Gapping down
In reaction to earnings/guidance:
- NFLX -26.7%, BKR -2.6%, CS -2.3%, HLLY -1.9% (guides Q1 net revs above consensus; also 6.5 mln share offering by selling stockholder), PACW -1.7%, IBKR -1.5%, CMA -1%
Other news:
- ROKU -6.7% (in sympathy with weak NFLX earnings)
- PARA -6.4% (in sympathy with weak NFLX earnings)
- DIS -4.7% (in sympathy with weak NFLX earnings)
- TEVA -4.7% (FDA issues CRL for for TV-46000/mdc-IRM)
- FUBO -4.5% (in sympathy with weak NFLX earnings)
- WBD -4.3% (in sympathy with weak NFLX earnings)
- RIO -2.4% (reports Q1 Production)
- VALE -1.9% (reports Q1 production results)
Analyst comments:
- TRIP -1.3% (downgraded to Neutral from Buy at Citigroup)
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Gapping up
In reaction to earnings/guidance:
- LAD +5.3%, ASML +5.2%, WTFC +3.7%, ANTM +3.7%, HCSG +3.6%, LRN +3%, MTB +2.9%, IBM +2.4%, LULU +2.2% (5-yr outlook/guidance), PG +1.6%, MATX +1.5%, OMC +1.5%, NDAQ +1%
Other news:
- ALVR +20.7% (announced that the U.S. Food and Drug Administration has granted Regenerative Medicine Advanced Therapy designation to its lead investigational multi-virus-specific T cell therapy posoleucel)
- IMAB +11% (report that the company is considering sale)
- HGEN +4.4% (Announces Peer-Reviewed Publication Demonstrating the Potential Clinical and Economic Benefits of Lenzilumab from the Perspective of the NHS)
- GTE +4.1% (announces corporate update)
- VSCO +3% (launches Happy Nation brand for tweens)
- BODY +2.2% (CFO to depart)
Analyst comments:
- LZ +2.4% (upgraded to Buy from Neutral at Citigroup)
- EXC +1.5% (upgraded to Overweight from Neutral at JP Morgan)
- ABNB +1% (upgraded to Buy from Neutral at Citigroup)
- CAR +1% (upgraded to Equal Weight from Underweight at Barclays)
Early premarket gappers
- Gapping up:
- ASML +6%, LAD +5.2%, WTFC +3.7%, VSCO +3%, BODY +2.2%, IBM +1.9%, OMC +1.5%, GTE +1.2%, LRN +1.1%, SLCA +0.7%, RKLB +0.6%, TASK +0.6%
- Gapping down:
- NFLX -27.1%, ROKU -6.8%, PARA -5.2%, DIS -5.2%, TEVA -4.8%, FUBO -4.7%, WBD -4.4%, CS -2.2%, RIO -2.1%, HLLY -1.9%, PACW -1.7%, IBKR -1.5%, VALE -1.3%, AMZN -0.6%, LH -0.6%
Investment bankers are agitated around Lactalis and Danone
Advisor to Lactalis, Perella Weinberg Partners is considering scenarios for the partial or total takeover of Danone. The operation would be complex for Emmanuel Besnier's group, which has a turnover lower than that of the agri-food giant. On the side of Danone, Olivier Pécoux, CEO of Rothschild in Paris, is in charge.
As he is very discreet, we do not know if he thinks about it every morning while shaving, but Emmanuel Besnier, the chairman of the management board of Lactalis, obviously dreams of attacking the French leader in the food industry. According to our information, the global milk giant, owner of President Camembert, Lactel milk and Galbani mozzarella, has been studying all possible options for several months to buy all or part of Danone.
Around this silent boss, equally discreet bankers and advisers are at work. The faithful Thierry d'Argent, director of the investment banking part of Société Générale, which manages the money for the family business, had lunch with him last week. On the legal side, Jean-Marc Grosperrin was involved in all the major recent deals, such as the acquisition in 2018 of the infant nutrition branch of Aspen Pharmacare, and currently continues to provide his advice.
But, it is above all David Azéma, director of the French branch of the American investment bank Perella Weinberg Partners since 2017, who would study the possible arrangements. This former commissioner at the State Shareholding Agency (APE), then worked for Bank of America, notably advised Veolia in the takeover of Suez. Last summer, he was already mandated by Lactalis for the takeover of the Leerdammer brand from its competitor Bel.
Too big a target for Lactalis?
