FT : Takeover contest puts spotlight on Singapore

Takeover contest puts spotlight on Singapore
Two bids for property conglomerate are separated in value by 0.001 of a local dollar

Singapore might be reluctant to say it openly, but the city-state sees a huge opportunity to try to seize the crown of leading international financial centre in Asia with rival Hong Kong suffering from political tensions and pandemic restrictions.

Much is going to plan. It has opened its borders to tourists and business travellers from countries including the UK, US, Canada and many European nations. Its regulators have created structures aimed at luring bankers and asset managers from Hong Kong and set rules that could allow the city to become a global cryptocurrency centre.

But a missing piece is for Singapore to show that its own equity market can be a vibrant arena for dealmaking. An opportunity to take the temperature on this has now arrived with a takeover contest that may ultimately be decided by two bids separated in value by 0.001 of a Singapore dollar. That is a matter of concern to some small shareholders.

The interest centres on Singapore Press Holdings, a locally listed media and property conglomerate that controls prized media assets, such as the Straits Times, and trophy real estate assets.

In May, SPH said it would separate its cash-burning media business into a not-for-profit company, but would leave its portfolio of non-media assets intact. That attracted the attention of Keppel, a Singapore conglomerate in which state investment company Temasek holds a 20 per cent stake.

Keppel made an offer to purchase and privatise the non-media business of SPH, including the juicy property holdings. The SPH board, which said that it had considered other offers, recommended Keppel’s cash-and-share offer as the best option. Shareholders approved the plan to separate the media business in September and Keppel’s bid was seen as a done deal. The entire thing, say some shareholders, has a classically Singapore feel to it: an “arranged marriage”, as one put it, organised under the eye of traditional and protective parents.

From the start, though, Keppel’s bid rankled with some minority shareholders, who saw it as undervaluing the assets. The premium offered by Keppel looked stingy, one minority SPH shareholder told the Financial Times. Some shareholders believe that if the media restructuring is taken into account, the offer remains below SPH’s net asset value per share of $2.18 at August 31. The value of its investment portfolio has increased, especially as the Covid-19 situation has improved.

Swirling in the deal’s background is the persistent Singapore question of corporate cosiness — an issue directly raised by a journalist at a briefing held shortly after the board recommended the Keppel bid. The role played by Lee Boon Yang, who is both SPH chair and Keppel’s former non-executive chair until April, was queried. The parties said Lee “did not play any part in the transaction”. 

Despite frustration expressed in private to the FT about the deal, the volume of audible backlash has been small. The corporate players involved, said some shareholders, were simply too core to the Singapore establishment for a big public fuss to be worth making.

Now the situation has produced a twist: an all-cash counter offer that came in 0.001 cents higher than the original cash-plus-share bid from Keppel. The second offer came from Cuscaden Peak, a consortium comprising a unit of billionaire hotelier Ong Beng Seng’s Hotel Properties and two Temasek-linked entities, CLA and Mapletree.

SPH shareholders remain concerned that both offers undervalue the company, the Securities Investors Association (Singapore) said this week.

Other parties are still free to make a better offer if they are interested. But SPH shareholders will hardly benefit from a “battle” that has, so far, been fought with the slenderest of differences in offer terms by two entities with shared links to a large investor.

SPH said it was engaging with both Keppel and Cuscaden “as part of its fiduciary duties to maximise value for all shareholders”. “Should an unsolicited superior proposal arise, the board will evaluate its merits,” it said. Keppel and Cuscaden declined to comment.

The clash may not yet be over — Keppel has until November 15 to respond with an “improved proposal”. But the situation raises an important question. Would shareholders have received a higher offer if it was all taking place in another centre of more active M&A animal spirits?

FT : Activist fund tries to scupper Goldman Sachs, Nippo and Eneos deal

Activist fund tries to scupper Goldman Sachs, Nippo and Eneos deal
Hedge fund Oasis says Japanese buyout puts minority shareholders at severe disadvantage

One of Asia’s most aggressive activist funds has resorted to a high-profile online campaign to disrupt a buyout deal involving Goldman Sachs, Japan’s biggest energy group and an 87-year-old construction company.

Oasis, a Hong Kong-based hedge fund, has launched a website which lists a personal email address and other contact details of the head of business planning at Nippo Corporation, encouraging would-be bidders to make a takeover offer for the construction group.

