>>> China Commerce Ministry (MOFCOM official Li Xingqian): Sees 'big' impact on

China Commerce Ministry (MOFCOM official Li Xingqian): Sees 'big' impact on food, agricultural sectors if coronavirus epidemic lasts; virus to 'hit hard' on domestic consumption in short-term;
- Reiterates expects consumption to gradually recover.
- Notes if the coronavirus 'crisis' lasts for a relatively long time, China's agricultural, food and labor
-intensive industries will be 'heavily' impacted.
- Reiterates epidemic won't hurt China's long-term consumption upgrade.

FT : Boeing asks to give up tax break to avert EU tariffs



From: Laurent Chekroun (MAKOR SECURITIES LO) At: 02/19/20 23:04:53
Subject: FT : Boeing asks to give up tax break to avert EU tariffs
Boeing asks to give up tax break to avert EU tariffs
Group calls for Washington state to repeal support that has fuelled 15-year dispute with Airbus

Boeing has asked for a $100m a year tax break from Washington state to be suspended in a bid to stop the EU from imposing billions of dollars in retaliatory tariffs this summer, when it is hoping to bring its troubled 737 Max back into service.

Washington state lawmakers on Wednesday introduced bills in the state’s senate and house proposing the end of a business rate tax break for aerospace companies that has saved Boeing more than $1bn since 2004.

The move threatens to nullify Brussels’ argument to the World Trade Organization that Boeing continues to benefit from illegal state aid — the basis on which the right to impose tariffs was expected to be granted later this spring.

Jay Inslee, Washington governor, said Boeing had asked the state to act ahead of expected EU tariffs, the latest sally in a 15-year long dispute between Boeing and Airbus over government subsidies.

Both sides have been found to have received illegal aid in what has become one of the longest-running trade disputes conducted through the WTO.

Boeing said in a statement that the legislation, when passed, would resolve the sole finding against the US in the dispute. It accused Airbus of continuing to benefit from “billions of dollars of illegal ‘launch aid’ subsidies . . . which the WTO has repeatedly found to violate global trade rules”.

Mr Inslee suggested, however, that Boeing had asked for the tax break to be “at least suspended” which could leave leeway for the EU to argue that it could still impose tariffs, if this is sanctioned by the WTO in the coming months.

Last year, the WTO authorised the US to slap levies on $7.5bn of goods after the EU was found to have failed to eradicate illegal support for Airbus aircraft. In October tariffs of 10 per cent were imposed on aircraft imports and 25 per cent on a range of other European goods. On Friday, the levy on aircraft imports was raised to 15 per cent.

Airbus and EU officials have suggested they could win approval for a tariff offensive running to billions of dollars as well.

Guillaume Faury, Airbus chief executive, at the European aircraft maker’s results last week, suggested these would be targeted to make it more difficult for Boeing to deliver its single aisle 737 Max into Europe. The aircraft has been grounded since March after two fatal crashes, but Boeing and its regulators have signalled it could be cleared to fly again later this year.

Both sides have called for a settlement, although neither is willing to make the concessions the other side demands before negotiations begin. Boeing has called for eradication of all government support including launch aid loans.

Washington’s governor said the bill to suspend the tax break had been introduced for fear that EU tariffs “would damage not just our commercial aircraft industry, but other important Washington exports”.

But the change could still take some time to come into effect, he said. “We need careful consideration of the issues and precision work on the legislation which involves not just state tax law, but international trade agreements and domestic trade law,” Mr Inslee said.

Airbus declined to comment.

The battle between Boeing and Airbus dates back to 2004, the year after the European aircraft maker’s deliveries overtook those of its US rival for the first time. The US case challenged subsidies that the European aerospace group had received as long ago as the 1970s. The US has claimed that $22bn in illegal funding has found its way to Airbus.

The EU followed up a few months later with a challenge of its own, alleging that more than $23bn in illegal aid has been channelled to Boeing. In 2010 and 2011 the WTO ruled that both companies had collected billions in unlawful assistance — Boeing from government contracts for defence and space business as well as tax breaks, and Airbus through aid to launch aircraft programmes that was repayable on delivery.

