WSJ : Ono Shareholders Agree to Sell Company to Vodafone

Ono Shareholders Agree to Sell Company to Vodafone

Vodafone to Pay Just Over €7 Billion for Ono

MADRID— Vodafone Group VOD.LN -1.00% PLC has reached an agreement with shareholders of Ono SA to buy the Spanish cable company for just over seven billion euros ($9.73 billion) including debt, people with knowledge of the deal said Sunday.

Vodafone has struggled to compete in Spain with Telefonica SA, Jazztel SA and other companies that offer packages combining high-speed home Internet, pay-TV and mobile phone service. Reuters The purchase agreement, which is to be announced Monday and will require regulatory approval, is part of a drive toward consolidation among Europe's fragmented array of operators and would add a much-needed fixed-line operation to Vodafone's Spanish unit. The deal followed weeks of negotiations and pre-empted a long-planned initial public offering of Ono stock.

The U.K. telecom giant plans to assume Ono's €3.34 billion debt and pay the remainder in cash to Ono's shareholders, who are led by a group of U.S. investment funds, said one person knowledgeable about the deal.

Vodafone has struggled to compete in Spain with Telefonica SA, TEF.MC -1.22% Jazztel SA JAZ.MC +0.39% and other companies that offer packages combining high-speed home Internet, pay-TV and mobile phone service. Vodafone's Spanish mobile unit has suffered falling service revenue, contracting margins and high churn levels.

Observers said that Vodafone, Europe's largest telecom firm by market value, had few options to benefit from Spain's nascent economic recovery other than a purchase of Ono.

By acquiring Ono, Vodafone is following a strategy it used in Germany last year when it became an integrated provider through the purchase of cable network operator Kabel Deutschland for €10 billion, including debt.

Ono reported Friday that its revenue rose 1.6% in 2013, to €1.6 billion from €1.57 billion in 2012, as the company swung to a €25 million net loss from a €52 million net profit the previous year.

The company added has 1.87 million retail customers, down 4% from the close of 2012, including 811,000 high-speed Internet customers. Net debt dropped slightly from €3.44 billion at the close of 2012.

Ono's shareholders on Thursday approved plans to list shares on the Madrid stock exchange next month and targeted a company valuation of about €7 billion. But shareholder representatives continued conversations with Vodafone and reached a deal to sell the company for a slightly higher sum.

Barron's : A Spruced-Up Morrisons Looks Like a Bargain

A Spruced-Up Morrisons Looks Like a Bargain

Management is embarking on an overhaul that should repackage the supermarket company and better position it to take on its British rivals.

Investors browsing the aisles for British supermarket stocks might not like what they see these days, but Morrisons could offer good long-term value.

Wm Morrison Supermarkets, known as Morrisons, has been pushed to the back of the shelf, bruised by fierce competition and a strategy that had passed its sell-by date. But management is embarking on an overhaul that should repackage the supermarket company and better position it to take on its British rivals.

The stock (ticker: MRW.UK) recently has taken a beating, losing almost a quarter of its value in the past 12 months. It was knocked down 12% on Thursday alone after reporting a loss for the fiscal year ended on Feb. 2, dragging down other retailers with it. (Morrisons has unsponsored American depositary receipts that trade in New York under the ticker MRWSY .)

It closed on Friday at 208 pence ($3.46), or roughly 11 times estimated earnings for the next fiscal year, and in line with market leader Tesco (TSCO.UK). Most analysts are neutral on Morrisons' stock, rating it Hold with a consensus price target of 225 pence. However, the more bullish suggest it can climb to 270 pence in the next 12 months, which would represent an upside of 30%.

The United Kingdom market has been tough for the Big Four domestic players—Tesco, J. Sainsbury (SBRY.UK), Wal-Mart Stores' (WMT) Asda, and Morrisons—as consumers tightened their belts in recent years amid an economic slowdown. At the same time, discounters made huge inroads.

Morrisons was hit harder than the other major supermarket chains because it didn't offer online sales—a serious error in an age when more people are shopping on the Internet. What's more, its outdated IT systems meant it couldn't provide a loyalty plan or personalized couponing, important considerations for shoppers on strict budgets.

Morrisons' weak position is evident. The company reported an 11% drop in operating profit to 865 million pounds ($1.44 billion) on a 2% drop in revenue to £17.68 billion in fiscal 2014. Restructuring costs of more than £900 million and other charges pushed it to a net loss, equivalent to about 10 pence per share.

But the Bradford, U.K.–based company is addressing its problems and appears to be taking the right steps to make up for lost time. Morrisons announced a deal last summer to offer food online in partnership with Ocado Group (OCDO.UK), an Internet grocer. The venture made its first delivery in January. Last year, Morrisons entered the fast-growing market for convenience stores, catering to customers who don't have time to visit supermarkets.

