FT : Shire drops on doubt over AbbVie takeover

Shire drops on doubt over AbbVie takeover

All may not be lost for Shire shareholders.
The drugmaker dropped 5.1 per cent this week on worries that US moves to curb tax inversions would derail its takeover bid from AbbVie. A key attraction of the deal is that AbbVie could redomicile to avoid US repatriation taxes on its global cash flows.

A meeting with AbbVie’s chief financial officer Bill Chase provided reassurance that the takeover will complete, Credit Suisse told clients. “While he cannot break down the value that AbbVie would obtain from an inversion specifically, the strategic importance of integrating Shire into a more diversified, speciality care NewCo holds more importance than some on the Street currently appreciate,” it said.
Buying Shire will give AbbVie greater flexibility to deploy cash trapped outside the US, which is more important to management than using controversial tax-lowering methods such as intercompany debt and interest expense deductions, said Credit Suisse.
Currently, AbbVie has a 13 per cent pro forma tax rate and pays 35 per cent to repatriate international cash. So even without redomiciling, AbbVie could still make savings worth about £9 per Shire share just by getting access to the UK group’s cash flow, 70 per cent of which comes from the US, Barclays estimated. “Put another way, for every dollar of expenditure that AbbVie can avoid paying with repatriated cash by utilising Shire’s US cash flows it saves 54 cents,” the broker told clients.
Merger cost savings can deliver a further £3.70 per Shire share so even if inversion is impossible, Abbvie’s offer, worth £52.42 on Friday’s prices, looked only marginally too high, Barclays said. Shire ended flat at £46.19, rallying from a session low of £45.00.

NY Post : The worst airlines in America

The worst airlines in America More details : {http://www.airfarewatchdog.com/blog/19447786/best-us-airlines-2014-edition/}

Better pick your airline carefully, or you’ll be at a higher risk of getting bumped off flights, losing your luggage or having your flights delayed or canceled, a new survey reveals.
According to a report released Thursday by AirfareWatchdog.com, some domestic airlines perform better than others when it comes to canceled flights, on-time arrivals, mishandled bags, denied boardings, and customer satisfaction. This year Delta, which typically ends up toward the bottom of the performance list, ranked No. 1 in overall performance, thanks to more on-time arrivals, fewer canceled flights and mishandled bags and better customer service. “Delta is this year’s unsung hero,” the report revealed. It was followed by Virgin America, Alaska Airlines, JetBlue and Frontier, in that order.
On the not-so-good side of this list are Southwest, Airtran (now part of Southwest), American, US Airways (now part of American Airlines) and United, which ranked dead last. United’s abysmal ranking may be due to the fact that it had the highest number of boarding denials (nearly 246 per one million passengers, compared with just 3.58 per one million for JetBlue, which ranked highest in this category) of all the airlines examined as well as the lowest overall customer satisfaction score (it ranked 60 out of 100, compared with 79 out of 100 for JetBlue, which had the best customer satisfaction score).
American and US Airways have the second-lowest customer satisfaction scores and have a high number of mishandled bags. AirTran has the highest number of denied boardings and mishandled bags, and Southwest gets low marks in terms of mishandled bags and on-time arrivals.
Of course, these overall rankings are more nuanced than they seem. While Delta ranked first in overall performance, its boarding denials are fairly high (more than 74 per one million passengers, compared with just 3.58 per one million for JetBlue).
George Hobica, the founder of AirfareWatchdog.com, says JetBlue’s boarding denials are low because it is one of the only airlines that doesn’t routinely overbook flights. And though JetBlue only ranked third in overall performance, it has the highest scores in terms of both customer satisfaction and the fewest denied boardings. Indeed, Hobica notes that JetBlue also has more legroom and “a better economy-class experience” so it’s often a great bet for flyers, even though it didn’t get the top spot this year. And Virgin America (No. 2) has the fewest mishandled bags and Alaska Airlines (No. 3) has the highest percentage of on-time arrivals.
While some airlines score better than others, the industry as a whole is still hated by consumers. According to a 2014 survey by the American Customer Satisfaction Index, out of the 43 industries measured, airlines ranked 40th in terms of customer satisfaction (only Internet service providers, social media companies and cable and subscription TV providers got worse scores).