The acquisition of all or part of Danone would of course be of a completely different dimension. The company is worth more than 30 billion euros on the stock market. By adding about 15 billion of debt, the amount climbs to more than 50 billion. It is therefore impossible for the Mayenne group, which achieved around 21 billion euros in turnover last year against 24 billion for Danone, to swallow such a piece without resorting to complicated financial arrangements. The consortium is possible to carve the beast together. Other more scholarly arrangements exist. In any case, it would be necessary to offload whole sections of the owner of Danette and Activia. Like water, which weighs 18% of the activity, or medical nutrition, whose operating margin is around 25%. The operation is therefore far from successful.
One thing is certain, Danone has been weakened by its recent change of management after the dismissal of former CEO Emmanuel Faber, then the arrival of new chairman Gilles Schnepp and his managing director, Antoine de Saint-Affrique. The return to growth strategy presented to investors on March 8 has given some analysts hope, while others criticize the lack of a clear course. The board of directors is in the renewal phase and the share price remains low, around €50-52.
For Lactalis, the advantages of a merger would be numerous. The cheese and milk giant has long been involved in infant nutrition. When it bought Numico in 2007, Danone had already sold part of its assets to Lactalis. In China, Danone's positions in this sector are interesting. The group is also well established in Latin America since the acquisition of the Italian Parmalat in 2011. But Emmanuel Besnier dreams of further conquering the American market, where he has already bought Stonyfield from Danone in 2017. Finally, Lactalis wants to diversify in plants, like Bel and Danone, which did not hesitate to put 11 billion euros on the table in 2016 to buy plant-based milks from WhiteWave Foods.
Danone's advice on being on the alert
On the Danone side, the new general manager also has lunches with the bankers. According to our information, Matthieu Pigasse, the boss of the French branch of Centerview, came to lend a hand to Antoine de Saint-Affrique for the development of his strategy exposed on March 8th. This former employee of Lazare therefore contributed to defining the scope of assets concerned by the disposals announced up to 10% of turnover. Banker Philippe Villin, who worked extensively alongside Gilles Schnepp to overthrow Emmanuel Faber, had lunch with Antoine de Saint-Affrique at the Bristol on April 14.
But it is mainly Olivier Pécoux, managing director of Rothschild in Paris, who is in charge. Him and Anthony
Advisor to Lactalis, Perella Weinberg Partners is considering scenarios for the partial or total takeover of Danone. The operation would be complex for Emmanuel Besnier's group, which has a turnover lower than that of the agri-food giant. On the side of Danone, Olivier Pécoux, CEO of Rothschild in Paris, is in charge.
As he is very discreet, we do not know if he thinks about it every morning while shaving, but Emmanuel Besnier, the chairman of the management board of Lactalis, obviously dreams of attacking the French leader in the food industry. According to our information, the global milk giant, owner of President Camembert, Lactel milk and Galbani mozzarella, has been studying all possible options for several months to buy all or part of Danone.
Around this silent boss, equally discreet bankers and advisers are at work. The faithful Thierry d'Argent, director of the investment banking part of Société Générale, which manages the money for the family business, had lunch with him last week. On the legal side, Jean-Marc Grosperrin was involved in all the major recent deals, such as the acquisition in 2018 of the infant nutrition branch of Aspen Pharmacare, and currently continues to provide his advice.
But, it is above all David Azéma, director of the French branch of the American investment bank Perella Weinberg Partners since 2017, who would study the possible arrangements. This former commissioner at the State Shareholding Agency (APE), then worked for Bank of America, notably advised Veolia in the takeover of Suez. Last summer, he was already mandated by Lactalis for the takeover of the Leerdammer brand from its competitor Bel.
Too big a target for Lactalis?
The acquisition of all or part of Danone would of course be of a completely different dimension. The company is worth more than 30 billion euros on the stock market. By adding about 15 billion of debt, the amount climbs to more than 50 billion. It is therefore impossible for the Mayenne group, which achieved around 21 billion euros in turnover last year against 24 billion for Danone, to swallow such a piece without resorting to complicated financial arrangements. The consortium is possible to carve the beast together. Other more scholarly arrangements exist. In any case, it would be necessary to offload whole sections of the owner of Danette and Activia. Like water, which weighs 18% of the activity, or medical nutrition, whose operating margin is around 25%. The operation is therefore far from successful.
One thing is certain, Danone has been weakened by its recent change of management after the dismissal of former CEO Emmanuel Faber, then the arrival of new chairman Gilles Schnepp and his managing director, Antoine de Saint-Affrique. The return to growth strategy presented to investors on March 8 has given some analysts hope, while others criticize the lack of a clear course. The board of directors is in the renewal phase and the share price remains low, around €50-52.
