To sell assets to reduce Mexico market share below 50%; Sales pending approval - financial press
- Plans to separate Telcel's towers from company.
- Renounces rights to acquire Dish Mexico control.
Belgium Calls on BNP to Share Lessons Learned from $9 Billion Fine
Finance Minister Asks Bank CEO to Explain His Plans
BNP Paribas's headquarters in Paris. The bank has agreed to pay out nearly $9 billion for violating U.S. sanctions against Sudan, Iran and Cuba. Associated Press
BRUSSELS— BNP Paribas SA BNP.FR -2.13% 's largest single shareholder, the Belgian government, has summoned the French bank's chief executive to seek an explanation about the U.S. sanctions case and its $9 billion penalties.
Belgium's Finance Minister Koen Geens expressed concern about the gravity of the charges against BNP Paribas and has asked the bank's CEO, Jean-Laurent Bonnafé, to come and meet him soon in Brussels, according to a statement issued by the ministry on Tuesday.
Mr. Geens "wishes to get a precise understanding of what lessons management and all the responsible parties will learn from what has happened, including matters regarding shareholder transparency," the ministry said.
BNP Paribas, France's largest listed bank by assets, last month pleaded guilty to violating U.S. sanctions against Sudan, Iran and Cuba, as part of an unprecedented settlement that included a year-long ban on the bank's ability to conduct certain U.S. dollar transactions.
BNP Paribas Chief Executive Jean-Laurent Bonnafé delivering a speech during the bank's 2012 results conference in Paris on Feb. 14, 2013. Associated Press
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A spokeswoman for BNP Paribas declined to comment.
The Belgian government's request highlights the pressure on the French bank and its management to explain how it plans to turn the page on what Mr. Bonnafé himself has described as a "difficult situation." The settlement with U.S. authorities has marked an abrupt fall from grace for a bank, which until now had largely dodged the scandals that gave the industry a bad name, such as the U.S. mortgage crisis or the Libor interest-rate rigging.
The country ended up with a stake in the French lender in 2009 when BNP Paribas bought Belgian bank Fortis, 532843.BY +1.38% which had been bailed out by the Belgian government.
The Belgian government has said it wasn't intent on holding on to its 10.3% interest in the bank. "However, a decision to sell this type of holding needs to be taken in a calm atmosphere by a government with a full mandate," said Mr. Geens.
Belgium's current six-party coalition government is in a caretaker role; preliminary talks to form a new government have been continuing since elections in late May.
In the settlement on June 30, U.S. officials laid out in stark terms a sophisticated and long-running scheme BNP Paribas relied on to disguise billions of dollars in financial transactions in violation of American sanctions—despite warnings by some within the firm about the legality, and morality, of the transactions.
In Sudan, the bank acknowledged using regional banks overseas to process more than $20 billion in financial transactions linked to local companies and government agencies at a time when the nation was engaged in what the U.S. and others call genocide.
Mr. Bonnafé expressed "deep regrets" for the French bank's misconduct shortly after U.S. authorities announced the settlement. "The failures that have come to light in the course of this investigation run contrary to the principles on which BNP Paribas has always sought to operate," Mr. Bonnafé said.
The bank said it would set up a special unit in New York to ensure BNP Paribas complies globally with U.S. sanctions. Its New York branch will be responsible for processing and controlling all of the bank's dollar flows in the future.
Closing Summary: High-Growth Names Weigh on Equity Indices Again
The major averages registered their second consecutive decline that sent the S&P 500 lower by 0.7% with nine sectors ending in the red. Like yesterday, small-cap stocks underperformed with the Russell 2000 and Nasdaq Composite posting respective losses of 1.2% and 1.4%.
In some ways, today's session resembled yesterday's affair as stocks began the trading day on a cautious note amid weakness in European equities. Yesterday, a disappointing Industrial Production report from Germany contributed to the cautious posture, while today's losses followed the largest monthly decline in UK's Industrial Production (-0.7%) since January 2013.
With participants receiving another warning sign about the strength of economic growth in the eurozone, the stage was set for another day of profit taking.
The technology sector resisted some of the selling pressure yesterday, but the top-weighted S&P 500 sector lost 1.0% today. The influential sector suffered from losses among components of all sizes, including a 0.6% drop in the shares of Apple (AAPL 95.32, -0.62) after the top-weighted tech stock spiked 2.1% on Monday.
