WSJ : Marvell Nears Deal to Buy Inphi

Marvell Nears Deal to Buy Inphi
Deal valued at about $10 billion could come as soon as this week

Marvell Technology Group Ltd. is nearing a deal to buy Inphi Corp. for as much as $10 billion, according to people familiar with the matter, in what would be the second big semiconductor tie-up this week as the industry rapidly consolidates.

The companies could announce a deal as soon as Thursday, assuming the talks don’t fall apart, the people said.

Marvell, which has a market value of roughly $26 billion, primarily makes chips used in data storage and networking. Buying Inphi would help Marvell expand its reach in networking, a fast-growing segment that has helped push Inphi’s stock up roughly 50% this year.

The semiconductor industry is in the midst of a full-fledged merger frenzy, all the more surprising in the middle of a pandemic. It has been fueled by surging demand for laptops and videogames, with people stuck at home, as well as growth in the data centers that facilitate companies’ shifting business activity online.

Rising share prices on the back of that demand have given chip companies a tool to make splashy acquisitions.

Advanced Micro Devices Inc. agreed Tuesday to buy chip maker Xilinx Inc. for $35 billion, in the biggest U.S. acquisition of 2020. That followed closely Nvidia Corp.’s agreement to pay $40 billion for Arm Holdings, the British mobile-phone chip design giant. Just last week, Intel Corp. agreed to sell its flash-memory manufacturing business to South Korea’s SK Hynix Inc. for around $9 billion, in a move that will reorient the struggling industry giant away from an area of historical importance.

In July, Analog Devices Inc. agreed to pay more than $20 billion for Maxim Integrated Products Inc.

Marvell’s last major deal was in 2018, when it bought Cavium Inc. in a roughly $6.4 billion deal. Marvell is based in Bermuda but run from Santa Clara, Calif., where Inphi has headquarters.

>>> US After Hours Summary: PINS +31%, F +4.4%, WDC +3.3%, NOW +2.

After Hours Summary: PINS +31%, F +4.4%, WDC +3.3%, NOW +2.9% higher on earnings; BLKB -12.2%, PI -8.8%, EBAY -4.7%, RCII -4.7%, TDOC -4.4% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: PINS +31%, EGOV +10.4%, AGI +7.6%, ALSN +7.6%, PPC +7.6%, ECHO +7.4%, PEN +6.7%, CDE +5.8%, SCI +5.5%, BOOT +5.3%, RGR +5.2%, ALGT +4.9%, F +4.4%, CTSH +4.1%, UCTT +4%, AEM +3.8%, EGHT +3.3%, WDC +3.3%, NOW +2.9%, AMP +2.8%, TROX +2.8%, FORM +2.6%, URI +2.4%, AM +2.2%, NLY +1.9%, FSLY +1.7%, SAVE +1.7%, CHDN +1.5%, AVT +1.4%, ISBC +1.4%, CACI +1.3%, TXRH +1.3%, AR +1.1%, PE +0.9%, AVB +0.7%, MAA +0.3%, OII +0.3%, V +0.3%, MRC +0.2%, SPSC +0.2%, SU +0.2%, AMGN +0.1%, BHE +0.1%, CNMD +0.1%, CUZ +0.1%, EHC +0.1%, GMED +0.1%, GRUB +0.1%, NGVT +0.1%, SRI +0.1%, RJF +0.1%

