>>> Brokers Upgrades & Downgrades - 23/04/2014

>>> Up
*HELLENIC PETROLEUM RAISED TO NEUTRAL VS UNDERPERFORM AT BOFAML
*MMK RAISED TO NEUTRAL VS UNDERPERFORM AT BOFAML
*MOL RAISED TO NEUTRAL VS UNDERPERFORM AT BOFAML
*PASCHI RAISED TO NEUTRAL VS SELL AT GOLDMAN
*PGNIG RAISED TO BUY VS NEUTRAL AT GOLDMAN
*PKN ORLEN RAISED TO BUY VS UNDERPERFORM AT BOFAML
*THOMAS COOK RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*WOLSELEY RAISED TO OUTPERFORM FROM NEUTRAL AT CREDIT SUISSE

>>> Down
*ARABIAN CEMENT COMPANY CUT TO UNDERPERFORM VS NEUTRAL AT BOFAML
*FRED. OLSEN CUT TO SELL FROM HOLD AT NORDEA
*PHILIPS CUT TO SECTOR PERFORM AT RBC CAPITAL
*TELIASONERA CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*TGS NOPEC CUT TO SELL AT NORDEA

>>> PT Changes


>>> Initiation
*ISS A/S RATED NEW NEUTRAL AT UBS, PT DKR195
*ISS RATED NEW OVERWEIGHT AT BARCLAYS, PT DKR215
*PREMIER FOODS RESUMED AT BUY AT JEFFERIES

>>> Call
>> Stock
*WOLSELEY ADDED TO CREDIT SUISSE'S EUROPE FOCUS LIST

>>> What to look at today - 23/04/2014

US MArket Closed Higher, 6th consecutive day, healthcare sector leaded the move, On the downside, consumer staples (-0.1%) and energy (-0.2%) were the only two sectors ending in the red, Volume were lights @ 665mil sahres...VIX @ 13.19 -0.45%...After Hours on Earnings : GILD +3% AMGN-2.4% CREE-7% T-2% JNPR -1.1% DFS -1.7% ILMN +10.4%...PLUG -9% on 15M shares secondary offer...April flash manufacturing PMI. Despite posting a slight improvement with the first sequential rise in 4 months, PMI was also in contraction for the 4th consecutive month. Moreover, the closely monitored New Exports and Employment subindices were decidedly negative - the former "changed direction" and is now decreasing while the latter is decreasing at a faster rate. HSBC China economist said the govt's new measures announced recently will likely produce limited impact, and more measures may be unveiled in the coming months, State Information Central of China official Zhu noted some Tier-2 and Tier-3 cities will be allowed to ease property sector curbs...Resona(8308) +3.3% on Einhorn position, Shenji Group (300 HK) profit warning -5.2%...China Mobile (941 HK) -2.2%...Nikkei +0.78%...HS -0.83%...Shanghai -0.39%

