(MKM) Dollar General: Merger with Family Dollar (FDO) could make sense, but orga

Dollar General: Merger with Family Dollar (FDO) could make sense, but organic growth seems preferable; maintain Buy

MKM Partners notes, DG and FDO are up 6% and 13% (vs. SPX up slightly), respectively, since the 6/6/14 disclosure that Icahn Capital had acquired a 9.4% beneficial ownership interest in FDO, as investors speculate about a possible merger. FDO added another 2% after-hours yesterday in response to a letter sent by Carl Icahn to CEO Howard Levine saying the company should be put up for sale immediately. While firm agreea that merger synergies could be significant, it thinks DG is better off continuing to pursue lower-risk organic growth.

(BFW) Pfizer/Astra Talks in 3-6 Months Would Not Be Surprise: JPM

Pfizer/Astra Talks in 3-6 Months Would Not Be Surprise: JPM
2014-06-20 14:21:54.227 GMT


By Sasha Damouni
     June 20 (Bloomberg) -- Pfizer/AstraZeneca deal rationale
still seen as “strong” with talks that may resume over next
3-6 months, if Astra is willing to engage w/ Pfizer on a
friendly deal, JPMorgan analyst Chris Schott said in note.
  * Schott says PFE may pursue other business development
    transactions to achieve greater critical mass in operating
    segments
    * PFE could look at mid-cap biotech acquisition to build
      out its innovative business or a generic/brand generic
      acquisition to broaden GEP portfolio
  * JPM added sees a Valeant-Allergan combination as
    “incrementally” more likely as it is becoming
    “increasingly challenging” for AGN to pursue inversion as
    path to value creation

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

To contact the reporter on this story:
Sasha Damouni in New York at +1-212-617-7787 or
sdamouni2@bloomberg.net
To contact the editor responsible for this story:
Brad Skillman at +1-212-617-2763 or
bskillman1@bloomberg.net

>>> World Cup 2014: Police investigate fans with wheelchairs pictured standing u

World Cup 2014: Police investigate fans with wheelchairs pictured standing up during matches
A group of supporters who appeared to jump out of their wheelchairs at Fifa World Cup 2014 games in Brazil are being investigated by police for ticket fraud
Some supporters have been pictured at the World Cup standing in areas reserved for wheelchair fans
12:18PM BST 20 Jun 2014
A group of supporters who appeared to jump out of their wheelchairs atWorld Cup 2014 are being investigated for ticket fraud.
Police are investigating pictures from CCTV and social media which show supposedly wheelchair-bound Brazil fans standing during the opening game of the tournament in Sao Paulo, between the hosts and Croatia.
Police believe some fans who bought tickets on the black market may have tried to cover their tracks by using wheelchairs to enter the stadium.
Many of the concession tickets designated for disabled fans have fallen into the hands of touts amid the scramble for tickets. There have also been instances of young adults being seen in seats reserved for pensioners.
Touts have been selling tickets for disabled people outside stadiums. Selling a ticket for more than face value is a crime for which the maximum sentence is four years in prison.

(BFW) AbbVie May Raise Shire Bid to $250/Shr, Bernstein Says

AbbVie May Raise Shire Bid to $250/Shr, Bernstein Says
2014-06-20 13:33:22.600 GMT


By Krysta Huber
     June 20 (Bloomberg) -- AbbVie expected to increase takeover
offer for Shire a fourth time, $250/shr max price AbbVie could
pay, Bernstein analyst Aaron Gal says in note.
  * SHPG disinterest a surprise
  * Allergan may also bid for Shire, may be “tough,” deal
    would still be accretive at $250/shr
  * Bid higher than $230/shr may be “difficult for anyone to
    pay”
  * ABBV may offer added value to SHPG, cites CVR on
    Lifitegrast, Premiplex
  * Rates SHPG mkt perform, PT $155; rates AGN outperform, PT
    $190
  * NOTE: Earlier, Tax Synergies, Savings Limited in AbbVie-
    Shire Tie-Up: Barclays; AbbVie’s Interest in Shire Is Mainly
    Tax Driven: Jefferies
  * NOTE: Earlier, Bloomberg said Abbvie Said to Weigh Higher
    Offer for Shire After Bid Rejected

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

To contact the reporter on this story:
Krysta Huber in New York at +1-212-617-0219 or
khuber9@bloomberg.net
To contact the editor responsible for this story:
Brad Skillman at +1-212-617-2763 or
bskillman1@bloomberg.net

WSJ : TPG’s $4 Billion Private Equity Man Goes Public

After earning more than $4 billion of profit for David Bonderman’s TPG Capital, British dealmaker Stephen Peel is leaving the private equity firm for a second career in public service.

His takeover in 2004 of German bathroom-fittings company Grohe triggered accusations from some politicians that private equity firms were “locusts” that strip assets and cut jobs. In response, Mr. Peel, 48, argues that his private equity experience can help boost the performance of companies and creating new jobs.