The fund is targeting a deal that was initially presented by the companies involved as a mark of corporate governance progress in Japan. Hundreds of listed businesses in the country are subsidiaries of larger groups that continue to hold substantial or controlling stakes in the entities.

Eneos, a Japanese energy group, holds a 57 per cent stake in construction subsidiary Nippo, which it said it was buying-in to and delisting. Eneos has opted for a structure in the deal that engages the merchant banking unit of Goldman Sachs, a decision that has raised concerns among minority shareholders that they are being put at a disadvantage.

The structure leaves the US investment bank with the overwhelming “economic interest” in the construction company, according to investors who have complained directly to Nippo.

Oasis said Nippo was open to bids and that approaches to Eneos would not be treated as hostile, citing assurances last week from both companies.

Nippo declined to comment, saying it would make its stance clear once a regulatory review of its deal with Goldman Sachs was complete.

Eneos did not respond to a request for comment. Goldman Sachs declined to comment.

Activist investors have long criticised these structures as inherently unfair to minority shareholders and prone to poor governance by the boards of both parent and subsidiary companies. Some groups accused of poor corporate behaviour, such as conglomerate Hitachi, have responded by buying-in or selling-off listed subsidiaries.

Under the terms of the tender offer, which proposes the creation of two classes of shares, a special purpose vehicle established by Goldman Sachs will hold 49.9 per cent of voting shares and 80.1 per cent of non-voting stock. Oasis has described the combined 65 per cent interest as “financial arbitrage” in favour of Goldman Sachs.

Oasis said last month that the deal was “taking advantage of the ease by which a majority shareholder can force out minority shareholders at a cheap price to relist later, capturing the disparity between the price paid and the real price of the business and assets”.

At least four big minority shareholders in addition to Oasis have said the offer of ¥4,000 ($35) per share for Nippo’s minority shareholders significantly undervalued the company, and a fair price should be more than ¥5,600 per share.

Japan Catalyst, an activist fund recently set up by online brokerage Monex, has also questioned why negotiations had been carried out exclusively with Goldman Sachs.

“It is not an appropriate decision from the perspective of protecting the interests of minority shareholders to expect a counterproposal after the announcement of the deal in the Japanese market, where the implementation of counterproposals is far from common,” the fund said in a letter to Nippo’s board in late September.

FT : Euronext breaks LSE deal to move clearing functions to Italy

Euronext breaks LSE deal to move clearing functions to Italy
Exchanges group activates break clause 6 years early as it tilts operations away from London

Euronext is breaking a deal with a subsidiary of the London Stock Exchange Group to shift clearing functions to Italy, in a move that further reduces the role of UK-based institutions in pivotal areas of Europe’s financial markets.

Euronext, the biggest stock markets operator in the EU, said on Monday it was giving notice to LCH in Paris, which is owned by the LSE, to terminate a 10-year deal early and begin moving its equity, derivatives and commodities business to Italy.

Its move has underscored the extent to which Euronext has leveraged its €4.4bn acquisition of Borsa Italiana from the LSE earlier this year to tilt its operations to the EU and away from London.

Euronext announced plans in April to move its trading servers from an Essex data centre owned by ICE Futures Europe to a new site at Bergamo in Italy. The first moves will begin from the middle of next year.

The LCH and Euronext deal on clearing was due to expire in 2027, but the purchase of Borsa Italiana included the CC&G clearing house in Milan, which meant that Euronext no longer had to rely on services from its rival.

Stéphane Boujnah, chief executive of Euronext, said the “transforming” deal had been key. “When you get bigger it allows you [to] do things in a different manner and to expand your business. Our ambitions on clearing and the data centre are a direct consequence of us now owning this type of assets,” he said.

A clearing house stands between two parties in financial transactions, helping to avoid fallout across markets should an entity default. It is a back-office function dominated by London. But it has become highly politicised in Europe after the UK voted to leave the EU.

Authorities see regulatory control over clearing houses as a crucial element in controlling systemic risk for the financial system. Euronext had tried to buy the French unit, valued at €510m, in 2017 when the LSE was looking to merge with Deutsche Börse but the deal fell through when the merger collapsed. Market participants say the continent is not ready to host clearing itself.

