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Sopra, Steria in Merger Talks, Boursier.com Says 2014-04-07 08:43:19.252 GMT
By James Ludden April 7 (Bloomberg) -- Parties in talks to create “merger of equals,” report says, without citing sources. * NOTE: Shares of both companies suspended
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To contact the reporter on this story: James Ludden in London at +44-20-7673-2645 or jludden@bloomberg.net To contact the editors responsible for this story: Andrew Rummer at +44-20-7073-3722 or arummer@bloomberg.net James Ludden
* What’s changed? - i) associate income from Regeneron to be booked from Q2, ii)
probability of success raised for key pipeline assets alirocumab (anti-PCSK9 –
cholesterol lowerer) and dupilumab (asthma/atopic dermatitis), and iii) higher
buybacks. These positives are partially offset by stronger FX headwinds. The net
result is 2014-20e EPS upgrades of up to 8% (1-4% 2014-16e), and a new PT of €80
(from €73). Preferred plays remain Roche, Novo Nordisk, Novartis, BMS & Pfizer.
* Regeneron value now better reflected - Sanofi’s most promising pipeline assets
come from its antibody partnership with Regeneron (covered by Yaron Werber).
Sanofi pays for R&D upfront, with Regeneron contributing 20% of Ph III, and paying
back its 50% of R&D costs over time. Sanofi will payaway 50% of US profits, and 35-
45% of ex-US profits, on partnered products (our model assumes blended 45%
payaway and €800m R&D costs paid back). Sanofi recently crossed 20% ownership
and, last Friday, announced it had successfully nominated a member onto
Regeneron’s board. Our model now assumes Regeneron associate income; we
assume a 25% ownership by year end, and 30% in 2015 (stand-still agreement in
place limiting Sanofi to 30% until 2017). This drives 3-5% EPS upgrades.
* Pipeline forecasts raised – We maintain a €2.5bn peak sales forecast for
alirocumab, but increase the probability of success from 55% to 70%, given
incremental Ph III data: risk adjusted sales +30% to €1.7bn. Our views on PCSK9
can be found on "It’s more than just about LDL-C lowering" and "so far so good but
needs to be huge to move the Sanofi needle". We increase risk-adjusted peak sales
for dupilumab from €0.4bn to €0.8bn to reflect the initiation of Ph III studies
* Other considerations – Buybacks revised to reflect recent commentary (€3bn for
2014, but raised from €1.5bn to €2bn thereafter – drives 1-3% EPS upgrades). Our
FX model now points to a -3-4% sales headwind, versus -2-3% previously.
Confidence in the Lantus franchise post biosimilars required to turn more positive
on the shares: 40% of EBIT and 50% contribution to 2013-17 sales growth.
Deutsche Telekom AG Reportedly Softbank could consider a move for Deutsche Telekom as part of European expansion strategy - German analyst
Deoleo SA Spain Govt considering a bailout for the company - Spain press
* Lafarge and Holcim in talks for a potential merger of equals
Lafarge and Holcim announced on Friday afternoon that they are in “advanced
discussions regarding a possible combination”. We think this potential “merger of
equals” would create a mega cement company with a geographic reach not seen
before in the cement world. We estimate the new entity would control more than
400Mt of cement capacity, with combined sales of more than €30bn and EBITDA of
€6.7bn (2014 pro forma). We believe at this stage that this potential merger is more
likely than not to happen and we continue to hold a Buy rating for both stocks.
* The upside: large synergies potential: 20% to 30% upside
Combining the two largest cement companies in the world would generate
significant potential synergies, in our view, both on the cost and the revenue sides.
In a conservative scenario, based on previous large transactions in the sector, we
estimate potential synergies at €800m to €1bn per annum at EBITDA level,
equivalent to a post-tax present value of €7.2bn or c20% of the market value of the
combined entity (based on last Thursday closing price). Based on the scope and
scale of the potential merger, we however can’t exclude a much larger potential
synergy number. Applying a 50% to 60% premium to the base case, synergies
could amount up to €1.5bn per annum, equivalent to a post-tax present value of
€12bn or c32% of the market value of the combined entity. Lafarge would then be
valued above €80 and Holcim above CHF105. We think there could also be some
potential synergies on cost of debt, taxes and pensions liabilities, although they are
more complex to identify at this stage.
* The risk: significant issues with competition authorities
We think this potential merger would raise very significant issues with competition
authorities in many markets where Lafarge and Holcim are currently competing. We
identify six key countries that could be problematic in our view, and which might
prevent the merger from completing (or where the combined entity would likely be
forced to sell assets): the US, Canada, the UK, France, Romania and the
Philippines. We estimate that these markets together would account for about 35%
of sales of the new combined entity. We note that the press release however refers
to “advanced discussions” which we think could imply that the companies are
optimistic that these potential issues could be addressed in time.
