(BFW) Diageo Should Bid for Beam, Consortium Offer Possible: Liberum

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Diageo Should Bid for Beam, Consortium Offer Possible: Liberum 2014-01-14 14:19:34.945 GMT

By Gaurav Panchal Jan. 14 (Bloomberg) -- For Diageo taking control of Beam would help it prevent Pernod from becoming a stronger no. 2 (U.S., globally), Liberum analyst Pablo Zuanic says. * Diageo’s U.S., global distribution would reap greater sales synergies helping Jim Beam close gap with Jack Daniels: Liberum * A Diageo bid 10% above Suntory’s offer for Beam would be 12% EPS accretive, aassuming 3% cost of debt, 10% cost synergies * Says a Diageo-led consortium bid is quite possible * For Pernod a deal would make it a solid no. 2 in U.S., reduce reliance on Absolut there, Liberum says. * Says a Pernod bid would bring net debt/EBITDA to 5.6x and generate no EPS accretion, a rights issue could be a stretch * Jan. 13: Suntory to buy Beam for $83.50-shr cash; Ackman a holder {NSN MZCA006TTDSH <go>} * Pernod said unlikely to make counteroffer for Beam, person says {NSN MZCI316JIJVK <go>} * Dec. 2012: Suntory held talks with Diageo about a potential joint offer for Beam, Bloomberg News reported {NSN MET53S0UQVI9 <go>}

Link to Company News:{DGE LN <Equity> CN <GO>} Link to Company News:{BEAM US <Equity> CN <GO>} Link to Company News:{2587 JP <Equity> CN <GO>} Link to Company News:{RI FP <Equity> CN <GO>} Link to Company News:{REMY US <Equity> CN <GO>} Link to Company News:{CPR IM <Equity> CN <GO>} Link to Company News:{BF/B US <Equity> CN <GO>}

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To contact the reporter on this story: Gaurav Panchal in London at +44-20-7392-0511 or gpanchal2@bloomberg.net

To contact the editor responsible for this story: Brian Lysaght at +44-20-7330-7908 or blysaght@bloomberg.net

>>> Danaher Corp Guides FY13 EPS at high end of prior range $0.91-0.96 v $0.95e

Danaher Corp Guides FY13 EPS at high end of prior range $0.91-0.96 v $0.95e
- Danaher announced that its President and Chief Executive Officer, H. Lawrence Culp, Jr., will comment tomorrow on the Company's fourth quarter 2013 performance in a presentation at the J.P. Morgan Healthcare Conference in San Francisco, CA. Mr. Culp will communicate that the Company's fourth quarter 2013 adjusted diluted net earnings per share and core revenue growth is anticipated to be approximately at the high end of the previously announced guidance.

>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: BGFV -4.4%, SSYS -4.1% (also was initiated with a Outperform at RBC Capital Mkts), BBW -2.9% (ticking lower), WWW -2.5% (sees FY13 EPS at high end of $1.37-1.42 vs $1.42 Capital IQ Consensus Estimate; sees revs $2.69 bln vs $2.72 bln Capital IQ Consensus Estimate), DAN -1.8%, YUM -0.7%, (reports Dec SSS increased 2% y/y for China division), WFC -0.5%.

Metals/mining stocks trading lower: HMY -3.3%, GFI -3%, IAG -2.1%, VALE -1.1%, GDX -1.1%, AU -1.1%, GOLD -0.9%, GLD -0.5%.

3D printing names are lower following SSYS guidance: DDD -4.2% ( initiated with a Outperform at RBC Capital Mkts), VJET -2.6%, XONE -2.4%

Other news: APU -5.2% (Heritage ETC, an affiliate of Energy Transfer Partners (ETP), to offer 8 mln AmeriGas common units), RAS -3.2% (announces 10 mln common share offering), WDAY -2.1% (announces proposed follow-on offering of 6 mln shares), FULL -1.7% (announces public offering of 1.6 mln shares of common stock), DDD -1.7% (still checking), GNW -1.5% (still checking), IHS-1% (announces 3.478 mln share secondary offering of common stock by Conscientia Investment Ltd), ALNY -0.5% (Isis Pharmaceuticals to Receive $7.5 Million from Alnylam).