>>> Stoxx 600 Pre-Market Indications

  • Dialog Semi (DLG TH) +3.6%
    • Dialog Semiconductor to Buy Adesto for $12.55/Share in Cash
  • Unilever (UNI2 TH) +2.2%
  • Fresenius Medical (FME TH) +1.5%
    • Vifor Pharma and Fresenius Kabi create joint venture in China for i.v. iron portfolio
  • BP (BPE5 TH) +1.3%
    • SteelGuru: Kosmos Energy and BP Gas Marketing ink pact for LNG Supplies from Greater Tortue Ahmeyim
  • ING (INN1 TH) +1.2%
    • UBS names ING chief Hamers to head Swiss banking giant
  • Wirecard (WDI TH) +0.8%
  • Air Liquide (AIL TH) +0.7%
  • Neste (NEF TH) +0.6%
  • Kone Oyj (KC4 TH) +0.5%
  • Zalando (ZAL TH) -0.6%
  • Schneider (SND TH) -0.6%
    • Schneider Sees 2020 Adjusted Ebita Margin 16% To 16.3%
  • Evotec SE (EVT TH) -0.7%
  • Grenke (GLJ TH) -0.9%
  • Evonik (EVK TH) -0.9%
  • K+S (SDF TH) -0.9%
    • K+S Cut to Underperform at Credit Suisse; PT 7 euros
  • AB InBev (1NBA TH) -1.7%
    • AB InBev wants its premium brands to have a bigger play in India’s beer market
  • TOMRA Systems ASA (TMR TH) -2.5%
    • TOMRA Systems ASA Fourth Quarter Revenue 1.2% Above Estimates
  • MTU Aero (MTX TH) -3.6%
    • MTU Aero Financial Plans for 2020 Depend on Coronavirus Impact
  • Air France-KLM (AFR TH) -4.4%
    • Air France-KLM Warns of $216 Million Profit Hit From Coronavirus

>>> Moncler / Ruffini in the Press - Doesn't Rule out Potential Merger or Acquis


Chief Executive Remo Ruffini said he did not rule out a tie-up with another group in the future but reiterated there was nothing concrete on the table.
"I am certainly looking for a new chapter for Moncler. We don't necessarily need to become part of a bigger group," Ruffini told reporters on the sidelines of Moncler's fashion show in Milan.

"We don't rule anything out but there is nothing realistic on the table," he added.

Speculation that Moncler, one of the most successful fashion groups in recent years, could become a takeover target has intensified since media reports last December said Gucci-owner Kering and the Italian group had held exploratory talks.

Both groups have poured cold water on the possibility of a merger.

Ruffini said plans for a loyalty share scheme that would allow him to increase his voting rights to 29% from 19.6% at present were not related to any merger project.

"It's got nothing to do with M&A," he said, adding the scheme would reward long-term investors and give him more clout to pursue his current growth strategy for the group.

Le Figaro -https://blinks.bloomberg.com/news/stories/Q5ZOCV5F8XS0

... «Je regarde en permanence ce qui est le meilleur pour l’avenir de Moncler et je ne suis fermé à rien, confie-t-il. L’industrie du luxe est très compétitive, et faire partie d’un groupe permet de mieux négocier les loyers avec les propriétaires de malls. Mais nous pourrions également envisager une acquisition.»

