TheChek News Flow

Private equity firms CVC Capital Partners Ltd and Silver Lake have teamed up to pursue Russell Investments, as have Warburg Pincus LLC and TPG Capital LP, the people said this week. They and CIBC are considering bids for all of the Russell Investments assets, they added.

Northwestern Mutual Life Insurance Co, which owns Russell Investments, is hoping to find a buyer for both the investment management and indexes businesses of Russell for as much as $3 billion, the people said.

Shortlisted parties have been tentatively asked to submit offers for Russell Investments by the end of the month, the people said. Some other bidders in the auction are only interested in some of the assets. MSCI Inc (MSCI.N), for example, is interested only in Russell's indexes business, some of the people said.

The sources asked not to be identified because the deliberations are confidential. Northwestern Mutual, CIBC, Warburg Pincus, TPG, CVC and Silver Lake declined to comment, while a MSCI spokeswoman did not respond to a request for comment.

Seattle-based Russell provides pension consulting, investment management, transition management services and indexes such as the Russell 1000 Global Index. It has more than $259 billion in assets under management, according to its website.

Reuters first reported in January that Milwaukee-based insurer Northwestern Mutual is discussing selling the Russell subsidiary because it has decided it is not a core part of its business.

For CIBC, an acquisition of Russell Investments would boost its asset management business and its global presence. The Toronto-based bank, like many of its Canadian peers, has stated that it plans to actively build scale in its asset management business via acquisitions.

CIBC faced a setback last year after losing out on a long-standing lucrative deal with loyalty-program company Aimia Inc (AIM.TO) and the latest industry data indicates that it has now ceded its spot as Canada's largest credit card issuer to rival Toronto-Dominion Bank (TD.TO), which last year agreed to buy half of CIBC's Aeroplan credit card portfolio.

Alternative asset manager Carlyle Group LP (CG.O) considered acquiring Russell Investments earlier this year to expand its product offerings, rather than as a buyout fund investment, people familiar with the matter said earlier this year, but the Washington, D.C.-based firm is no longer in the auction.

A Carlyle spokesman did not immediately respond to a request for comment.

French ‘ticking bomb’ can be safely defused

Look elsewhere for systemic threat to euro area

France has been characterised by some as a “ticking bomb” at the heart of the euro area. This has been overdone, although there remains no doubt of the need for substantial restructuring.

Progress with adjustment has been modest to date. But the ticking bomb has failed to detonate. French growth has resumed, albeit at anaemic pace, and sovereign bond yields remain at multi-decade lows. A French sovereign crisis akin to those seen in the periphery remains remote.

In short, “France-bashers” have been disappointed.

Has the bomb been defused? Or is it simply on a slow-burning fuse?

France is benefiting from the fact that institutional investors, including Northern European insurance companies, Asian central banks, and sovereign wealth funds, have little choice but to hold longer dated, euro-denominated assets. Peripheral debt remains too risky for such conservative investors. Having sold peripheral bonds in a flight to safety at the peak of the eurozone crisis, they loaded up on holdings of German Bunds . But with France still identified as part of Europe’s core, higher yielding French sovereign debt finds ready buyers.

Market pressure on France to implement reform is therefore muted – at least when compared with the acute coercion faced by the periphery at the peak of the sovereign debt crisis.

Slow-burning fuse

On one interpretation, absence of market pressure creates complacency. Fiscal indiscipline leaves public expenditure at levels that cannot be maintained indefinitely, even if generous financing conditions sustain them at shorter horizons.

This is the slow-burning fuse: unsustainable policy choices lead inevitably to crisis, even if onset is delayed by easy financing.

Even in our more optimistic view there is no expectation that rapid economic reform will transform the French economy overnight. Domestic political sensitivities preclude this. But the breathing space offered by France’s favourable sovereign funding environment creates scope for a gradual – and potentially more efficient – adjustment process. This prospect raises the possibility that the French “time-bomb” can be defused safely.

The case for gradual adjustment is strong. The abrupt nature of Spain’s macroeconomic restructuring under market pressure has proved costly, as illustrated by the evolution of Spanish unemployment. And enacting aggressive consolidation in the eurozone’s second-largest economy threatens to exacerbate the area-wide demand shortfall, thereby intensifying deflation risks.

Yet the desirability of gradualism in theory may simply act as a smokescreen for inaction in practice. There are two reasons for greater optimism.

First, the French authorities have delivered more than they get credit for. Labour reforms agreed a year ago permit greater flexibility at the firm level.

Admittedly, such initiatives barely touch on politically more sensitive and macroeconomically more crucial issues: lowering longer term unemployment benefits; reducing public employment; promoting a reallocation of resources across sectors, not just within firms. But you have to start somewhere.

Hesitant process

Reform in France will remain a hesitant process, conducted beneath the political radar. A stealthy approach is the only politically viable option. While the macroeconomic benefits of restructuring remain distant, market participants should be alive to the microeconomic value created by reform, even when implemented without the fanfare one would expect in the Anglo-Saxon world.

Second, while the French state may be too big, it retains the institutional capacity to implement reform once the political courage to initiate it has been summoned. This cannot be said of all France’s euro area partners. This institutional capacity is what makes France still part of Europe’s core, despite its formidable economic challenges.