Analyst comments: WU -2.9% (downgraded to Sell from Neutral at Citigroup), RTEC -2% ( downgraded to Neutral from Outperform at Credit Suisse), QCOM -1.3% (downgraded to Market Perform from Outperform at Raymond James), GIS -1.2% (downgraded to Underweight from Equal Weight at Morgan Stanley), CAM -1.1% (downgraded to Equal Weight from Overweight at Morgan Stanley ), SIRI -0.8% (downgraded to Equal Weight from Overweight at Barclays ), MSFT -0.8% (Microsoft downgraded to Neutral from Buy at Citigroup)

>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: QTM +19.7%, LEDS +19.5% (light volume), DRWI +12.6%, NLS +12.2% (sees Q4 EPS and revs above consensus), BHE +3.1%, HLS +1.8% (discloses preliminary observations and considerations on the quarter; increases 2013 guidance), TLYS +1.4% (expects fourth quarter results to be in the mid range of our previously communicated outlook for both comparable store sales and earnings), JPM +0.5%.

M&A news: ANV +25.6% (China Gold Stone Mining Reports Cash Tender Bid for Allied Nevada Shares, tendering holders will be paid $7.50/share in cash), CHTR +1.7% / TWC +1.6%(Charter offers to buy TWC for about $132.50 per share; Time Warner Cable unanimously rejects 3rd proposal from Charter).

A few financial related names seeing modest strength: IRE +2.4%, ING +1.9%, DB +1%, BAC +0.5% .

Select oil/gas related names trading higher: CHK +4.1%, QEP +2.8% (JANA Partners discloses 9.5% active stake in amended 13D filing out last night; up from 7.6% last reported on 11/13; will continue to have discussions with the board), HK +1.9%, STO +1.4%, RIG +1.3%, RDS.A +0.6%, BP +0.5%, TOT +0.1%, .

Other news: OPTT +59.1% (announces funding agreement with Australian Government for A$66.5 mln Grant), TNK +9.2% (CEO Bruce Chan announces intention to resign effective June 20, 2014; a search will be conducted for his replacement), GALE +6.2% (Galena Biopharma and Dr. Reddy's (RDY) Announce Strategic Partnership for NeuVax in India), DM +5.6% (anounced that it entered into the Seventh Amendment to its Third Amended and Restated Credit Agreement dated December 6, 2010 ), +4.2% (still checking), TSU +3.3% (still checking), PLUG +3.3% (continued strength), STM +2.8% (still checking), ARIA +2.8% (Ariad Pharm and Medinol Announce Initiation of Two Registration Trials of the NIRsupreme Ridaforolimus-Eluting Stent for Use in Coronary Artery Disease; triggers milestone payments to ARIAD of $3.75 ml), CTIC +2.7% (provides 2014 outlook and recent drug portfolio progres), JNPR +2.7% (Juniper Networks comments on Elliott's 13D filing), FLR +2.6% (Fluor and JGC awarded EPC contract for Kitimat LNG project), ARMH +2.4% (still checking), VVUS +2.3% (Vivus Collaborates with Aetna to test first comprehensive weight management program integrating weight loss medication), CTB +2.1% (provides update on its Chinese JV), GOOG +1.5% ( to acquire Nest Labs ), UN +1.5% (still checking), WEN +1.3% (announces commencement of a modified 'Dutch auction' tender offer to repurchase shares of its common stock for an aggregate purchase price of up to $275.0 mln ), JNPR +1.1% (comments on Elliott's 13D filing), MCK +1.1% (may consider Celesio JV, according to reports ), YRCW +0.8% (Rima Senvest Management disclosed 6.8% passive stake in 13G filing out last night after the close; downgraded to Hold from Buy at BB&T Capital Mkts ), SHLD +0.7% (modestly rebounding despite S&P putting Sears Holdings Corp. Ratings on CreditWatch Negative on Lower Earnings Expectations; expect cash burn to be more than anticipated), FINL +0.4% and HRB +0.4% (positive commentary on Mad Money), PDCE +0.3% (S.A.C. Capital Advisors discloses 5.1% passive stake in 13G filing).

