Deutsche Bank AG There is speculation that €8B rights offering could price €21-21.50/share (approx 28% discount to prior close); expected to price later today
Hutchison, Vimpelcom restart merger talks for Italian mobile business; Goldman, Morgan Stanley named advisers
Hutchison Whampoa [HKG:13], a Hong Kong-listed conglomerate, and Vimpelcom [NASDAQ:VIP], a Russian telecom firm, have restarted discussions to combine their mobile units in Italy, according to a newswire report.
Reuters, citing unnamed people with knowledge of the matter, reported that Goldman Sachs is Hutchison's adviser while Morgan Stanley is advising Vimpelcom. Mediobanca will probably be involved in the deal, the report said, without specifying the Italian bank's potential role.
The talks were reignited after Hutchison has been allowed to buy O2 Ireland, and the debt of Wind, the Italian telecom controlled by Vimpelcom, has been partly refinanced, the report said.
A report in La Repubblica in February said that Hutchison's 3 Italia would take a majority stake in the new entity formed by the merger due to Wind's high debt.
Source Newswire Round-up
Mediaset may match Telefonica's bid for 56% stake in Digital Plus - report
Mediaset, the listed, Italian media group, could try to match the offer made by Spanish telco Telefonica for a 56% stake in the Spanish pay TV operator Digital Plus, an unsourced article by Italian-language daily Il Sole 24 Ore reported.
The item said Mediaset has 15 days to match the EUR 750m offer, already accepted by the vendor, Spanish publication group, Prisa.
The report noted that Mediaset already holds 22% of Digital Plus via its Mediaset Espana subsidiary.
The report said another option for Mediaset to pursue would be to offer slightly more cash to buy the stake in order to get a better deal than Telefonica. The item said that a further option would be to make a deal with Telefonica where both the parties would get a 50% stake each in Digital Plus.
The article noted that further options for Mediaset include to remain in Digital Plus with its present stake or sell the stake, which are seen as unlikely.
Source Il Sole 24 Ore
There may be competition to three mobile operators" (Montebourg) Link to French Article {http://bit.ly/1m9oTkJ}
The Minister of Economy, Productive Recovery and Digital hammered his desire to see the market consolidate but downplaying the risk of rising prices due to the presence of Free, disruptive.
Arnaud Montebourg persists and signs ... but rounded corners. Interviewed Tuesday by the Economic Affairs Committee of the Senate, the Minister of Economy, Productive Recovery and Digital hammered the need, he said, returning to the three mobile operators. However, he tried to reassure the consequences for customers, in response to concerns expressed for example by UFC Que Choisir and relativize the will of government interference.
"Promote the consolidation and return to three operators does not mean agreement. I would say consumer associations there may be competition to three operators. The presence of Free, which is disruptive of the sector will maintain pressure on prices "argued Arnaud Montebourg.
The minister, however, joked late January and claimed the same over the role of "organizing agreements" as are necessary for his eyes. However, he acknowledged that an agreement had been convicted "rightly" in the area between the three operators in the 2000s and that we should not "condemn a particular operator."
Not intrusive in the decisions of operators
The minister, who had stepped into the breach for the supply of Bouygues for redemption SFR against the Numericable, held by Vivendi, has defended the practice of interference in the affairs of telecom operators. "We are not intrusive in their strategic decisions," he said. However, he believes that "we have not absorbed the seismic effects of the arrival of the new operator, Free Mobile e" and that the situation is "not sustainable and even dangerous" when operators are engaged in "a competition unleashed by the price. "Now," the combination of SFR and Numericable does not solve the problem, which remains before us. "
"I publicly encourages operators to seek reconciliation as well combinations they wish to implement. "
The Minister had already stated publicly in mid-May that " Mr. Bouygues is perfectly able to imagine solutions with other SFR. I prompted, he knows, I told him . "The fact that Orange is studying a possible merger with Bouygues Telecom , a large and complex operation, was also seen as dictated by the state shareholder of the incumbent approach.
Total, GDF Suez and Orange will enter Euronext capital - Link to rench Article :{http://bit.ly/1rKfR6d}
Heavyweight CAC 40 should take an interest in the stock market operator before its IPO.
Several CAC 40 could participate in the introduction of Euronext Stock Exchange. According to our sources, Total, GDF Suez and Orange are committed to participate in the round of the operator of the Paris market, which is expected to reach the coast at the end of the month.
The oil group, the telecom and energy company could take a stake of around 1% each. Others might follow in the future. They could thus be seen as "strategic investors" in the prospectus of the operation. For Euronext capitalization of around 1.5 billion euros (analysts suggest a range of 1.3 to 2 billion euros), so this would be a entrance fee of about 15 million euros.