An IT upgrade is also near completion. The new system will allow Morrisons to more effectively manage its supply chain, and track stock to improve service and in-store availability. A loyalty card should be rolled out this year.

These improvements will bring Morrisons back into line with rivals, but they come at a cost: capital expenditure has topped £1 billion a year for the past couple of years. That period seems to be the top of the cycle. Capex should fall to £550 million this year and £400 million in 2015.

Morrisons reckons the measures it is taking will contribute £1 billion in savings through the next three years, with half of that coming from promotional activities. Coming off such a low base, that may be conservative.

The company also expects to raise £1 billion from property disposals in the next three years. It has a strong property portfolio that it says is worth about £9 billion—almost double its market value of some £4.86 billion.

Good execution should help Morrisons reach its target of £2 billion of free cash flow over the next three years. Free cash flow was negative last year. Making progress toward that goal will be critical to its success. A consensus of analysts' estimates forecast a profit of 18 pence a share for the current year.

Morrisons is confident. Despite posting a loss, it hiked its full-year dividend, keeping a prior promise, and pledged to boost its payout this year by at least 5% to a minimum of 13.65 pence per share. Morrisons stock currently yields more than 6%.

Investors should be tempted by what Morrisons now has on offer.

AMSTERDAM-LISTED Altice (ATC.Netherlands) can offer upside if it can secure a deal to acquire Vivendi's (VIV.France) mobile business, SFR. Discussions are ongoing, and the price tag is reportedly close to 12 billion euros ($16.7 billion). Altice consolidates mobile and cable assets, and has a track record of improving margins by purchasing scale and renegotiating contracts. SFR would represent a good opportunity for Altice, whose shares closed on Friday at €30, giving it a market cap of €6.20 billion. The stock isn't widely followed, but Credit Suisse reckons it could climb to €35.90 a share in 12 months.

>>> Barron's Summary: Positive on CQB, GHC, EMC, FEIC, PX, RHT; Cautious on MW,

Barron's Summary: Positive on CQB, GHC, EMC, FEIC, PX, RHT; Cautious on MW, MATX

- Cover story: Detroit is undergoing a renaissance, led by investors such as Dan Gilbert of Quicken Loans, who has invested $1.5B to buy and rehab more than 40 buildings in downtown and nearly Greektown; For a true turnaround to take effect, Detroit must come to terms with its woeful financesterms that will result in severe pains for many of the holders of its crushing $18B in debt and future obligations. Some holders of the citys general obligation bonds could take an unheard of 80% haircut on their principal. 
- Tech Trader: Tiernan Ray reports that the most interesting new technology at SXSW was related to sensors, a sector that has been around for awhile but is gaining steam as smartphones and wearable devices proliferate; Key players include Bionym, Alps Electric, INVN, SYNA, and OVTI, but investors need to be cautious, as shares can be volatile. 
- Trader: Anxiety about the Fed may be feeding a rally in gold, but it remains difficult to choose which stock to play in the sector, partly because political risks are rampant (Cautious on CEF, GDX, AEM); Negative on MW: With acquisition of JOSB at an inflated price, clothier is borrowing money to buy a chain whose profits have languished for years; it isnt clear how the two slow-growing companies will improve, and MW shares could fall 20% to the low $40s. 

Features: 
1) Story looks at the S&P 500s cheapest stocks based on price/earnings multiples (ESV, HPQ, RIG, VLO, NE, MU, GT, MET, GM, PRU, TSO, MPC, XRX, LNC, JPM) and price/book value ratios (CLF, GNW, AIG, C, NWSA, RDC, BAC, HIG, XL, WPX, L, RIG, ESV, APA, NE); 
2) Positive on EMC, FEIC, PX, RHT: Companies are likely to benefit as corporate America increases long-overdue spending on plants, equipment, and software in shift from share repurchases to reinvestment; 
3) Cautious on MATX: Shares trade at a premium of nearly 20% to the S&P 500 but uncertainty about the shippers financial liability for a giant molasses spill in Honolulu harbor could put pressure on them; 
4) Barrons list of the Best Online Brokers of 2014, topped by Interactive Brokers, tradeMonster, Place Trade, TD Ameritrade, and TradeStation. 

- Small Caps: Positive on CQB: Banana giants merger with Irelands Fyffes could create a leaner, meaner supplier due to cuts in logistics and procurement costs along with other synergies, deal should also benefit rival big banana firms such as FDP. 

- Follow-Up: Positive on GHC: Repurchase of 20% of its shares from Berkshire Hathaway is a bullish development for the TV and education company, which looks appealing based on its asset value and the turnaround potential at Kaplan; Last weeks stock auction of FNMA and FMCC shares is just the preliminary tremor of a major earthquake that will render all the claims of the old equity holders worthless. 

