TheChek News Flow

Olam is à commodities trading firm

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Temasek Unit Offers to Buy Olam in $4.2 Billion Cash Deal (2) 2014-03-14 03:51:53.450 GMT

(Updates share price in fifth paragraph.)

By Michelle Yun and Jonathan Burgos March 14 (Bloomberg) -- A Temasek Holdings Pte unit offered to buy Olam International Ltd. in a bid that values the commodity trader at S$5.3 billion ($4.2 billion), about 16 months after it helped stave off an attack by short-seller Carson Block. Breedens Investments Pte is offering S$2.23 cash per share, the Singapore-based company said today in a statement, a 12 percent premium to Olam’s last closing price of S$1.995. It’s also making an offer for Olam’s outstanding bonds and warrants. Temasek, Singapore’s state-owned investment firm, became the largest investor in Olam after concerns raised by Block in November 2012 caused the stock to plummet. The bid for Olam, one of the world’s top three coffee and rice traders, highlights growing interest in agricultural investments as rising global populations boost food demand. “Temasek is already a large holder of Olam so they probably know the business better than everybody else,” said Robert Aspin, the Singapore-based head of equity investment strategy at Standard Chartered Plc. “The fact that they are willing to pay a premium is indicative of the value that they see in the underlying business.” Olam gained 11 percent to S$2.21 as of 11:09 a.m. in Singapore as it resumed trading after the stock was halted yesterday. Trading volume on March 12 was 16.2 million shares, or 3.6 times the average daily volume in the previous three months, according to data compiled by Bloomberg.

Group Support

Breedens also has an agreement with a group including Kewalram Singapore Ltd., Olam’s founding family shareholder, and 10 Olam executives including Chief Executive Officer Sunny Verghese to not tender their shares until six months after the offer closes, Breedens said in a statement. All totaled they hold 52.5 percent of Olam stock. Kewalram and three members of key management have agreed to sell a 5.6 percent stake in Olam in acceptance of the offer. Credit Suisse Group AG, DBS Group Holdings Ltd., and United Overseas Bank Ltd. advised Breedens. Olam has rallied 30 percent this year in Singapore through to March 12, compared with a 2.2 percent decline in the benchmark Straits Times Index. The stock is set for its seventh weekly increase amid a rise in farm commodity prices. The S&P GSCI Agricultural Index has advanced 14 percent this year, with price surges in coffee and cocoa.

Keep Listing

Breedens doesn’t plan to make any major changes to Olam’s businesses or terminate employees. It also intends to keep Olam as a listed company, unless the minimum float requirements aren’t met, it said. Olam is a supplier and processor of agricultural products and food ingredients across 16 platforms in 65 countries. “We believe a successful offer will provide Olam with a stronger and more stable shareholder base to support Olam’s strategy and business model for the long term,” Breedens Director David Heng said in the statement. The offer by the Temasek unit comes after Cofco Corp., China’s largest state-owned food company, agreed last month to buy to 51 percent of Dutch grain trader Nidera BV. In a separate deal, Noble Group Ltd., Asia’s biggest commodity trader by sales, is in talks to potentially form a joint venture around its agriculture unit with Cofco.

Block’s Bet

Block said in November 2012 he was betting against Olam because he questioned the trader’s accounting methods and asset purchases, pushing the stock to a more than three-year low in December 2012. Olam rejected the assertions by Block and his research firm Muddy Waters LLC. Block today declined to comment. “Olam has been oversold following the issues raised by Muddy Waters and has bounced back strongly as the company addressed those concerns,” Alan Richardson, a Hong Kong-based money manager at Samsung Asset Management, said by phone before the announcement. As well as adding Olam shares after the Block allegations, Temasek also backed a $750 million bond sale by the commodity trader. Olam said in December 2012 it planned to sell bonds and warrants to address any “lingering doubts” about its finances. The investment firm agreed at the time to buy any rights not taken up by other investors. Temasek holds 24.6 percent of Olam through its units Breedens and Aranda Investments Pte, and the founding family has a 20.2 percent stake, according to today’s statement.