(MergerMarket) Newmont CEO comments seen as unlikely to re-spark Barrick merger

Newmont CEO comments seen as unlikely to re-spark Barrick merger talks, source says

Newmont Mining (NYSE:NEM) CEO Gary Goldberg’s comments on Thursday that he was still open to merger talks with Barrick Gold (TSX:ABX) are unlikely to get Barrick back to the negotiating table at this time, a source familiar with the matter said.

Barrick's thought process had not changed since talks between the gold miners fell apart in April, the source said, adding that the company has “moved on.” This was also in line with Barrick Executive Chairman John Thornton’s comments in July that rekindling merger talks was not something on the Toronto, Ontario-based supermajor's mind.

At the time, Barrick said that a key reason behind the talks breaking down was Newmont’s reneging on three key elements of the term sheet signed by both companies on 8 April. The crucial points were identification of the assets that would be included in a spin-off company; "carefully constructed governance agreements," describing the role and authority of the chairman, lead director and CEO of the combined companies; and the location of a joint head office in Toronto.

The source brushed off speculation that Thornton could offer Goldberg a co-president role in the event a merger between the companies materialized. Barrick announced in July that COO Jim Gowans and African Barrick Chairman Kelvin Dushnisky would be named co-presidents and current CEO Jamie Sokalsy would be stepping down on 15 September.

An industry banker noted that after the talks collapsed in April, it appeared unlikely that they would restart anytime soon. In this pricing environment, a bigger precious metals company is almost always worse than a smaller one, this banker pointed out.

An industry executive agreed with these comments, saying it was unclear whether the management teams of Barrick and Newmont could constructively work together and referenced the "messy" way the most recent round of merger talks had ended between the two companies.

Leading up to the late-April announcement, Barrick and Newmont traded volleys of press releases and public statements that included negative characterizations of Barrick’s co-chairman by Newmont and reported assertions by Barrick founder Peter Munk that Newmont was extremely bureaucratic and "not shareholder-friendly."

A second banker, however, noted one can never say never in terms of a merger being scuppered.

Prior to the talks falling apart, a separate source familiar with the situation said that Barrick had retained RBC Capital Markets and Michael Klein & Co as financial advisors for the transaction, along with Davies and Cravath, Swain & Moore as legal advisors.

A Newmont spokesperson said Goldberg's comments were consistent with what the company has stated previously. Barrick declined comment.

>>> Alibaba ends funding round talks with Snapchat

Alibaba ends funding round talks with Snapchat - report (translated)

Alibaba [A Li Ba Ba], the Chinese e-commerce company, has ended funding round talks with SnapChat Inc., the Pacific Palisades, California-based mobile application company, Sina.com reported, citing an unidentified source.

The source added that the talks were terminated last month prior to a Bloomberg report dated 30 July. He went on to say that Alibaba abandoned the talks possibly to avoid potential noises which may affect its IPO process, but Snapchat is in the process of a funding round and its market value is estimated to be USD 10bn.


Source Sina.com

>>> Weekly Update

Weekly Market Update: Ebola, Rockets and Tanks, Oh My

- Geopolitical events dominated the conversation again this week, as turmoil in Israel, Ukraine, Iraq, and West Africa provided plenty of dramatic, market-moving headlines. In the meantime, negative Italian Q2 GDP and worrying German industrial data cast a shadow over Europe, while the Nikkei fell 5% on the week thanks to weaker-than-expected July numbers. Most of the June quarter corporate earnings reports are in the can, leaving just a few retailers and some big tech names to report next week. At the end of a volatile week, the DJIA ended up 0.4%, the S&P500 gained 0.3% and the Nasdaq tacked on 0.4%.