>>> TradeGAte Pre-MArket Indications

DAX:
  • Fresenius Medical (FME TH) +1.6%
    • Fresenius Medical FY Profit Stagnates, Confirms 2020 Goals (1)
  • Wirecard (WDI TH) +1%
  • Fresenius SE (FRE TH) +0.5%
    • Fresenius SE Full Year Adjusted Ebit 1.1% Above Estimates
  • HeidelbergCement (HEI TH) +0.2%
  • BMW (BMW TH) +0.2%
  • Deutsche Post (DPW TH) -0.2%
  • Infineon (IFX TH) -0.4%
  • Deutsche Telekom (DTE TH) -0.4%
  • Covestro (1COV TH) -0.5%
    • Covestro Sees EU60M Hit to 1Q Profit from Coronavirus Impact
  • MTU Aero (MTX TH) -3.5%
    • MTU Aero Financial Plans for 2020 Depend on Coronavirus Impact
MDAX:
  • Dialog Semi (DLG TH) +3.6%
    • Dialog Semiconductor to Buy Adesto for $12.55/Share in Cash
  • Varta (VAR1 TH) +1.1%
  • Duerr (DUE TH) +1.1%
  • Puma (PUM TH) +0.7%
    • Puma Upgraded at RBC; Late to Rally, But Still Sees Upside
  • Qiagen (QIA TH) +0.7%
  • Nemetschek (NEM TH) -0.6%
  • TeamViewer (1UD TH) -0.7%
  • K+S (SDF TH) -0.8%
    • K+S Cut to Underperform at Credit Suisse; PT 7 euros
  • Evonik (EVK TH) -0.9%
  • Siltronic (WAF TH) -1.2%
SDAX:
  • ADVA Optical (ADV TH) +2.1%
  • Nordex (NDX1 TH) +1.3%
  • SGL (SGL TH) +1.1%
  • Borussia Dortmund (BVB TH) +0.9%
  • Suedzucker (SZU TH) +0.4%
  • Jenoptik (JEN TH) +0.1%
  • DIC Asset (DIC TH) Flat
  • Leoni (LEO TH) -0.1%
  • Heidelberger Druck (HDD TH) -0.6%
  • Aixtron (AIXA TH) -0.7%

FT : Coronavirus latest: China’s banks to face up to $1.1tn surge in questionabl

Coronavirus latest: China’s banks to face up to $1.1tn surge in questionable loans, S&P warns

China’s key lending rate has been cut as Beijing attempts to steady the country’s economy, which is reeling from the Covid-19 outbreak. More than 75,000 people have been infected with coronavirus globally, with South Korea reporting on Thursday a sharp rise in cases.


>>> What to look at today - 20th of February 2020

Stocks came under pressure in Asia and U.S. and European equity futures retreated after Japan reported two deaths from the coronavirus and cases in South Korea jumped, spurring concerns about the spread of the disease outside China.
Futures on the S&P 500 Index were down along with the offshore yuan after the Japanese report. The dollar rose against most Asian currencies, and held near the strongest against major counterparts since May 2017. Australia’s dollar reached its lowest against the greenback since the global financial crisis after a monthly jobs report underscored slack that may keep monetary policy easy. Treasuries edged up.
US After Hours STMP +32%, ZG +15% and MANT +10% are up big on earnings; TVTY -32% SAM -9%, OSUR -9% are heading lower on earnings

Nikkei +0.34% Hnag Seng -0.18% CSI +2.33% Shanghai +1.84% Shenzen +2.14%

Eur$ 1.0789 CNH 7.0245 CNY 7.0146 JPY 111.54 GBP 1.2903 CHF 0.9842 RUB 63.7155 TRY 6.0894 WTI$ 53.68 +0.73%

S&P -0.07% EuroStoxx -0.16% FTSE +0.05% Dax -0.10% SMI +0.05%

Macro :
- BofA Strategists Go All-In Behind Global Rally Built on Bad News
- U.S. Investor Bull-Bear Spread 11.9: AAII
- German March GfK Consumer Confidence +9.8; Est. +9.8 (Table)