Social media names slumped notably with the likes of Facebook (FB 62.76, -2.53), LinkedIn (LNKD 158.67, -10.58), and Twitter (TWTR 37.41, -2.82) posting losses between 3.9% and 7.0%.
Things looked a bit better among chipmakers as the PHLX Semiconductor Index trimmed its loss to 0.5% after being down as much as 1.0% at the halfway point of the session. Similarly, biotechnology also inched up off its midday low, but the iShares Nasdaq Biotechnology ETF (IBB 253.63, -5.46) still lost 2.1%, which weighed on the health care sector (-0.9%).
On the upside, the utilities sector (+0.6%), which struggled last week, spent the entire session in the green to boost its week-to-date gain to 1.0%.
Utilities notwithstanding, consumer staples (-0.2%), energy (-0.2%), and materials (-0.3%) settled ahead of the broader market, but could not climb into the green. In the materials space, Alcoa (AA 14.85, +0.11) bucked the trend, adding 0.6% ahead of its after-hours earnings report.
Today's weakness in equities translated into strength for the bond market, sending the 10-yr note higher by 15 ticks. For its part, the benchmark yield fell five basis points to 2.56%.
Participation was a bit below average with just under 670 million shares changing hands at the NYSE.
Economic data was limited to the Jobs Openings and Labor Turnover Survey and the Consumer Credit report:
The Job Openings and Labor Turnover Survey for May indicated job openings increased to 4.635 million from 4.464 million
Consumer credit increased by $19.60 billion in May after increasing a downwardly revised $26.10 billion (from $21.80 billion) in April. The consensus expected consumer credit to increase by $16.10 billion
Consumer credit typically goes through large monthly revisions, but any future revision is unlikely to alter the current trend of double-digit credit growth
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while the minutes from the June FOMC meeting will cross the wires at 14:00 ET.
S&P 500 +6.2% YTD
Nasdaq Composite +5.1% YTD
Dow Jones Industrial Average +2.0% YTD
Russell 2000 +0.7% YTD
Reports Q2 $0.18 v $0.13e, R$5.84B v $5.63Be
- Affirms FY14 global aluminum demand growth +7% (prior +7%) Outlook: Global aluminum demand growth forecast of 7 percent in 2014 reaffirmed; global aluminum deficit increasing; global alumina surplus shrinking Segments:
- Alumina after tax operating income $38M v $64M y/y
- Primary metals after-tax operating income $97M v -$32M y/y
- Global rolled products after-tax operating income $79M v $79M y/y
- Engineered products and solutions after-tax operating income $204M v $193M y/y
- Adj EBITDA margin 13.3% v 10.5% y/y
- CEO: We are taking the downstream business to new profitability heights, capturing midstream demand as auto lightweighting accelerates, while continuing to relentlessly improve upstream performance. Our strategy of building a lightweight multi-material innovation powerhouse and a highly competitive commodities business is driving compelling and sustainable shareholder value.
Airbus staff quizzed in SFO probe into alleged Saudi corruption
The UK Serious Fraud Office has made arrests and questioned four individuals in connection with its long-standing investigation into alleged corruption in Saudi Arabia by a subsidiary of Airbus, the European aerospace and defence group.
Two individuals who have been questioned are still employees at GPT Special Project Management – the Airbus subsidiary that specialises in communications equipment for the Saudi national guard – according to people familiar with the investigation. Another two are former GPT employees.
The interviews signify another change in pace in the SFO’s probe. Almost two years ago the probe was ratcheted up to a criminal inquiry; before that the agency allowed Airbus to carry out an internal inquiry into allegations made by a whistleblower relating to GPT’s £1.5bn contract to supply equipment to the Saudis.
The new activity could signal that the SFO is in the final stages of its probe, according to legal experts.
The SFO is examining whether GPT bribed individuals in connection with its contract to supply communications equipment to the Saudi national guard.
Details about gifts allegedly given to Saudi generals, and payments made to a Cayman Islands bank account, were passed to the SFO by Ian Foxley, a former Saudi-based employee of GPT.
GPT has a contract to design, operate and maintain communications systems to the Saudis under a government-to-government programme called Sangcom. The UK Ministry of Defence is GPT’s sole customer under that contract, and is supposed to approve the Airbus subsidiary’s expenditures.