- The Ebola outbreak in West Africa has become very serious this week, and the World Health Organization has declared it a major public health risk requiring a coordinated global response. The disease has begun to appear in Nigeria, where the government declared a state of emergency, and there are concerns it could spread beyond Africa. Cases of people with Ebola-like symptoms have been reported in the US, Europe and Saudi Arabia, but no cases have been conclusively proved. Shares of Canadian biotech Tekmira have gained another 40% this week after the FDA partially lifted its clinical hold on the firm's experimental anti-Ebola viral therapeutic. Biocryst, which is also working on a treatment for Ebola, is up 15% on the week.

- In the first half of the week, there were mounting fears that Russia was moving closer to invading Ukraine after authorities in Kiev and NATO figures said Moscow had built its forces back up to around 20,000 troops (plus the 20,000 troops stationed in Crimea). The thought was that Moscow would introduce troops under the guise of a "humanitarian mission" after many armored units were seen with "peacekeeping" markings painted on their vehicles. However on Friday there were sudden signs of fresh de-escalation as the chairman of the Russia Security Council said his country would like to find ways to "de-escalate the Ukraine situation" and Moscow ended scheduled military drills and stated that air and air defense units have been ordered back to their home bases. Nevertheless, the political battle of wills continues and Russia imposed countersanctions on the West, banning a broad range of food imports.

- Within a few hours of each other, two huge M&A deals fell apart this week, while a third was altered to remove a tax inversion component following strong political pushback. 21st Century Fox abandoned its $80 billion offer to acquire Time Warner, citing hostility to the deal at Time Warner and reluctance to overpay. Sprint abandoned attempts to reach a deal to acquire T-Mobile, costing CEO Dan Hesse his job. Walgreen said it would go ahead with buying up the rest of Alliance Boots it does not already own but abandoned plans to move its tax address abroad.

- Media names CBS and Disney both saw very solid quarterly reports that topped expectations. Disney reported strong Q2 revenue growth, although the results were not quite as good as results seen in Q1. News Corp disclosed a mixed set of Q4 results, missing the consensus EPS estimate for the first time four quarters but beating on revenue. Revenue and earnings sagged on a y/y basis.

- Shares of luxury goods names Coach and Michael Kors were closely watched after quarterly reports. Kors widely beat top- and bottom-line expectations, saw a 24% gain in comps and raised its FY15 outlook. But on the conference call, executives warned that margins would suffer going forward due to increased markdowns and disclosed a big increase in inventories. Coach also topped earnings and revenue expectations, with the international business strong and Chinese comps up by double digits, even as North America comps sagged.

- Solar names soared on very good results out of solar power installer SunEdison, which reported decent profits (beating expectations for a big loss) and revenue swelled 61% y/y. SunEdison said it completed more projects in the quarter than it had expected, goosing results higher. Earlier in the week First Solar had widely missed expectations and saw earnings and revenue sag on a y/y basis, although SUNE's 15% post-earnings gain helped pull FSLR up nearly 10% on the week.

- The Fed cleared Bank of America's resubmitted capital plan. Recall that back in April, the Fed directed the company to resubmit its CCAR application after it emerged that the bank had incorrectly reported data used in the calculation of regulatory capital ratios. The Fed approval allows BoA to go ahead with its plan to boost its dividend to $0.05 per share from $0.01 per share.

- The ECB left its policies unchanged at the August meeting. While acknowledging ultra-low inflation and slowing economic prospects, ECB President Draghi continued to affirm his confidence that the ECB's June measures would ultimately push prices and growth higher over the medium term. During the press conference, Draghi pushed back against criticism that the ECB is not doing enough by further detailing the TLTRO program, asserting it will disburse up to €450-850B to the real economy. On Ukraine, Draghi warned the conflict had the real potential to negatively impact the Eurozone.

