(BFW) Reynolds/Lorillard Deal May Add 5%-7% to BAT EPS: Morgan Stanley...


Reynolds/Lorillard Deal May Add 5%-7% to BAT EPS: Morgan Stanley
2014-05-27 07:54:07.110 GMT


By Heather Burke
     May 27 (Bloomberg) -- British American Tobacco would boost
its U.S. scale, growth outlook with a possible Reynolds
American/Lorillard deal, Morgan Stanley says.
  * BAT may participate in a deal to keep its ~42% stake in RAI
    or stay above ~32% holding needed to keep its 5 board seats
  * Benefits of RAI/LO deal clear, FDA menthol review a risk,
    FTC may fight deal on antitrust or require brand
    divestitures
  * BAT underlying business strong, increasing U.S. business may
    dilute growth, isn’t needed
  * Sees BAT having 2015 EPS accretion 5%-7%, assuming RAI uses
    50% equity financing to buy LO for $65/shr
  * Imperial Tobacco may buy some brands that may have to be
    divested, possible purchase of Kool/Salem for 6-8x EV/Ebitda
    could be 5-8% accretive to FY15, risk that RJR’s brands ex-
    Camel, Pall Mall having >10% vol. declines

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

To contact the reporter on this story:
Heather Burke in London at +44-20-7673-2044 or
hburke2@bloomberg.net
To contact the editors responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net
Gaurav Panchal

(Telegraph) Pfizer boss Ian Read hits back over AstraZeneca

Pfizer boss Ian Read hits back over AstraZeneca
Read confirms he has abandoned £69bn offer for Pfizer's UK rival and criticises UK's 'complicated’ takeover rules for the 'missed opportunity'

Pfizer's boss has ended his battle for AstraZeneca with a parting shot at the British Government – and a call for sweeping reforms of drug pricing and takeover laws.
Ian Read told the Telegraph that the rules capping drug prices are discouraging investment in Britain, and are “inconsistent” with the Government’s apparent desire to attract research and development.
The Scottish-born chief executive also said that the Takeover Code which governs acquisitions is “overly complicated, overly bureaucratic” and does not promote the interests of shareholders.
Mr Read’s comments came as Pfizer confirmed it had thrown in the towel in its attempt to buy AstraZeneca in what would have been the biggest deal ever in the drug industry. The US drug giant officially withdrew its final “compelling, full value” £69bn offer yesterday afternoon and must now walk away from a possible deal for at least three months, at which point it could only return at the invitation of AstraZeneca’s board. It cannot make a fresh, unsolicited approach for six months.
“It is inconsistent to me [for the] Government to wish to have a vibrant science centre and vibrant investment in clinical research, and yet not to have big market incentives,” Mr Read said.