For Related News and Information: Olam’s Second-Quarter Profit Falls 13% as Sales Volumes Fell NSN N0YKP66K50YU <GO> Olam Survives Muddy Waters in Bond Comeback: Corporate Financ NSN MXW4AS6K50XV <GO> Olam Drops Profit Target as It Cuts Spending After Review NSN MLUW7D6JTSEA <GO> Top Stories:TOP<GO> Global Commodity Prices:GLCO<GO>

--With assistance from Elisabeth Behrmann in Sydney, Nikolaj Gammeltoft in New York and Klaus Wille in Singapore.

To contact the reporters on this story: Michelle Yun in Hong Kong at +852-2977-4643 or myun11@bloomberg.net; Jonathan Burgos in Singapore at +65-6212-1156 or jburgos4@bloomberg.net To contact the editors responsible for this story: Jason Rogers at +65-6231-3673 or jrogers73@bloomberg.net Andrew Hobbs at +61-2-9777-8642 or ahobbs4@bloomberg.net Madelene Pearson, Iain Wilson

Asian Market Update: Nikkei down 3% as geopolitical jitters and China growth concerns remain in the spotlight

***Economic Data*** - (SG) SINGAPORE Q4 FINAL UNEMPLOYMENT RATE: 1.8% V 1.8% PRELIM - (NZ) NEW ZEALAND FEB NON-RESIDENT BOND HOLDINGS: 63.3% V 63.7% PRIOR - (NZ) NEW ZEALAND FEB BUSINESS MANUFACTURING PMI: 56.2 V 56.2 PRIOR - (CL) CHILE CENTRAL BANK CUTS OVERNIGHT RATE TARGET BY 25BPS TO 4.00%; AS EXPECTED - (PE) PERU CENTRAL BANK LEAVES REFERENCE RATE UNCHANGED AT 4.00%, AS EXPECTED - NPD: Feb total US video game sales $810M, +9% y/y

Market Snapshot (as of 03:30 GMT): - Nikkei225 -2.9%, S&P/ASX -1.3%, Kospi -0.6%, Shanghai Composite -0.5%, Hang Seng -1.1%, Mar S&P500 +0.1% at 1,841, Apr gold flat at $1,371, Apr crude oil flat at $98.17/brl

***Highlights/Observations/Insights*** - Asian indices are on the back foot again after yesterday's bounce, with familiar themes of China slowdown and Ukraine-Russia standoff sending more investors to the sidelines. Disappointing multi-year low rates of growth in China's industrial production, retail sales, and fixed-asset investment are illuminating that the official 7.5% GDP target may in fact be optimistic, explaining why several mainland officials were quick to underscore it is a "flexible" or "elastic" forecast. Key themes outlined by the NPC this week - reining in credit, fighting pollution, and even stamping out lavish gifts - are all conceivably growth-negative. Chinese press reports today noting a senior govt official said people should not panic if growth is below target, with 7% still meeting employment objectives. ANZ economists also note the latest Feb data puts Q1 GDP below 7.5%. - Corporate defaults also appear to be a new thorn on the side of China economy, weighing further on confidence in the immediate-term. An FT report today noted a second company in China - Haixin Iron and Steel (second largest steel maker in Shanxi Province) - has formally defaulted on debt. Questions to confirm the default in a phone call to the company were unanswered. AUD/USD is bumping along its US session lows near $0.9010, while NZD/USD has backed away from its overnight $0.86 highs to trade around $0.8540.

- With 3 days to the controversial referendum in Crimea, neither side appears to be backing down from its firmly entrenched position. Ukraine interim PM Yatsenyuk, who is travelling to the US this week, addressed the UN Security Council with a plea for help. He also spoke directly to the Russia envoy Churkin in Russian, asking if Russia wants war or to return to talks. Churkin remained resolute in opposition to the overthrow of Yanukovych and failure to follow the Feb 21st agreement, but also responded that Russia does not want war. - Separately, US govt rejected Ukraine's plea for military assistance in the form of weaponry, but said it will continue to consider the request based on the situation on the ground. Meanwhile in eastern Ukraine's industrial city of Donetsk, pro-Russian protesters clashed with pro-Ukraine marchers, with 2 reported fatalities and the possibility of a pretense for Russia to protect its interests outside of Crimea.