An SFO spokesperson said: “In connection with a Serious Fraud Office investigation, we can confirm that a search warrant has been executed and a number of arrests have been made. Officers from the National Crime Agency assisted the SFO with its operation.”
If the SFO has enough evidence to charge individuals or the company, and the agency believes prosecution to be in the public interest, it has to first seek permission from Dominic Grieve, UK attorney general, who must sign off on any overseas corruption prosecutions relating to the period before July 2011 when new UK anti-bribery laws came into effect.
Airbus said: “Airbus Group understands that four former and current employees were recently interviewed under caution as part of a wide-ranging SFO investigation into subsidiary GPT. At this stage we cannot add anything further to our previous statements on this matter.”
Last year Airbus said its own investigation into GPT yielded no evidence of wrongdoing. The results of the company’s inquiry were passed to the SFO.
The US authorities are also aware of the allegations made by Mr Foxley.
The case has echoes of the SFO’s inquiry into alleged bribery in Saudi Arabia and other countries by BAE Systems. That case was significantly narrowed by Downing Street on national security grounds in 2006, casting a shadow on UK anti-corruption efforts.
BAE eventually pleaded guilty in the UK to one count of false accounting over a Tanzanian radar system. It paid $400m to US authorities to settle allegations over its Saudi Al-Yamamah contract.
Closing Commodities: Oil, gold, silver largely recover morning losses
* Precious metals fell into negative territory following the Job Openings and Labor Turnover Survey for May report which showed job openings increased to 4.635 mln from 4.464 mln.
* Aug gold retreated from a session high of $1325.70 per ounce and brushed a session low of $1314.30 per ounce. It eventually settled at $1316.60 per ounce, just 50 cents below the break-even level.
* Sep silver touched a session high of $21.25 per ounce shortly after floor trade opened but chopped around near the unchanged line following the release of May JOLTS data. Unable to gain momentum, it settled 1 cent higher at $21.02 per ounce.
* Aug crude oil advanced to a session high of $104.20 per barrel moments after equity markets opened but quickly retreated into the red. It brushed a session low of $102.98 per barrel and settled with a 0.1% loss at $103.36 per barrel.
* Aug natural gas spent its entire floor session in negative territory, dipping as low as $4.13 per MMBtu in morning action. It eventually settled with a 0.7% loss at $4.20 per MMBtu.
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Templeton’s Mobius Sees China Heading in ‘Right Direction’: FUW 2014-07-08 16:16:52.86 GMT
By Jeffrey Vögeli July 8 (Bloomberg) -- Opening of formerly state-run sections of Chinese economy to bring “unexpected growth dynamic,” says Franklin Templeton fund manager Mark Mobius, according to Swiss newspaper Finanz und Wirtschaft. Mobius also says: * Some Chinese companies will go bankrupt as economy restructured * India stock market “euphoria” after Modi’s election “somewhat exaggerated,” investors should wait until market corrects * PetroChina Co Ltd, Ambev SA, Samsung Electronics Co. among Mobius’ preferred stocks
For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>
To contact the reporter on this story: Jeffrey Vögeli in Zurich at +41-44-224-4107 or jvogeli@bloomberg.net To contact the editor responsible for this story: Frank Connelly at +33-1-5365-5063 or fconnelly@bloomberg.net
The Fourth Proposal Tops the Others (Until the Next Proposal)
This morning, AbbVie Inc. (NYSE-ABBV) announced a Fourth Proposal in its attempt to co-join with Shire PLC (Nasdaq-SHPG, LSE-SHP). The updated merger consideration is comprised of £22.44 cash and 0.8568 ABBV per SHP share (for an indicative value of £51.15). Using a 1.7115 USD/GBP exchange ratio, the proposal valued SHPG at $262.55 per share (based on the ABBV closing price of $57.40 on 7/7/14). The implied proposal premiums for SHPG shares are 37% to the prior day ($191.71), 47% to the prior 20 day average close ($178.88), 51% to the prior 40 day average close ($174.38) and 86% to 12/31/13 ($141.29). The implied 2014E and 2015E valuation multiples for standalone SHPG (deal-related excluding any tax efficiencies and operating synergies) are 20.0x and 17.9x EV/EBITDA and 27.0x and 24.4x P/E, respectively. Later in the morning, SHPG released a statement noting ABBV did not give the company notice of its “revised conditional non-binding proposal” before it was publicly announced and that its Board will meet to review it.
