MCK/Celesio Deal Failure Odds 50% as Elliott Plays ‘Chicken’:ISI

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MCK/Celesio Deal Failure Odds 50% as Elliott Plays ‘Chicken’:ISI 2014-01-06 14:04:11.192 GMT

By Cristin Flanagan Jan. 6 (Bloomberg) -- 50% chance McKesson’s purchase of Celesio may fall through as Elliott Management seeks higher bid for its stake in Celesio, writes ISI analyst Ross Muken. * NOTE: Dec. 23, Elliott ‘Irrevocably’ Rejects McKesson’s Offer for Celesio * Dec. 12, M&A SCENARIOS: McKesson May Raise Celesio Bid; Counter Unlikely * If tender offer for Celesio successful, Muken sees 1 of 2 scenarios MCK raising value of Celesio’s conv shrs, Elliott sells shrs at market to drop back below 25% threshold * MCK may rise to $165-$170 if tender successful, fall to ~$150 if fails * NOTE: Dec. 10, ISI said: probability of Celesio deal failure to ~25% after Elliott announcement vs 10% previously * CLS1 GY shrs extend losses to as much as 1.9%; falls as low as EUR22.55 vs MCK offer EUR23 * MCK 15 buys, 3 holds, 1 sell; avg PT $175 (in-line with ISI PT): Bloomberg data For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

--With assistance from Gaurav Panchal in London. Editor: Joanna Ossinger

To contact the reporter on this story: Cristin Flanagan in New York at +1-212-617-8919 or cflanagan1@bloomberg.net

To contact the editor responsible for this story: Joanna Ossinger at +1-212-617-7789 or jossinger@bloomberg.net

>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: HGG -15.4%, SCSS -7.7%, .

M&A news: TSU -3.1% ( Telefonica has denied reports it is considering bid for TSU Brazil).

Select Brazil related names showing weakness: OIBR -2.3%, CPL -2.3%, PBR -1.7%, RIO -1.7%, ERJ -1.6%, VALE -1.4%.

Other news: NOAH -3.8% (still checking), CAMT -3.1% (CEO steps down; board appoints Active Chairman Rafi Amit to CEO), BBY -2.8% (following HGG guidance), ONVO -1.8% (still checking), CELG -1.4% (WSJ details dispute between Celegene (CELG) and hospitals over cancer drug royalties; downgraded to Sell from Neutral at Goldman), UNXL -1.3% (following cautious Barron's mention).

Analyst comments: SRPT -7% (downgraded to Sell from Neutral at Citigroup), ATHM -6.7% (initiated with a Sell at Goldman), TWTR -5.2% ( downgraded to Underweight from Equal-Weight at Morgan Stanley), FSLR -4.1% (downgraded to Sell from Buy at Goldman), ARIA -3.5% (downgraded to Sell from Neutral at Citigroup), EBAY -1.6% (downgraded to Equal-Weight from Overweight at Morgan Stanley), HOLX -1.6% ( downgraded to Equal-Weight from Overweight at Morgan Stanley), ALXN -1.5% (downgraded to Neutral from Buy at Goldman), PETM -1.4% (downgraded to Sell from Hold at Deutsche Bank), ARRS -1.3% (downgraded to Equal Weight from Overweight at Barclays), RVBD -1.2% (downgraded to Hold from Strong Buy at Needham), AAPL -1.1% (downgraded to Sell at Standpoint Research), NMM -0.8% (downgraded to Neutral from Buy at Global Hunter Securities), PM -0.6% ( initiated with a Sell at Standpoint Research), AFL -0.4% (downgraded to Neutral from Outperform at Credit Suisse)

>>> Corning Inc. Unveils World's First Antimicrobial Cover Glass

Corning Inc. Unveils World's First Antimicrobial Cover Glass
- Unveils Antimicrobial CorningGorillaGlass at the International Consumer Electronics Show (CES). It is the first EPA-registered antimicrobial cover glass. The glass is formulated with an antibacterial agent, ionic silver, which is incorporated into the glass surface for sustained activity. Process and metrology innovations enable the precise control of silver levels necessary to preserve the mechanical, optical, and dielectric properties of Corning Gorilla Glass.
- Antimicrobial Corning Gorilla Glass is being tested with numerous manufacturers for various applications, and high-volume production capability has been demonstrated. The RoomWizard by Steelcase, a web-based room scheduling system, will feature Antimicrobial Corning Gorilla Glass and will be showcased at CES.
- Antibacterial wipes, foams, sprays, and films exist today, but they are temporary, and many device manufacturers advise against them. Antimicrobial Corning Gorilla Glass can be installed in electronic devices such as computers, cellular phones, calculators, telephones, and other electronic display panels.