Companies trading higher in after hours in reaction to news: TCDA +8.8% (to provide update from FDA Meeting on Oct 29), OSTK +3.8% (tZERO signs agreement with Tynton Capital for digitization services), SYNH +3.2% (to acquire Synteract), REGN +2.2% (announces trial data for COVID-19 cocktail, REGN-COV2, met the primary and key secondary endpoints), LLY +1.9% (announces publication of BLAZE-1 data), SUN +1.8% (new CFO), GERN +1.7% (data from the IMerge Phase 2 trial published), GOOG +1.2% (FIT and GOOG planned merger extended to Feb 2021), AMZN +0.8% (will soon have rights to broadcast soccer in Italy, according to Reuters), NEM +0.7% (increases dividend), MGM +0.5% (renews and expands partnership with Detroit Red Wings), AMSF +0.4% (declares special cash dividend of $3.50/share), JRVR +0.1% (new CEO), TFX +0.1% (to acquire Z-Medica), OR +0.1% (provides corporate update), HTGC +0.1% (approved for third SBIC license), NOC +0.1% (is considering a sale of its tech services biz, according to Bloomberg)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: WH -15.2%, BLKB -12.2%, INOV -10.1%, PI -8.8%, EBAY -4.7%, RCII -4.7%, TDOC -4.4%, LVGO -3.9%, SPWR -3.4%, FBHS -2.9%, MSA -2.9%, CREE -2.6%, PEGA -2.3%, WERN -2.2%, RYN -2%, MUSA -1.9%, PTC -1.8%, SFM -1.7%, GILD -1.4%, ETSY -1.2%, CERN -0.9%, YUMC -0.9%, KLAC -0.3%, ORLY -0.3%, DRE -0.2%, EQIX -0.2%, HCC -0.2%, KRC -0.2%, MOH -0.2%, PGRE -0.2%, VICI -0.2%, ACA -0.1%, AFG -0.1%, NDLS -0.1%, PKI -0.1%, RBC -0.1%, SSNC -0.1%, WRI -0.1%, FMX -0.1%

Companies trading lower in after hours in reaction to news: CCXI -13.8% (announces positive topline data from AURORA trial of avacopan), ARCH -3.5% (convertible offering), MUSA -1.9% (announces update to its capital allocation strategy; initiates $0.25/sh dividend), FIT -0.4% (FIT and GOOG planned merger extended to Feb 2021), FNF -0.2% (increases dividend), IMO -0.2% (starts operation of newly constructed cogeneration unit)

>>> Asian Update

Asia Market Update: Asia mostly tracks US equity declines; Some headlines focused on COVID-related concerns and election uncertainty; Samsung drops on guidance; China bank earnings in focus; US equity FUTs rise after prior decline; ECB decision and US Q3 GDP due later


General Trend:
-Samsung expects lower profits in Q4 amid lower smartphone sales and weak server DRAM demand
- Australia’s Energy index drops over 3%, tracks the recent decline in oil prices; Financials drop amid weakness in the US and earnings from ANZ; Newcrest drops after Q1 production update and recent decline in gold prices; Consumer Discretionary index drops after sales update from JB Hi-Fi
- Decliners in HK include Gaming, Financial and Property shares; Tech firms also drop after recent gains, track declines on the Nasdaq; ZTE drops over 5% after reporting earnings
- Standard Chartered’s Q3 profits beat ests amid better than expected provisions
- Shanghai Composite traded flat during the morning session; Consumer firms outperformed as Kweichow Moutai rose
- China/HK companies that may report earnings include PetroChina, China Construction Bank, CITIC Bank , Tsingtao Brewery, SJM Holdings, BYD , Guangzhou Auto
- Topix Securities index declines after results from Nomura; Electric Appliance and Pharma indices rise; Sony rises over 6% after results/guidance
- Japanese companies expected to report earnings include Panasonic, Fanuc, Kyocera, Daiwa Securities, Docomo, NEC, Tokyo Electron, Takeda, Mitsubishi Electric, Oriental Land, AGC, Advantest, Fuji Electric, Konica Minolta
- Offshore yuan (CNH) rises after prior declines; Presidential Candidate Biden said to have noted he would consult US Allies for collective leverage for future tariffs on China (financial press)
- BoJ trimmed its near-term economic forecasts (as speculated), said factors (including forex) are risks to inflation
- BoJ Gov Kuroda is due to hold post rate decision press conference at 6:30 GMT
- China’s Plenary session is expected to conclude today
- Companies expected to report during the NY morning include Allegheny Technologies, Baxter International, Comcast, ConocoPhillips, DuPont, Huntsman, International Paper, Kellogg, Moody’s, Moderna, Newmont Mining, Royal Caribbean, Ralph Lauren, Spotify, Molson Coors, Tempur Sealy, Willis Towers Watson, YUM! Brands
- Apple is due to issue Q4 results after the US market close

