Gapping down
In reaction to earnings/guidance:
- URBN -11.5%, BBY -10.4%, ZM -9.4%, ANF -6%, A -5.5%, AMWD -5.1%, DLTR -1.9%, BKH -1.4%, BURL -1.1%, AEO -0.8%
Other news:
- MAG -4.2% (announces $40 mln bought deal financing)
- PTC -3.4% (stock offering)
- GOEV -2.1% (AFV Partners discloses 5.2% stake)
- GLPG -1.9% (completes patient enrollment for MANGROVE Phase 2 trial)
- VRT -1.8% (stock offering)
- ARRY -0.9% (CEO to retire)
Analyst comments:
- GXO -3.3% (downgraded to Hold from Buy at Loop Capital)
- EBAY -1.1% (downgraded to Neutral from Buy at Guggenheim)
Gapping up
In reaction to earnings/guidance:
- GENI +13.4%, TUYA +8.7%, TITN +4.7%, DY +3.6%, ARWR +3.1%, XPEV +3%, SJM +2.8%, DKS +1.6%, J +1%
Other news:
- AADI +27.5% (FDA approval of its first product FYARRO for patients with locally advanced unresectable or metastatic malignant perivascular epithelioid cell tumor)
- SITM +5.9% (to join S&P MidCap 400)
- EBS +4.5% (moving to the S&P SmallCap 600, leaving the S&P MidCap 400)
- ARWR +3.1% (ARWR enters into license agreement with GSK under which GSK will develop/commercialize ARO-HSD; Arrowhead to receive upfront payment of $120 mln; ARWR also report earnings)
- AVB +1.6% (names new CEO)
- UFPI +0.9% (acquires controlling interest in Ficus Pax for $13.5 mln)
- INDI +0.9% (stock offering)
- HRL +0.8% (increases dividend)
Analyst comments:
- BGRY +7.5% (upgraded to Outperform from Neutral at Credit Suisse)
- BMBL +3.8% (upgraded to Outperform from In-line at Evercore ISI)
- EPAM +1.8% (upgraded to Buy from Hold at VTB Capital)
- ABBV +0.9% (upgraded to Buy from Hold at Societe Generale)
Early premarket gappers
- Gapping up:
- AADI +45%, SITM +5.5%, ARWR +4.6%, EBS +4.3%, XPEV +4.2%, DY +3%, TUYA +1.9%, AVB +1.6%, UFPI +0.9%, WSC +0.6%
- Gapping down:
- URBN -12.5%, ZM -8.1%, GOEV -3.9%, MAG -3.3%, ARRY -3%, A -3%, INDI -1.7%, GLPG -1.4%, BKH -1.4%, VRT -0.9%, PTC -0.8%, DXCM -0.7%, PFE -0.5%, KEYS -0.5%
Telecom Italia: KKR calling
Mario Draghi holds the keys to Europe’s largest-ever leveraged buyout.
Italy’s prime minister can call upon so-called golden power rules to block KKR’s proposed €33bn buyout offer for Telecom Italia (TIM). The deal would be the largest leveraged buyout since 2007 when KKR, TPG and Goldman Sachs took Texas power company TXU private for $48bn.
TIM was a direct beneficiary of the European Central Bank’s largesse under Draghi’s “whatever it takes” gambit. After Draghi’s measures, struggling companies like TIM were able to muddle through by raising cheap debt.
The central bank bought the company’s bonds under its quantitative easing programme. Since the bonds have no change of control protection, there is some irony that current bondholders, the ECB included, would stand to be clobbered if Draghi signed off on a buyout for which KKR raised new secured debt.
KKR’s offer is the latest twist in the turbulent corporate history of the struggling telecoms group, which involves aborted takeover attempts by Telefónica and AT&T and a battle for control between Vivendi and Elliott Management.
TIM boss Luigi Gubitosi has been under pressure, with two profit warnings and a falling share price. Vivendi, which owns a 24 per cent stake, had been agitating for his removal, and a board meeting had been planned for November 26 to discuss a potential management overhaul.
Could a deal with KKR, which already holds a 37.5 per cent stake in TIM’s “last mile” network, be a last-ditch rabbit-in-a-hat solution for Gubitosi? “I don’t think KKR is in the business of playing the rabbit,” one adviser following the situation told DD.