* Many questions still to be answered
There are several other key questions raised by this potential merger: 1/ the
potential structure of the deal, 2/ the implications for the credit ratings, 3/ the
management of the combined entity, 4/ the support from the large shareholders and
5/ the political risks, especially in France. We believe that a “merger of equals”
would potentially imply some transfer of value from Holcim toward Lafarge.
* We keep our BUY ratings on both Lafarge and Holcim
We believe that the market could discount a large part of the potential synergies.
We increase our PO on Lafarge to €70 (from €60) and on Holcim to CHF95 (from
CHF84), accounting for 75% of the potential synergies of our base case scenario.
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HOLCIM, LAFARGE EXECUTIVES SPEAK ON MERGER PLANS: LIVE <GO> 2014-04-07 06:34:44.445 GMT
By Grant Clark April 7 (Bloomberg) -- Click {BBTV 120509476 <GO>}
Link to Company News:{HOLN VX <Equity> CN <GO>} Link to Company News:{LG FP <Equity> CN <GO>}
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To contact the editor responsible for this story: Grant Clark at +65-6212-1101 or gclark@bloomberg.net
Bernie Ecclestone has said he would like to regain control of F1 in partnership with leading teams such as Ferrari, even as he prepares to step back from the day-to-day running of the sport.
Asked if he wanted to buy up stakes if they became available or even take over the whole of the F1 business, Mr Ecclestone, who retains a 5 per cent stake, said: “We’d certainly want control.”
He said he wanted to revive a plan drawn up some years ago for him and the teams to become controlling shareholders of F1. “I’d like to see if we could get back to that,” said Mr Ecclestone.
In terms of his day-to-day role, the 83-year-old F1 chief executive, facing trial on bribery charges later this month in Munich, said he had identified two or three people to take over some of his responsibilities, though he declined to name them.
Expressing confidence in an acquittal, Mr Ecclestone said in an interview: “I’d like to shift a lot of things that I currently do for other people to do, and perhaps look after the strategy a little bit more.”
The ownership of F1 is in flux, amid suggestions that alegacy stake held by Lehman Brothers and a Norges Bank Investment Management holding may be sold. John Malone, cable billionaire and chairman of Liberty Global and Liberty Media, has also shown interest in taking a F1 stake.
CVC Capital Partners, the leading shareholder with 35 per cent, has shelved its exit strategy plan of floating F1 because of uncertainty caused by Mr Ecclestone’s legal problems.
Mr Ecclestone held talks in London last week with Ferrari chairman Luca di Montezemolo “about life in general”.
He added: “They’d like to see more or less what I think is the right way to go. They’re supportive of what I would like to see done with it [F1].”
A person with knowledge of the Ferrari strategy for F1 said the takeover idea was definitely an option, though it was not the only one. Ferrari would definitely want a say in the future of F1, the person said.
Further talks between the F1 chief executive and Mr Montezemolo took place in Bahrain, along with Jean Todt, president of the governing body Federation Internationale de l’Automobile, about the state of F1.
Controversial rule changes for this season, including the introduction of new fuel-efficient engines, have been heavily criticised by promoters and fans.
Mr Ecclestone’s trial begins on April 24. He will attend court two days a week, enabling him to continue to attend Grand Prix.
The trial had given him “a bit of jolt” but he said he had not given a thought to the idea of being convicted and ending up in jail.
“I don’t think I’ve ever been scared of anything ... And I don’t worry about anything,” he said.
He is charged with bribery and aiding and abetting breach of trust. The case arises from the conviction in 2012 on corruption charges of Gerhard Gribkowsky, a German banker, who was a key figure in the 2005-06 sale of BayernLB’s F1 stake to CVC.
Mr Gribkowsky was found to have accepted payments totalling $44m from the F1 chief executive and Bambino, an Ecclestone family trust.
Mr Ecclestone denies the charges, saying the money was paid because the former banker was threatening to expose his tax affairs.
Societe Generale not interested in acquiring Commerzbank (translated)
Societe Generale, the French bank, is not interested in acquiring German bank Commerzbank, Handelsblatt reported. The German daily cited Societe Generale Chief Frederic Oudea who said that he is not interested in growth without sufficient synergies, noting that in his opinion the German market for private clients is not very profitable. The German state owned rescue fund Soffin owns 17% in Commerzbank, the report stated.
Source Handelsblatt