WSJ : Alstom Gets Fired Up On GE Bid Prospects

Alstom Gets Fired Up On GE Bid Prospects

Alstom, ALO.FR +10.93% the troubled French conglomerate, doesn't often turn heads.

Hence the enthusiasm with which investors met reports that General Electric GE +0.20% was in talks to buy the company for about $13 billion. The stock jumped 11% Thursday, despite Alstom saying it was unaware of any offer. Further reports that day indicated GE was interested in buying just Alstom's energy business.

The latter makes more sense. Certainly, if GE did want to bet on a big acquisition—it typically hasn't spent much more than $4 billion on a single deal—Alstom would be a questionable choice.

Buying the whole company would accelerate GE's plan to bulk up in industrials, reducing its reliance on more volatile financial services. It could also pick up Alstom at a discounted price thanks to the latter's mounting balance-sheet pressures. At the reported offer price, Alstom would be valued at 7.7 times fiscal 2014 earnings before interest, tax, depreciation and amortization based on Nomura estimates. GE trades at about 10 times.

Synergies could be compelling. Folding Alstom's weak gas-turbines business into GE, which is the market leader, might produce decent savings. And combining Alstom's power-transmission business with GE's assets and its Chinese joint venture would create a powerful global competitor in a market that is fragmenting.

While this strengthens the case for GE to consider Alstom's energy business, a takeover of the whole company likely would come with too much baggage. Alstom's rail arm, accounting for 23% of operating profit, offers modest growth prospects. Moreover, 56% of its power-equipment sales and a majority of its services revenue come from coal-fired plants, estimates UBS. UBSN.VX -0.11% Those face serious regulatory and renewable-energy challenges. New coal installations are expected to decline 1.7% a year through 2020 based on UBS forecasts.

Alstom also carries a lot of political and legal complexity. Restructuring French operations could prove hard to pull off. And Alstom was implicated in a bribery investigation in March after its joint-venture partner on an Indonesian power project agreed with the U.S. Justice Department to pay a fine. Alstom could face up to $1.25 billion in fines and pre-enforcement litigation costs assuming the investigations follow a similar course to a case concerning Siemens SIE.XE +0.03% in 2008, estimates Nomura. Alstom said in March it was cooperating with the investigation.

Given all this, Alstom's investors would doubtless welcome a takeover at a premium, not least Bouygues, EN.FR +4.64% which owns a 29.3% stake. GE's own shareholders likely wouldn't share their excitement.

FT : Sotheby's shares jump as Loeb wins support

Sotheby's shares jump as Loeb wins support

Fuel has been added to the fire that first erupted at Sotheby's when high-profile activist investor Daniel Loeb targeted one of the world's best-known auction houses for its financial performance.
ISS, an adviser on corporate governance to institutional investors, has recommended Sotheby's shareholders vote to add Mr Loeb and Olivier Reza, a jewellery entrepreneur, to the board of the auction house.
The recommendation is a victory for Mr Loeb, whose hedge fund Third Point is Sotheby's largest shareholder, as both he and Sotheby's management lobby investors before the auction house's annual meeting on May 6.
In its report, ISS said Mr Loeb, who has engineered management shake-ups at companies including Yahoo, brings:
The sort of deep financial and analytic acumen which, had it also been given voice in the boardroom over the past four years, might have prevented a "record" year in which the company's second-highest revenues in a decade could only deliver one of its lowest EBITDA margins of the same period.
However, ISS failed to back Harry Wilson, a restructuring executive and the third candidate that Third Point is seeking to put on Sotheby's board.
Sotheby's rejected the analysis from ISS, arguing that replacing its board members with Mr Loeb's picks could "negatively impact shareholder value."
Late on Wednesday, the auction house unexpectedly released first-quarter results that showed a sharp narrowing in its losses from a year earlier.
Shares in Sotheby's climbed almost 4 per cent at the open in New York.

>>> Xavier Niel to buy Monaco Telecom for up to $450m


Xavier Niel to buy Monaco Telecom for up to $450m

French billionaire Xavier Niel is nearing a deal to personally acquire Monaco's largest telecoms company for as much as $450m from Cable and Wireless Communications, the UK-listed group.
As Daniel Thomas and Anne-Sylvaine Chassany report, the deal is in the final stages of negotiations and could be announced this week, according to two people familiar with the situation.
One person said that the acquisition would be a personal investment for Mr Niel, rather than through Iliad or Free, the telecoms businesses that he owns in France.
Another person close to the discussions added that Mr Niel had been attracted to the business given the wealthy profile of the consumer in Monaco, which is becoming haven for wealthy expats from eastern Europe as well as its traditional residents from the French elite.
Monaco Telecom, which is part owned by the principality, is the main provider of mobile, fixed line, broadband and pay TV services.
Mr Niel has been looking to buy telecoms businesses in Europe for his personal investment portfolio separated from Iliad. He teamed up with Goldman Sachs in 2011 to attempt to buy the Swiss business owned by Orange, although was eventually outbid by Apax.
For Cable and Wireless Communications (CWC), the sale will mark the final part of a wider disposal process to refocus the group on the Caribbean and Central American region.
The deal will be the first major decision to be taken by recently joined chief executive Phil Bentley, who arrived from British Gas with a mandate to take the 140-year-old business into the next stage of its development.