Any deal involving the knotty puzzle that is TIM would be complicated to pull off, Lex notes.
Still, it is one of several reminders that the era of the private equity mega-deal is back.
This month alone there has been Hellman & Friedman and Bain Capital’s $17bn acquisition of healthcare tech company Athenahealth and Advent International’s talks with antivirus software company McAfee over a $14bn deal.
The private equity industry doesn’t like to be reminded of the TXU deal. By 2014, the company had filed for bankruptcy, in a disaster that seemed to symbolise the worst excesses of the buyouts boom.
Investment banks net more than $320m from sale of WarnerMedia to Discovery
Many of the same advisers collected hefty fees when AT&T bought company five years ago
Investment banks netted more than $320m from the sale of AT&T’s WarnerMedia to Discovery, just five years after many of the same advisers made hefty fees from the sale of the media group to the US telecoms company.
AT&T agreed to spin off and merge WarnerMedia with rival Discovery earlier this year at a significantly lower price than it paid to acquire the entertainment group in 2016.
New York-based boutique bank Allen & Co received $75m for its services to Discovery while bankers at JPMorgan earned $15m for advisory work and a further $140m for financing services, according to Discovery’s proxy statement.
WarnerMedia’s advisers included Goldman Sachs, which received $47.8m, and merchant bank LionTree, which earned $43.1m, according to Refinitiv estimates.
Five years earlier, bankers including those at Allen & Co and JPMorgan made $234m after AT&T agreed to buy WarnerMedia — then called TimeWarner — for $85bn, according to Refinitiv.
Allen & Co, a publicity shy firm that has no website, received $50m for advising WarnerMedia on the sale to AT&T while Citigroup and Morgan Stanley netted $50m and $40m, respectively. JPMorgan, Perella Weinberg Partners and Bank of America each made $31.2m from advisory services to AT&T.
AT&T’s senior executives received $9m in bonuses for the acquisition that has now been unpicked.
Wall Street banks have this year enjoyed record fee revenues of above $100bn from advising on mergers and acquisitions thanks to a boom in dealmaking, which surpassed the $5tn mark for the first time.
Media dealmaking has been one of the biggest drivers of the boom as companies race to compete with streaming services such as Netflix. Earlier this year, Amazon bought MGM, the film studio behind James Bond, for $8.5bn.
AT&T’s deal with Discovery, which creates a company with an enterprise value of $132bn, highlights the speed with which traditional media groups are rushing to compete in the streaming wars. The fees generated by investment banks underscore the lucrative rewards on offer for putting together and pulling apart deals for clients.
The transaction, spearheaded by AT&T’s chief John Stankey and Discovery’s David Zaslav, will combine Discovery’s catalogues, which range from nature to history, with prized media assets including the Warner Bros studios, the HBO network behind TV series Succession, and cable television channels including CNN.
JPMorgan, Goldman Sachs and LionTree declined to comment. Allen & Co has no media contact details.
More asset managers confirm interest in launching crypto products
Fidelity, UBS and State Street are the latest to say they are scrutinising the crypto fund space
Fidelity, UBS and State Street Global Advisors have confirmed that, like rivals BlackRock and Invesco, they are looking into launching products that offer exposure to cryptocurrencies, such as bitcoin.
Assets in European exchange traded products and mutual funds with cryptocurrency exposure have topped €10.5bn, according to Morningstar data, showing the potential appeal of these products for asset managers.
XBT, part of CoinShares, is the largest provider in Europe, with assets of €5.4bn across eight products domiciled in Sweden and Jersey, followed by Swiss group 21Shares, which manages €2.1bn across its range.
Matteo Andreetto, head of SSGA’s SPDR exchange traded fund business for Europe, the Middle East and Africa, said: “Clearly, we are looking at the space and evaluating the way the space is evolving.
“Clients are not only asking about cryptocurrencies but also specifically SPDR crypto products. They like the fact we are a robust, safe pair of hands.”
Fidelity said it was “keeping close to the evolution of cryptocurrencies [ . . . ] as part of a wider exploration of the potential for digital assets, and the distributed ledger technology that sits behind them”.
“As you would expect, Fidelity International is exploring the potential of this technology for the benefit of clients,” Fidelity added.
Clemens Reuter, global head of ETFs at UBS Asset Management, said: “[Cryptocurrency is] an area everyone needs to look at the moment.” However, he added: “As of today, we have not decided to launch anything.”