Keep an eye on :
- AC FP : Accor Full Year Ebitda Meets Estimates, Accor CFO Says ‘Practically No Activity’ in China Hotels
- AIR FP : Airbus to Restructure Defense Unit, Cutting 7% of Workforce
- AF FP : Air France-KLM Warns of $216 Million Profit Hit From Coronavirus
- ALFEN NA : Infestos Cuts Alfen Stake to About 18.7% in Private Placement
- CS FP : AXA Profit Misses Estimates on Costs for CEO Buberl’s Revamp
- NOFI NO : Bank Norwegian Targets First Dividend as Profit Beats Estimates
- BAVA DC : Bavarian Nordic Full Year Revenue Beats Highest Estimate
- ATL IM : Benettons Reject Italy’s Latest Concession Offer: Repubblica
- BESI NA : BE Semiconductor Fourth Quarter Gross Margin Beats Estimates
- BFSA GY : Befesa Full Year Revenue Misses Lowest Estimate
- EN FP : Bouygues Telecom FY Free Cash Flow EU301m, Forecast EU300m
- CAI AV : CA Immo Sees Strong FY-Revaluation Gain of over EU450 Million
- CTM SS : Catena Media Sets New Financial Targets After Profit Warning
- CLN SW : Clariant Proposes Two Directors to Board as Nahas, Soave Resign
- CNP FP : CNP Assurances Full Year Ebit Beats Estimates
- ALCLS FP : Cellectis Rallies After Amended Collaboration Pact With Servier
- 1COV GY : Covestro Sees EU60M Hit to 1Q Profit from Coronavirus Impact
- DECB BB : Deceuninck Full Year Loss Per Share EU0.11 Vs. EPS EU0.11 Y/y
- DBK GY : Deutsche Bank Boosts Lending to Cash-Strapped Tycoons in India
- DLG GY : Dialog Semiconductor to Buy Adesto for $12.55/Share in Cash
- DUFN SW : Folli Follie Says Shares It Owns in Dufry Have Been Frozen
- EDPR PL : EDP Renovaveis Full Year Net Income EU475 Mln
- EKTAB SS : Elekta Third Quarter Operating Profit Beats Estimates
- ERA FP : Eramet Scraps 2019 Div., Mulls Disposals to Boost Fin. Structure
- EVS BB : EVS Broadcast 2020 Revenue Forecast Misses Estimates
- FIE GY : Fielmann Revenue in Line as Optician Sells 1.6% More Glasses
- FLS DC : FLSmidth Was Involved in Tunisian Corruption Case, Finans Says
- FME GY : Fresenius Medical FY Profit Stagnates, Confirms 2020 Goals
- FRE GY : Fresenius SE Full Year Adjusted Ebit 1.1% Above Estimates
- FPE GY : Fuchs Petrolub Prelim Full Year Profit After Tax Meets Estimates
- FUR NA : Fugro raises EU81.8m Through ABB of New Depository Receipts
- GAM SW : GAM Holding FY Underlying Pretax Profit CHF10.5 Mln
- GFC FP : Gecina Full Year Recurring Net Income Beats Highest Estimate
- HEIJM NA : Heijmans Says Outlook for 2020 Is at Comparable Level to 2019
- INH GY : Indus Holding Prelim Full Year Revenue Matches Estimates
- BAER SW : Julius Baer Admits Its Shortcomings in Fighting Money Laundering
- KIN BB : Kinepolis Full Year Revenue Beats Highest Estimate
- KRN GY : Krones Full Year Ebitda EU227.3 Mln, -26% Y/y
- LEAS BB : Leasinvest 2020 Dividend Per Share View Misses Lowest Est.
- FII FP : LISI Full Year Ebit Beats Highest Estimate
- MTU GY : MTU Aero Financial Plans for 2020 Depend on Coronavirus Impact
- KN FP : Natixis CIB Names Kallala Global Head of Global Markets
- NEX FP : Nexans 2020 Ebitda Forecast Midpoint Meets Estimates
- NDA SS : Nordea Board Seeks Approval to Buy Back Max. 5.56% of Shares
- NN NA : Elliott Takes Stake in Dutch Insurer NN and Pushes for Change
- PFV GY : Pfeiffer Vacuum Full Year Sales Meet Estimates
- RECIB SS : Recipharm Fourth Quarter Adjusted Ebitda Beats Highest Estimate
- RNO FP : Ghosn Probe in France Intensifies With Focus on Oman, Versailles
- RNO FP : Renault Gets Street-Low Price Target at Citi on Cash Concerns
- SU FP : Schneider Sees 2020 Adjusted Ebita Margin 16% To 16.3%
- SRAIL SW : Friedrich Merz Steps Down From Stadler Rail Board: WiWo
- SIVE SS : Sivers IMA Holding Offering Prices 5.96m Shares at SEK9/Share
- SREN SW : Swiss Re Full Year Combined Ratio Misses Lowest Estimate
- TEF SM : Telefonica Fourth Quarter Oibda Misses Lowest Estimate
- TEN IM : Tenaris Fourth Quarter Net Sales 1.1% Below Estimates
- TRN IM : Terna Full Year Revenue Meets Estimates
- TOM NO : TOMRA Systems ASA Fourth Quarter Revenue 1.2% Above Estimates
- FP FP : Fresenius Medical FY Profit Stagnates, Confirms 2020 Goals
- UBI IM : UBI Shareholders Group to Meet Thursday on Intesa Bid: Ansa
- UBSG SW : UBS to Name ING’s Ralph Hamers as Next CEO: FT
- UCB BB : UCB 2020 Revenue Forecast 1.7% Below Estimates
- UQA AV : Uniqa Full Year Pretax Profit 2.1% Above Estimates
- VK FP : Vallourec Names Guinotte CEO, Reappoints Mallet as CFO
- VK FP : Vallourec to Launch Rights Issue of About EU800m in 2Q Rights Issue Helps Vallourec Kick Debt Can Down the Road: React