“They’re rightfully proud of the work being done in oncology, yet the UK is one of the countries that has the lowest reimbursement [of] and access to oncology products.”
At the moment, the National Institute for Health and Clinical Excellence (Nice), decides whether drugs are sufficiently cost-effective for use by the NHS. It effectively bars some drugs from use, and sets caps on the prices of others.
Pfizer's retreat marks the end of an acrimonious four weeks which stirred up fierce divisions among shareholders, scientists and politicians over whether the takeover would lead to a reduction in R&D investment in Britain.
Over the last month, Mr Read has promised that the merged group would employ at least a fifth of its global R&D workforce in the UK for a minimum of five years, and that the company would have moved its tax domicile to Britain from the US, in a process known as inversion.
Leif Johansson, chairman of AstraZeneca welcomed the end of the deal, saying the Anglo-Swedish company would "continue building on the momentum we have already demonstrated as an independent company".
He also praised Pascal Soriot, chief executive of AstraZeneca, for his "dedication and focus over a period of uncertainty".
But on Monday, Mr Read said the deal’s failure was a “missed opportunity” for Britain.
“I think it is regretful because, long term, there was a missed opportunity to have the largest pharmaceuticals company in the world domiciled in the UK, committing 20pc of its R&D over a long period. That would have been very healthy for science in the UK and manufacturing in the UK,” he said.
He also said it was a “missed opportunity” for AstraZeneca shareholders.
As soon as Pfizer’s interest became public, “our conversations never really got to the point of engagement beyond talking to the chairman,” he said. “There was never any willingness or wish to do due diligence. [We had had] more than several conference calls with the chairman and the board had rebuffed our approach so we felt the only way was to make a full and final offer.”
Pfizer made four approaches to AstraZeneca, culminating in a “full and final” offer of £55-a-share which valued the business at £69bn. According to Mr Read, AstraZeneca turned the proposal down after a mere 15-minute conversation.
Many analysts criticised Pfizer for making such a decisive move, instead of keeping the door for discussions open until the 28-day takeover deadline, which expired on Monday at 5pm. However, Mr Read said that he had “no regrets” about his tactics, and that he had remained disciplined on price throughout.
“We got strong signals from our interaction with most of the shareholders. Most of them encouraged us that they [thought] a bid above £50-a-share would be well-received and they would expect AstraZeneca to engage…the full and final offer was a no-regrets move,” he said.
However, he argued that Pfizer was constrained by the Takeover Code, which was designed to protect shareholder interests by limiting the amount of time companies have to make offers for listed businesses they want to acquire in the wake of the controversial takeover of Cadbury by Kraft in 2009.
“Takeover Rules are not very conducive to getting the right solution for shareholders,” he said. “[They are] overly complicated, overly bureaucratic. They were put in place to be in the best interests of shareholders. I don’t necessarily believe they serve that function,” he said.
The Takeover Code is thought to have influenced Pfizer’s tactics during the battle, but many observers blame the febrile political atmosphere for ultimately killing off the deal. Critics styled it as the takeover of a British company by an American predator, comparing Pfizer to everything from a “shark that needs feeding” to a “praying mantis”. At one point, Ed Miliband, the Labour leader, called for a “national interest test” for foreign takeovers, and accused David Cameron, the Prime Minister, of acting as a “cheerleader” for the transaction.
However, Mr Read told the Telegraph that politics had nothing to do with the deal’s failure.
“I don’t think politics was a problem. We were treated respect by the government. They made it very clear where they stood in terms of their expectations that we were serious investors,” he said. “It was never a negotiation [with government]. It was just a discussion. They were making points to us so we could reassure them and the British people that we could be good corporate stewards in the UK.”
However, he also cast doubt on whether the deal could accurately be described as a foreign takeover, as many critics – and AstraZeneca - claimed.
“It was part of AstraZeneca’s strategy to paint itself as a British company,” Mr Read said. “It has a huge presence in the US. It is made up of a Swedish company and a British company. Then they bought an American company…it’s a global company like any pharma company is global. Global companies do their research where there are great academics and great science,” he said.

>>> Frontline LTD Reports Q1 Adj Net $3.6M v loss $18.8M y/y, Op R$170M v $126M


Frontline LTD Reports Q1 Adj Net $3.6M v loss $18.8M y/y, Op R$170M v $126M y/y
- Will not pay a dividend for the first quarter of 2014 
- The average daily time charter equivalents ("TCEs") earned in the spot and period market in the first quarter by the Company's VLCCs and Suezmax tankers were $32,700 and $27,700, respectively, compared with $22,400 and $12,900, respectively, in the preceding quarter. The spot earnings for the Company's double hull VLCCs and Suezmax vessels were $32,500 and $27,700, respectively, compared with $21,600 and $12,900, respectively, in the preceding quarter. 
- In the event that cash flow from operations does not enable Frontline to satisfy short term or medium to long term liquidity requirements, Frontline will have to consider alternatives, such as raising equity or selling assets, establish new loans or refinance existing arrangements.

>>> Alstom / Siemens - Comment from Oddo on Reuters Article

ALSTOM (NEUTRAL, TP E33) SIEMENS REPORTEDLY TO MAKE AN OFFER TOMORROW:
Reuters reports that SIE's offer would put a slightly higher value on Alstom's
energy operations compared to the bid from GE. The offer would consist of
Siemens's rail unit and less than E7B in cash, and it would not include
Alstom's nuclear, wind energy (all renewables valued at E730m acc to us) and
grid (E2bn valuation acc to us) units.
==> We believe valuation of this offer would be roughly in line with GE's
though way more complicated to read as it is difficult to put a fair valuation
on SIE's rail unit. Note it seems that SIE's signalling unit (the jewel) seems
to be excluded form SIE's offer... All in all we believe that discussions will
keep going on with GE and SIE (note GE is in Paris to meet government officials
today and tomorrow) BUT that GE remains the favorite as long as SIE comes out
"only" with such an offer (no signalling unit in the pipe, uncertainties on
SIE's rail unit...)

>>> Alpiq could raise up to CHF 900m from Swissgrid stake sale, sector specialis

Alpiq could raise up to CHF 900m from Swissgrid stake sale, sector specialist says 

Alpiq, the listed, Swiss energy group, could raise up to CHF 900m from its 34.7% stake sale in Swiss national grid company, Swissgrid, Aargauer Zeitung reported.

The Swiss daily cited Vontobel energy sector specialist Dominik Meyer who said the stake could be worth between CHF 675m and CHF 900m.