In May, Invesco told Ignites Europe that it was “investigating” digital asset exposure for ETPs.
Jose Garcia-Zarate, associate director, passive strategies at Morningstar, said he expected more cryptocurrency products to be launched as part of the “gimmicky” trend.
“ETFs lend themselves to these sorts of exposures,” he added.
However, the asset managers also pointed to the hurdles involved in entering the cryptocurrency space.
Reuter noted that investing in cryptocurrencies was not yet permitted for Ucits funds.
Andreetto said SSGA would not launch an ETF until the group was “sure” it could reach the “very high bar” to sit alongside its other ETFs and “have all the features of [a] SPDR product”.
“Moving into an ETP would be a deviation for us,” he adds.
European ETPs and funds giving cryptocurrency exposure generated an average return of 461.7 per cent over the 12 months to the end of October. They have achieved an annualised return of 116.3 per cent over three years, Morningstar data show.
But Garcia-Zarate said investors should be “careful what they wish for” with cryptocurrency products.
Investors “need very in-depth due diligence” to understand how cryptocurrencies and related futures markets work, he said.
Binance in talks with sovereign wealth funds about investments
Cryptocurrency exchange hopes ties would improve ‘perception and relationships’ with governments
Binance is in talks with sovereign wealth funds about them taking a stake in the world’s largest cryptocurrency exchange, as it seeks to buttress relationships with governments and offset aggressive regulators, according to its chief executive.
The exchange has faced mounting pressure from regulators this year and believes investments from sovereign wealth funds would help improve its “perception and relationships” with various governments, Changpeng Zhao told the Financial Times in an interview.
“But it may also tie us to specific countries . . . which we want to be slightly careful with,” he added.
Zhao, who is known as “CZ” and also founded Binance, said its global entity was in preliminary discussions to raise capital from several sovereign wealth funds in addition to the capital raising for its US affiliate ahead of a public listing. He declined to say which funds the company was in discussions with. “The ticket size involved will not be small . . . it won’t be a short process,” he added.
Crypto exchanges have seen their valuations soar in recent months, tracking the growing value of bitcoin and other cryptocurrencies. Coinbase became the only publicly listed cryptocurrency exchange earlier this year at a valuation of $76bn, while FTX recently achieved a valuation of $25bn in its last funding round, up from $1bn in February 2020.
Zhao is the biggest shareholder in Binance, which is profitable. Its Singapore business has been backed by Vertex Ventures, the venture capital arm of the state-backed investment company Temasek.
The crypto entrepreneur said last week at the Bloomberg New Economy Forum that the platform was recording daily transaction volumes of $170bn, compared with $10bn-$30bn two years ago. Zhao said the revenue run rate was “in the billions”.
The attempt to strengthen its capital structure comes as Binance steps up the hunt for a new global headquarters in cities including Singapore and Dubai.
The company offers crypto trading to consumers around the world but regulators have criticised some of its high-risk financial products, including derivatives trading.
Until recently, Binance was secretive with the location of its founder and insisted it had no fixed headquarters. The company was founded in China but pulled out of the country in 2017, after crypto exchanges were banned there, and established a number of offices in other states.
Binance says it has no office or operations in mainland China and only a “small number” of employees remaining working on blockchain technology and other “non-platform related” tasks. It claims no data otherwise resides in China.
China’s ban on crypto mining and transactions exemplifies the government’s approach to block outside technology in favour of delivering a homegrown version, Zhao said. Beijing is widely promoting its own central bank digital currency.
That method has worked in the internet sector with companies including Alibaba and Tencent but Zhao said it “may be different” with the freewheeling crypto industry.
The crypto clampdown in China has come alongside increased regulatory scrutiny this year from regulators in Europe, Asia and the UK.
Binance last week published a letter of fundamental rights for crypto users. The manifesto-like bill tackled a range of issues including user privacy and also called for greater regulation.
There is a perception that exchanges are “being crazy” as a result of not having traditional licences, Zhao said. “I’m a very calm guy. I’m not a crazy guy. So we actually want regulation to be more clear in this space.”
Even so, regulators including the UK’s Financial Conduct Authority say they are unable to properly supervise the business as Binance has declined to provide basic information such as trading names and functions for its global entities. Big banks, such as Barclays, have even stopped some customers from transferring funds to Binance.