>>> Europe : Brokers Upgrades & Downgrades - 20th of February 20

>>> Up
* Entra Raised to Overweight at Barclays; PT 175 kroner
* Euronext PT Raised to 88 euros from 78 euros at Deutsche Bank
* Inditex PT Raised to 36 euros from 31 euros at Citi
* Puma Raised to Outperform at RBC; PT 90 euros
* Puma Raised to Hold at MainFirst; PT 75 euros
* Suez Raised to Buy at HSBC; PT 19 euros
* Travis Perkins Raised to Buy at Citi; PT 1,900 pence
* United Utilities Raised to Hold at HSBC; PT 1,000 pence

>>> Down
* AB InBev Cut to Underweight at JPMorgan; PT 60 euros
* AB InBev ADRs Cut to Underweight at JPMorgan; PT $65
* Epiroc Cut to Sell at Pareto Securities; PT 105 kronor
* Glencore Cut to Hold at Renaissance Capital
* K+S Cut to Underperform at Credit Suisse; PT 7 euros
* National Grid Cut to Hold at HSBC; PT 1,075 pence
* Norma Cut to Hold at Pareto Securities; PT 37 euros
* Renault PT Cut to 20 euros from 30 euros at Citi

>>> Initiation
* Akasol Rated New Buy at Bankhaus Metzler; PT 60 euros
* Centamin Reinstated Outperform at BMO; PT 175 pence
* Global Fashion Group Rated New Buy at MainFirst; PT 2.50 euros
* Nexi Rated New Buy at Deutsche Bank; PT 21 euros
* Swedish Match Rated New Overweight at JPMorgan; PT 700 kronor

>>> Call
* Gecina FY Income Beats, Guidance Slightly Lower, Analysts Say
* Tenaris 4Q Misses, May Prompt Shares to Drop: Morgan Stanley
* Travis Perkins Positioned to Outperform on Market Recovery: Citi
* Renault Gets Street-Low Price Target at Citi on Cash Concerns

>>> Asian Update

Asia Market Update: Indices trade mixed and Asian currencies (ex Yen) decline as coronavirus continues to impact multiple countries; PBOC cut rates as expected but some want to see even more action; Trump meeting related to Huawei said to still be ‘on’


- Shanghai Composite trades above 3,000 despite weakness in yuan, steel producing region announces stimulus
- Shanghai Property index underperforms as some want more aggressive easing by the PBOC
- Hebei (China largest steel producing region) announces CNY50B (~$7.1B) special financing vehicle
- Hubei, which has been at the center of the coronavirus epidemic, is expected to sell ~CNY10B in bonds later today
- HK gaming companies trade broadly lower, Macau said it would reopen most of its casinos today
- Lenovo reported better than expected Q4 results, said vast majority of the Group’s factories in China have reopened and are operational on a limited basis, although its suppliers and even logistics services across the countries remained impacted
- Japanese equities pare opening gains, 2 passengers on Japan cruise ship said to have died from the coronavirus
- Softbank Group rises over 3%, reached agreement on up to ¥500B margin loan
- Australian earnings remain in focus, Qantas rises over 5% amid its earnings and capacity reductions
- USD/CNH trades above 7.04, China again set the yuan weaker than the ‘7’ level
- Aussie trades at lowest level since 2009 amid mixed jobs data and risk aversion
- Coronavirus concerns weigh on Korean Won (KRW), South Korea’s total external debt hits record high
- M&A flows in focus for USD/JPY: Japan’s Seven & I said to be in exclusive talks to buy Marathon’s Speedway for $22.0B
- There is speculation that China might bailout troubled conglomerate HNA Group
- China’s Commerce Ministry (MOFCOM) sometimes holds its weekly press conference on Thursday (comments generally seen during the early European morning)

