>>> Brokers Upgrades & Downgrades - 08/08/2014

>>> Up
*KERING RAISED TO BUY VS UNDERPERFORM AT BOFAML
*EURONEXT RAISED TO NEUTRAL VS SELL AT UBS

>>> Down
*ADIDAS AG CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*ALPIQ HOLDING CUT TO UNDERPERFORM VS NEUTRAL AT CREDIT SUISSE
*DEUTZ AG CUT TO SELL VS BUY AT BANKHAUS LAMPE
*HENDERSON GROUP CUT TO HOLD VS BUY AT CITI
*INTU PROPERTIES CUT TO NEUTRAL VS BUY AT UBS
*KUEHNE & NAGEL CUT TO NEUTRAL VS BUY AT GOLDMAN
*LUFTHANSA CUT TO UNDERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
*MEGGITT CUT TO HOLD VS BUY AT BERENBERG
*SECURITAS CUT TO SELL VS HOLD AT DEUTSCHE BANK
*SKF RAISED TO OVERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
*SKY DEUTSCHLAND CUT TO HOLD VS BUY AT BERENBERG
*TOD’S PT CUT TO EU80 VS EU84 AT UBS; KEPT AT SELL
*VOLKSWAGEN PREF. CUT TO SELL VS NEUTRAL AT GOLDMAN

>>> PT Changes
*BPOST PRICE EST. RAISED TO EU19.00 FROM EU18.20 AT ING
*TOD’S PT CUT TO EU78 VS EU88 AT MAINFIRST; KEPT AT UNDERPERFORM
*TOD’S PT CUT TO EU70 VS EU75 AT BOFAML; KEPT AT UNDERPERFORM
*TOD’S PT CUT TO EU89 VS EU95 AT DEUTSCHE BANK; KEPT AT HOLD

>>> Initiation
*ADP RATED NEW NEUTRAL AT UBS; PT EU102
*FLUGHAFEN WIEN RATED NEW BUY AT UBS; PT EU88
*FRAPORT RATED NEW BUY AT UBS; PT EU59
*DIXONS CARPHONE RATED NEW BUY AT CITI; PT 430P
*DIXONS CARPHONE RATED NEW BUY AT BOFAML; PT 400P

>>> Call

>>> Asian Update

Asian Market Update: Obama authorizes strikes on ISIS; China posts record trade surplus; BOJ cuts view on exports and output

***Economic Data*** - (CN) CHINA JULY TRADE BALANCE: $47.3B (record high surplus) V $26.0BE - (JP) BANK OF JAPAN (BOJ) POLICY STATEMENT: REITERATES TO INCREASE MONETARY BASE AT ANNUAL PACE OF ¥60-70T (AS EXPECTED); Maintains overall economic assessment; Downgrades Exports and Industrial Output; Upgrades Wages and Labor Conditions - (JP) JAPAN Q2 HOUSING LOANS Y/Y: 2.7% V 2.9% PRIOR - (JP) JAPAN JUL BANK LENDING INCL TRUSTS: 2.2% (3-month low) V 2.3% PRIOR; BANK LENDING EX-TRUSTS: 2.3% V 2.5% PRIOR - (JP) JAPAN JUNE BOP CURRENT ACCOUNT BALANCE: -¥399B V -¥326BE; BOP ADJUSTED CURRENT ACCOUNT: ¥126B (3rd consecutive surplus) V ¥109BE; TRADE BALANCE BOP BASIS: -¥537B V -¥593BE - (AU) AUSTRALIA JUN HOME LOANS M/M: 0.2% V 0.6%E; INVESTMENT LENDING: -0.3% V -0.9% PRIOR; OWNER-OCCUPIED LOAN VALUE: +1.8% V -0.7% PRIOR - (PE) PERU CENTRAL BANK LEAVES REFERENCE RATE AT 3.75% (NOT EXPECTED)