Zhao said he was not worried about illegal activity on Binance’s platform because the company was “probably better than banks” for having checks in place, such as know your customer and anti-money laundering technology, given the exchange has been under scrutiny.
Binance has increasingly gravitated towards governments where the company can communicate “more directly” with regulators, such as Singapore. Zhao added he had also spent the past two months meeting regulators in cities including Dubai, Paris, Qatar and Bahrain.
Most countries do not have clear guidelines for products including gamified tokens and non-fungible tokens, he said, so Binance was waiting for more clarity before “committing to a single jurisdiction”.
U.S. futures fell and Asian stocks were mixed Tuesday amid a jump in Treasury yields and the dollar as Jerome Powell’s renomination to head the Federal Reserve fueled bets on a quicker reduction of monetary stimulus.
Nasdaq 100 contracts underperformed after a Wall Street technology selloff hurt U.S. shares. European contracts fell as the region’s Covid flareup saps sentiment. In Asia, a Hong Kong gauge of Chinese tech stocks dropped on speculation over stiffer regulations.
Powell said the Fed would use its tools to support the U.S. economy and labor market and prevent higher inflation from becoming entrenched. Treasuries slid, with markets pricing in a full quarter-point rate hike into the June Fed meeting and seeing a good chance of a second by September and a third by December.
The dollar was around the highest since September 2020, while the yen fell past 115 per dollar for the first time since 2017. Oil retreated ahead of an expected announcement by the U.S. on a coordinated release of reserves. Bullion pared a slump.
Macro :
- Biden Says Powell Nomination Will Keep Fed Stable, Independent
Macro :
- Biden Says Powell Nomination Will Keep Fed Stable, Independent
- BofA Is Bearish on Markets and Sees ‘Rates Shock’ Coming in 2022
- Goldman Says Buying The Dip Might Get Riskier Later in The Year
Keep an eye on :
Keep an eye on :
- AGS BB : Ageas Shares Reverse Earlier Decline After Betaville Mention
- AAPL US : Italy Competition Regulator Fines Apple, Amazon $230 Million
- ASRNL NA : ASR to Give Sustainable Farmers 5% to 10% Discount on Rent
- BOY LN : Bodycote Sees FY Group Rev up to GBP10M Lower Than Previous View
- BRBY LN : Burberry Won’t Renew Lease at Hong Kong Store, HKET Says
- BYG LN : Big Yellow Group 1H Revenue GBP81.8M Vs. GBP65.8M Y/y
- CFEB BB : CFE Raises FY Profit View, Sees Return to Pre-Covid Level
- CLN SW : Clariant CEO Sees Price Pressure on Raw-Materials Easing
- CPG LN : Compass FY Adjusted Pretax Profit Beats Estimates
- COREA SS : Corem, ALM Equity Plan to Create, List Rental Housing Company
- DAI GY : Inflation Shock Boosts Allure of Dividends From Daimler, BMW
- DHER GY : Delivery Hero Holders Offer 407,000 Shares via UniCredit Bank
- EOAN GY : Germany’s E.On Prepares $30 Billion Spending Plan to 2026
- INTER NA : Intertrust Says Received Multiple Proposals Up to EU22 Per Share
- NESTE FH : Neste Starts Construction in Green Hydrogen Project at Rotterdam
- O5G GY : CPI Property Says Apollo, Founder Subscribe for New Shares
- O5G GY : CPI Property Says Apollo, Founder Subscribe for New Shares
- ORA FP : Orange Belgium in Talks for Voo at EU1.8b Value: M&A Snapshot
- PIC BB : Picanol Boosts FY Adjusted Ebitda Forecast
- PETS LN : Pets At Home 1H Adjusted Pretax Profit GBP70.2M Vs. GBP39.6M Y/y