Analyst comments: TC +22.7% (upgraded to Buy from Neutral at BofA/Merrill ), TSRO +6.5% (attributed to positive Deutsche Bank comments), LOGI +3.4% (upgraded to Buy from Neutral at Goldman ), AZN +3% (upgraded to Outperform from Market Perform at Leerink), CLF +2.9% (upgraded to Buy from Hold at Deutsche Bank), BRCD +2.8% (upgraded to Overweight from Neutral at JP Morgan), PAY +2.2% (upgraded to Overweight from Neutral at JPMorgan), INTC +2% (upgraded to Overweight from Neutral at JP Morgan), YHOO +1% (upgraded to Buy from Fair Value at CRT Capital )

>>> US Early premarket gappers

Early premarket gappers

Gapping up: TC +23.3%, OPTT +13.6%, DRWI +12.6%, QTM +10.7%, NLS +10%, TNK +9.2%, DM +5.6%, TSU +3.3%, BHE +3.1%, STM +2.8%, CTIC +2.7%, JNPR +2.7%, FLR +2.6%, ARMH +2.4%, CTB +2.1%, HLS +1.8%, CHTR +1.7%, TWC +1.6%, GOOG +1.5%, UN +1.5%, TLYS +1.4%, JNPR +1.1%, DB +1%, YRCW +0.8%, SHLD +0.7%

Gapping down: APU -5.2%, BGFV -4.4%, HMY -3.3%, RAS -3.2%, GFI -3%, WWW -2.5%, WDAY -2.1%, DAN -1.8%, FULL -1.7%, DDD -1.7%, GNW -1.5%, SSYS -1.4%, VALE -1.1%, IHS -1%, YUM -0.7%, ALNY -0.5%

>>> JPMorgan Chase beats GAAP by $0.06, beats Adjusted by $0.06; reports revs in

JPMorgan Chase beats GAAP by $0.06, beats Adjusted by $0.06; reports revs in-line (57.70)
Reports Q4 (Dec) earnings of $1.30 per share, $0.06 better than the Capital IQ Consensus Estimate of $1.24; The Firm's return on tangible common equity for the fourth quarter of 2013 was 14%, compared with 15% in the prior year. Adjusted for the significant items EPS would have been $1.40 this year compared with $1.35 in the prior year and CapIQ adjusted consensus of $1.34.ROTCE would have been 15% this year, flat compared with the prior year.

Revenues on a reported basis fell 2.1% year/year to $23.16 bln vs the $23.19 bln consensus.