Eur$ 1.3818 S&P Fut +0.04% European Future Unchanged

Macro
- HSBC China April Flash Manufacturing PMI 48.3, Matching Estimate

Keep an eye on :
- A2A IM : A2A operation to sell 5% stake on market to conclude by end of first half of 2014
- AZN LN : Sanofi and Novartis rumoured to have appointed advisers to consider bid for AstraZeneca - The Independent
- CS FP : Axa Has Cut Eastern Europe Ambitions, CEO Tells Echos
- BIM FP : BioMerieux 1Q Sales Rise 3.3% y/y to EU371m; Maintains Forecast
- O2C GY : C.A.T. Oil 2013 Ebitda, Net Beat Ests.; 2014 Outlook Misses
- CLN VX : Clariant mulls disposing of less profitable units and boost investment in Asia - China Business News
- DSY FP : Dassault Systemes Extends Accelrys Offer For the Fourth Time
- EDF FP : EDF Is Ready to Cut Tariffs for Big Industrial Users: Echos
- ENI IM :MOL about to sign agreement with ENI to acquire Agip petrol stations - Hospodarske Noviny
- ERICS SS : Ericsson 1Q Sales Miss, Gross Margin Beats, Sees Orders Boosting 2H Results as 1Q Sales Miss
- GLJ GY : Grenkeleasing Confirms Forecast for 2014 Net Profit EU52m-EU56m
- KLOV SS : Kloevern 1Q Pretax Profit Misses Est.
- KRA1V FH : Kemira 1Q Net, EPS Beat Ests., Sales Miss; Outlook Is Maintained
- MELE BB : Melexis 1Q Rev. EU75.6m; Raises Full-Year Sales Forecast
- OSR GY : CREE-7% after hours on Earnings
- PHIA NA : Philips to Make `Small' Acquisitions, CEO Tells Boersen-Zeitung
- PUB FP : Publicis-Omnicom Merger Threatened by Tax Issues, Echos Says - Full article sent @ 7:27 Paris time
- REED NA : Reed Elsevier 1Q Growth Similar to 2013; Reaffirms 2014 Outlook
- SAF FP : Safran 1Q Adj Revenue Climbs 3.3% Y/y to EU3.44b on OE, Services
- SAL IM : Salini Impregilo Plans EU200m Capital Increase, MF Reports
- SCVB SS : VW Offer Reaching 90% Acceptance is Not a Given, JPMorgan Says
- SCVB SS : Alecta Rejects Volkswagen's Bid for Scania, Dagens Industri Says
- TKA AV : Telekom Austria supervisory board to vote on shareholder pact today - Wirtschaftsblatt
- TLSN SS : TeliaSonera 1Q Sales Miss, Sees Modest Risk to FY Rev. Outlook
- UNI IM : UnipolSai May Issue EU500m Hybrid Bond to Cut Debt, Sole Says
- VPK NA : Vopak 1Q Ebitda EU180m Versus EU189m, Sees Challenges in EMEA
- ZC FP : Zodiac Aerospace Sees Further Year of Organic Growth in 2013/14

(MergerMarket) Allergan has few alternatives to Valeant

Allergan has few alternatives to Valeant

Valeant Pharmaceuticals’ (NYSE:VRX) hostile bid for Allergan (NYSE:AGN) leaves the Botox maker with limited options to fend off the aggressive approach.

On Tuesday, Valeant made a public offer for Allergan valued at USD 48.30 cash and 0.83 share of Valeant common stock for each Allergan share. The move came a day after Bill Ackman’s Pershing Square Capital said it had amassed a 9.7% stake in Allergan and was working with Valeant on the takeover.

At least initially, Allergan is expected to resist the bid, Bernstein Research analyst Aaron Gal said. Irvine, California-based Allergan said it would evaluate the offer with the help of Goldman Sachs, BofA Merrill Lynch and Latham & Watkins. A spokesperson declined to comment.

Allergan’s board of directors can try to make a strong case for why it should remain independent, one banker said. The company can cut costs and promise investors a higher growth rate, Gal said.

Another option would be for Allergan to explore a sale and reach out to potential buyers, who may be willing to pay more than price-disciplined Valeant, a second banker said.

France-based Sanofi (NYSE:SNY) may evaluate a potential tie-up, the first banker said. Conglomerate Nestle (VTX:NESN), which in February acquired dermatology company Galderma, may also take an interest, Gal said. Nestle could combine its prescription and over-the-counter skin treatment maker Galderma with Allergans’s focus on dermatological products, the analyst said.

But it may be a hard sell Allergan to mainstream pharmaceutical buyers, as Allergan’s products sell to different physicians, so there would be less synergies than with Valeant, the first banker said. The same banker said large pharma companies are looking at targets in the oncology, orphan drugs and Hepatitis C space and dermatology and ophthalmology are not necessarily focus areas for them.

Alternatively, Allergan could look to make an acquisition which would act as a poison pill, a third banker said. CEO David Pyott has previously said that he is looking to do deals and could raise up to USD 10bn to finance a transaction.

The company has faced pressure to pursue a so-called tax inversion deal to lower its tax rate and has previously looked into the idea, the first banker said. Ireland-based Shire (NASDAQ:SHPG) has been named as one possible target, Gal said.

The very public manner of the hostile bid may be a way for Valeant to test the waters to see how both companies’ stocks react, the second banker said. Valeant will not make an all-cash bid, Valeant CEO J. Michael Pearson said on a conference call on Tuesday.