By investing in this IPO issuers seeking to join the dynamic space. A symbol for a group that wants to position itself as a "center of raising capital for the financing of the real economy."
Pan-European activity
The shareholding of the tenors rating follows the announcement, there a few days, the establishment of a core group of banks and financial institutions who together hold 33% stake. This round table is representative of the pan-European business of Euronext, operating places in Amsterdam, Brussels, Lisbon and Paris: it includes BNP Paribas, Société Générale, Caisse des Dépôts et bpifrance but Avistar SGPS (Banco Espírito group Santo), ABN AMRO, Fortis (BNP), the Belgian Euroclear or the holding Belgian Public Federal Holding and Investment.
They pledged to keep their shares for three years after the entry into Euronext Stock Exchange. It is "a strong signal to the market" and "a great sign of confidence that we are delighted," said then Dominique Cerutti, CEO of Euronext, noting that this ad was beyond the control of IntercontinentalExchange (ICE).
This hard core shareholders was highly anticipated after months of negotiations involving Bercy, discussions polluted by the European project tax on financial transactions. Almost to the end, many observers feared that this round fails to conclude, while large institutions such as AXA or Crédit Agricole had publicly declared their intention not to participate.
Certainly, critical minds will notice that many of the banks are the core recommendations of the operation and some of the major groups have their state capital, but these ads are encouraging few weeks of introduction.
With these key investors, Euronext will now have to convince a wider range of investors. The operation is closely monitored while it marks the return of independence for the Paris Bourse. Euronext fell into the hands of the NYSE in 2007, before being bought by IntercontinentalExchange (ICE) last year.
Link to article : {http://nyti.ms/1oUCMJY}
In BNP Case and Beyond, Regulators Search for Penalties to Fit the Crimes
United States bank regulators are descending deep into the plumbing of the financial system as they seek the most fitting punishment for the giant French bank now in the cross hairs of the law enforcement authorities.
BNP Paribas is expected to plead guilty in the coming weeks to charges that it processed payments for companies and countries that were subject to United States sanctions. A criminal conviction would leave a stain on the bank’s reputation. BNP Paribas is also expected to pay financial penalties of about $8 billion, which would leave a sizable, though manageable, dent on its balance sheet. And a settlement is likely to require that the bank fire some senior executives.
Despite those potential punishments, some regulators want to do more — and that is why they have turned their attention to the depths of the banking system. They are considering restrictions on the BNP Paribas operations that funnel billions ofs through the vast network of pipes that connect the world’s largest banks.
Specifically, Benjamin M. Lawsky, New York State’s top financial regulator, is considering whether to temporarily suspend BNP Paribas’s ability to process dollar payments, according to people briefed on the settlement talks. This activity, often known as dollar clearing, may not in itself generate large profits, but it plays a crucial role in moving money between the bank and its clients in its core businesses, like lending and trading.
The fact that regulators are considering restrictions on such an important banking activity has added a significant twist to the debate over how to punish large banks.
Some legal specialists said that crimping dollar clearing could lead to unpredictable consequences. “It is a new form of punishment,” Oliver I. Ireland, a partner at Morrison & Foerster, said. “It seems to me to be a very uncertain tool to achieve an end.”
But consumer advocates said that banks and their representatives often overstated the potential effect of punishments. As a result, they said, law enforcement authorities should treat dark predictions about a dollar-clearing ban on BNP Paribas with skepticism. “This strikes me as less than a modest sanction,” said Dennis Kelleher, president of Better Markets, a group that has lobbied for tougher regulation of big banks.
BNP Paribas declined to comment on its dollar-clearing operations.
The United States authorities have enormous sway over dollar clearing because such transactions ultimately clear in the United States, even when they are initiated overseas. The United States government itself plays a hugely important role in processing payments through the Federal Reserve’s Fedwire Funds Service system. The question for regulators, however, is whether they can isolate a certain type of clearing, allowing them to focus the desired level of punishment on a certain business.
Bankers who work in the clearing business said that, in theory, a focused approach was possible. In particular, a bank can break out dollar clearing by business line or type of customer if it is part of the widely used Swift payments system. BNP Paribas appears to be part of Swift. As a result, regulators could require BNP Paribas to temporarily halt dollar clearing, for instance, within the division that made the payments that regulators say evaded sanctions.
There are, however, outcomes in which a dollar-clearing suspension may not hurt BNP Paribas much at all. The regulators may, for instance, prevent the bank from conducting clearing operations itself but allow BNP Paribas to contract its clearing to other banks for a certain period. Under that situation, the bank would most likely not experience significant disruption in core businesses like trading and lending. BNP Paribas’s customers would still be able to send the bank money, and it could still send dollars out.