***Index Snapshot (as of 02:30 GMT)*** - Nikkei225 -2.9%, S&P/ASX -1.0%, Kospi -1.2%, Shanghai Composite -0.2%, Hang Seng -0.7%, Sept S&P500 -0.6% at 1,893

***Commodities/Fixed Income/Currencies*** - Dec gold +0.4% at $1,317, Sept crude oil +1.0% at $98.27/brl, Sept Copper flat at $3.17/lb - SLV: iShares Silver Trust ETF daily holdings rise to 10,101 tonnes from 10,034 tonnes prior (highest since June 30th) - (AU) Australia MoF (AOFM) sells A$700M in 2020 bonds; avg yield 2.9522%; bid-to-cover: 3.21x - (US) Weekly Fed Balance Sheet Total Assets Week ending Aug 6th: $4.41T v $4.41T prior; Reserve Bank Credit: $4.37T v $4.36T prior; M1: -$9.5B (first decline in 3 weeks) v +$17.8B prior; M2: +$29.2B v +$23.5B prior; M1 y/y change: 11.4% (1-year high) v 11.2% w/w; M2 y/y change: 6.7% (11-month high) v 6.6% w/w - (CN) China MoF sells 20-yr bonds at average yield of 4.62% - USD/CNY: (CN) PBoC sets yuan mid point at 6.1562 v 6.1670 prior setting (strongest Yuan setting since Jul 22nd)

***Market Focal Points/Key Themes*** - After much speculation over intervention in northern Iraq, where ISIS atrocities against the Kurdish Yazidi sect killed hundreds and displaced tens of thousands in recent days, president Obama threatened targeted air strikes if militants move on the city of Erbil where US advisors are stationed. Calling it a humanitarian mission to prevent genocide, US military aircraft have already started to make drops of water and food supply to some 40K Iraqis stranded on mountain ranges faced with death by ISIS or starvation. US officials further clarified that air strikes have not yet taken place and reiterated US will not put boots on the ground to fight militants, but maintained the need to fill a political vacuum with more "moderate" forces to return Iraq to stability. Risk aversion related flows spiked on the announcement - S&P futures fell about 15 handles below 1,895, yield on the US 10-yr fell 5bps to 2.38%, Gold rose nearly $10 to $1,318, and USD/JPY cratered over 50pips below 101.60. Oil futures were also up about 1% on geopolitical ramifications. Nikkei fell as much as 3% - it lowest levels since mid-June.

- Shanghai Composite is the only regional index with mild declines, erasing post Obama-conference losses on much stronger than expected China trade data. $47B surplus for July is a record high, and even though imports surprisingly fell 1.6%, double-digit 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.

- Monetary policy statement from the BOJ saw the central bank maintain its overall economic assessment unchanged for the 12th consecutive meeting, but also downgraded its view on exports and industrial output as had been speculated in local press. BOJ said exports "have shown some weakness", and also added output "recently shown some weakness" though still increasing moderately as a trend. BOJ was also a bit more upbeat on wages, noting "employment and income situation is improving steadily".

- Aussie dollar is the biggest loser in the dollar majors, driven by risk-off sentiment on Iraq announcement as well as concurrently released RBA quarterly policy statement. RBA cut its 2014 and 2015 GDP targets by 0.25pts to 2.5% and 2.75% (midpoint) respectively, and also narrowed lower its 2016 growth projection to 2.75-3.75% v 2.75-4.25% prior forecast. On inflation, RBA lowers 2014 core CPI target to 2.25% v 2.5% prior, but raised 2015 CPI to 2.75% midpoint from 2.5%. Following the release of 12-year high unemployment rate from Australia earlier this week, RBA said the jobless rate is likely to remain elevated for some time yet and might not decline substantially until 2016. AUD/USD hit 2-month lows of $0.9240, down over 30pips from opening highs, while AUD/JPY was off by as much as 80pips below ¥94.00.