- Bank of Japan released the minutes from its February meeting when it extended/expanded its 0.1% fixed rate lending scheme. Most members agree economy remains on recovery path and that the loans measure would further help escape from deflation, but were also quick to point out that it should not be taken as adjustment of key policy. Recall the rally after that decision was widely attributed to perception that the BOJ is signalling it is prepared to undergo more easing - a perception that was negated with this week's fairly neutral statement. USD/JPY hit a low of 101.60 in Asia, around the US-session lows, while Nikkei225 is leading regional markets to the downside with a 3% slump below 14,400, also its 3-week lows.

***Fixed Income/Commodities/Currencies*** - (AU) Australia MoF (AOFM) sells A$800M in 6.0% 2017 Bonds; avg yield: 2.8861%; bid-to-cover: 4.85x - JGB: (JP) Japan's MoF sells ¥2.46T in 0.2% (0.2% prior) 5-yr notes; Avg yield: 0.204% v 0.185% prior; Bid to cover: 3.81x v 4.07x prior - (JP) BOJ offers to purchase ¥2.0T in T-bills effective Mar 18th - GLD: SPDR Gold Trust ETF daily holdings rise 2.1 tonnes to 813.3 tonnes (highest since 814.1 on Dec 20th) - USD/CNY: (CN) PBoC sets yuan mid point at 6.1346 (weakest Yuan setting since Dec 3rd) v 6.1320 prior setting - (US) Weekly Fed Balance Sheet Total Assets Week ending Mar 12th: $4.18T v $4.17T prior; Reserve Bank Credit: $4.14T v $4.13T prior; M1: +$103.6B (4-week high) v +$14.8B prior; M2: -$13.9B (biggest decline in 3 months) v -$8.2B prior; Foreign central bank holdings of US Treasuries: $2.86T (***LOWEST holdings since $2.85T in Dec 2012) v $2.96T w/w; M1 y/y change: 9.3% (5-month high) v 8.8% w/w; M2 y/y change: 5.7% v 5.6% w/w

***Equities*** US markets: - ULTA: Reports Q4 $1.09 v $1.07e, R$868M v $856Me; +7.7% afterhours - MFRM: Reports Q4 $0.30 v $0.29e, R$312.1M v $312Me; +6.2% afterhours - BP: Said to have reached administrative agreement with the EPA - financial press; +0.9% afterhours - ZUMZ: Reports Q4 $0.71 adj v $0.61e, R$226.8M v $227Me; to repurchase up to additional $30M in common stock (approx 4% of market cap); -2.8% afterhours - NSTG: Study shows precision, reproducibility of PAM50-Based Prosigna Breast Cancer Assay in Multiple Clinical Testing Laboratories - update; -2.8% afterhours - BODY: Delays 2013 annual report filing; Guides Q4 R$66M v $75Me - NT 10K filing; -6.7% afterhours - ARO: Reports Q4 -$0.35 (ex items) v -$0.30e, R$670M v $699Me; -11.9% afterhours

Notable movers by sector: - Financials: China Investment Holdings 132.HK -4.7% (FY13 results); China Development Bank International Investment 1062.HK +9.1% (positive profit alert); Northeast Securities 000686.CN +7.7% (FY13 results); New World Development 17.HK -13.7% (issues rights shares); New World China Land 917.HK +28.8% (privatization plan); Ping An Insurance 2318.HK -2.1% (FY13 results) - Materials: POSCO 005490.KR -0.9% (CEO comments); China Polymetallic Mining 2133.HK -11.7% (FY13 results); Adelaide Brighton Limited ABC.AU -10.6% (potential loss of key customers) - Industrials: Sino-Ocean Land 3377.HK -1.5% (FY13 results); Zhangjiagang Furui Special Equipment 300228.CN +6.1% (Q1 guidance); Changshu Tianyin Electromechanical 300342.CN -10.0% (FY13 results; negative Q1 guidance); Leighton Holdings LEI.AU -2.9% (may face write-downs) - Technology: Shenzhen H&T Intelligent Control 002402.CN +3.4% (FY13 results) - Healthcare: Town Health International Investments 3886.HK +2.5% (positive profit alert); Tianjin Ringpu Bio-Technology 300119.CN +4.3% (FY123 results); Xizang Haisco Pharmaceutical Group 002653.CN +3.5% (FY13 results

