected to lead to significant divestment of assets.
Mr Galchev, who did not respond to a request for comment, controls Eurocement, Russia’s biggest cement maker by sales with plants in Russia, Ukraine and Uzbekistan. His company has an 11 per cent stake in Holcim.
People close to the deal said that Mr Galchev will have to bid for the assets in a tender process, competing with private equity firms and other big cement groups, but the likely sale of some choice sites was a reason for his supporting the deal.
The company said that the disposals, set to be mainly in developed markets, represent capacity generating between 10-15 per cent of the combined company’s earnings before interest, tax, depreciation and amortisation, which was €6.5bn at the end of 2013. It said it would divest assets worth about €5bn in sales.
The deal was brokered by some shareholders at Holcim and Lafarge in consultation with senior management in talks that started in July 2013.
It was seen as an opportunity to gain critical mass and shed European assets in a sector that has been stricken by overcapacity.
Shareholders involved included Nassef Sawiris, Egypt’s richest man who owns 15 per cent of Lafarge, Albert Frère, who owns 21 per cent of Lafarge through Groupe Bruxelles Lambert, and Thomas Schmidheiny, who owns 20 per cent of Holcim.
Mr Galchev was not involved in the initial negotiations, said people close to the talks. He has a frosty relationship with Holcim’s largest shareholders, the Schmidheiny family, after what was perceived as a hostile attempt to build up his stake in 2008 and 2011.
One person close to the talks said that part of the attraction for the Schmidheiny family in going through with the Lafarge merger was that it would dilute the shareholding of Mr Galchev, preventing the possibility of any takeover.
Holcim and the Schmidheiny family declined to comment.

WSJ : Hedge Fund Magnetar Sues McKesson Over Celesio Deal

Hedge Fund Magnetar Sues McKesson Over Celesio Deal
Hedge Fund Claims a Large Celesio Shareholder Was Paid Higher Price Than Others

FRANKFURT—Hedge fund Magnetar Financial LLC on Wednesday filed a lawsuit against McKesson Corp. MCK -0.46% alleging that the U.S. drug retailer breached German law in its takeover of German rival Celesio AG CLS1.XE +1.37% earlier this year, according to documents reviewed by The Wall Street Journal.

Magnetar accuses McKesson of offering a higher price to one large Celesio shareholder, Elliott Management Corp. McKesson officials weren't immediately available to comment. An Elliott official declined to comment on the lawsuit.

Magnetar cites German law requiring all shareholders and bondholders to receive equal treatment in a takeover. "Under German takeover law, minority shareholders are entitled to receive the minimum price paid to all other shareholders," Magnetar said Wednesday.

If the lawsuit is successful it could force San Francisco-based McKesson to pay an additional €370 million to Celesio shareholders and bondholders who have already tendered their holdings.

Earlier this year, an Elliott-managed hedge fund amassed large stakes in Celesio's shares and two of its convertible bonds. It then threatened to block McKesson's bid of €23.50 a share, which valued Celesio at more than €6 billion, including debt.

To win Elliott's consent, McKesson paid it nearly €31 for each convertible bond, the lawsuit claims.

Documents published by McKesson indicate it did pay the equivalent of €31 a share for Elliott's convertible bonds. Other convertible bondholders received the equivalent of €23.50 a share.

"We believe McKesson's actions were specifically aimed at evading the minimum price rule in German takeover law, and resulted in offering only €23.50 per Celesio share to minority shareholders, whilst paying a look-through price of up to €30.95 per Celesio share through the acquisition of convertible bonds," Magnetar said.

>>> US Early premarket gappers

Early premarket gappers
Gapping up: MY +10.9%, TSL +8.1%, TSL +8.1%, QIWI +6%, TIF +5.4%, HERO +4.6%, ADMS +3.4%, FEYE +2.5%, AZN +2.3%, LQ +1.7%, ITMN +1.3%, AU +1.2%, LOW +1.1%, ALU +1%, ADI +1%, TGT +1%, ICPT +0.7%, CPF +0.7%

Gapping down: MEIL -12.7%, ISR -4.4%, INTU -3.9%, DY -3.9%, VSAT -2.8%, ARIA -2.7%, AEO -2.3%, HRL -1.4%, MMYT -0.9%, ST -0.8%