The fast-growing Canadian pharma group is known as a disciplined buyer, most notably losing out on its bid for Cephalon to Israel’s Teva (NYSE:TEVA) by a wide margin. More recently, Valeant lost a bid for eye health company ISTA to Bausch + Lomb. It later acquired the winning bidder.

The unusual deal structure, with activist investor Bill Ackman’s Pershing Square agreeing to take an almost 10% stake in Allergan and publicly expressing his support for the deal, provides Valeant with a little more certainty, the second banker said.

While the two companies overlap across certain markets, Valeant has already contacted the Federal Trade Commission to discuss the antitrust review process, Pearson said on today’s call.

Valeant has identified its Botox competitor Dysport, and wrinkle-fillers Restylane, Perlane as product lines that would need to be divested, and contacted potential buyers for the assets, Pearson said. The divests will not be material to the transaction.

Antitrust regulators will likely issue a second request for any deal, but it is usually easy to provide remedies in pharma deals, an antitrust attorney said.

Allergan probably will not use antitrust risk as a defensive mechanism, the attorney added. It could use the risk to demand a strict merger agreement, he said. Selling companies sometimes demand buyers to agree to take all actions necessary to appease regulators.

>>> Sanofi and Novartis rumoured to have appointed advisers to consider bid for

Sanofi and Novartis rumoured to have appointed advisers to consider bid for AstraZeneca 

Sanofi and Novartis are said to have engaged advisers to examine possible bids for rival drugs group AstraZeneca, The Independent reported. The market report said France-based Sanofi is believed to be likely to offer GBP 55 (EUR 67) per share. Novartis, based in Switzerland, did not wish to comment, the report said.

Weekend media reports said Pfizer had approached London-listed AstraZeneca with a GBP 50-per-share offer and was turned down. Yesterday, 22 April, it was suggested that New York-based Pfizer might return with a revised offer of GBP 60 per share, the report said.

The Daily Mail reported market chatter that should Pfizer not succeed in taking over AstraZeneca, it might instead approach UK-listed Shire.

Meanwhile, the Financial Times reported speculation that Shire might be approached for a defensive merger by Allergan, the Irvine, California-based pharma company which is being pursued for a hostile bid from Valeant and Bill Ackman.


Source Independent, Daily Mail, Financial Times

(GS) Consumer Staples: China infant formula data: No improvement for Danone



Global: Consumer Staples

China infant formula data: No sign of share improvement for Danone

Danone share remains at 4% with no sign of improvement
The latest Nielsen data for China infant formula suggests Danone had a 4.2% market share over Jan/Feb, a small deterioration from the last data point (4.3%) for Nov/Dec. Nielsen data only tracks large retailers in tier 1 and tier 2 cities, and therefore only measures a small proportion of modern retail while also not capturing several important channels such as internet retailing, mother and baby stores, and cross-border. We believe the non-tracked channels are taking share of the overall market and we also believe that Danone’s share within these channels has been more resilient than in modern retail due to its focus on the more premium end of Danone’s infant formula brands. However, the lack of improvement in the latest Nielsen data suggests that the division has not yet begun to improve the performance of its main China infant formula brand, Dumex. On the 4Q13 results conference call, Danone management indicated that its overall share of infant formula (all channels) was c. 14% for December, having recovered from 12% in October.


MJN gains share with lower average pricing
Mead Johnson Nutrition (MJN) gained a further 292 bp of share vs. the Nov/Dec data to record a 2-year high in terms of market share, as average prices declined 4%, the 10th consecutive month of declines (more than any other brand), boosted volume growth.


Amidst eight consecutive months of industry sales decline
For the 8th consecutive month, the infant formula market has been in decline (-9%) in the Nielsen tracked channels, following contamination allegations and industry probes into price fixing and bribery. Danone has faced the brunt of these issues with sales declines of 74% yoy in Jan/Feb while Mengiu and Nestle/Wyeth have achieved double-digit growth.


Pricing slows across the market – Nestle most robust
The infant formula market has witnessed slowing average price increases over the last 12 months from 8.5% growth in March/April 2013 to 3.5% in Jan/Feb 2014. Of the large-cap companies in China, Nestle/ Wyeth has withstood this trend better than most, while MJN has had the largest average price declines over the period.