***Headlines/Economic Data***
Australia/New Zealand
-ASX 200 opened -0.4%
- ANZ.AU Reports FY20 (A$) adj Cash profit 3.76B v 6.47B y/y, NII 14.05B v 14.34B y/y
- FMG.AU Reports Q1 iron ore shipments 44.3Mt v 42.2Mt y/y; Ore production 58.4Mt v 50.6Mt y/y; affirms FY21 guidance
- (NZ) New Zealand Oct Final ANZ Business Confidence: -15.7 v -14.5 prelim
- (AU) Australia Q3 Import Price Index Q/Q: -3.5% v -2.0%e; Export Price Index Q/Q: -5.1% v -3.5%e

Japan
-Nikkei 225 opened -1.1%
- (JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED
- (JP) Bank of Japan (BOJ) Quarterly Outlook for Economic Activity and Prices: Cuts GDP and CPI outlook for FY20/21
- (JP) JAPAN SEPT RETAIL SALES M/M: -0.1% V 1.0%E; Y/Y: -8.7% V -7.6%; Dept. Store, Supermarket Sales Y/Y: -13.9% v -11.6%e
- (JP) Japan Investors Net Buying of Foreign Bonds: -¥1.01T v +¥419.8B prior; Foreign Net Buying of Japan Stocks: +¥228.4B v -¥94.0B prior
- (JP) Japan PM Suga: Need major countries cooperation to avoid debt problems; To take measures as needed to help struggling people; Not at a point to organize dates for China President Xi visit to Japan

Korea
-Kospi opened -1.4%
- 005930.KR Reports final Q3 (KRW) Net 9.36T v 6.29T y/y; Op 12.4T v 12.3T prelim, Rev 67.0T v 66.0T prelim
- (KR) Bank of Korea (BOK): To extend Loan facilities for Financial companies by 3 months until Feb 3rd 2021
- 005930.KR Confirms applying for export license to Huawei, has yet to hear from US Officials

China/Hong Kong
-Hang Seng opened -1.7%; Shanghai Composite opened -1.0%
- (CN) China PBoC Open Market Operation (OMO): Injects CNY140B in 7-day reverse repos v Injects CNY120B in 7-day reverse repos prior; Net inject CNY90B v Net inject CNY40B prior
- (HK) Hong Kong Monetary Authority (HKMA) sells HK$7.8B to again defend peg as HKD currency trades at strong end of trading band
- 1876.HK Reports Q3 $316M v $257M y/y; Adj EBITDA $607M v $633M y/y, Rev $1.82B v $1.82B y/y
- 386.HK Reports Q3 (CNY) IFRS Net 46.2B v 11.9B y/y, Rev 520.4B v 734.0B y/y
- (CN) China PBOC sets Yuan reference rate: 6.7260 v 6.7195 prior

Other
- UMC Confirms UMC and US Department of Justice reach Plea Agreement on Trade Secret Case to pay $60M

North America
- (US) Presidential Candidate Biden said to have noted he would consult US Allies for collective leverage for future tariffs on China, Biden would 'immediately' speak with key allies before deciding on the future of the current US tariffs on China - financial press
- (US) Speaker Pelosi: have been negotiating on a $2T relief package with the White House; details on aid bill could change after the election - press interview
- TIF Board said to approve sale to LVMH at lower offer of $131.50/shr – FT
US Earnings after the close:
-AKAM Q4 guidance disappoints

Europe
- (UK) Sept Auto Manufacturing 114.7K units, -5.0% y/y; YTD manufacturing 632.8K units, -35.2% y/y - SMMT
-STAN.UK Reports Q3 adj Pretax $745B v $502B y/y, Op income $3.53B v $3.98B y/y; to considering shareholder returns in FY20