Clearing specialists said, however, that an important activity known as correspondent banking would most likely be hurt even if BNP Paribas were allowed to use other banks to do its clearing. In correspondent banking, banks perform basic activities, including dollar clearing, for other financial institutions. Correspondent banking clients that use BNP Paribas for dollar clearing would have to transfer that function to other banks and could decide not to return.
“It comes down to a matter of attrition — how many customers the bank loses during the period of suspension,” said Cornelius K. Hurley, a professor at the Boston University School of Law. BNP Paribas has a substantial payments business, but its most recent annual report did not break out the contribution from correspondent banking.
Still, some banking experts remain unsettled by the idea of a dollar-clearing ban, even if regulators can carefully focus such an action. “The American authorities cannot speak to how the corporate and financial institutional clients of BNP Paribas will react,” said Jacob Frenkel, a lawyer at Shulman Rogers.
Consumer advocates are also not placing too many hopes on a dollar-clearing ban being the sort of get-tough measure that gives regulators the edge against large banks.
“Enforcing a United States foreign policy objective against a foreign bank is so far afield from Wall Street bank fraud harming U.S. citizens,” Jeff Connaughton, who was chief of staff for Ted Kaufman, the former Democratic senator from Delaware, said in an email. “This experimentation with criminal plea consequences just seems contrived compared to the damage caused by the legacy of dramatic law enforcement failures against U.S. banks,” he said.
Still, regulators have signaled that they simply have to consider measures like dollar-clearing bans if they want to exact punishments that fit the crime — and help to deter future wrongdoing. “We try and act in a tough but fair manner when it comes to enforcement. But I doubt we get it right in every case,” Mr. Lawsky said in a speech in March, when he alluded to a dollar-clearing suspension. “That said, we are committed to trying to find the right balance that creates real deterrents.”
Asian Market Update: Australia GDP surprises to the upside; Dai-ichi Life announces $5.7B purchase of Protective Life
***Economic Data*** - (AU) AUSTRALIA Q1 GDP Q/Q: 1.1% (2-year high) V 0.9%E; Y/Y: 3.5% V 3.2%E - (AU) AUSTRALIA MAY AIG PERFORMANCE OF SERVICES INDEX: 49.9 V 48.6 PRIOR (3rd month contraction, 3-month high) - (NZ) NEW ZEALAND MAY ANZ COMMODITY PRICE M/M: -2.2% V -3.7% PRIOR (3rd consecutive decline) - (NZ) NEW ZEALAND Q1 VALUE OF ALL BUILDINGS Q/Q: 16.0% V 5.5%E - (JP) JAPAN MAY MARKIT SERVICES PMI: 49.3 (2nd straight month of contraction) V 46.4 PRIOR; MARKIT/JMMA COMPOSITE PMI: 49.2 (2nd straight month of contraction) V 46.3 PRIOR - (UK) UK MAY BRC SHOP PRICE INDEX Y/Y: -1.4% V -1.3%E (13th month of decline)
Market Snapshot (as of 03:30 GMT): - Nikkei225 flat, S&P/ASX -0.5%, Kospi +0.3%, Shanghai Composite -1.0%, Hang Seng -0.6%, Jun S&P500 -0.1% at 1,920, Aug gold +0.1% at $1,245, Jul crude oil +0.1% at $102.73/brl
***Highlights/Observations/Insights*** - Higher than expected Q1 GDP out of Australia seemingly justified a less-dovish than expected RBA policy statement overnight. 1.1% sequential jump was a 2-year high, sending AUD/USD up over 30pips above $0.9290. Among GDP components, Capital Formation (0.0% v -1.2% prior) had a notable positive contribution, while terms of trade slumped even though exports contributed +1.4%. Commentary regarding the mining space was also a positive surprise - Australian Bureau of Statistics said the mining industry accounted for around 80% of growth in GDP in the March quarter, with a "stronger than usual growth in the period reflected in a high seasonally adjusted figure of 8.6%. - In other economic data from Australia, AiG Services index remained in contraction but hit a 3-month high. AIG economist noted "employment sub-index declined further in May, to 45.8 points, indicating a worsening decline in employment in the services sectors, as employers remain cautious about the near-term outlook."
- NZD/USD remains under pressure in the Asia session, hitting a fresh 3-month low below $0.8420. The initial catalyst for Kiwi weakness was another disappointing Fonterra Global Dairy Trade auction earlier in the US session as prices fell -4.2% - its 8th consecutive decline and also the biggest decline in 4 auctions. BNZ economist said the big decline in dairy prices since Feb "virtually guarantees a fall in the terms of trade measure" in Q2.