The derivatives business would move in 2024 after the notice period expired at the end of 2023, Euronext said. The cash equities business could serve notice right away, Boujnah said. CC&G would be folded into a bigger unit called Euronext Clearing, the exchange added. The LSE said the cash equities business was subject to a 12-month notice period.

“The total potential impact is less than 1 per cent of total group revenue and is not at risk for a number of years,” the LSE said in a statement.

The move meant Euronext increased its forecast for pre-tax synergies from the deal by 67 per cent to €100m; however, it also raised its prediction on restructuring costs, from €100m to €160m. Half of the new total would be in operating costs and the rest in exceptional costs, it said.

Boujnah also suggested to the European Commission that the EU executive use Euronext’s MTS government debt platform, part of Borsa Italiana, for trading of the bonds issued under the Next Generation EU recovery programme.

FT : Tesla/Elon Musk: option exercise would be a rare moment of tax accountabili

Tesla/Elon Musk: option exercise would be a rare moment of tax accountability
Richest man in the world can afford the $15bn tax bill

When Tesla, a decade ago, granted Elon Musk a package of stock options tied to the value of the nascent electric carmaker, its market capitalisation was a measly $3.2bn. Tesla’s value has appreciated so much— almost 400 times to $1.2tn — that his pending federal and California tax bills triggered by those options could amount to $15bn.

No wonder Musk asked for advice. He polled his tens of millions of Twitter followers if he should sell a tenth of his holdings to pay his taxes. They said sell. Though that tax bill equates to less than a day’s trading in Tesla, markets still fear the selling pressure. His tax situation follows on from national debates on whether the super-rich should pay levies on their growing stock market fortunes.

He has plenty to sell. The 2012 stock award for Musk offered him 5 per cent of the company’s shares if a series of thresholds were met. Almost every one of the criteria were met. The exercise price on the 2012 option package is just $6.24. In 2018, Tesla granted Musk the chance to earn another 12 per cent of the carmaker based on new operating and valuation thresholds. The strike price on those options was $70. Today’s shares now trade around $1,200.

Some worried that Musk simply used social media as a cover for timely profit-taking. Tesla shares have soared nearly 70 per cent this year. But the chief executive himself recently acknowledged that he would need to sell shares earned from the 2012 grant, before the options expired in 2022, to pay any taxes owed.

California in the first quarter of 2021 generated nearly $60bn in tax revenue. That figure was nearly a quarter higher than in 2019, as the state benefited from rising tech stock valuations. Musk could pay $3bn in state taxes as well as $12bn in federal taxes. Shares he directly owns, not including the options, are worth roughly $200bn making him easily the richest man in the world. Affordability is not the issue.

That does not mean he will dig into his pocket soon. Notably, more than half his shares have also been pledged as collateral for personal loans, a way for the super-rich to avoid the tax payments from liquidating shares. Yet the thought that Musk might even pay a modest amount of his huge bill would provide a small victory for those alarmed by America’s wealth polarisation.

>>> US After Hours Summary: RBLX +28.7%, NEWR +18.8%, REAL +10.8%, FIVN +7.8%, Z

After Hours Summary: RBLX +28.7%, NEWR +18.8%, REAL +10.8%, FIVN +7.8%, ZNGA +7.2% higher on earnings; AMRS -25.1%, SDC -23.2%, NVTA -13.9%, FRPT -13.6% lower on earnings; PVG +18.3% to be acquired

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: RBLX +28.7%, TDUP +24.9%, NEWR +18.8%, REAL +10.8%, MRTX +9.1%, FIVN +7.8%, ZNGA +7.2%, ACAD +6.1%, ATCO +5.4%, TREX +3.4%, PRIM +2.3%, BAND +2.1%, IFF +1.7%, ROVR +1.7%, FSK +1.5%, NHI +1.3%, TME +1.1% (also to bring catalog of Chinese music to Apple Music users worldwide), CLOV +0.9%, TWO +0.6%, PRI +0.4%, BEKE +0.2%, INST +0.2%, LFST +0.1%