For Lactalis, the advantages of a merger would be numerous. The cheese and milk giant has long been involved in infant nutrition. When it bought Numico in 2007, Danone had already sold part of its assets to Lactalis. In China, Danone's positions in this sector are interesting. The group is also well established in Latin America since the acquisition of the Italian Parmalat in 2011. But Emmanuel Besnier dreams of further conquering the American market, where he has already bought Stonyfield from Danone in 2017. Finally, Lactalis wants to diversify in plants, like Bel and Danone, which did not hesitate to put 11 billion euros on the table in 2016 to buy plant-based milks from WhiteWave Foods.
Danone's advice on being on the alert
On the Danone side, the new general manager also has lunches with the bankers. According to our information, Matthieu Pigasse, the boss of the French branch of Centerview, came to lend a hand to Antoine de Saint-Affrique for the development of his strategy exposed on March 8th. This former employee of Lazare therefore contributed to defining the scope of assets concerned by the disposals announced up to 10% of turnover. Banker Philippe Villin, who worked extensively alongside Gilles Schnepp to overthrow Emmanuel Faber, had lunch with Antoine de Saint-Affrique at the Bristol on April 14.
But it is mainly Olivier Pécoux, managing director of Rothschild in Paris, who is in charge. Him and Anthony
Les banquiers d'affaires s'agitent autour de Lactalis et Danone
Conseil de Lactalis, Perella Weinberg Partners envisage des scénarios de rachat partiel ou total de Danone. L'opération serait complexe pour le groupe d'Emmanuel Besnier qui affiche un chiffre d'affaires inférieur à celui du géant de l'agro-alimentaire. Du côté de Danone, Olivier Pécoux, le DG de Rothschild à Paris, est à la manœuvre.
Les banquiers David Azéma (Perella Weinberg Partners) et Olivier Pécoux (Rothschild). © Vincent Isore/IP3/Linkedin/olivierpécoux
Comme il est très discret, on ne sait pas s'il y pense tous les matins en se rasant, mais Emmanuel Besnier, le président du directoire de Lactalis, rêve manifestement de s'attaquer au leader français de l'agroalimentaire. Selon nos informations, le géant mondial du lait, propriétaire du camembert Président, du lait Lactel ou encore de la mozzarella Galbani, étudie depuis plusieurs mois toutes les options possibles pour s'offrir tout ou partie de Danone.
Autour de ce patron silencieux, des banquiers et conseillers tout aussi discrets sont à la manœuvre. Le fidèle Thierry d'Argent, directeur de la partie banque d'investissement de la Société générale, qui gère les sous de l'entreprise familiale, a déjeuné avec lui la semaine dernière. Côté juridique, Jean-Marc Grosperrin était de tous les gros deals récents, comme l'acquisition en 2018 de la branche nutrition infantile d'Aspen Pharmacare, et continue actuellement de prodiguer ses conseils.
Mais, c'est surtout David Azéma, directeur de la branche française de la banque d'affaires américaine Perella Weinberg Partners depuis 2017, qui étudierait les montages possibles. Cet ancien commissaire à l'Agence des participations de l'Etat (APE), passé ensuite par la Bank of America, a notamment conseillé Veolia dans le rachat de Suez. A l'été dernier, il était déjà mandaté par Lactalis pour le rachat de la marque Leerdammer à son concurrent Bel.
Une cible trop grosse pour Lactalis ?
L'acquisition de tout ou partie de Danone serait bien entendu d'une tout autre dimension. L'entreprise vaut plus de 30 milliards d'euros en bourse. En y ajoutant environ 15 milliards de dette, le montant grimpe à plus de 50 milliards. Impossible donc pour le groupe mayennais, qui réalisait environ 21 milliards d'euros de chiffre d'affaires l'an dernier contre 24 milliards pour Danone, d'avaler un tel morceau sans recourir à des montages financiers compliqués. Le consortium est possible pour dépecer la bête à plusieurs. D'autres montages plus savants existent. Dans tous les cas, il faudrait se délester de pans entiers du propriétaire de Danette et Activia. Comme l'eau, qui pèse 18 % de l'activité, ou la nutrition médicale, dont la marge opérationnelle avoisine les 25 %. L'opération est donc loin d'aboutir.
Une chose est sûre, Danone a été fragilisé par son changement récent de direction après le limogeage de l'ancien PDG Emmanuel Faber, puis l'arrivée du nouveau président Gilles Schnepp et de son directeur général, Antoine de Saint-Affrique. La stratégie de retour à la croissance présentée le 8 mars aux investisseurs a redonné de l'espoir à certains analystes, quand d'autres reprochent l'absence de cap clair. Le conseil d'administration est en phase de renouvellement et le cours de bourse reste bas, autour de 50-52 €.