>>> Morgan Stanley Sees Significant Pickup in EU M&A

Morgan Stanley strategists see high probability of a significant pickup in corporate activity in Europe, including M&A.
  • Only missing element is likely to be continued lackluster trends in capex given weak GDP environment, low levels of capacity utilization: Morgan Stanley
  • Number of factors point to rebound in M&A, including earnings/ROE recovery, rising business confidence: Morgan Stanley
  • Morgan Stanley’s preferred private equity screen identifies undervalued stocks based on metrics commonly used by PE.
    • Top 10 ranked stocks on list of 50: Soco International, OMV, Portucel, Fred Olsen Energy, Suedzucker, Kesko, Yara, ERG, Iberdrola, Shell
    • Criteria: screens for potential long ideas by ranking stocks by 5-metrics (equal-weighted): Free cash flow to EV, EV to fixed assets, P/BV, EBIT to interest paid, div. yield (excludes cos with mkt cap <$2b)

>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: RDWR +4.8%.

M&A news: SIRI +7.8%, LMCA +1.8% ( Liberty Media announces proposal to make Sirius XM Holdings a wholly owned subsidiary of Liberty), JOSB +5.5% ( Men's Wearhouse ommences cash tender offer for Jos. A. Bank at $57.50 per share), TWC +3.8% (LMCA exec comments on M&A potential), PACR +3.2% (Pacer Intl confirms it will be acquired by XPO Logistics in a deal valued at $335 mln; shareholders of PACR will receive $6.00 in cash and $3.00 of XPO common stock; transaction to be significantly and immediately accretive), TSU +-3.1% ( Telefonica has denied reports it is considering bid for TSU Brazil ), .

Select solar related names showing strength boosted by reports indicating China plans more support to solar industry: SOL +6.9% (panels to power 420 MW solar project in Japan), SCTY +5.6% (positive mention on MadMoney; upgraded to Buy from Neutral at Goldman; added to Conviction Buy list ), RSOL +4.5%, JKS +4.5% (signs RMB 400 mln 15-year project loan agreements with China Development Bank), TSL +4.2%, YGE +3.6% (supplies 1 MW of solar panels to Serbia's 2nd largest solar project ),SPWR +0.8%, .

Other news: PPHM +26.9% (receives FDA Fast Track designation for its immunotherapy Bavituximab as a potential treatment of second-line non-small cell lung cancer), ATHX +18.5% (may be attributed to positive blog mention highlighting treatment for ischemic stroke), FNF +6.6% (announces formation of Black Knight Financial Services and issuance of a 35% interest in two Black Knight operating subsidiaries to Thomas Lee Partners), MSTX +6% (announces positive data in model for heart failure), OXBT +5% ( Announces Key Details of Phase 3 Trial Protocol for levosimendan; The Phase 3 trial will be conducted in approximately 50 major cardiac surgery centers in North America), IDIX +4.1% (upgraded to Buy from Neutral at UBS; appoints Jacques Dumas, PhD, as Chief Scientific Officer ), PLUG +3.8% (continued strength), GLPI +3.5% (declares special dividend of $11.85 per share), QIHU +2.8% (still checking), ZNGA +2.8% (WSJ Digits details news that Zynga will accept bit coin for online gaming payments), RMBS +2.7% (signs comprehensive agreement with Samsung (SSNLF); enabling broad adoption of Rambus technologies for inclusion into Samsung products), YONG +2% ( establishes the close of business on Jan 10, 2014 as the record date for Special Meeting of Shareholders to approve merger agreement), TWGP +2% (announced that on January 3, 2014 it entered into an Agreement and Plan of Merger with ACPRe Ltd; following the settlement of all outstanding equity awards, will be converted into the right to receive $3.00 in cash), NOV +1.7% (still checking), BA +1.5% (announces 8 year IAM 751 contract extension; Boeing, Air Algerie announced commitment for eight next-generation 737-800s; order will be worth $724 mln at list prices ), TMUS +1.5% (T-Mobile US to acquire 700 MHz A-Block Spectrum from Verizon Wireless), DDD +1.3% (3D Systems Recasts the Consumer 3D Printing Experience With New Cube 3), BAC +1.2% (still checking), CTIC +0.9% (receives positive final appraisal determination from NICE), DAL +0.9% (positive mention on MadMoney), TCS +0.6% (positive mention on MadMoney).

Analyst comments: CALL +2.6% (initiated with a Buy at Canaccord Genuity), TRLA +2.3% (upgraded to Outperform at RBC Capital Mkts), PVA +2.2% (Penn Virginia: Hearing named as top pick and suggested as M&A target at SunTrust), GNW +2% (upgraded to Buy from Neutral at UBS), MGM +1.7% (MGM Resorts upgraded to Buy from Neutral at Citigroup), HBAN +1.3% ( upgraded to Equal Weight from Underweight at Barclay), BSX +1.2% (upgraded to Overweight from Equal-Weight at Morgan Stanley), Z +1.1% (upgraded to Outperform at RBC Capital Mkts), WYNN +1% (Wynn Resorts upgraded to Buy from Neutral at Citigroup), ABT +0.9% (Abbott Labs upgraded to Overweight from Equal-Weight at Morgan Stanley), RF +0.7% (Regions Financial upgraded to Buy from Hold at Deutsche Bank), MDT +0.6% ( upgraded to Overweight from Neutral at JP Morgan)

>>> GOOG & FB

* Google :
- Price Target raised to $1,300 from $1,100 at UBS
- Bernstein making Positive comments; maintains Outperform rating, price target raised to $1,350

* Facebook Price Target raised to $62 from $53 at Morgan Stanley