Companies trading higher in after hours in reaction to news: PVG +18.3% (to be acquired by Newcrest Mining), MILE +7.2% (MILE to be acquired by LMND for $500 mln in stock), SDIG +2.5% (stock offering), THC +2.4% (to acquire SurgCenter Development for $1.2 bln), VGR +1.8% (Douglas Elliman to file registration statement in connection with planned spin-off from Vector Group), VMEO +1.1% (reports Oct metrics), PSX +0.4% (to convert its Alliance Refinery to a terminal facility), RSI +0.4% (confirms selection to operate online sports betting in NY), WYNN +0.2% (obtains market access in NY for online sportsbook operations), INST +0.2% (to acquire Kimono), AA +0.2% (unveils technology roadmap to support vision to reinvent aluminum industry), BALY +0.1% (confirms award of license to conduct online sports betting in NY), AMGN +0.1% (announces new data from the HER-MES study), OEC +0.1% (to convert manufacturing line to produce hard carbon black)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: AMRS -25.1% (also to offer $400 mln in convertible senior notes), SDC -23.2%, WPRT -16.8%, NVTA -13.9%, FRPT -13.6%, MWA -12.2%, DDD -10.1%, SANM -9.1%, TRIP -8.4% (also CEO and co-founder Stephen Kaufer to step down in 2022), MRC -6.8%, OSH -6.4%, NVRO -5.3%, AMC -5.1%, NEX -4.9%, TPIC -4.8% (also announces up to $600 mln capital investment from Oaktree), PYPL -4.3%, VUZI -4.2%, NCMI -3.6%, AEIS -3.4%, CBT -3.2%, JKHY -2%, SWAV -1.3%, SPCE -1.2%, SQSP -0.7%, BLDP -0.6%, CXW -0.2%, PRA -0.2%, AEL -0.1%, ENV -0.1%

Companies trading lower in after hours in reaction to news: ALKS -8.8% (announces receipt of notices of partial termination from Janssen Pharma), FA -8.5% (stock offering), APR -8.3% (stock offering), EWCZ -7.6% (stock offering), MASS -7.1% (stock offering), LMND -4.9% (MILE to be acquired by LMND for $500 mln in stock), KDNY -4.4% (stock offering), TALO -4.3% (stock offering), SITM -4.2% (stock offering), CYRX -3.8% (announces direct placement of stock; also to offer $300 mln of convertible senior notes), PING -3.7% (stock offering), HOOD -3.6% (unauthorized third party obtained access to personal info), IEA -3.2% (stock offering), HCIC -2.3% (terminates merger agreement with Plus), KNBE -2.1% (stock offering), PLYA -1.7% (stock offering), DASH -0.2% (NYC law will require delivery services to pay for costs related to driver accidents, according to NY Post), PSN -0.1% (wins $49 mln contract for army environmental remediation), MRK -0.1% (pending acquisition of XLRN has been cleared by competition authorities in Germany and Austria)

(PZM) Newcrest to Acquire Pretivm for C$18.50 in Cash and Shares

Webcast and Conference Call
Pretivm and Newcrest will host an investor conference call and webcast to discuss the Transaction at 3:30 pm Pacific Time (6:30 pm Eastern Time) today.

Webcast details:
Monday, November 8, 2021 at 3:30 pm PT (6:30 pm ET)

In light of the Transaction, Pretivm has cancelled its previously scheduled third quarter investor conference call on November 12, 2021. The third quarter disclosure will proceed as scheduled on November 11, 2021.

Presentation attached

>>> US Close Dow +0,29% S&P +0,09% Nasdaq +0,07% Russell +0,23%

Closing Market Summary

The stock market began the week on a quiet note with the S&P 500 (+0.1%) inching toward its intraday record from Friday. The benchmark index climbed for the eighth consecutive day while the Dow (+0.3%) outperformed slightly.

The S&P 500 hit its best level of the day during the opening minutes before slowly retreating toward the unchanged level. However, it bounced out of the red in the late morning, inching back toward its opening mark as the day went on.

Growth-sensitive sectors like energy (+0.9%) and materials (+1.2%) got out to an early lead where they remained until the close. The energy sector was boosted by crude oil, which climbed $0.71, or 0.9%, to $81.96/bbl, rising toward its high from Thursday (83.42). Meanwhile, the materials sector benefited from the weekend passage of $550 bln in new infrastructure spending. Copper miner Freeport-McMoRan (FCX 39.43, +2.39, +6.5%) was a standout performer in the materials sector, bouncing toward its October high, while fertilizer producer, CF Industries (CF 62.54, +3.34, +5.6%), and building materials provider, Vulcan Materials (VMC 205.76, +9.70, +5.0%), followed.