>>> Fortinet: Color on Quarter

Fortinet: Color on Quarter

  • Needham raises CY14 to $0.48/$707 mln from $0.46/$690 mln and CY15 to $0.59/$803 mln from $0.57/$784 mln. States that Fortinet reported strong results, with revenue and EPS both coming in above consensus estimates. Guidance for JuneQ was roughly in-line, yet the formal outlook for CY14 remains "directional" and firm questions how much visibility FTNT has. Billings performance in MarQ of +26% y/y was well above guidance, and driven by strong product revenues; investors may focus on why the strong license performance in MarQ did not seem to drive strong deferred growth (dragging subscriptions along with appliances). Firm remains cautious given volatility of service provider vertical and management's reluctance to offer clear full-year guidance. Maintain Hold rating.
  • FBR raises tgt to $28 from $27 (23x firm's FY15 FCF est) to reflect increased confidence in co's long-term growth story and more stabilized execution in the field. While it has been a roller coaster ride for Fortinet (and its investors) over the past year, it appears co is clearly on a smoother growth path for 2014 and beyond as a strong product cycle, better execution, and a robust pipeline are setting the stage for "the comeback kid of security software" to capitalize on a fertile security market. While some investors may be frustrated by co's ramped up investment trajectory, FBR views this as near-term pain for long-term gain in hopes of reaccelerating license growth on the heels of a larger sales force and channel presence.

(Le Figaro) Only Alstom "energy" activities of interest General Electric

Only Alstom "energy" activities of interest General Electric
Link to Google Translation : {http://bit.ly/1icgbVc}
Link to original in French : {http://bit.ly/1psYWnn}


A major operation goes well take place between Alstom and General Electric, as explained in Bloomberg this morning. However, the discussions would focus exclusively on Alstom "energy" activities, not on transport.
ADVERTISING

The French energy giant and Transport Alstom will lose a large part of its activities. Thursday morning, the American press agency Bloomberg said that the U.S. giant General Electric was about to launch a takeover bid for Alstom .In fact, the discussions would focus exclusively on the activities of the French energy group, according to information obtained by the BBC. Gas turbines, coal, distribution, offshore wind: these activities account for over 70% of total turnover of Alstom, which exceeds 20 billion euros. The transportation industry, which includes manufacturing TGV, remain listed independently.
Disposal of assets
This scheme allowed Alstom to publish a statement in which he says "being informed of any proposed public offer for its capital." And indeed, there should be no public offering, but a simple transfer of assets. The group said on May 7, he will "point on the prospects of its various activities," on the occasion of the publication of its annual results. The time will probably be ideal to discuss this proposed sale.
Governments have reacted cautiously. Thursday morning, the Prime Minister, Manuel Valls, said that France is attentive "to jobs, technology and policy center." Therefore no strong opposition. General Electric will be more credible in the eyes of the government that already has a global competence center in Belfort, in the field of gas turbines. Inherited a treasury center industry in 1999 to a company called ... Alstom.

>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: QDEL -9.2%, CLB -5.5%, XLNX -5.4% (also downgraded to Neutral from Outperform at Credit Suisse), FIO -4.4%, QCOM -4.3%, CAB -3.5%, (light volume), IM -3.4%, (light volume), HZO -3.4%, (light volume), GHL -3.3% (light volume), CBI -3.2%, MKSI -3%, BTU -2.4%, SPNC -2.2%, (light volume), RTN -2.2%, TYL -1.8%, UAL-1.8%, ALGN -1.8%, TSCO -1.6%, UN -1.5%, UPS -1.4%, MMM -1.4%, KFN -1.3% (light volume), FLS -1.2%, (light volume), UL -0.8%, JBLU -0.8%, NVS -0.7%, SYK -0.3%, CAM -0.3%, ORLY -0.2%, EFX -0.1%.

Metals/mining stocks trading lower: SLV -2.1%, GG -2.1%, EGO -1.5%, AUY -1.5%, SLW -1.5%, IAG -1.4%, GOLD -0.7%, GLD -0.5%, .

Other news: HEAR -17.7% ( announces ~ $45 mln common stock offering), TNP -11.3% (Announces Public Offering of 11 mln Common Shares), EROC -7.2% (announces suspension of distribution; intent to resume following close of midstream contribution transaction), SINA -4.3% (checking around), ADES -3.7% (discloses restatement and provides update on accounting review and business segments), ALTR -2.8% (following XLNX results), YGE -2.1% ( announces proposed follow-on public offering of 25 mln ADSs), AGIO -1.8% (announces pricing of 2 mln share public offering of common stock at $44 per share), YY -1% (despite Maxim initiation with Buy; still checking), NSLP -0.6% (announces pricing of upsized public offering of 3 mln common units at $23.25 per unit).

Analyst comments: GOLD -0.9% (Randgold Resources downgraded to Neutral from Overweight at HSBC)