- Japan's Dai-ichi Life reached a deal to acquire US-based Protective Life in a $5.7B merger, creating a new top-20 global life insurance entity. The announcement comes in the wake of the press speculation of a deal over the weekend which PL had actually denied. Under agreed terms, Dai-ichi Life will acquire all outstanding shares of PL for $70/shr, which represents a 34% premium over Protective's unaffected closing stock price of $52.30 on May 30 and over 10% from closing levels on Tuesday. Transaction, which has been approved by both companies' boards of directors, is expected to close by the end of 2014 or early 2015, subject to regulatory approvals in Japan and the US.
***Speakers/Political/In the Papers*** - (CN) China State Researcher: Sees fall in marginal contribution to economic growth from China's urbanization - Chinese press - (CN) US Commerce Dept imposes duties on China solar imports following finding that China has subsidized certain solar products - press - (CN) China Commerce Ministry: China dissatisfied with US ruling over China solar products; US action to worsen solar trade dispute - press - (CN) China Pres Xi Jinping: To put in efforts to solve smog and air pollution problem; encourages innovation in engineering to achieve sustainable development - Xinhua - (AU) Australia Treasurer Hockey: Transition away from mining is underway; non-mining sectors starting to lift - financial press - (US) Fed's Fisher (FOMC voter, hawk): Odds are slim of interest rate hike this year - press
***Fixed Income/Commodities/Currencies*** - (JP) BOJ offers to buy ¥300B in 1-3 yr JGB, ¥200B in 3-5yr JGB and ¥400B in 5-10yr JGB - (AU) Australia MoF (AOFM) sells A$700M in 4.5% 2033 Bonds; avg yield: 4.3157%; bid-to-cover: 3.53x - (US) API PETROLEUM INVENTORIES: CRUDE: -1.4M v 0e, GASOLINE: +0.8M v +0.5Me, DISTILLATE: -0.3M v +1Me - (AU) Port Hedland May Iron Ore Exports: 36M tons (record) v 34.8M tons prior - GLD: SPDR Gold Trust ETF daily holdings rise 1.8 tonnes to 787.1 tonnes (highest level since Apr 30th) - (NZ) Fonterra Global Dairy Trade auction: Dairy Trade price index: -4.2% from prior auction (8th consecutive decline, biggest decline in 4 auctions) - USD/CNY: (CN) PBoC sets yuan mid point at 6.1693 v 6.1710 prior setting (strongest Yuan setting since May 27th)
***Equities*** US markets: - NSTG: Enters into Biomarker Companion Diagnostic Collaboration with Celgene Corporation; to receive $45M in upfront and other payments; +15.4% afterhours - MFRM: Reports Q1 $0.31 v $0.36e, R$333.5M v $335Me; Raises FY14 revenue guidance; +1.1% afterhours - PL: To be acquired by Dai-Ichi Mutual Life Insurance; +7.7% afterhours - TIBX: Reports prelim Q2 $0.12-0.13 v $0.21e, R$250-252M v $268Me ($0.20-0.22, R$263-271M prior guidance); -12.2% afterhours
Notable movers by sector: - Consumer Discretionary: Noni B Ltd NBL.AU +33.3% (approached for acquisition) - Financials: Australand ALZ.AU +5.9% (receives cash offer); China Vanke 000002.CN -1.9% (May sales results); Dai-Ichi Mutual Life Insurance 8750.JP +0.4% (to acquire Protective Life) - Industrials: Avic Heavy Machinery 600765.CN -4.4% (exec investigated); Fujian Longking 600388.CN +5.3%, Beijing SPC Environmental Protection 002573.CN +2.9% (Pres Xi encourages smog treatment); Mazda Motor 7261.JP +2.0% (May US, China sales results); Fuji Heavy Industries 7270.JP +1.1% (Subaru May US sales results)
AT&T discloses further clarifications and key facts to the proposed acquisition of DIRECTV (DTV); expects cost synergies to exceed $1.6 bln (35.20 -0.24) Co provides updated information regarding further clarifications and key facts to the proposed acquisition of DIRECTV: • AT&T expects cost synergies to exceed $1.6 billion annual run-rate by three years after closing. These savings will begin in the first year after closing, ramp up over four years and grow with the addition of video subscribers thereafter. It is anticipated that at least 40% of these total synergies will be realized by year two after closing. • This transaction is a clear combination of complementary assets and capabilities that creates a strong consumer bundle which will also drive improvements in customer retention. • The Company expects significant revenue-related synergies that are not currently factored in the $1.6 billion cost synergies. These revenue opportunities are in the areas of bundling, video content to multiple screens, cross selling and advertising. • Also, AT&T will be able to use its 2,000 plus company owned stores and the approximate 10,000 retail locations of the combined companies' authorized agents to sell these new bundled services. Currently, about 50% of AT&T retail stores do not sell a pay TV product. • Given our limited competitive overlap, and the significant consumer benefits, we are confident that the regulators will approve this combination.