Levels as of 1:20 ET
- Nikkei 225, -0.4%, ASX 200 -1.6% , Hang Seng -1%; Shanghai Composite +0.1% ; Kospi -1.1%
- Equity S&P500 Futures: +1.1%; Nasdaq100 +1%, Dax +0.6%; FTSE100 +0.2%
- EUR 1.1758-1.1744 ; JPY 104.50-104.27 ; AUD 0.7070-0.7043 ;NZD 0.6656-0.6636
- Gold +0.2% at $1,882/oz; Crude Oil +0.2% at $37.47/brl; Copper +0.6% at $3.0838/lb

>>> US Close Dow -3.43% S&P -3.53% Nasdaq -3.73% Russell -2.97%

Closing Stock Market Summary

The S&P 500 dropped 3.5% on Wednesday, as heightened growth concerns exacerbated de-risking efforts and the recent negative momentum in the market. The Nasdaq Composite fell 3.7%, the Dow Jones Industrial Average fell 3.4%, and the Russell 2000 fell 3.0%.

Similarly, no sector was spared with losses ranging from 2.4% (real estate) to 4.3% (information technology).  

The weakness started in the futures market after European markets opened to news that Germany and France were preparing renewed lockdown measures to curb the spread of the coronavirus. Germany's DAX dropped 4.2% on Wednesday, versus a 3.0% decline in the Europe Stoxx 600. 

The coronavirus path in the U.S. is tracking in the wrong direction, leaving investors worried that more cities and states could adopt similar measures. With a stimulus deal unlikely to come before the election to mitigate the financial difficulties many businesses and households are facing, the market presumably started to rethink future earnings growth. 

Most Q3 earnings reports continued to exceed expectations, but the reactions remained disappointing. Granted, Microsoft (MSFT 202.68, -10.57, -5.0%) did guide revenue for its fiscal second quarter below consensus, and MasterCard (MA 291.38, -25.73, -8.1%) was one the larger companies that missed expectations. 

Shares of UPS (UPS 155.78, -15.06, -8.8%) dropped nearly 9% despite beating top and bottom-line estimates. The Dow Jones Transportation Average fell 4.3%. 

If that wasn't enough to deter sentiment, Pfizer (PFE 35.45, -1.98, -5.3%) delayed the release of its Phase 3 vaccine trial results, which were expected this week, and the CEOs of Alphabet (GOOG 1516.62, -87.64, -5.5%), Facebook (FB 267.67, -15.62, -5.5%), and Twitter (TWTR 48.56, -2.71, -5.3%) testified before the Senate Commerce Committee on Section 230 of the Communications Decency Act. 

Interestingly, longer-dated Treasuries gave up early gains to close little changed. The 2-yr yield and 10-yr yield both finished flat at 0.15% and 0.78%, respectively. The U.S. Dollar Index advanced 0.6% to 93.46. WTI crude futures fell 5.3%, or $2.10, to $37.45/bbl amid the stronger dollar, bearish inventory data, and demand concerns. 

Separately, the weekly MBA Mortgage Applications Index increased 1.7% following a 0.6% decline in the prior week.

Looking ahead, investors will receive the advance estimate for Q3 GDP, the weekly Initial and Continuing Claims report, and Pending Home Sales for September on Thursday. 

  • Nasdaq Composite +22.7% YTD
  • S&P 500 +1.3% YTD
  • Dow Jones Industrial Average -7.1% YTD
  • Russell 2000 -7.5% YTD

FT : Oman gets $1bn in aid from Qatar

Oman gets $1bn in aid from Qatar
Cash-strapped sultanate is tapping richer neighbours for much-needed financial help

Oman has received $1bn in direct financial support from Qatar as the cash-strapped sultanate seeks to stave off an economic crisis worsened by coronavirus and lower oil prices.

One of the poorer oil-dependent Gulf states, Oman is tapping richer neighbours for much-needed financial aid as it balances the need to plug a widening budget deficit against the potential threat to its much-prized neutrality.