***Equities*** US markets: - SHOR: Reports Q4 $0.08 v $0.05e, R$88.6M v $85.4Me; +14.5% afterhours - MELI: Reports Q2 $0.72 v $0.56e, R$131.8M v $107Me; +13.6% afterhours - ANET: Reports Q2 $0.35 v $0.13e, R$137.9M v $126Me; +9.1% afterhours - TKMR: FDA Modifies TKM-Ebola Clinical Hold to Partial Hold; +8.1% afterhours - LULU: Founder Dennis Wilson to reportedly sells half of stake to Advent, move would take hostile takeover and proxy fight off the table - press; +6.1% afterhours - GPS: Reports Q2 Rev $3.98B v $3.97Be; July SSS +2.0% v +1.0%e; +5.1% afterhours - NVDA: Reports Q2 $0.30 v $0.19e, R$1.10B v $1.11Be; +4.4% afterhours - ELX: Reports Q4 $0.07 v $0.03e, R$99.8M v $96.3Me; +4.1% afterhours - SCTY: Reports Q2 -$0.96 (adj) v -$1.00e, R$61.3M v $61.3Me, energy contracts 28.3K v 17.3K q/q; +3.1% afterhours - MNST: Reports Q2 $0.81 v $0.76e, R$779.0M v $697Me; +2.5% afterhours - LGF: Reports Q1 $0.36 v $0.13e, R$449.4M v $475Me; +1.8% afterhours - CBS: Reports Q2 $0.78 v $0.72e, R$3.19B v $3.30Be; increases dividend 25%; increases buyback program $3B (10% of market cap) to $6B; +0.2% afterhours

- NWSA: Reports Q4 $0.01 v $0.04e, R$2.19B v $2.18Be; flat afterhours - MDRX: Reports Q2 $0.09 v $0.09e, R$351M v $353Me; -2.0% afterhours - CSC: Reports Q1 $1.03 v $0.94e, R$3.24B v $3.20Be; -2.2% afterhours - FI: Reports Q2 $0.23 v $0.31e, R$272.9M v $282Me; Doubles quarterly dividend to $0.15/shr (implied yield 2.6%); -4.6% afterhours - HIBB: Reports prelim Q2 $0.30-0.32 v $0.40e; R$194M v $203Me; Lowers FY14 EPS to $2.63-2.73 v $2.89e (prior $2.78-2.98); -6.4% afterhours - ZNGA: Reports Q2 $0.00 v $0.00e, R$153.2M v $192Me; -7.5% afterhours

Notable movers by sector: - Consumer Discretionary: Great Wall Motor 2333.HK -2.7% (July operating results); Huayi Compressor 000404.CN +1.2% (H1 results); Yamada Denki 9831.JP -8.3% (Q1 results); Asics Corp 7936.JP +5.7% (Q1 results); K's Holdings 8282.JP +4.2% (Q1 results); Olympus Corp 7733.JP -9.3% (Q1 results); Kasai Kogyo Co 7256.JP +3.7%(Q1 results) - Financials: China Vanke 2202.HK -7.0%, Anhui Conch Cement 914.HK -2.5% (lower on high AH premium); Resorttrust Inc 4681.JP +6.4% (Q1 results) - Materials: Rio RIO.AU -0.2% (H1 results); Mitsubishi Materials 5711.JP -9.5% (Q1 results); Sumitomo Metal Mining 5713.JP -8.1% (Q1 results) - Industrials: Taiyo Yuden 6976.JP -9.9% (Q1 results); NHK Spring Co 5991.JP -5.0% (Q1 results) - Technology: Nikon Corp 7731.JP -9.3% (Q1 results; lowers FY14/15 results); Japan Display 6740.JP -9.9% (Q1 results) - Healthcare: Sawai Pharmaceutical 4555.JP -5.1% (Q1 results) - Telecom: China Unicom 762.HK -2.3% (H1 results)

Yesterday’s Inversion Buyers Become Tomorrow’s Targets: Real M&A

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Yesterday’s Inversion Buyers Become Tomorrow’s Targets: Real M&A 2014-08-07 23:00:01.3 GMT

(For a Real M&A column news alert: SALT REALMNA <GO>.)