Closing Market Summary: S&P 500 Ends Flat While Small-Caps Underperform Again
The stock market finished the Tuesday session on a modestly lower note, but small-cap stocks underperformed once again. The Russell 2000 slipped 0.2%, while the S&P 500 snapped its three-day win streak, shedding less than a point.
Equity indices faced an uphill climb from the opening bell, but the S&P 500 was able to cut the bulk of its losses during the initial 45 minutes of action; however, the early rebound attempt was stonewalled by the underperformance of small-caps. With high-beta names unable to gain any significant traction, the benchmark index returned to its earlier low. The S&P 500 then staged another recovery, which placed it right below its flat line by the close.
To be sure, the (nearly) flat finish reflected a lack of concerted sector leadership during the trading day. On the cyclical side, energy (+0.3%) and financials (+0.1%) posted modest gains, while the remaining four sectors lost between 0.1% and 0.3%.
Interestingly, the industrial sector (-0.2%) settled just behind the broader market, masking the relative weakness among transport stocks. The Dow Jones Transportation Average fell 0.8%, but that was likely a function of some profit taking after the bellwether complex surged 3.1% over the past two weeks. Airlines were able to withstand the selling pressure as four of five carriers posted gains with JetBlue Airways (JBLU 10.05, +0.23) leading the way. The stock advanced 2.3%.
Elsewhere, the four countercyclical groups finished mixed with health care (+0.2%) and utilities (+0.3%) posting slim gains, while consumer staples (-0.3%) and telecom services (-1.0%) ended in the red.
The somewhat sloppy session lured some investors into demanding portfolio insurance, which sent the CBOE Volatility Index (VIX 11.79, +0.21) higher by 1.8%. Despite the uptick, the near-term volatility measure ended the day not far above its 2014 low (11.29%), which was notched yesterday.
Even though volatility protection was in demand, the safety of the Treasury market was not. On that note, the 10-yr note spent the session in a steady retreat, falling 19 ticks, which sent its yield higher by seven basis points to 2.60%.
Today's participation marked an improvement from recent days, but remained below average as 644 million shares changed hands at the NYSE floor.
Economic data was limited to April factory orders, which increased 0.7% following an upwardly revised 1.5% (from 1.1%) increase in March. The consensus expected an increase of 0.5%.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while the ADP Employment Change for May (consensus 200,000) will cross the wires at 8:15 ET. The April Trade Balance (consensus -$41.30 billion) and Q1 Productivity (consensus -2.5%) and Unit Labor Costs (consensus 4.8%) will be reported at 8:30 ET, while the May ISM Services Index (consensus 55.5) will be released at 10:00 ET. The day's data will be topped off with the 14:00 ET release of the Fed's Beige Book for June.
- S&P 500 +4.1% YTD
- Dow Jones Industrial Average +0.9% YTD
- Nasdaq Composite +1.4% YTD
- Russell 2000 -3.1% YTD
Mattress Firm misses by $0.04, misses on revs; reaffirms FY15 EPS & comp guidance, raises FY15 rev guidance; Q1 comps +4.3%
* Reports Q1 (Apr) earnings of $0.31 per share, excluding non-recurring items, $0.04 worse than the Capital IQ Consensus Estimate of $0.35; revenues rose 20.8% year/year to $333.5 mln vs the $337.58 mln consensus.
* Co issues guidance for FY15, reaffirms EPS of $1.88-2.00, excluding non-recurring items, vs. $1.95 Capital IQ Consensus Estimate; raises FY15 revs to $1.50-1.56 bln from $1.46-1.52 bln vs. $1.5 bln Capital IQ Consensus Estimate. * Co reaffirms FY15 low single digit comp growth guidance.
* Co reported comparable-Store Sales Growth of 4.3% in first fiscal quarter.
Opened 56 new stores, closed eight, and acquired 92 bringing the total number of Company-operated stores to 1,365 as of the end of the fiscal quarter.
* Adjusted operating income margin was 6.0% of net sales as compared to 8.6% in the first fiscal quarter of 2013, and included a 170 basis-point decline in gross profit margin, a 130 basis-point decrease from general and administration