March 13, 2014 8:36 PM Missing Flight Left Data Trail Jetliner 'Pinged' Satellites With Location, Altitude for Hours After Disappearance

Communication satellites received intermittent data "pings" from a missing Malaysia Airlines jet, giving the plane's location, speed and altitude for at least five hours after it disappeared from civilian radar screens, people briefed on the investigation said Thursday. The final satellite ping was sent from over water, at what one of these people called a "normal" cruising altitude. The people declined to say where specifically the transmission originated, adding that it was unclear why the transmissions stopped. One possibility one person cited was that the system sending them had been disabled by someone on board. The automatic pings, or attempts to link up with satellites operated by Inmarsat PLC, occurred a number of times after Malaysia Airlines Flight 370's last verified position, these people said, indicating that at least through those hours, the Boeing Co. 777 carrying 239 people remained intact and hadn't been destroyed in a crash, act of sabotage or explosion. Malaysian Airlines said it hadn't received any such data. Chicago-based Boeing declined to comment Thursday. If the plane remained airborne for that entire period it could have flown more than 2,200 nautical miles from its last confirmed position over the Gulf of Thailand, these people said. On Thursday, meanwhile, the international search for the plane zeroed in on areas far west of the plane's last known location. Cmdr. William Marks, the spokesman for the U.S. Seventh Fleet, said the USS Kidd would move through the Strait of Malacca, on Malaysia's west coast, and stay at its northwest entrance, while surveillance planes would search an area of the Indian Ocean 1,000 miles or more west of the strait. Malaysia, which is overseeing the search effort, directed Indian forces to a specific set of coordinate in the Andaman Sea, northwest of the Malay peninsula, an Indian official said Thursday. "There was no specified rationale behind looking in those areas, but a detailed list was provided late Wednesday evening," the Indian official said. U.S. aviation investigators said they were analyzing the satellite transmissions to determine whether they can glean information about the plane's location or status. The transmissions were sent via onboard technology designed to send routine maintenance and system-monitoring data back to the ground via satellite links, according to people familiar with the matter. Among the possible scenarios investigators said they are now considering is whether the jet may have landed at any point during the five-hour period under scrutiny, or whether it ultimately crashed. The people said aviation investigators are exploring the possibility that someone on the plane may have intentionally disabled two other automated communication systems in an attempt to avoid detection. One system is the transponders, which transmit to ground radar stations information on the plane's identity, location and altitude, and another system that collects and transmits data about several of the plane's key systems. The widebody jet was scheduled to fly overnight to Beijing from Kuala Lumpur in the predawn hours of March 8. Its transponders last communicated with Malaysian civilian radar about an hour after takeoff. After the plane dropped off civilian radar screens, these people said, the satellite link operated in a kind of standby mode for several hours and sought to establish contact with a satellite or satellites. These transmissions didn't include data about any of the plane's critical systems, they said, but the periodic contacts indicate to investigators that the plane was still intact and believed to be flying at least a significant portion of that time. The people said the transmissions included detailed information about the plane's location, speed and bearing. The transmissions, one person said, were comparable to the plane "saying I'm here, I'm ready to send data." Unknown so far to investigators is what happened to the plane following the final satellite ping, these people said. Questions remain about the plane's status, including what was happening in the cockpit. But the huge uncertainty about where the plane was headed, and why it apparently continued flying so long without working transponders and other communication links, has raised theories among investigators that the aircraft may have been commandeered for reasons that remain unclear to U.S. authorities. At one briefing, according to this person, officials were told that investigators are actively pursuing the notion that the plane was diverted "with the intention of using it later for another purpose." As authorities scramble to analyze and understand all of the transmissions from the missing 777, the situation continues to change rapidly. Some people briefed on the issue initially described the transmissions as information that had been relayed from onboard monitoring systems embedded in the two Rolls-Royce PLC Trent 800 engines, not the idling satellite communications system.