The latest proposal was made 10 days before the 7/18/14 deadline for the firm intention of an offer to SHP. The implied deal value is an 11% increase over the prior £46.26 per SHP share indicative value and is inline with shareholder expectations of a $260/share deal price. The current proposal reflects a 31% premium to the initial indicative value of £38.97. Despite the apparent “good news” of the higher proposal price, SHPG shares traded down to the low-$230s (after being indicated in the $240/share range pre-market). Our thoughts on the weakened ABBV price in trading today are as follows: • The recent failed attempt by Pfizer Inc. (NYSE-PFE) to reach an agreement to merger with UK-incorporated AstraZeneca PLC (NYSE-AZN) after making four proposals does not inspire much confidence that this situation will be different; • ABBV share price has traded straight down this morning which we ascribe to a mix of additional share hedging (both the proposal and the sector) and concerns that the stock will return to the low-mid $50s range on no transaction; • Expectations that ABBV would increase its proposal had been priced into SHPG over the past week and investors are taking profits on the trade; and • ABBV has been bidding against itself and is running out of room to meaningfully increase the merger value of a final Proposal.
Assuming a $210/share SHPG downside (similar to the ~20% discount to the last PFE proposal of £46.26 per AZN share indicative value), the deal probability has swung from 60% pre-market to 40% currently. We believe 50% is more appropriate (at least until the SHPG Board issues a formal response) and that the dynamics of this situation are better than the AZN/PFE. On 6/20/14, SHPG rejected ABBV’s Third Proposal, emphasizing that it undervalued the “full benefits” of its growth strategy to double revenues to $10B by 2020 (“10x20” plan). This does not seem to be outright rejection of an unsolicited proposal based on a long-term business strategy to bring conceptual R&D products to market (the AZN defense) but rather ascribing the right price premium for an existing drug portfolio with product extension possibilities. We believe this latest proposal is meant to at least get the parties to the table to have meaningful discussions (which is one step farther that AZN/PFE).
SHPG does not have the same political and economic exposure in the UK as AZN, and ABBV is less that half the size of PFE. While a transaction is not going to fly under the radar screen, it certainly should attract less attention over tax efficiencies than the PFE proposal; ABBV had an overall FY13 tax rate of ~22% compared to 27% for PZE. ABBV may have limited room to increase its current proposal; we estimate 4% P/F 2014 EPS accretion using $500M savings, a 5.5% blended interest expense, and an adjusted 13% tax rate for ABBV standalone and deal synergies. However, we believe SHPG could trade up to the mid-$240s if the parties at minimum agree to have serious discussions prior to the upcoming firm offer deadline. The companies seem to have more compatible corporate cultures than AZN/PFE; SHPG has had a history of making tuck-in acquisitions and ABBV was spun off from Abbott Laboratories (NYSE-ABT) in 2013. We believe that ABBV is committed to a transformative deal; the proposal put forth today is a signal of support from SHPG shareholders that had indicated $260/share was an acceptable takeover value.
Marathon Partners Equity Management discloses increased 5.07% stake (up from 3.8%) - filing
- Reporting Persons have no plans or proposals which, other than as expressly set forth below, would relate to or would result in: (a) the acquisition of additional securities of the Issuer or the disposition of presently-owned securities of the Issuer; (b) any extraordinary corporate transaction involving the Issuer; (c) a sale or transfer of a material amount of assets of the Issuer; (d) any change in the present Board of Directors or management of the Issuer; (e) any material change in the present capitalization or dividend policy of the Issuer; (f) any material change in the operating policies or corporate structure of the Issuer; (g) any change in the Issuer's charter or by-laws; (h) the Shares of the Issuer ceasing to be authorized to be quoted in the over-the-counter security markets; or (i) causing the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934. The Reporting Persons, however, reserve the right, at a later date, to effect one or more of such changes or transactions in the number of shares they may be deemed to beneficially own. The Reporting Persons have been and may continue to be in contact with members of the Issuer's management, the Issuer's Board of Directors, other significant shareholders and others regarding alternatives that the Issuer could employ to improve shareholder value.
Apple trades to lows; may be attributed to cautious UBS comments related to slowing momentum factors such as challenges in China