WSJ : Ardian Raises $9 Billion to Invest in Existing Buyout Funds

Ardian Raises $9 Billion to Invest in Existing Buyout Funds
Largest Such Pool Ever Assembled

The former private-equity unit of French insurer AXA SA CS.FR +2.35% said it has raised $9 billion to buy stakes in existing buyout funds, the largest such pool ever assembled, highlighting the growing demand for second-hand private-equity investments.

The amount eclipses the $7.1 billion that Ardian, then a unit of AXA, raised for so-called secondaries in 2012. Ardian, formerly known as AXA Private Equity, in September spun out of the Paris-based insurer, which still owns a minority stake in the business.

Secondary stakes offer buyers a quicker and clearer path to profits and can eliminate some of the fees charged to the pensions, endowments and wealthy families that commit cash to private-equity funds as they are formed.

The market for secondary private-equity stakes has grown from a niche where buyers expected big discounts to take on interests in funds that were performing poorly or to provide quick cash to distressed owners. Now, such sales make up only a sliver of the still-murky market, investors say.

In recent years, however, many of the stakes trade at or close to the value of the underlying investments as the selection of assets available has grown to include many of the best-performing private-equity funds.

"With bad assets, your discount will never be enough," Vincent Gombault, who runs Ardian's fund of funds and private debt businesses, said in an interview. Instead, Ardian aims to acquire pieces of well-performing funds, angling for deals by snapping up packages that include stakes in more than 50 private-equity funds, he said.

"Having a fund with this type of size allows us to execute this strategy," said Benoit Verbrugghe, who heads Ardian's U.S. business.

In the past year Ardian said its deals have included a $580 million package of stakes in 53 funds from a European pension plan and stakes in two funds from a U.S. financial institution for which it paid $394 million.

Ardian currently is invested in about 450 active private-equity funds through its secondary funds.

The volume of for-sale stakes has been bolstered by banks under regulatory pressure to shed assets and pension managers wishing to reduce the number of funds they are invested in. Corporate mergers can also lead to well-performing private-equity investments hitting the block, as combined pension plans can find themselves overweight in particular funds or strategies, investors say.

Ardian's record $9 billion is part of a larger fund that also includes $1 billion intended to be invested directly into new buyout funds. Ardian's secondary funds, which now number six, have grown steadily in size as the market for deals has grown. In its last fund before the financial crisis, it raised $4 billion and followed up in 2012 with $7.1 billion.

Messrs. Gombault and Verbrugghe said that they expect to invest between $2 billion and $3 billion from the latest fund annually over the next four years. Though debt can be used in deals to stretch how far a fund can go, the leverage levels in such transactions are usually less than half of the total price and much less than in corporate buyouts.

(Les Echos) Publicis, Omnicom merger threatened by tax reasons

Link to Google Translation : {http://bit.ly/1mxltuT}
Link to Original Article in French : {http://bit.ly/1i7SFc3}

Publicis, Omnicom merger threatened by tax reasons

Future Leaders Group consider impossible to predict the timing of the merger.