Gains in heavily weighted sectors like health care (+0.5%) and financials (+0.5%) kept the S&P 500 from finishing in the red while the top-weighted technology sector (+0.6%) also finished ahead of the broader market. Chipmakers were a significant source of strength with AMD (AMD 150.16, +13.82, +10.1%) rallying more than 10% to a fresh record. The company unveiled a couple new products and announced an order from a large customer.

On the downside, the utilities sector (-1.5%) finished just behind the consumer discretionary space (-1.4%). The utilities sector widened its month-to-date loss to 1.0%, which leaves the group at the bottom of the November leaderboard, while the discretionary sector narrowed its November gain to 3.5%. The sector was pressured by losses among half of its components with Tesla (TSLA 1162.00, -60.09, -4.9%) falling toward its low from the middle of last week after CEO Musk indicated that he will abide by the results of a poll that suggested he should sell 10% of his stock.

Treasuries finished the day on a mostly lower note with the 10-yr yield rising four basis points to 1.50%.

In Fed news, Governor and vice chair for supervision Quarles has resigned, planning to depart at the end of the year.

The October NFIB Small Business Optimism (prior 99.1) will be released tomorrow at 6:00 ET, followed by October PPI (consensus 0.6%; prior 0.5%) and Core PPI (consensus 0.4%; prior 0.2%) at 8:30 ET.

  • S&P 500 +25.2% YTD
  • Russell 2000 +23.7% YTD
  • Dow Jones Industrial Average +19.0% YTD
  • Nasdaq Composite +19.0% YTD

>>> Moderna - High Authority for Health now advises against vaccinations with Mo

The High Authority for Health now advises against vaccinations with Moderna's vaccine for those under 30 years of age because of a possible increased risk of myocarditis in the youngest. In a press release, the HAS indicates that the latest data available in France "confirms the risk of the occurrence of very rare cases of myocarditis with favorable evolution" after vaccination against Covid-19. However, these very rare cases of inflammation of the heart, which are easily treated when properly managed, are "five times less" in those under 30 vaccinated with Pfizer-BioNTech rather than with Moderna, according to HAS.

The HAS therefore now recommends to vaccinate those under 30 only with the Pfizer-BioNTech vaccine "whether it is a primary vaccination or a booster".

NY Post : Jay-Z loses NY sports betting bid as Barstool’s Portnoy faces rough se

Jay-Z loses NY sports betting bid as Barstool’s Portnoy faces rough sex claims

The state gaming commission is meeting Monday to select two groups to offer mobile or online sports betting in New York — but the team that includes rapper-mogul Jay-Z, Fanatics and Barstool’s Sportsbook will not be one of them, The Post has learned.

The elimination of the Jay-Z group comes days after several women reportedly accused Barstool founder David Portnoy of unwanted overly rough and violent sex. Portnoy has denied the allegations.

A gaming source said Monday the Jay-Z, Barstool group was not selected for a license. It ranked fourth behind another group, Bet 365, the insider said.

As The Post first reported last week, the gaming commission is recommending two groups to launch online sports betting: the consortium of Bally Bet, BetMGM, DraftKings and FanDue; as well as the group of Caesars, Wynn Interactive, Empire Resorts, PointsBet and Rush Street Interactive, sources said.

Online sports betting is likely to be up-and-running in New York before kickoff for this year’s Super Bowl, source told The Post.

Once officials give the green light, New York expects $10 billion in sports betting next year, with the nearly $1 billion in expected profits split between the state and the operators.

The companies selected by New York have agreed to fork over 51 percent of their profits to the state, according to a source familiar with the matter — a split that far outpaces the take in most states where online sports betting is legal.

To compare, New Jersey online sports betting operators share 13 percent of their profits with the state. Connecticut charges operators 13.75 percent. Thirteen other states range from Iowa, which charges 6.75 percent, to Pennsylvania, which charges 34 percent.

The only state with a take similar to New York is New Hampshire, which also charges 51 percent.

Barstool and the gaming commission had no immediate comment.