- Italy's economy unexpectedly contracted in the second quarter, deepening fears that a wider economic slowdown is under way in Europe. Italy GDP was -0.2% q/q and -0.3% y/y, after a final Q1 GDP reading of -0.1% q/q and -0.5% y/y , marking a rare triple dip recession. Germany, France and the Eurozone report initial Q2 GDP figures next Thursday. There are real concerns about the German data after Germany reported June factory orders -2.4% y/y on Wednesday and June industrial production -0.5% on Thursday, after which the two-year bund yield fell below zero for the first time since May 2013 and the 10-year bund yield fell to an all-time low below 1.07%. EUR/USD hit nine-month lows below 1.3340.

- In Japan, the strengthening yen and disappointing July economic figures sent the Nikkei225 down by nearly 5% this week. Despite speculation of a rift in the policy board, the BoJ's latest statement retained its unanimous stance on key policy settings even as the assessment of exports and industrial output were downgraded, as both have "shown some weakness." The BoJ still cheered improvement in employment and income situation along with some signs that consumption tax headwinds are starting to abate. Government bond yields in Tokyo have plunged to new lows, with the 10-year falling to a 16-month low of 0.5%.

- After two straight weeks of strong gains, the Shanghai Composite was down 0.3% this week, a modest decline against the backdrop of volatility in the emerging markets. A very strong set of China trade data helped restore markets on Friday. July's $47B surplus was the biggest on record, and even though imports fell, a 14% rise in exports more than made up for that decline. Shipments to Europe were particularly strong, up about 17% y/y, while exports to Japan reversed last month's drop with a 3% increase. The stream of economic data from China continues with the release of July inflation figures late on Friday.

>>> US Close Dow +1,13% S&P +1,15% Nasdaq +0,83%

Closing Market Summary: First Full Week of August Ends on Upbeat Note

The major averages finished the first full week of August on a strong note. The S&P 500 settled higher by 1.2% with all ten sectors posting gains. Thanks to the advance, the benchmark index added 0.3% for the week.

Although stocks ended higher, the futures market was pressured overnight after President Obama delivered a statement last evening, authorizing humanitarian air drops and air strikes in Iraq. The announcement weighed on futures, while giving a boost to Treasuries.

Despite the overnight weakness, equity futures began climbing once European markets opened for action. Furthermore, the overall sentiment improved in reaction to a report from RIA, indicating Russia is seeking to de-escalate the Ukraine crisis. However, it is worth noting that regional leaders have recently warned that Russia could invade Ukraine under the guise of ‘peacekeeping.'

Once the opening bell rang, the key indices searched for direction through the first hour of action, but were able to rally to fresh highs with support from heavily-weighted sectors like consumer discretionary (+1.6%), industrials (+1.4%), and health care (+1.1%). The market received another push during the early afternoon after news reports cited Russia's defense ministry as saying Russia's exercises near the border with Ukraine are over.

The afternoon news lifted underperforming sectors into the green, while sending the day's leaders to new highs. On the fixed income side, Treasuries erased all of their overnight gains and ended flat with the 10-yr yield at 2.42%.

The utilities sector (+2.0%) finished in the lead, while other countercyclical groups were somewhat mixed. Consumer staples (+1.0%) and telecom services (+0.5%) lagged, while health care (+1.1%) ended just behind the S&P 500 thanks to strength in the biotechnology space. The iShares Nasdaq Biotechnology ETF (IBB 251.49, +3.34) rose 1.4%, but ended just short of its 50-day moving average (252.10).

Similar to biotechnology, other high-beta areas like chipmakers and homebuilders also rallied.

Microchip manufacturers rallied after NVIDIA (NVDA 19.00, +1.54) reported better than expected earnings and hiked its revenue guidance. The stock surged 8.8%, while the broader PHLX Semiconductor Index rose 1.2%. However, the technology sector (+0.6%) underperformed amid relative weakness in top-weighted components like Apple (AAPL 94.74, +0.26) and Microsoft (MSFT 43.20, -0.03).