Pour Lactalis, les avantages d'un rapprochement seraient nombreux. Le géant du fromage et du lait est entré depuis longtemps dans la nutrition infantile. Au moment de racheter Numico en 2007, Danone avait déjà vendu une partie de ses actifs à Lactalis. En Chine, les positions de Danone sur ce secteur sont intéressantes. Le groupe est aussi bien installé en Amérique latine depuis l'acquisition de l'italien Parmalat en 2011. Mais Emmanuel Besnier rêve de conquérir plus avant le marché américain, où il a déjà racheté Stonyfield à Danone en 2017. Enfin, Lactalis veut se diversifier dans le végétal, à l'image de Bel et de Danone, qui n'a pas hésité à mettre 11 milliards d'euros sur la table en 2016 pour s'offrir les laits végétaux de WhiteWave Foods.
Les conseils de Danone sur le qui-vive
Du côté de Danone, le nouveau directeur général enchaîne, lui aussi, les déjeuners avec les banquiers. Selon nos informations, Matthieu Pigasse, le patron de la branche française de Centerview, est venu donner un coup de main à Antoine de Saint-Affrique pour l'élaboration de sa stratégie exposée le 8 mars dernier. Cet ancien de Lazare a donc contribué à définir le périmètre d'actifs concernés par les cessions annoncées à hauteur de 10 % du chiffre d'affaires. Le banquier Philippe Villin, qui a largement œuvré aux côtés de Gilles Schnepp pour renverser Emmanuel Faber, déjeunait avec Antoine de Saint-Affrique au Bristol le 14 avril.
Mais c'est principalement Olivier Pécoux, directeur général de Rothschild à Paris, qui est à la manœuvre. Lui et Antoine Saint-Affrique ont eu tout le temps d'approfondir leurs relations en siégeant ensemble pendant dix ans au conseil d'Essilor. Olivier Pécoux vient même de prendre l'un des trois fils de son ami en stage de six mois chez Rothschild, au sein du département analyse en fusion-acquisition. Depuis le changement de direction chez Danone mi-septembre, la banque est devenue la principale conseillère du groupe. Un de ses associés, François Wat, a, lui aussi, participé à l'élaboration du Capital Market Day du 8 mars. Les banquiers de Rothschild vont-ils prendre les devants pour proposer des actifs, voire des divisions entières à céder ? Ou se retrouveront-ils, comme Suez l'an dernier, à résister face aux assauts de Lactalis et de Perella Weinberg?
Bruno Le Maire ou son successeur à Bercy ne pourraient sans doute pas cette fois venir en aide à Danone si la transaction restait majoritairement française. D'autant que David Azéma est en lien direct avec Emmanuel Macron et son secrétaire général, Alexis Kohler, dont il est un proche. Reste à passer sereinement la présidentielle. Mais l'été pourrait être chaud.
>>> Up
* Akastor Raised to Buy at ABG; PT 12 kroner
* Avis Budget Raised to Equal-Weight at Barclays; PT $245
* DNB Bank Raised to Equal-Weight at Morgan Stanley; PT 225 kroner
* Intercos Raised to Buy at Jefferies; PT 16 euros
* Leonardo Raised to Overweight at Morgan Stanley; PT 11.80 euros
* Leonardo Raised to Overweight at Morgan Stanley; PT 11.80 euros
* Randstad Raised to Neutral at JPMorgan; PT 55 euros
* Roche Raised to Hold at Intron Health; PT 350 Swiss francs
* SEB Raised to Buy at Kepler Cheuvreux; PT 134 kronor (+)
* SSE PT Raised to 2,200 pence from 1,900 pence at Morgan Stanley
* XXL Raised to Buy at Arctic Securities; PT 13 kroner (+)
>>> Down
>>> Down
* Dassault Aviation Cut to Equal-Weight at Morgan Stanley
* Leifheit Cut to Hold at Berenberg; PT 26.20 euros
* Netflix Cut to Neutral at Piper Sandler; PT $293
* Netflix Cut to Sell at Pivotal; PT $235
* Netflix Cut to Neutral at Atlantic Equities; PT $280 (+)
* Netflix Cut to Neutral at KGI Securities; PT $350 (+)
* Novo Nordisk Cut to Hold at Intron Health
* PRS REIT Cut to Hold at Berenberg; PT 115 pence
* Rheinmetall Cut to Equal-Weight at Morgan Stanley; PT 211 euros
* Synthomer Cut to Hold at HSBC; PT 310 pence
* Thales Cut to Equal-Weight at Morgan Stanley; PT 110 euros
>>> Initiation
* Thales Cut to Equal-Weight at Morgan Stanley; PT 110 euros
>>> Initiation
* Amazon Assumed Buy at Citi; PT $4,100
* Cint Rated New Hold at Handelsbanken
* DoorDash Rated New Buy at Citi; PT $155
* Expedia Assumed Neutral at Citi; PT $200
* Forterra Rated New Buy at Investec; PT 271 pence (+)
* Ibstock Rated New Hold at Investec; PT 180 pence (+)
* Marshalls Rated New Hold at Investec; PT 685 pence
* Meta Platforms Assumed Buy at Citi; PT $300