Closing Market Summary: S&P 500 Surrenders Year-to-Date Gain

The major averages finished the Thursday session near their lows after renewed concerns surrounding the situation in Ukraine, combined with more warnings signs from China, contributed to participants reducing their risk exposure. The jitters related to China are tied up in economic and financial risk, whereas, the concerns over Ukraine are tied up in geopolitical risk that has the potential to become a global economic problem.

The tech-heavy Nasdaq (-1.5%) led the retreat while the S&P 500 lost 1.2% with eight sectors ending in the red. As a result, the benchmark index settled below its 2013 closing high of 1848.36.

Equity indices began the session with modest ins, but the early strength was short-lived as the S&P 500 notched its high within the first ten minutes of action, spending the remainder of the trading day in a steady slide. Although stocks opened higher, the dollar/yen pair flashed an early warning signal when it began dropping at the start of the New York Session. The currency pair hovered near 102.80, but slumped all the way to 101.60 by the time the closing bell rang.

The yen often draws safe-haven interest in times of geopolitical distress and today's move basically snowballed given carry-trade dynamics that work against yen-based borrowers when the currency strengthens. In turn, the sharp move weighed on risk assets, including US stocks.

Continued worries about the strength of the Chinese economy fed into the risk-off posture after industrial production (8.6% year-over-year versus9.5% expected), fixed asset investment (17.9% year-over-year versus 19.4% expected), and retail sales (11.8% year-over-year versus 13.5% expected) all fell short of estimates. Copper futures have been pressured recently, and continued retreating today. The red metal fell 1.3% to $2.923/lb.

Elsewhere, the dispute between Russia and Ukraine jumped back into focus after Ukraine's acting President Oleksandr Turchynov was quoted by Reuters as saying he believes Russian forces concentrated on Ukraine's eastern border are ‘ready to invade.' The comments were followed by a statement from U.S. Secretary of State John Kerry, who said if the Sunday referendum goes ahead as planned there will be a ‘serious series of steps' taking place on Monday from the United States and Europe.

Notably, Treasuries, which began climbing just after the start of the New York session, accelerated their advance following the remarks from President Turchynov. The 10-yr note added 24 ticks, sending the benchmark yield lower by nine basis points to 2.65%.

Similarly, volatility protection was in high demand as indicated by an 12.1% increase in the CBOE Volatility Index (VIX 16.22, +1.75).

Nine sectors posted losses with cyclical groups bearing the brunt of the weakness. The tech sector (-1.6%) registered the largest decline while industrials (-1.5%) and consumer discretionary (-1.4%) followed not far behind. The underperformance of technology weighed on the Nasdaq, which also suffered from the relative weakness of biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 254.80, -6.70) tumbled 2.6%. Biotech also weighed on the health care sector (-1.4%), which was the only laggard among countercyclical groups.

The remaining defensive sectors—consumer staples (-0.6%), telecom services (-0.4%), and utilities (+0.9%)—outperformed with utilities overtaking the health care sector for the top spot on this year's leaderboard. The rate-sensitive sector extended its year-to-date gain to 6.2% versus 5.6% for health care.

Despite the daylong selling pressure, participation was below average with 678 million shares changing hands at the NYSE floor.

Reviewing today's data:

* Retail sales increased 0.3% in February after declining a downwardly revised 0.6% (from -0.4%) in January. The consensus expected retail sales to increase 0.2%.The report was pretty solid, but did not represent an upward shock that would come as a result of pent up winter-delayed demand. Sales increased in-line with the 0.2% increase in aggregate earnings that were reported in the February employment report. We would have expected a bigger upward swing if pent up demand was unleashed. 

* The initial claims level fell to 315,000 for the week ending March 8 from an upwardly revised 324,000 (from 323,000) for the week ending March 1. The consensus expected the initial claims level to increase to 329,000. The DOL reported that there were no special factors that drove the initial claims level to its lowest point since November 2013. 