By Brooke Sutherland Aug. 8 (Bloomberg) -- With a record number of U.S. tax- inversion deals shrinking the pool of possible targets, the next crop of acquirers may pursue their former American peers that have already reincorporated abroad. While the Treasury Department is taking heed of President Barack Obama’s call to stop “corporate deserters” and weighing ways to deter companies from making overseas acquisitions for tax advantages, tax expert Robert Willens says it may only lead buyers to accelerate their plans. U.S. firms that have moved their legal addresses abroad present another option, according to Jefferies Group LLC, after about 20 deals since 2010 reduced the number of large, native European and Canadian candidates. “You’re going to hear a lot of saber rattling on this issue, but it’s going to be hard to do anything at least before November, even from an executive level,” Kevin Kedra, a Rye, New York-based analyst at Gabelli & Co., said in a phone interview. “These deals still make sense,” he said. “There are a lot of quality companies out there that have done an inversion that could now be targets themselves.” Perrigo Co. and Actavis Plc alone have added a combined $44 billion in market capitalization since announcing they were reincorporating abroad. The gains would make it easier for a larger rival to acquire them and meet the threshold for inversions that typically requires the foreign company’s investors to end up with at least 20 percent of the combined firm. Once Salix Pharmaceuticals Ltd. closes its deal with Cosmo Pharmaceuticals SpA and moves its mailbox to Ireland, it too could top the target list, said Canaccord Genuity Group Inc.

Political Action

The Treasury said this week that it’s examining whether it has the authority to act on its own to curb inversions and bypass Congress, which is unlikely to act in the near term, according to analysts including Charles Rhyee of Cowen Group Inc. Obama and the Treasury probably lack the power to do anything as substantive as what Congress could to prevent these deals, said William Dantzler, a tax partner at White & Case LLP. The rule that allows an inversion “is in the statute plain as day,” Dantzler wrote in an e-mail. “Only Congress could change that.”  While news of the Treasury’s potential moves pressured stocks of inversion-related companies, the best the Obama administration could do is temper some of the financial benefits of such a deal -- which isn’t a straightforward process and probably won’t be retroactive, said Willens, founder of tax and accounting firm Robert Willens LLC. Even so, “don’t take your time on these if you don’t want to be caught holding the bag,” Willens said in a phone interview.

Harder Hunt

Finding something to buy may not be as easy as it once was. Since Valeant Pharmaceuticals International Inc. kicked off the recent inversion frenzy with its 2010 purchase of Biovail Corp., targets from Elan Corp. to Shire Plc have been gobbled up. There is an increasing scarcity “of companies to invert, at least sizeable companies,” David Steinberg, a San Francisco- based analyst at Jefferies, said in a phone interview. “There are still some European-based companies that are current standalones, which have not been inverted that could be. But a lot of the targets now are effectively U.S. companies who are domiciled in Ireland, like Perrigo.”

Reincarnated Targets

Perrigo, which moved its legal address to Ireland last year with its purchase of Elan, is attractive because of its dominant store-brand business model and strong cash flow, Steinberg said. Abbott Laboratories, Bristol-Myers Squibb Co. and Eli Lilly & Co. are among logical suitors, as they don’t compete with Perrigo’s over-the-counter store labels, he said. “As it relates to inversion, if that ever did come about, it would be a secondary benefit, not the primary driver of us taking any type of M&A action,” said Edward Sagebiel, a representative for Indianapolis-based Eli Lilly. Spokesmen for Perrigo and Actavis declined to comment, as did representatives for Abbott Park, Illinois-based Abbott and New York-based Bristol-Myers. Actavis, the world’s biggest generic drugmaker, could also lure inversion interest from large pharmaceutical companies, said Kedra of Gabelli. Actavis gained an Irish domicile when it acquired Warner Chilcott Plc in 2013. The $54 billion company bought Forest Laboratories Inc. this year to expand in brand- name drugs, bolstering its appeal for some buyers, Kedra said. Analysts said this week that Pfizer Inc. may be interested in Actavis as an alternative to U.K.-based AstraZeneca Plc, which rejected an offer from the $179 billion company in May. Actavis has gained $37 billion in market value since announcing the Warner Chilcott deal, making it large enough for Pfizer to potentially make the inversion math work.