Meyer said the stake will attract many buyers but the size of the transaction and ownership statues which only permit the company to be owned by industrial investors, thereby ruling out foreign state funds, means that the sale could take some time. A controlling majority also has to remain in Swiss hands, the report noted.

Another Swiss energy group, BKW, yesterday announced it is also examining the sale of its stake (12.6%), however, a third shareholder, Axpo, said it currently has no plans to sell and would await contact with other shareholders.


Source Aargauer Zeitung

(Les Echos) The Italian Bonomi no longer excludes a cons-offer on Club Med

The Italian Bonomi no longer excludes a cons-offer on Club Med
Ordered by the AMF to decide, Italian no longer excludes an escalation in conjunction with Investindustrial funds.
The Italian businessman Andrea Bonomi confirms its sights set on the control of Club Med. Three days after the notice of the Autorité des marchés financiers ( AMF ) who asked him to clarify his game, the company Strategic Holdings Andrea Bonomi (which already owns 10% of Club Med) said Monday its intentions.
While challenging the "lawfulness" of the request of the AMF and reiterating that his company has no priority is to launch a takeover of a listed company, the Italian businessman does not hide his sights set on the control Club Med. Whereas the attitude of fellow policeman changed that it no longer excludes a cons-launch offer on the Club Med in partnering with Investindustrial, the industry capital of the group.
An offer that would be friendly
"Strategic Holdings could envisage to join Investindustrial, as a minority shareholder in a company acquisition that could be implemented by Investindustrial," says the company Andrea Bonomi, while stating that "no decision has been taken. " Clearly, as he had suggested, it does not preclude a launch against supply-side of the OPA-Fosun Ardian (through Gaillon Invest), depending on the developments. In a second statement, Investindustrial confirmed to have been "forced" by the decision of the AMF to apply the anti-rumored device "to commit the necessary resources to launch a possible bid on Club Med. " The fund based in London states that it is considering such an offer in a friendly environment, with the support of the Board of Club Med, and he gives five weeks to conclude operations "due diligence".
Delay or not?
Invest Gaillon side, we continue to try "unfair" the "strategy of frustration of the offer" followed by the Italian businessman who would be to "put pressure on management" in seeking to organize a sort of de facto control. In addition, the side of Club Med, it does not hide his doubts about the "change root" of the Benetton Group, near Bonomi, who recently renounced tender its shares (2%) to the OPA.
Remains whether Andrea Bonomi procrastinates or if he really wants to defeat the Sino-French tandem Fosun-Ardian he considers flawed.
Meanwhile, the AMF Board will review the statement of INVESTINDUSTRIAL. The responsibility of the regulator is to set the calendar. But what matters for him is that lnvestindustrial has said he intends to make a bid. "If there is a prospect of offering the best price, no one can deprive a shareholder" says a business lawyer.
French Article :

L’Italien Bonomi n’exclut plus une contre-offre sur Club Med

Sommé par l’AMF de se prononcer, l’Italien n’exclut plus une surenchère de concert avec le fonds Investindustrial.