Elsewhere, homebuilders provided a measure of support to the discretionary sector with the iShares Dow Jones US Home Construction ETF (ITB 22.71, +0.53) climbing 2.4%. Retailers and media names also played a part in the outperformance. The SPDR S&P Retail ETF (XRT 85.24, +1.30) added 1.6%, while media stocks were underpinned by CBS (CBS 59.23, +2.33) after the company reported above-consensus results.

Participation was on the light side with a bit more than 615 million shares changing hands at the NYSE.

Economic data was limited to second quarter productivity/unit labor costs data and the Wholesale Inventories report for June:
  • Nonfarm labor productivity increased 2.5% in Q2 2014 following a downwardly revised 4.5% (from -3.2%) decline in the first quarter 
    • The consensus expected nonfarm productivity to increase 1.4% 
  • An increase in wages led to a 3.1% increase in hourly compensation in the second quarter, down from a 6.8% increase in the first quarter 
    • The larger increase in output, however, reduced unit labor costs growth from an 11.8% gain in the first quarter to only 0.6% growth in the second. The small increase in unit labor costs leaves a lot of room for future profit growth 
  • Wholesale inventories increased 0.3% in June after increasing by a downwardly revised 0.3% (from 0.5%), while the consensus expected an increase of 0.4% 
    • The BEA assumed wholesale inventories increased 0.7% in the second quarter GDP report. The lower-than-expected increase along with the downward revision to the May data will result in a smaller contribution to overall growth from the inventory sector when the second estimate is released at the end of the month 
There is no economic data of note scheduled to be released on Monday.
  • S&P 500 +4.5% YTD 
  • Nasdaq Composite +4.7% YTD 
  • Dow Jones Industrial Average -0.1% YTD 
  • Russell 2000 -2.9% YTD 

(BFW) Possible Obama Anti-Inversion Action More Immediate Threat: ISI


Possible Obama Anti-Inversion Action More Immediate Threat: ISI
2014-08-08 18:22:09.163 GMT


By Rachel Layne
Aug. 8 (Bloomberg) -- IRS, U.S. Treasury may issue
“unilateral reinterpretation” of inversions-related laws, a
move riskier than conventional rulemaking, ISI analysts Krishna
Guha, Terry Haines and Ernie Tedeschi write in note.
* Treasury’s short-term intent, possibly by the end of
Congressional recess given President Obama’s call for speed
this week, “is to have IRS create as much uncertainty as
possible” around tax provisions so companies “seriously
reconsider whether to invert at all”
* Approach riskier than Treasury action via rulemaking,
which would be viewed as weak by Democrats and take a
year to finalize becuase it opens Obama admin. to
lawsuits
* Congress still unlikely to pass any legislation in 2014
* In 2015, ISI sees successful bipartisan comprehensive tax
reform effort for legislation includling lower corporate top
rate, and movement towards a territorial tax system
* Meanwhile, Democrats most likely to address inversions
via amendments in govt. spending bills this fall, keep
alive anti-inversion “drumbeat by all available means”
in August as a matter of “economic patriotism”
* Republicans still opposed to anti-inversions
legislation, preferring to use issue tax reform driver
in 2015 fall government spending bills
* NOTE: Earlier, Barclays says AbbVie-Shire Still Offers Tax
Savings w/o Inversion; July 29, Bloomberg Intelligence says
AbbVie’s Bid For Shire Tops All Pending Tax Inversion Deals
** Aug. 7, DealRep says bankers evaluate CVRs as tax inversion
hedge; M&A breakup risk evaluated on potential tax legislation
** Aug. 6, Walgreens says Boots deal doesn’t meet inversion
rules
* NOTE: Earlier, Cos. bulk up tax lobbying as Obama seeks to
curb inversions
For Related News and Information:
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--With assistance from Cristin Flanagan in New York.

To contact the reporter on this story:
Rachel Layne in Boston at +1-617-210-4634 or
rlayne@bloomberg.net
To contact the editor responsible for this story:
Brad Skillman at +1-212-617-2763 or
bskillman1@bloomberg.net