Here he is on his career so far:

On leaving private equity:

“I have had an amazing career and done what I wanted to do. The firm has allowed me to take a lot of risks in all these markets and it’s worked out well. It’s been exciting. It’s been terrifying. Staying in private equity, I can’t imagine the next 10 or 15 years being dramatically different or more exciting and I think I’ve got enough time to have a different career.”

On emerging markets:

“In emerging markets you get asked to do lots of difficult things. I am very, very clear about the moral compass required to do business in these markets and not to stray into a grey zone that is uncomfortable.

“Things will go wrong so you’ve got to buy well. If something goes wrong and you get into a conflict, you hold firm, stand your ground, do the right thing and you will usually get through it.

“One of my strong interests is around governance in emerging markets and how you improve it, reducing corruption, building better democratic institutions.”

On trade versus aid to assist the poor:

“I think there are a lot of questions over the aid model. It’s pretty clear in Asia that economic development and smart investment in infrastructure has taken people out of poverty, not aid. How you stimulate and put the business environment in place — private equity skills have a lot to add to that.”

German labor union IG Metall’s Jörg Weigand, who advised Grohe employees after TPG’s takeover, is cautiously optimistic about Mr. Peel’s career move:

“Stephen Peel and TPG became synonymous for bad locusts for very good reasons.

“I think that there are a lot of NGOs that could now profit from his management skills. The public would also profit if Peel would try to teach economists to be sustainable, and socially acceptable economic models instead of the regular strategies of turbo capitalism.”

>>> Nucor Corp Guides Q2 $0.35-0.40 v $0.65e --> NUE -2.4% Pre Open


Nucor Corp Guides Q2 $0.35-0.40 v $0.65e

Included in the first quarter of 2014 earnings was a $12.8 million ($0.04 per diluted share) charge primarily related to tax legislation changes in the state of New York. Also included in first quarter of 2014 results was a $9.0 million charge ($0.02 per diluted share) related to the disposal of assets within the steel mills segment. Included in the projected second quarter of 2014 results is approximately $21 million ($0.04 per diluted share) of additional employee stock-based compensation expense related to the timing of annual grants that are typically authorized in June of each year. 

Overall operating performance at our steel mills segment is expected to be slightly improved compared to the first quarter of 2014, as improvements in sheet and plate profitability are partially offset by lower profitability in structural steel. In June, Nucor-Yamato Steel is undergoing a planned three week outage associated with our $115 million sheet piling capital project. This planned outage will result in lower shipments for structural steel. Import levels continue to negatively impact pricing and margins, particularly at our bar and sheet mills. Additionally, the second quarter of fiscal 2014 is four days shorter than the first quarter of 2014, contributing to lower shipments. Steel demand continues to be strong, particularly for sheet and plate products. 

Our fabricated construction products businesses (rebar fabrication, joist and decking and pre-engineered metal buildings) returned to solid profitability in the second quarter of 2014, reflecting improving conditions in the nonresidential construction markets. Although nonresidential construction markets are at historically low levels, they are improving. Accordingly, we expect further increased operating profits in our fabricated construction products businesses going forward. 

Projected second quarter of 2014 results include no charge to value inventories using the last-in, first-out (LIFO) method of accounting, compared to a charge of $14.5 million ($0.03 per diluted share) in the first quarter of 2014 and no charge to value inventories in the second quarter of 2013.

RTR - Shire rejects AbbVie's $46 billion takeover bid


(Reuters) - British drugmaker Shire (SHP.L) has rejected a 27 billion-pound ($46 billion) takeover offer from AbbVie (ABBV.N), the latest attempt by a U.S. healthcare firm to tap into lower tax rates abroad via an acquisition.

Shire, which has no single controlling shareholder, has been seen as a prime takeover target for U.S. drugmakers due to its attractive rare diseases business and its Irish tax base.

Saying its annual product sales are set to more than double by 2020 to $10 billion, Shire rejected the 46.26 pounds per share offer as failing to reflect its true value, despite the offer being at a 30 percent premium to its share price over the last month.

But analysts and one large shareholder said the firm may struggle to resist a bid of over 50 pounds per share.

"You can easily see other people coming for Shire now because it’s in a good space," one of Shire's 40 biggest shareholders told Reuters.

"Their pipeline is fantastic, it’s growing at 20 percent so for them (Abbvie) to offer 46 quid for that sort of growth profile we think is not enough. If they came back with 50-plus people would find it difficult (to say no) and that would be very sad."

Founded in 1986 in Britain, Shire conducts most of its business in the United States and has been domiciled in Ireland for tax purposes since 2008.

AbbVie's takeover offer proposed creating a new U.S.-listed holding company with a tax domicile in Britain, where the government has also introduced tax breaks designed to encourage research and development.