This is not to paint a Panglossian picture of adjustment in France. Much needs to be done. President François Hollande’s recent statements demonstrate understanding of the challenges, but action is needed, not just words.

The Franco-German axis remains the motor of European integration. Restarting that motor is crucial to making the euro area workable. German trust in France’s willingness and ability to reform – and to take the implied economic and political pain – needs to be rebuilt. That requires results, not just promises.

Yet change is in the air in France, more credibly than most perceive. If you are seeking the source of a systemic threat to the euro area in the coming years, look elsewhere.

Co announces its Board has unanimously adopted a one-year stockholder rights plan effective April 22, 2014 and declared a dividend distribution of one preferred share purchase right on each outstanding share of the Company's common stock.

The Co became aware of the recent rapid and previously undisclosed accumulation of a significant amount of the Company's common stock in connection with an acquisition proposal made today by Valeant Pharmaceuticals, Inc. The Plan is not intended to prevent an acquisition of the Company on terms that the Board considers favorable to, and in the best interests of, all stockholders. Rather, the Plan aims to provide the Board with adequate time to fully assess any proposal.

Under the Plan, stockholders of record at the close of business on May 8, 2014 will receive one right for each share of Allergan common stock held on that date. The distribution of the rights is not taxable to stockholders, and the Plan is scheduled to expire on April 22, 2015.

Newmont, Barrick Stay in Contact After Aborted Merger Talks

Mining Companies Seem to Be Keeping Open Possibility of Resuming High-Level Negotiations

But their senior executives are unlikely to resume formal talks at least until after Newmont's annual general meeting on Wednesday—if at all—these people and another person familiar with the situation said.

Talks broke off because of a disagreement over plans for a spinoff of some assets, people familiar with the matter said. The continued contact suggests both sides are looking at a potential resumption of formal high-level negotiations.

Peter Munk, Barrick's founder and chairman, said it is "difficult to find a reason" for his company not to merge with Newmont, in a deal that would provide cost savings given the proximity of the companies' mines in Nevada.

"The economic gains of drilling the properties as one, of being able to disregard [company] borders, of establishing common infrastructure utilization, contain great benefits," he said, declining to talk about any details of negotiations. Why have "two accountants or two geologists when one could do?" he said.

Any return to high-level talks could also be on pause until after Barrick's annual shareholder meeting in Toronto next week, at which Mr. Munk is to step down from the board.

The latest round of negotiations was driven by Mr. Munk's successor, John Thornton, according to people familiar with the matter. The former Goldman Sachs Group Inc. banker is Barrick's co-chairman, along with Mr. Munk, but is to become sole chairman at next week's annual meeting.

Mr. Munk suggested that he has had less to do with negotiations, calling himself a "retired gentleman," and referring several times to Mr. Thornton's negotiating role.

In interviews, Mr. Thornton has indicated a willingness to remodel Barrick, potentially increasing its exposure to copper and silver and bringing in Chinese partners. Mr. Thornton, who has served on the boards of several big-name companies, including Ford Motor Co. F +0.75% , would be chairman in any new company, according to people familiar with the matter.

On Monday, many analysts welcomed the news of a potential tie-up but said its success would hinge on the combined company being able to generate the cost savings that the miners reportedly have outlined.

According to people familiar with the matter, the companies think they can wring out $1 billion in cost savings, with much of the total coming from their operations in Nevada.

Most analysts, however, peg the potential savings at closer to $500 million. Some shareholders and others say that even those savings make the potential alliance worthwhile. "It makes sense; cost savings are there," said John Ing, a longtime Barrick investor at Toronto-based Maison Placements Canada Inc.

Several analysts have cautioned against too much excitement, however, given the fact that the new companies would inherit around $15 billion of net debt and would face the same issues of growing their production at a time when new, large high-grade deposits are harder to find. Part of that debt would go into the spinoff, according to one person familiar with the matter.

This isn't the first time Newmont and Barrick have tried to come to a deal, adding to the caution that some analysts and investors are displaying. Previous talks mainly fell apart over the issues of boardroom composition and which executives would get the top jobs, several former executives said.

But Mr. Munk said that this history of talks suggests the deal is more likely, not less. "Serious people do not talk to each other over two decades unless there is a cogent, valid reason."

* EU suppliers trade in line with US suppliers but 15% above historical average multiples; we think it is time for re-positioning in the sector

* Our top picks are Michelin and Faurecia (upgrade both to OW from N); we confirm our UW ratings on Valeo and Elring; cut Pirelli to N from OW; and maintain our ratings for Nokian (N), Continental (OW) and Leoni (OW)

* We prefer Continental and Michelin over Pirelli: Seeing slowing demand in LatAm and a mix component that can hardly surprise on the upside, we are 10% below Pirellis’ 2015 consensus EPS; we downgrade the name to N from OW and shift our preference to Michelin (upgrade to OW from N) to participate in the ongoing recovery in European premium/US truck RT tyre volumes. We like Continental and think that its 2014 earnings guidance is too cautious due to very conservative raw material price assumptions.

* Consensus revisions – positive on Faurecia, negative on Valeo: We see Valeo at record capex this year, which results in almost no FCF generation. Being 10% below 2015 consensus EPS, we remain UW. We have become a fan of the Faurecia Seating story, which should kick off in 2015e and upgrade our rating to OW from N.