* Snap Assumed Buy at Citi; PT $50
* Vitesco Rated New Neutral at Oddo BHF; PT 40 euros
* Xilam Animation Rated New Outperform at Oddo BHF; PT 53 euros
>>> Call
* Xilam Animation Rated New Outperform at Oddo BHF; PT 53 euros
>>> Call
* ASML Demand Still Strong, ‘Fast Shipments’ Impacting, Cowen Says (+)
* Berenberg Strategists Back Active Hedging Amid Macro Risks (+)
* Credit Suisse Update Is a ‘Clear Disappointment,’ Vontobel Says (+)
* Danone 1Q Sales ‘Meaningfully’ Beat Expectations, Jefferies Says (+)
* Deutsche Boerse, Euronext, London Stock Exchange PTs Upped at MS (+)
* Heineken’s Strong 1Q Results Were Widely Expected, MS Says (+)
* JPMorgan’s Kolanovic Says Time Is Right to Buy Growth and Value
* JPMorgan’s Kolanovic Says Time Is Right to Buy Growth and Value
* L’Oreal’s 1Q Beat May Be Not Enough to Move the Shares, RBC Says
* Lanxess Earnings Pre-Release a ‘Small Positive,’ Jefferies Says (+)
* Leonardo Has Most Scope to Outperform in Defense: Morgan Stanley (+)
* Naked Wines Reassures With Its Trading Update, Jefferies Says (+)
* Severfield Update Brings Positive Order-Book Surprise: Jefferies (+)
* Teleperformance Beat on Solid Growth, Covid Boost: Deutsche Bank
Oaktree-backed 17Capital raises almost $3bn for first credit fund
Vehicle will lend to private equity groups that want to boost returns with extra leverage
17Capital, a financier to buyout groups, has raised $2.9bn for its first credit fund, which will lend money to private equity funds that want to juice returns by using more leverage to strike deals.
The London-based investment firm, backed by Oaktree Capital, is already a pioneer of lending money to private equity funds by allowing them to borrow against the value of their portfolio companies. Such arrangements allow funds to acquire assets without having to tap their investors for new capital.
“We are lending to private equity funds and helping them make additional investments in existing companies, or to buy out co-investors, helping them create more value for their investors,” said Pierre-Antoine de Selancy, managing partner at 17Capital, in an interview.
The firm’s debut credit fund, one of the largest in the private debt space, is targeting a yield of as much as 9 per cent and comes as cash pours into the buyout industry via increasingly complex structures.
Founded in 2009, 17Capital has pushed the envelope to find more exotic ways of financing the private equity industry. It is, for instance, a provider of so-called net asset value lending, where a private equity fund will finance up to 20 per cent of its NAV using debt.
This borrowed cash is then used by a portfolio company to help pay for an acquisition, potentially increasing the fund’s overall value in future years, albeit by taking on greater risk.
17Capital typically lends to private equity funds with between $1bn and $5bn in assets under management, but is increasingly targeting larger players.
In March, Oaktree Capital Management, the distressed debt investor founded and co-chaired by Howard Marks, acquired a controlling interest in 17Capital for an undisclosed price. The deal was intended to expand the business in North America and help it finance larger deals as buyout firms raise ever-bigger funds.
Before raising its credit fund, 17Capital had offered financing by making preferred equity investments in private equity funds, deploying over $7bn in 78 such deals since its founding.
Inclusive of preferred equity financing and its newly formed credit fund, 17Capital is willing to provide funding of about 50 per cent of a fund’s net asset value, said De Selancy.
He characterised the financing arrangements as an appropriate way to bolster investment returns and manage cash more efficiently in a low-interest rate world.
“Leverage is extremely efficient if it is used properly,” De Selancy said. “If it is used properly, carefully and with good purpose, it is a really good thing.”
In recent years, private equity firms have been able to raise money in a plethora of ways, such as by selling minority stakes in the holding company to other funds that want a slice of fee income. Buyout firms have also recently sold billions in fixed-rate debt to insurers.
Some private equity funds also have their own credit facilities, called “subscription lines”, which give them the ability to invest and strike deals without immediately drawing capital from their limited partners.