The approach marks the latest in a long line of mergers proposed by U.S. firms seeking to lower their tax rates, and comes less than a month after the collapse of Pfizer's (PFE.N) $118 billion bid for AstraZeneca (AZN.L) which was also motivated in part by tax considerations.

Ireland's corporation tax rate currently sits at 12.5 percent, one of the lowest in the world, while Britain has been cutting its rate from 28 percent in 2010 to 21 percent this year and 20 percent from 2015, well below the U.S. headline rate of 35 percent plus local taxes.

Tax advisers say the British system also enables international companies to lower their tax rates in other ways.

Shire said the offer from AbbVie not only undervalued the company's prospects but "the board also had concerns regarding the execution risks associated with the proposed (tax) inversion structure, as AbbVie would redomicile in the UK for tax purposes."


HIGHER PRICE NEEDED

AbbVie was first to release a statement confirming that its offer had been rejected, after Reuters revealed the talks late on Thursday.

Confirmation of the offer could kick off a bidding war for Shire, with sector bankers expecting the group to also prove appealing to U.S. pharmaceutical and biotech firms such as Bristol-Myers Squibb (BMY.N), Amgen (AMGN.O), Gilead (GILD.O) and Biogen (BIIB.O).

Shire's share price was up 15 percent at over 43 pounds by 1150 GMT, valuing the firm at over 25 billion pounds ($43 billion). Shire said the rejected offer comprised 0.7988 AbbVie shares and 20.44 pounds in cash for every Shire share.

AbbVie, which has a market capitalisation of around $86 billion, said it made an initial cash and share proposal in early May with an indicative value of 39.50 pounds per share.

It did not describe the latest offer as final, meaning it could come back with an even higher price and has been given a deadline under UK takeover rules to either make a firm intention to make an offer, or walk away, by 1600 GMT on July 18.

However, analysts at Barclays said that the cost synergies and tax inversion benefits of the existing offer could be limited.

"With no obvious therapeutic overlaps between AbbVie and Shire, the prospect for cost savings appears limited to us," they said. "We would view Shire as very much a bolt-on acquisition for AbbVie, albeit one with a $47 billion price tag.

"We also believe the cash component of AbbVie’s current proposal is on the cusp of what it can come up with," the analysts said, adding, however, that a deal would help AbbVie to become less reliant on its rheumatoid arthritis drug Humira.

Shire, which specialises in medicines for attention deficit hyperactivity disorder (ADHD) and drugs to treat rare genetic disorders, was previously approached by Botox-maker Allergan (AGN.N) months before the U.S. group itself became a takeover target for Valeant (VRX.TO).

Shire is being advised by Citi, Evercore and Morgan Stanley whilst Abbvie is being advising by JPMorgan.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: SWHC -9.8%, OC -6.8%, ORCL -6.4%, AKS -5.9%, DRI -4.1%, TIBX -1.5%.

M&A news: TRGP -10.4% (TRGP and NGLS announced discussions regarding a potential business combination with Energy Transfer Equity (ETE) have been terminated), NGLS -10.2%.

Select metals/mining stocks trading lower: GG -1.1%, AG -1%, GOLD -0.9%, ABX -0.8%, GDX -0.7%, MT -0.7%, NEM -0.6%, BHP -0.6%, GLD -0.5%.

Other news: MACK -10.8% (co to regain worldwide rights to develop and commercialize MM-121; co to pursue registration path for MM-121 and partnership opportunities), CLRX -9.7% (prices of an underwritten public offering of 913,500 shares of its common stock), RIBT -6.3% (announced proposed public offering of common stock and warrants, size not disclosed), EMES -5.6% (announced secondary public offering of ~3.52 mln common units by selling unitholders), EXL -5.2% (announced public fllow-on offering of 10.0 mln shares of common stock; Barclays Capital Inc. and Raymond James & Associates, Inc. will act as joint book-running managers), KND -3.7% (priced 9 mln share offering of common stock at $23.75 per share), RGR -3.7% (in sympathy with SWHC),MCP -3.1% (Moody's downgraded co's corporate family rating to Caa2 from Caa1, affirmed B3 rating on senior secured notes), DB -2.8% (proposing issuance of 299.8 mln of new registered no par value shares), BECN -2.3% (in sympathy with OC's lowered guidance), EVDY -1.7% (WBMD commences litigation against co for trademark infringement, believes that the WBMD claims do not have merit), KORS -1.5% (potentially in sympathy with COH's downgrades), ING -1.3% (potentially in sympathy with DB), HW -0.9% (in sympathy with OC's lowered guidance).

Analyst comments: SAH -1.7% (downgraded to Sell from Neutral at Goldman), PETM -1.4% (downgraded to Neutral from Outperform at Wedbush), COH -1.1% (downgraded to Mkt Perform from Outperform at BMO Capital Mkts; downgraded to Neutral from Overweight at HSBC).