* Total business inventories increased 0.4% in January after increasing an unrevised 0.5% in December while the consensus expected an increase of 0.3%. Total inventories consist of manufacturers, merchant wholesalers, and retailers. Both manufacturer (0.2%) and wholesaler (0.6%) inventories were announced prior to the release. The only unknown was retailer inventories, which increased 0.4% in January after increasing 0.7% in December. The important takeaway from the report was that the inventory gain may not have been planned. Total business sales fell 0.9% in January after declining 0.1% in December. That sharp drop in spending caused an overstock situation as more goods than expected were left on shelves. 

* The Treasury Budget for February showed a deficit of $193.50 billion, which followed the prior month's deficit of $203.50 billion. The consensus expected the deficit to hit $195.00 billion. 

Tomorrow, February PPI will be released at 8:30 ET while the preliminary reading of the Michigan Sentiment Survey for March will cross the wires at 9:55 ET.

* Nasdaq Composite +2.0% YTD  * Russell 2000 +1.5% YTD  * S&P 500 -0.1% YTD  * Dow Jones Industrial Average -2.8% YTD

Barclays to shake up investment bank

Barclays is preparing a radical overhaul of its troubled investment bank in a move which is expected to result in thousands of job cuts, adding to pressure on the division’s two heads. The shake-up comes amid growing investor disquiet about the bank’s decision to increase bonus payments by 10 per cent to £2.4bn in total last year in spite of a one-third fall in its pre-tax profits. Shareholders are also unhappy about rising costs and falling profits at the investment bank, which is jointly run by Tom King in the US and Eric Bommensath in Europe. The new strategy for the investment bank is expected to be unveiled before the summer. Two people familiar with the situation said the bank was also considering replacing Mr King and Mr Bommensath, though this may not happen until after the new strategy is presented. Barclays denied that a search was "in train for any change to leadership in the investment bank". Antony Jenkins, chief executive, has attracted widespread criticism for the performance of the investment bank and for arguing that without the higher bonuses Barclays would face a "death spiral" of departing bankers. One top 25 investor at Barclays said: "Jenkins has been slow to act. The honeymoon . . . is clearly over, if there ever was one. The issue of costs is one Jenkins needs to get a grip of." Last year the division generated a return on equity of 8.2 per cent – below its cost of capital – while its ratio of costs to income increased from 39.6 to 43.2 per cent. The unit was hit by a sharp drop in revenues at its core fixed income division, once the main motor of Barclays profits. The climate has worsened this year, as the fixed income industry has suffered a decline of up to 25 per cent since December. Barclays is expected to slash thousands of jobs at the investment bank and reallocate capital away from the division to more profitable areas, such as Barclaycard and UK mortgage lending. Mr King and Mr Bommensath were only appointed by Mr Jenkins a year ago to replace Rich Ricci, a close ally of the previous chief executive, Bob Diamond, who was ousted in 2012 as a result of the Libor rate manipulation scandal. One potential replacement as head of the investment bank is Tushar Morzaria, the well-regarded finance director who joined in October from JPMorgan Chase. However, some question whether he has enough experience. Mr King was regarded as a talented M&A adviser in his previous jobs at Barclays and Citigroup. Mr Bommensath, who joined Barclays in 1997, faces growing criticism from within the bank, according to insiders. The duo have failed to convince investors that they can restore the investment bank to making sustainable returns above its cost of equity. Shares in Barclays have fallen more than 10 per cent since its results last month, underperforming the sector, but mirroring a similar fall at its main European rival Deutsche Bank. Some investors are threatening to vote against the bank’s remuneration report at next month’s annual meeting, adding to the pressure on Mr Jenkins to take swift action. "The pay thing was a scandal and it has put fund managers who I speak to in a really tricky position," said one adviser to Barclays. Another person familiar with the bank said: "The investment bank has to shrink and be reshaped. They are a bit like rabbits in headlights."

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*CARREFOUR SEEKS TO SELL STAKE IN BRAZIL UNIT FOR $2.1B:REUTERS 2014-03-13 15:52:41.349 GMT

--RITA DEVLIN

-0- Mar/13/2014 15:52 GMT