Bigger Options

Most companies that have ditched their U.S. addresses in the past four years have gotten bigger. The collective market value of those firms has increased by $129 billion since the inversions were announced, data compiled by Bloomberg show. “They can be a target for a very large company since they’ve gotten pretty large themselves,” said Willens, the tax expert. “It definitely feeds on itself.” It’s not just expat pharmaceutical companies that could become targets. Emerson Electric Co., valued at $43 billion yesterday, could invert with a takeover of Tyco International Ltd. or Pentair Plc, both former U.S. companies now based in Europe, said Steven Winoker of Sanford C. Bernstein & Co. With a tax rate higher than 30 percent and most of its cash held abroad, “Emerson has the most to gain among our U.S.- domiciled companies,” Winoker wrote in a June 20 report. “Frankly, any of our companies that are left trapped in the U.S. after this window closes might be looking at significant money left on the table.”

Down the List

The at least nine inversion deals still pending could turn more companies into takeover bait. In the absence of legislation, the completion of Salix’s Irish reincorporation will give the $8.5 billion company an added allure for buyers that may have already been eyeing its portfolio of gastrointestinal drugs, according to Corey Davis, a New York- based analyst at Canaccord. Auxilium Pharmaceuticals Inc., a $902 million maker of treatments for curved penises, could also become a target after it closes its inversion deal with Canadian biotechnology firm QLT Inc., said Michael Yee a San Francisco-based analyst at RBC Capital Markets, a unit of Royal Bank of Canada.

The Spinversion

U.S. companies also would have more options if they explored a spinversion, a type of inversion in which a conglomerate would spin off a portion of its business and reincorporate that piece by combining it with an overseas entity. Kimberly-Clark Corp., the $40 billion maker of Kleenex tissues that’s already spinning off a health-care unit, would be a candidate for such a transaction, Ed Outslay, an accounting professor at Michigan State University, said by phone. A representative for Dallas-based Kimberly-Clark declined to comment, as did spokesmen for Tyco and Emerson. A representative for Raleigh, North Carolina-based Salix didn’t respond to request for comment. Neither did Auxilium and Pentair.

The Downside

Smaller deals may be easier to carry out amid growing backlash, said Kedra of Gabelli, a unit of Gamco Investors Inc. Companies such as Actavis are still appealing inversion targets for large buyers, though possible suitors including Pfizer will now have to wrangle with an even bigger political spotlight, he said. The potential backlash was too much for Walgreen Co., which said this week it won’t use its deal with Bern, Switzerland- based Alliance Boots GmbH to move overseas. The drugstore company is still planning to buy the 55 percent of Boots that it doesn’t already own. “The window is starting to close, and with Obama’s movement, I think that’s accelerating the closure of that window,” Damien Conover, a Chicago-based analyst at Morningstar Inc., said in a phone interview. Because Walgreen is a well-known consumer name, it was probably more sensitive to political criticism. The drugstore’s decision to not pursue an inversion may actually be a positive for companies that are already in the middle of their own deals or considering one, said Yee of RBC. “It didn’t shake the boat even more with a major American company doing it,” he said by phone. U.S. companies with an inversion deal in mind that makes sense still should act fast, said Dantzler of White & Case. They would be “well-advised to accomplish it as quickly as possible,” he said.