The merger between Publicis and Omnicom aurat place? Upon publication of financial results of Omnicom, for the first quarter of 2014, revealing an operating profit 389.7 million, up 3%, the words of John Wren, the general manager of the second largest communications group, were likely to sow some trouble: "It is impossible to predict the timing of completion of the merger with Publicis," said he said during a conference call, referring to the "complexity" of the operation to justify the delay.
Even more than the expectation of the green light from the Chinese competition authorities - the only ones missing - is the tax records that would block a priority, the completion of the merger of two global advertising giants. During the announcement, on 28 July 2013, the project, John Wren, and Maurice Lévy, CEO of Publicis had indeed indicated that the headquarters of the future together would be established in the Netherlands.
Exclusive tax residence
But according to some competitors, the weakness of the "commercial activity" and the assets of the Dutch company Publicis Groupe Investments BV, holding all subsidiaries outside France, have caused tensions, there are three weeks with the tax authorities Batavian complicating the finalization of the case. The implementation in the Netherlands of the headquarters future together was thus denied. This is the reason why the two groups decided to turn now to the UK in order to obtain "an exclusive residence for tax purposes." A version that belies Marie-Gabrielle Heilbronner, Senior Vice President, General Secretary of Publicis Groupe, bridgehead on this sensitive. "Folder we got at the beginning of the merger announcement, the downstream Batavian tax authorities to implement our new headquarters in the Netherlands merged group, provided that the operational headquarters remain in Paris and New York. In agreement with Omnicom, it was desired to UK tax residence of the new entity. That is why we agreed in our agreements to achieve our common best efforts to obtain this tax residence. Publicis, the important thing is that our first taxable base in France remains unchanged. The United Kingdom has not yet given its formal opinion, but it is on track. "
But much less nuanced about John Wren yesterday threw disorder. "Against all odds, we were not able at this stage to obtain the necessary approvals to establish the tax status of the future group. If we can not obtain such approvals, it could jeopardize the probability of satisfying the conditions for the completion of our transaction. "The threat is clear.
Already last Thursday during a conference call for financial analysts and reported by the U.S. Weekly "Advertising Age" Maurice Lévy joked: "Go back to society" standalone "not a problem for us. Life is good for Publicis whatever happens, with or without Omnicom, "noting, however, confidence in the conclusion of the" deal "

>>> Asian Update

Asian Market Update: AUD sinks on lower than expected Australia Q1 CPI; China flash PMI remains in contraction


***Economic Data***
- (CN) CHINA APR HSBC/MARKIT FLASH MANUFACTURING PMI: 48.3 V 48.3E (first sequential rise in 4 months; 4th consecutive contraction)
- (AU) AUSTRALIA Q1 CONSUMER PRICES (CPI) Q/Q: 0.6% (3-quarter low) V 0.8%E; Y/Y: 2.9% (below 2-3% RBA range) V 3.2%E; CPI Trimmed Mean Q/Q: 0.5% (1-year low) v 0.7%e ; Y/Y: 2.6% v 2.9%e
- (AU) AUSTRALIA MAR SKILLED VACANCIES M/M: -0.2% V +0.3% PRIOR
- (NZ) NEW ZEALAND MAR CREDIT CARD SPENDING M/M: 1.3% V 0.3% PRIOR; Y/Y: 8.1% V 5.9% PRIOR
- (NZ) NEW ZEALAND MAR NET MIGRATION: 3.8K V 3.5K PRIOR (multi-year high)

Market Snapshot (as of 03:30 GMT):
- Nikkei225 +0.6%, S&P/ASX +0.6%, Kospi -0.1%, Shanghai Composite -0.5%, Hang Seng -0.7%, Jun S&P500 flat at 1,874, Jun gold +0.3% at $1,285, May crude oil -0.2% at $101.55/brl

***Highlights/Observations/Insights***
- Australia Q1 CPI was well below estimates, remaining in the 2-3% RBA target range on headline basis and posting a 1-year low on Q/Q Trimmed Mean (core) basis. AUD/USD plummeted some 90pips below 0.9280, as lower CPI gives RBA more room to preserve its neutral stance for longer and negates expectations of an inevitable rate hike to forestall accelerating property prices.

- Asian indices are mixed with China leading the decliners after the release of April flash manufacturing PMI. Despite posting a slight improvement with the first sequential rise in 4 months, PMI was also in contraction for the 4th consecutive month. Moreover, the closely monitored New Exports and Employment subindices were decidedly negative - the former "changed direction" and is now decreasing while the latter is decreasing at a faster rate. HSBC China economist said the govt's new measures announced recently will likely produce limited impact, and more measures may be unveiled in the coming months.

- Also of note in China, State Information Central of China official Zhu noted some Tier-2 and Tier-3 cities will be allowed to ease property sector curbs. Announcement comes after last week's release of March property prices where average new home prices rose just 7.7% y/y, an 8-month low. In other notable Chinese press reports, MOFCOM report estimated 2014 retail sales growth at 13% - in line with 2013 but well below 14.5% target. China Securities Regulatory Commission (CSRC) released additional 19 pre-IPO disclosures, with the 3-day tally amounting to 65 companies. IPO-related dilution was also cited as posing considerable weakness to China equity markets.