- Mutual Funds: Interview with Richard Nackenson, Portfolio Manager, Neuberger Berman Multi-Cap Opportunities (top ten holdings: JPM, CAH, BA, BRKB, SLB, EBAY, HCA, OMC, MSFT, MMM); Interview with Jeremy Grantham, Founder and Strategist, GMO, who says Bubbles dont usually stop until sensible investors, value investors, and prudent investors have been hung out to dry. That hasnt happened yet, so theres probably quite a bit left in this rally. 
- European Trader: Positive on Wm Morrison Supermarket: Shares look like a bargain as management launches overhaul that will repackage the supermarket chain and better position it to take on British rivals. 
- Asian Trader: Over five years, the Philippines has ranked as Asias best-performing market, up about 230%, while over the past 12 months it has grown faster than China (Positive on EPHE, Ayala, Robinsons Land). 
- Emerging Markets: Chinas largest Internet companies, such as Alibaba and Tencent, are on a buying spree, a trend that is likely to continue, with BONA, YOKU and QIHU likely targets. 
- Streetwise: Biotech companies such as ICPT, ITMN, and SGMO have been driving gains at the Russell 2000 index, which has risen 24% in the past 12 months.

>>> Moody's raises outlook on European Union to Stable from Negative; Affirms AA

Moody's raises outlook on European Union to Stable from Negative; Affirms AAA - update
RATIONALE FOR THE AFFIRMATION 
- The first driver of the affirmation is the joint and several liability of member states to their EU obligations. In the event that a borrowing member state fails to repay a loan on time and the EU's own resources are insufficient to service the debt, the EC has the right to draw on all member states in order to make up for the shortfall -- Article 323 of the Treaty on the functioning of the EU legally obliges member states to provide funds to meet all of the EU's obligations in respect of third parties. Moreover, if the EU needs to call for additional resources from member states beyond the contributions outlined in the annual budget, the amount it calls from each member does not have to be proportional to that member's contribution to the EU budget. In this context, the strong support for the EU evident among the member states is critical to its rating. 
- The second driver is the EU's multi-layer debt-service protection given: (1) the borrowing country's commitment to repay its loan (the funds raised are lent back to back, and the borrowing country pays down the interest and loan principal); (2) the EU's vast budgetary resources relative to its debt obligations; and (3) the European Commission's right to call for additional resources from member states, if needed. 
- The third driver of the affirmation is the EU's conservative budget management. The European Commission (EC) is responsible for EU budget drafting and implementation, subject to approval by the Council and the European Parliament (EP). The EU Treaty requires the EU to balance its budget, prohibiting any borrowing to cover budgetary shortfalls. In addition, the EU's Multiannual Financial Framework (MFF) provides the general framework for a seven-year period and establishes a ceiling for total expenditures for the annual budgets during that period. All borrowings by the EC are ultimately guaranteed by the EU, either through its budget or in the form of the EC's right to draw on all member states to cover any shortfalls. In this context, the EU may defer budget expenditures to accommodate its debt service. 

-- WHAT COULD CHANGE THE EU'S RATING - DOWN 
- Risks to the creditworthiness of the EU and to its rating include a deterioration in the creditworthiness of the EU member states, as reflected in downgrades of Moody's ratings for these states. The EU's rating is particularly sensitive to changes in the ratings of the four countries rated Aaa or Aa1 that make large contributions to the EU budget (i.e., Germany, France, the UK and the Netherlands). A weakening of the commitment of the member states to the EU and changes to the EU's fiscal framework that would lead to less conservative budget management would also be credit negative.

>>> Russia Pres Putin tells US Pres Obama he supports deploying international OS

Russia Pres Putin tells US Pres Obama he supports deploying international OSCE inspectors in all parts of Ukraine; Still believes Crimea referendum was legitimate - press
- Putin and Obama said to agree that despite the differences, there is a need to jointly seek a way to stabilise Ukraine situation. 
- Believes Ukraine authorities continue to remain unwilling to curb violence against the Russian-speakers by ultranationalist factions. 
- Uses Kosovo situation as precedent with reference to Crimea.

>>> Louis-Dreyfus family members may sell some shares to Margarita Louis-Dreyfus

Louis-Dreyfus family members may sell some shares to Margarita Louis-Dreyfus
Raw materials trader the Louis-Dreyfus group could soon see Margarita Louis-Dreyfus hold 80% of the shares in the group, according the Journal du Dimanche. The French weekly noted that talks are underway for four family shareholders to sell some or all of their holding to Margarita Louis-Dreyfus, already a 64 % shareholder.

Quoting an unnamed source, the item noted that Margarita Louis-Dreyfus has been asked to go it alone if she wishes to finance the operation. The would-be vendors, according to the JDD, are sisters Monique and Colette Louis-Dreyfus and a cousin called Laure who is based in the United States. Talks have been conducted for the past few weeks, the item noted, but have stumbled over pricing issues.