Fourth-quarter results included the following significant items:
    • An increase of $812 million after-tax ($0.21 per share) from gain on sale of Visa shares;
    • An increase of $306 million after-tax ($0.08 per share) from gain on sale of One Chase Manhattan Plaza;
    • A decrease of $1.1 billion after-tax ($0.27 per share) for legal expense, including announced Madoff settlements;
    • An increase of $775 million after-tax ($0.20 per share) from reduced reserves in Real Estate Portfolios & Card Services;
    • A decrease of $1.2 billion after-tax ($0.32 per share) from funding valuation adjustments ("FVA") and debit valuation adjustments1 ("DVA").
  • Fortress balance sheet maintained Basel I Tier 1 common of $149 billion, and ratio of 10.7%
    • Estimated Basel III Tier 1 common ratio of 9.5%
    • High Quality Liquid Assets of $522 billion
    • Book Value $53.25 compared to $52.01 in Q3
Consumer & Community Banking:
  • Net income was $2.4 billion, an increase of $383 million, or 19%, compared with the prior year, due to lower provision for credit losses and lower noninterest expense, largely offset by lower net revenue. Net revenue was $11.3 billion, a decrease of $1.0 billion, or 8%, compared with the prior year. Net interest income was $7.1 billion, down $199 million, or 3%, driven by spread compression in Credit Card, lower deposit margins and lower loan balances due to portfolio runoff, partially offset by higher deposit balances. The provision for credit losses was $72 million, compared with $1.1 billion in the prior year and a benefit of $267 million in the prior quarter.
  • Mortgage originations were $23.3 billion, down 54% from the prior year and 42% from the prior quarter. Purchase originations of $13.0 billion were up 6% from the prior year and down 35% from the prior quarter. Mortgage Banking net income was $562 million, an increase of $144 million, or 34%, compared with the prior year, driven by lower noninterest expense and provision for credit losses, predominantly offset by lower net revenue. Net revenue was $2.2 billion, a decrease of $1.1 billion compared with the prior year.
  • Mortgage Servicing pretax income was $2 million, compared with a pretax loss of $913 million in the prior year, reflecting lower expense and higher revenue. Mortgage net servicing-related revenue was $689 million, an increase of $71 million. MSR risk management was a loss of $24 million, compared with income of $42 million in the prior year.
  • Card, Merchant Services & Auto net income was $1.0 billion, an increase of $190 million, or 23%, compared with the prior year, driven by lower provision for credit losses, partially offset by lower net revenue. Net revenue was $4.7 billion, down $140 million, or 3%, compared with the prior year. Net interest income was $3.3 billion, down $222 million compared with the prior year, primarily driven by spread compression in Credit Card.
Corporate & Investment Banking:
  • Net income was $858 million, down 57% compared with the prior year. These results primarily reflected lower revenue and a lower benefit from the provision for credit losses, partially offset by slightly lower noninterest expense. Net revenue was $6.0 billion compared with $7.6 billion in the prior year. Net revenue included a $1.5 billion loss as a result of implementing a funding valuation adjustment ("FVA") framework for OTC derivatives and structured notes. This change reflects an industry migration towards incorporating the cost or benefit of funding into their valuation; the majority of this adjustment relates to uncollateralized derivatives. Net revenue also included a $536 million loss from debit valuation adjustments.
  • Banking revenue was $3.0 billion, down 4% from the prior year.
  • Investment banking fees were $1.7 billion, down 3% from the prior year, driven by lower debt underwriting fees of $801 million, down 19% from a record prior year, and by lower advisory fees of $434 million, down 7% from the prior year. This was predominantly offset by higher equity underwriting fees of $436 million, up 65% from the prior year, on strong market issuance and improved market share.
  • Treasury Services revenue was $1.0 billion, down 7% compared with the prior year, driven by lower trade finance revenue.
  • Lending revenue was $373 million, primarily reflecting net interest income on retained loans, fees on lending-related commitments, and gains on securities received from restructured loans.
  • Markets & Investor Services revenue was $3.0 billion, down 33% from the prior year.
  • Combined Fixed Income and Equity Markets revenue was $4.1 billion, flat compared with the prior year. In the prior year, Fixed Income Markets also included a modest loss from the synthetic credit portfolio.
  • Securities Services revenue was $1.0 billion, up 3% from the prior year, primarily driven by higher custody and fund services revenue, due largely to higher assets under custody and higher deposits.

>>> Luxury : watch export will rise slowest pace in 4y

LUXURY: Watches - Switzerland’s watch exports will rise in 2014 after advancing at the slowest pace in four years in 2013 due to a drop in Chinese demand, said Jean-Daniel Pasche, head of the Federation of the Swiss Watch Industry…View: Citi forecast +8% for 2014 (wristwatches), we get a trading update from Richemont on Thursday, Citi expect +10% organic in 3Q to Dec, Oct was +12 (but +9 ex one off high jewellery sale), this implies +9 in Nov-Dec combined).

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