- Australia's top gold miner - Newcrest - reported its quarterly output figures. Q2 production fell 11% q/q to 551.6k oz, which was up from 514K y/y. Copper output rose to 21K tonnes from 19K y/y. Newcrest shares traded firmer, helped by its bullish guidance for the balance of the year. NCM affirmed production, noting output is expected to be around the top end of the guidance range (2.3M oz).

- Ahead of tomorrow's RBNZ policy decision, New Zealand Institute of Economic Research (NZIER) Shadow Board saw a near-unanimous support for the central bank to raise rates by another 25bps. NZIER said recovery in the economy is broadening, and households are starting to spend more after years of putting many decisions on hold following the global financial crisis.

***Fixed Income/Commodities/Currencies***
- (JP) BOJ offers to buy ¥250B in 1-3yr JGB, ¥250B in 3-5yr JGB and ¥170B in JGB with maturity over 10-yr
- (US) API PETROLEUM INVENTORIES: CRUDE: +520K (smallest build in 3 weeks) v +2.5Me, GASOLINE: -3.4M v -1.5Me, DISTILLATE: +570K v -0.5Me

***Equities***
US markets:
- SMCI: Reports Q3 $0.37 v $0.28e, R$373.8M v $335Me; +17.2% afterhours
- ILMN: Reports Q1 $0.53 v $0.44e, R$420.8M v $391Me; +10.4% afterhours
- SWKS: Reports Q2 $0.62 v $0.59e, R$481M v $470Me; Initiates $0.11 dividend; +8.8% afterhours
- YUM: Reports Q1 $0.87 v $0.84e, R$2.72B v $2.83Be; +3.6% afterhours
- GILD: Reports Q1 $1.48 (adj) v $0.90e, R$4.87B v $3.68Be; +2.9% afterhours
- JNPR: Reports Q1 $0.29 v $0.29e, R$1.17B v $1.15Be; -1.1% afterhours
- DFS: Reports Q1 $1.31 v $1.25e, R$2.08B v $1.76Be; -1.7% afterhours
- T: Reports Q1 $0.70 v $0.70e, R$32.5B v $32.4Be; -2.0% afterhours
- AMGN: Reports Q1 $1.87 v $1.89e, R$4.52B v $4.73Be; -2.4% afterhours
- IRBT: Reports Q1 $0.18 v $0.16e, R$114.2M v $113Me; -2.8% afterhours
- VMW: Reports Q1 $0.80 v $0.79e, R$1.36B v $1.35Be; Maintains FY14 R$5.94-6.10B v $6.04Be; Affirms license rev $2.55-2.63B - conf call; -4.9% afterhours
- ISRG: Reports Q1 $1.13 v $3.26e, R$464.7M v $512Me; Cuts FY14 procedure growth +2-8% (prior +9-12%); Will not provide FY14 revenue guidance today [2nd quarter in a row with no rev guidance] - conf call; -5.8% afterhours
- CREE: Reports Q3 $0.39 v $0.39e, R$405.3M v $409Me; -7.8% afterhours
- PLUG: Files to offer 15M shares of stock; -9.0% afterhours

Notable movers by sector:
- Financials: Resona Holdings Inc 8308.JP +3.3% (Einhorn discloses position)
- Materials: Apac Resources 1104.HK +1.9% (repurchase program); Mincor Resources MCR.AU +5.1% (Q3 production results); Newcrest Mining Ltd NCM.AU +2.8% (Q2 production results)
- Energy: CNOOC 883.HK -1.2% (Q1 results); Resolute Mining RSG.AU +5.2% (Q3 production results)
- Industrials: CNR 601299.CN +2.7% (awarded CNY30B contract); Shenji Group Kunming Machine Tool 300.HK -5.2% (profit warning); Aisin Seiki 7259.JP +1.7% (production plans)
- Utilities: Huaneng Power International 902.HK +1.0% (Q1 results)
- Telecom: China Mobile 941.HK -2.2% (Q1 results); Softbank Corp 9984.JP +1.6% (partnership with GE)