The JDD estimated a transaction value in the EUR 1bn range.


Source Journal du Dimanche

>>> SFR-Altice deal not a slam dunk

SFR-Altice deal not a slam dunk - report (translated)

The tie-up between Altice and SFR, which on Friday announced ongoing exclusive negotiations, is not yet a confirmed deal, according to the Journal du Dimanche. The French language weekly noted that the parties in talks included the caveat in the press release that SFR parent Vivendi would meet within three weeks to look into what might happen and if it should look at other options.

The JDD also included comment from an anonymous Vivendi management source that if the deal was to fall through, Vivendi would need a back-up plan.

Another source close to Vivendi noted that should Numericable not be in a position to meet its financial guarantees, the door would be open.

The exclusive negotiations announced two days ago will be on the basis of an EUR 11.75 bn payment to Vivendi and a 32% share in the equity of the combined listed entity. It also provides Vivendi with pre-determined exit conditions.


Source Journal du Dimanche

>>> BHP Billiton CEO says return of cash to shareholders possible once net debt

BHP Billiton CEO says return of cash to shareholders possible once net debt falls to USD 25bn

BHP Billiton chief executive Andrew Mackenzie said the listed Anglo-Australian mining group could return cash to shareholders once its debt is cut to USD 25bn (EUR 18.00bn). Mackenzie, quoted in a Sunday Times report, said BHP will give serious thought to increasing cash returns to investors when it cuts net debt to USD 25bn.

BHP could reduce its debt that much as early as June, the item said. The company launched a previous USD 10bn share buyback in 2011, the article noted.

The report cited analysts at UBS who estimated that BHP could spend USD 5bn on new share buybacks. The analysts believe BHP could announce the buyback when it publishes its FY results in August, the item added.

BHP Billiton’s market capitalisation currently stands at USD 165.96bn.


Source Sunday Times

WSJ : German Utility RWE to Sell Oil Unit Dea to Russian Bil

German Utility RWE to Sell Oil Unit Dea to Russian Billionaire Fridman Intends to Sell Oil and Gas Production Unit for More Than $7 Billion FRANKFURT—German utility RWE AG RWE.XE +1.33% said Sunday it intends to sell its oil and gas production unit to Russian billionaire Mikhail Fridman in a transaction valued at more than €5 billion ($7 billion).

Germany's second largest utility by market value said it had agreed in principle to sell its upstream oil and gas business RWE Dea for around €4.5 billion to Mr. Fridman's energy investment vehicle L1 Energy. L1 Energy will also take on around €600 million of RWE's liabilities, raising the deal's value to €5.1 billion.

RWE said it agreed to the "major contractual conditions" of the disposal, but details remained to be resolved. The company expects to finalize the transaction shortly, it added.

"This agreement is a major milestone in delivering our announced strategic realignment of the group," said RWE Chief Executive Peter Terium.

RWE put Dea up for sale about a year ago, in what was seen as a cornerstone of its effort to reduce debt and conserve cash. The company is struggling with falling profits from its power plants because subsidized renewable energies are eating into its business across Europe.

Mr. Fridman's bid for RWE Dea topped a rival offer from Germany's Wintershall AG, a unit of chemical giant BASF SE, BAS.XE +1.40% which had offered around €3.5 billion.

A third offer had been filed by a consortium of U.S. private-equity firm Kohlberg Kravis Roberts & Co. and state-owned Kuwait Petroleum Corp. But people familiar with the disposal talks said last week that KKR and Kuwait had dropped out of the tender process.

L1 Energy confirmed it had agreed on the acquisition of RWE Dea.

RWE said the deal would be subject to the approval of its supervisory board and regulators in several countries.

Crimea to Switch to Russian Ruble April 1: Ria Novosti

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BN 03/16 16:52 *RIA CITES CRIMEAN DEPUTY PREMIER TEMIRGALIEV BFW 03/16 16:52 *CRIMEA TO SWITCH TO RUSSIAN RUBLE APRIL 1: RIA NOVOSTI

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Crimea to Switch to Russian Ruble April 1: Ria Novosti 2014-03-16 16:57:20.447 GMT

By Daryna Krasnolutska March 16 (Bloomberg) -- Ria cites Crimean Deputy Prime Minister Rustam Temirgaliev on abandoning Ukraine’s hryvnia. * NOTE: Crimea Votes on Secession as Ukraine Says Russia Massing Troops {NSN N2JBNX6K50XX <go>}

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

To contact the reporter on this story: Daryna Krasnolutska in Kiev at +380-44-490-1252 or dkrasnolutsk@bloomberg.net

To contact the editor responsible for this story: Andrew Langley at +44-20-7392-0582 or alangley1@bloomberg.net