Le complexe du Club Med à Punta Cana en République dominicaine. - Club Med/EyePress/NEWSCOM/SIPA
Le complexe du Club Med à Punta Cana en République dominicaine. - Club Med/EyePress/NEWSCOM/SIPA
L’homme d’affaires italien Andrea Bonomi confirme ses visées sur le contrôle du Club Med. Trois jours après la mise en demeure de l’Autorité des marchés financiers (AMF) qui lui avait demandé de clarifier son jeu, la société Strategic Holdings d’Andrea Bonomi (déjà actionnaire à 10% du Club Med) a précisé lundi ses intentions.
Tout en contestant la «régularité» de la demande de l’AMF et en réitérant que sa société n’a pas vocation prioritaire à lancer une OPA sur une société cotée, l’homme d’affaires italien ne cache pas ses visées sur le contrôle du Club Med. Considérant que l’attitude du gendarme boursier a changé la donne, il n’exclut plus de lancer une contre-offre sur le Club Med en s’associant avec Investindustrial, la branche de capital-investissement de son groupe.
Une offre qui serait amicale
«Strategic Holdings pourrait ainsi envisager de s’associer à Investindustrial, en tant qu’actionnaire minoritaire dans une société d’acquisition qui pourrait être mise en place par Investindustrial», souligne la société d’Andrea Bonomi, tout en précisant qu’«aucune décision n’a été prise». En clair, comme il l’avait déjà laissé entendre, il n’exclut pas de lancer une contre-offre face à l’OPA de Fosun-Ardian (à travers Gaillon Invest), en fonction de l’évolution du dossier. Dans un second communiqué, Investindustrial confirme avoir été «forcé» par la décision de l’AMF d’appliquer le dispositif anti-rumeurs «d’engager les moyens nécessaires au lancement d’une éventuelle offre publique sur Club Méditerranée». Le fonds basé à Londres précise qu’il n’envisage une telle offre que dans un cadre amical, avec le soutien du conseil du Club Med, et qu’il se donne cinq semaines pour conclure les opérations de « due diligence ».
Temporisation ou non ?
Du côté de Gaillon Invest, on continue à juger «déloyale» la «stratégie de frustration de l’offre» suivie par l’homme d’affaires italien qui reviendrait à «mettre la pression sur le management» en cherchant à organiser une sorte de contrôle de fait. En outre, du côté du Club Med, on ne cache pas ses interrogations sur le «changement de pied» du groupe Benetton, proche de Bonomi, qui a récemment renoncé à apporter ses titres (2%) à l’OPA.
Reste à savoir si Andrea Bonomi temporise ou s’il souhaite vraiment faire échec au tandem sino-français Fosun-Ardian qu’il juge bancal.
En attendant, le collège de l’AMF va examiner la déclaration de InvestIndustrial. La responsabilité du régulateur est de fixer le calendrier. Mais ce qui importe pour lui, c’est que lnvestindustrial ait dit qu’il avait l’intention de lancer une offre. « S’il y a une perspective d’une offre à meilleur prix, personne ne peut en priver un actionnaire » commente un avocat d’affaires.

>>> What to look at today - 27/05/2014

US Maket Closed - the BOJ released the Corporate Service Price Index for April, which was up by 3.4% from the prior month beating expectations and the March reading of 0.7%. Not including the consumption tax increase, the corporate service prices were rose an annual 0.8%...Renew tensions between china & Vietnam...Nikkei +0.66% HS-0.14% Shanghai -0.10%

Eur$1.3655 S&P Fut +0.33% European Fut -0.12%

Macro:
- Japan’s Abe Plans Aid for Vietnam, Hopes to Host Putin: WSJ

Keep an eye on :
- AC FP : Accor is buying a portfolio of 97 hotels in Europe for €900m ( from Axa & Moor Park Funds)
- AIR FP : Arianespace Delays June Launch on Satellite Fault, Figaro Says
- ALO FP : Siemens Is Continuing Due Diligence on Alstom, Echos Says
- AREVA FP : Areva Says Uranium Prices Are Too Low to Start Imouraren Mine
- AZN LN : Pfizer Ponders Next Move as $117 Billion AstraZeneca Bid Fails
- BKIA SM : Bankia Starts to Sell Off Remaining Real-Estate, Expansion Says
- BMPS IM : Monte Paschi Targets June 9 as Shr Sale Start Date: Radiocor
- CU FP : Investindustrial Considers Possible Tender Offer for Club Med
- DBR SJ : De Beers CEO Sees Diamond Output Peaking by 2017, Welt Reports
- DL NA : Delta Lloyd Unit Plans to Securitze EU352.7m in Mortgage Loans
- DSY FP : Dassault Systemes Holders to Get Two Shares for One in Split
- F IM : Fiat Has Numerous Financial Engineering Options, Barclays Says
- IND IM : Indesit owner receives improved offer from Haier
- KWS GY : KWS Saat 3Q Sales, Profit Rises; Lowers FY14 Outlook
- MC FP : L Capital sells 40% stake in Calligaris to owning family - MF Fashion
- MAU FP : Maurel & Prom Names Hochard CEO, Henin Chairman
- MS IM : Mediaset Preferred Europe Broadcaster at Berenberg; PT Raised
- NHH SM : Intesa Sanpaolo sells 8.4% stake in NH Hoteles for EUR 132.6m
- O2C GY : C.A.T. Oil 1Q Net Rises 32.1% to EU9.5m on Lower Taxes
- PUBN SW : Tamedia Offers CHF190/Shr for PubliGroupe; Tender Starts June 18
- RIO LN : Rio Signs Guinea Govt Accord for $20b Iron-Ore Project
- SAP GY : SAP could eye Tibco takeover ( TIBX US - €3.3b market cap)
- SIE GY : Siemens close to finalising EUR 7bn offer for Alstom energy operations 
- TKA AV : America Movil/Telekom Austria deal still at Austrian competition authority
- VAC FP : Pierre & Vacances 1H Revenue Up, Says 3Q Reservations Ahead Y/y
- VIG AV : Vienna Insurance 1Q Pretax Profit EU152m, -4.7% Y/y