- PRSM LN : Bali Bidco Received Letter of Intent for 17.5M Blue Prism Shares
- RIV LN : River and Mercantile Gets Approaches from Premier Miton, AssetCo
- SVT LN : Severn Trent 1H Interim Dividend Per Share 40.86p Vs. 40.63p Y/y
- SOBI SS : Agnafit Bidco Extends Sobi Bid Acceptance Period A Final Time
- SYAB GY : Synlab Holders Offer About 10m Shares: Terms
- TNET BB : Telenet Not Withheld for Final Talks for Acquisition of Voo
- TESB BB : Tessenderlo Raises Outlook, Sees 2021 Adj. EBITDA ~10% higher
- TKA GY : Thyssenkrupp Holder Cevian Capital Offers ~43m Shares: Terms
- TIT IM : Italy May Boost State Lender Role at Telecom Italia Amid KKR Bid
- TIT IM : Vivendi Says KKR’s Bid for Telecom Italia Is Too Low
- TTE FP : Total Says Libya Has Approved Acquisition of Hess’s Waha Stake
- TRI FP : Trigano FY Current Operating Income Beats Estimates
- VLA FP : Valneva Shares Drop as Much as 18% in Paris
- VCP LN : Victoria 1H Adjusted Pretax Profit GBP41.1M Vs. GBP13.7M Y/y
- VIMIAN SS : Vimian Enters Partnership With Angany to Develop Vaccines
- VIV FP : Vivendi Says KKR’s Bid for Telecom Italia Is Too Low
- XIOR BB : Xior to Spend ~EU55m on Student Residence Project in Amsterdam
>>> Up
* Aedifica Raised to Buy at SocGen; PT 149 euros
* Aker BP Raised to Neutral at SpareBank; PT 305 kroner
* Aker BP Raised to Neutral at SpareBank; PT 305 kroner
* Aroundtown Raised to Buy at SocGen; PT 7.70 euros
* Barratt Raised to Buy at Berenberg; PT 810 pence
* Big Yellow Group Raised to Buy at Liberum; PT 1,720 pence
* Cancom PT Raised to 73 euros from 58 euros at Deutsche Bank
* Carmila Raised to Hold at SocGen; PT 14.20 euros
* Cofinimmo Raised to Buy at SocGen; PT 167.50 euros
* Gecina Raised to Hold at SocGen; PT 131.50 euros
* ICADE Raised to Buy at SocGen
* Inmobiliaria Colonial Raised to Buy at SocGen; PT 10.10 euros
* Klepierre Raised to Hold at SocGen; PT 20.40 euros
* Lucas Bols Raised to Buy at Kepler Cheuvreux; PT 14 euros
>>> Down
* Lundin Energy Raised to Buy at SpareBank; PT 370 kronor
* Merlin Properties Raised to Buy at SocGen; PT 11.90 euros
* Vonage Cut to Market Perform at William Blair
* Vonage Cut to Market Perform at Northland; PT $21
* Vonage Cut to Hold at Craig-Hallum; PT $21
>>> Down
* CNP Assurances Cut to Hold at Berenberg; PT 21.90 euros
* Equinor Cut to Sell at SpareBank; PT 220 kroner
* Equinor Cut to Sell at SpareBank; PT 220 kroner
* Grand City Properties Cut to Hold at SocGen; PT 23.80 euros
* Hammerson Cut to Sell at SocGen; PT 27.50 pence
* Hochschild Mining Cut to Hold at Peel Hunt; PT 112 pence
* Hochschild Mining Cut to Hold at Peel Hunt; PT 112 pence
* Illimity Cut to Hold at Kepler Cheuvreux; PT 13.60 euros
* Randstad Cut to Underperform at Exane; PT 58 euros
* Shurgard Cut to Hold at SocGen; PT 60 euros
>>> Initiation
>>> Initiation
* D'Ieteren Rated New Buy at Kepler Cheuvreux; PT 193 euros
* HomeToGo Rated New Buy at Deutsche Bank; PT 11.50 euros
* HomeToGo Rated New Buy at Deutsche Bank; PT 11.50 euros
* Meggitt Reinstated Neutral at JPMorgan; PT 800 pence
>>> Call
>>> Call
* Big Yellow Group 1H a Beat; Jefferies Cuts Rating on Valuation
* CRH Guidance Implies Earnings Estimate Upgrades, Goodbody Says
* CRH Guidance Implies Earnings Estimate Upgrades, Goodbody Says
* Julius Baer Cut at Morgan Stanley With EPS Upside Now Limited
* U.K. Housebuilders Cheap and Ready for Outperformance: Berenberg
* Telefonica Cut at Berenberg on Spain Unit Margin Problems
* Tomra Growth Priced In, New Equal-Weight at Morgan Stanley