For Related News and Information: Spinversions Make Giants Candidates to Escape U.S. Tax: Real M&A NSN N8IISN6TTDSN <GO> Tax-Inversion Takeovers Deliver Market-Beating Returns: Real M&A NSN N7BYU46KLVRJ <GO> Path to Skirt U.S. Taxes Widens With REIT Spinoff Blueprint NSN N9HOSI6S972I <GO> Top tax stories: TNI TAX WWTOP <GO> Top deal news: DTOP<GO> Real M&A columns: NI REALMNA <GO>

--With assistance from Jennifer Surane in New York.

To contact the reporter on this story: Brooke Sutherland in New York at +1-212-617-0448 or bsutherland7@bloomberg.net To contact the editors responsible for this story: Beth Williams at +1-212-617-2307 or bewilliams@bloomberg.net Whitney Kisling, Mohammed Hadi

>>> US Notable After Hours Earnings Movers

Notable after hours earnings movers: MELI +14.7%, ANET +8.5%, DAR +6.8%, RBCN -13.2%, PODD -16.3%, CPST -12%

Companies trading higher after hours following earnings/guidance:

MELI +14.7%, ANET +8.5%, DAR +6.8%, UBNT +6.3%, SPPI +5%, GPS +4.7%, UEIC +4.3%, ELX +3.9%, NVDA +3%, VVUS +3.3%, MDVN +2.6%

Companies trading lower after hours following earnings/guidance:

RBCN -13.2%, PODD -16.3%, CPST -12%, HIBB -9.1%, NERV -8.6%, ZNGA -8.2%, MED -5.9%, UNXL -6.5%, SLXP -5.6%, BCOR -4.9%, SFM -3.3%

>>> US Close Dow -0,46% S&P-0,56% Nasdaq-0,46%

Closing Market Summary: S&P 500 Settles Below 100-Day Moving Average

The stock market ended the Thursday session on a lower note despite showing strength in the early going. The S&P 500 fell 0.6% with eight sectors registering losses.

Equities climbed out of the gate after the European Central Bank reaffirmed its commitment to the current policy course. In addition, better than expected earnings and economic data also factored into an upbeat start.

Despite the set of positive factors, the S&P 500 could not overtake its opening high at 1928.97. Instead, the index spent about an hour near that level before retreating into the red. An afternoon report from the New York Times concerning potential U.S. airstrikes on militants in Iraq contributed to keeping dip-buyers sidelined.

As a result, the S&P 500 ended the session below its 100-day moving average (1913/1914), while the Dow Jones Industrial Average (-0.5%) settled just above its 200-day moving average (16343) after crossing that level for the first time since February 6.

The health care sector (-1.2%) ended at the bottom of the leaderboard amid weakness in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 248.15, -3.67) lost 1.5% after being rejected by its 50-day moving average (251.88).

Other countercyclical sectors like consumer staples (-0.8%) and telecom services (-1.0%) also underperformed, while the utilities sector (+1.1%) displayed relative strength to narrow its week-to-date loss to 2.0%.

Meanwhile, all six cyclical groups posted losses with the materials space (-0.9%) having the worst showing. Similarly, the other commodity-related sector—energy (-0.7%)—also finished near the bottom of the leaderboard.

Elsewhere, the technology sector (-0.5%) ended just ahead of the S&P 500, but that was a bit misleading as the relative strength in two influential components—Apple (AAPL 94.48, -0.01) and Microsoft (MSFT 43.23, +0.49)—kept the sector from registering additional losses. Chipmakers, however, lagged broadly with the PHLX Semiconductor Index sliding 1.4%.

Also of note, the industrial sector ended little changed after showing relative weakness yesterday. Two heavily-weighted components, Boeing (BA 119.84, +1.50) and General Electric (GE 25.50, +0.06), contributed to the outperformance, while the broader PHLX Defense Index shed 0.1%. Transport stocks displayed strength during the session, but the Dow Jones Transportation Average (-0.2%) slipped into the red during afternoon action.