Officials from the sultanate marketing a bond on conference calls said Qatar had deposited the amount in the central bank of Oman, and promised that there was more to come, three people briefed on the conversations said.

Investors said Qatari support for Oman is a good start, but more is needed. “A billion isn’t going to move the needle — they need to raise a lot more,” said one, who requested anonymity because he was not authorised to speak about transactions.

Oman did not respond to a request for comment. Qatar declined to comment.

The sultanate’s ties with Qatar have deepened since fellow Gulf states Saudi Arabia and the United Arab Emirates imposed a trade and travel embargo on Doha in 2017. Muscat helped the Qataris sidestep the boycott by providing alternative trade routes.

The UAE is in pole position to provide additional aid to Oman, said Cinzia Bianco, a visiting fellow at the European Council on Foreign Relations.

Several months ago, Muscat opened discussions with Qatar and the UAE over financial support, which remain ongoing, she said.

The potential for further regional assistance helped Oman, rated as subinvestment grade, to raise $2bn in bonds last week. The government said it was in the “preliminary stages” of talks over financial support from other Gulf countries, the bond prospectus revealed.

Options for potential Emirati support could include commercial loans underpinned by UAE banks or investment in projects, said Ms Bianco. Oman raised a $2bn bridge loan earlier this year that was jointly arranged by Abu Dhabi’s leading lender.

Historically fraught Emirati-Omani ties have eased under Sultan Haitham bin Tariq Al Said, who took the throne on the death of his long-serving predecessor Qaboos in January. In August, the new sultan replaced Yusuf bin Alawi, the longstanding foreign minister, with Badr Al Busaidi, who is perceived as less hostile to the UAE.

Omanis are nonetheless concerned that financial aid could come with conditions that erode the sultanate’s traditional neutrality. Muscat has been a forum for back channel talks with Yemeni Houthi rebels and Iran, with which Oman maintains close relations despite Tehran’s enmity with other Gulf states.

“This is a genuine concern for Omanis who recall how resisting polarisation is embedded in their political culture,” said Ms Bianco. “However, the truth is we are in uncharted waters, under a different leadership and in a different geopolitical context.”

Ravaged by lower oil prices and the economic repercussions of Covid-19, Oman’s gross domestic product is forecast to contract by 10 per cent this year, according to the IMF. The country needs oil prices to average $105 a barrel to balance the budget, so with prices closer to $40 a barrel it faces a fiscal deficit of more than an estimated 18 per cent of GDP this year.

Oman has introduced revenue raising and cost-cutting measures to deal with the growing fiscal pressures, including introducing a 5 per cent sales tax next year and plans for an income tax on high earners.

WSJ : Tiffany, LVMH Near Agreement on New Deal Terms

Tiffany, LVMH Near Agreement on New Deal Terms
New agreement calls for LVMH to pay $131.50 a share, down from $135

Tiffany TIF +0.91% & Co. is nearing an agreement to accept a lower price in its takeover by LVMH Moët Hennessy Louis Vuitton LVMUY -3.97% SE that would end a bitter dispute between the luxury-goods companies.

The companies have come to a preliminary agreement on new deal terms that would call for LVMH to pay $131.50 for the iconic U.S. jewelry maker, according to people familiar with the matter. That is down from a prior agreement of $135 a share.

Tiffany’s board plans to consider the revised terms at a meeting later Wednesday, and there is no guarantee they will accept them, the people said. Should they accept the revised terms, litigation that erupted over the deal would go away and conditions required for it to close would be reduced, some of the people said. That would pave the way for a new shareholder vote and a closing of the deal possibly by January.

Tiffany agreed to sell itself to LVMH late last year in a roughly $16.2 billion deal. The acquisition represented the biggest bet yet by LVMH under Bernard Arnault, the French billionaire who has been its chief executive and controlling shareholder for three decades. But LVMH said in September it was backing out of the deal, blaming trade disputes between France and the Trump administration. Many saw the move as a bid to lower the price.