The retreat in equities boosted the Treasury market, where the 10-yr note added half a point to lower its yield six basis points to 2.41%. This represented the lowest close for the benchmark yield since June 2013. The safe-haven demand was also visible in the foreign exchange market, where the yen jumped and pressured the dollar/yen pair into the 102.00 area.

Participation was below average with fewer than 660 million shares changing hands at the NYSE.

Economic data was limited to weekly initial claims and the Consumer Credit report for June:

* Initial claims declined to 289,000 from 303,000, while the consensus expected a reading of 308,000 

* Even though claims have held below the 300,000 mark over the past four weeks that has not translated into payroll growth in the neighborhood of 300,000 jobs per month, which had been the case in the past  * Since the relationship hasn't held up, it appears the data has been skewed by seasonal adjustments or monthly volatility in the payroll data. If payroll volatility is the issue, we should see a surge in the August jobs report 

* Consumer credit increased by $17.30 billion in June, which was higher than the consensus estimate of $15.80 billion 

* The prior month's credit growth was left unrevised at $19.60 billion 

Tomorrow, productivity (consensus 1.4%) and unit labor costs (consensus 2.0%) data for the second quarter will be released at 8:30 ET, while the Wholesale Inventories report for June (consensus 0.4%) will be reported at 10:00 ET.

* S&P 500 +3.3% YTD  * Nasdaq Composite +3.8% YTD  * Dow Jones Industrial Average -1.3% YTD  * Russell 2000 -3.8% YTD

(BFW) Naguib Sawiris Cut Telecom Italia Short Position This Week


Naguib Sawiris Cut Telecom Italia Short Position This Week
2014-08-07 15:12:33.252 GMT


By Sam Chambers
Aug. 7 (Bloomberg) -- Regulatory filings show Naguib
Sawiris’s Orascom TMT Investments cut its short position in
Telecom Italia by 23% to 134m shrs this week, equivalent to 1%
of co’s shrs outstanding.
* Sawiris still holds the largest short position in TI.
Details here
* In Jan, Sawiris told Bloomberg News he was prepared to
invest in TI if Telefonica sold its stake and co. didn’t
sell its Brazilian unit
* Sawiris is chairman of Orascom TMT Investments, which is
a telco/tech investor and strategic shareholder
* Telecom Italia shrs jumped as much as 2.7% this afternoon
after Bloomberg reported TI said to have approached Vivendi
over an alliance in which VIV may acquire stake in co.
* Aug 5: Telefonica offered $9b for Vivendi’s GVT unit; said
it may offer TI shrs to Vivendi as part of the deal
* NOTE: Telecom Italia shareholders here


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

To contact the reporter on this story:
Sam Chambers in London at +44-20-7673-2021 or
schambers7@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net

RTR - VW axes McKinsey cuts blueprint as union balks– sources


(Reuters) - Volkswagen's (VOWG_p.DE) 5 billion euro ($6.68 billion) cost-cutting plan has suffered a major setback after labor leaders forced management to axe detailed proposals drawn up by consultants at McKinsey, sources told Reuters on Thursday.

The cost-cutting target itself still stands, though, the sources said.

Volkswagen and McKinsey declined to comment.

The move underlines how much relations between management and workers have soured at Europe's biggest carmaker, which is struggling to raise profits amid stagnating emerging markets and low growth at home.

Late last month, Chief Executive Martin Winterkorn told employees he sought 5 billion euros worth of efficiency gains at its core passenger-car brand by 2017.

The sources said managers had commissioned McKinsey to help streamline production and cut costs at VW, a company at which employees enjoy multi-year job guarantees.

Last week, Volkswagen said it had replaced its production chief Michael Macht after a new modular vehicle design failed to translate into higher profits at its main factory in Wolfsburg, Germany.

Rather than greater efficiencies in production, the new vehicle assembly components used on Volkswagen's flagship Golf model caused costly overtime work and delays, leading the company to report a drop in operating profit.