***Headlines/Economic Data***
Australia/New Zealand
-ASX 200 opened +0.1%
- (AU) AUSTRALIA JAN EMPLOYMENT CHANGE: +13.5K V +10.0KE; UNEMPLOYMENT RATE: 5.3% V 5.2%E; Full Time Employment Change: +46.2K v -1.8K prior
- QAN.AU Qantas International will cut 16% of Asia capacity until at least the end of May due to coronavirus, guides FY20 Net profit to be negatively impacted by A$100-150M (lower fuel prices helping to make less impact)
- QAN.AU Reports H1 (A$) Net 445M v 463M y/y; underlying EBIT 900M v 916M y/y; Rev 9.5B v 9.2B y/y
- ORG.AU Reports H1 (A$) underlying Net 528M v 592M y/y; underlying EBITDA 1.6B v 1.7B y/y; Rev 6.7B v 7.7B y/y
- (NZ) New Zealand sells NZ$200M v NZ$200M indicated in 2.75% 2037 bonds; avg yield 1.7453% v 1.9229% prior; bid to cover 2.1x v 2.98x prior

Japan
-Nikkei 225 opened +1.1%
- (JP) Japan Fin Min Aso: No need to revise FY20 budget plan due to coronavirus measures
- (JP) Tokyo Stock Exchange (TSE) may require companies that do not meet listing requirements to delist as opposed to downgrading the companies to a lower market section - Japanese media
- (JP) Japan Investors Net Buying of Foreign Bonds: ¥1.42T v ¥1.63T prior week; Foreign Net Buying of Japan Stocks: -¥214.4B v ¥282.9B prior week
- 9984.JP Has pledged 953M shares related to Japan telecom unit as collateral for margin loan, seeking to borrow up to ¥500B (~$4.5B) (after the close yesterday)
- (JP) Japan MoF sells ¥900B v ¥900B indicated in 0.30% 20-year bonds; avg yield 0.2320% v 0.3000% prior; bid to cover 3.99x v 3.83x prior

Korea
-Kospi opened +0.6%
- (KR) According to Korea Economic Research Institute (KERI): South Korea GDP has nearly halved in the past two decades due to low productivity and regulations
- (KR) South Korea Vice Health Min: No talks of extra budget yet

China/Hong Kong
-Hang Seng opened +0.4%; Shanghai Composite opened +0.2%
- (CN) CHINA PBOC SETS 1-YEAR LOAN PRIME RATE (LPR) AT 4.05% V 4.15% PRIOR (4.05%E); SETS 5-YEAR LPR AT 4.75% V 4.80% PRIOR (4.75%E)
-(CN) China Hebei Govt: Established special financing vehicle with CNY50B (~$7.1B) to restore production and stabilize investment amid coronavirus outbreak
- (CN) China Hubei province coronavirus update for Feb 19th: 349 additional cases v 1.7K prior, Additional deaths 108 v 132 prior
- (CN) China National Health Commission: Hubei lowered its coronavirus case toll by removing clinically diagnosed patients with negative RNA test results
- 521.HK China govt reportedly close to taking over HNA Group amid business slowdown caused by coronavirus outbreak – press
- 2317.TW Warns China caution to have negative impact on FY20 Rev, will be cautious about restarting production in China - press
- (CN) China Transport Ministry: Lunar new year travel 1.48B trips, -50% y/y (20-year low) - press
- (CN) China PBoC quarterly monetary policy report: Fundamentals of domestic economy have not changed but faces several challenges; reiterates its prudent but flexible monetary policy stance
- (CN) China Jan Swift Global Payments CNY: 1.65% v 1.94% prior
- (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 3rd consecutive time, Net CNY0B v drains CNY0B prior
- (CN) China PBOC sets Yuan Reference Rate: 7.0026 v 7.0012 prior (2nd consecutive weaker setting)
- (CN) China PBOC recent stress test showed 17 of 30 local banks would fail to meet their capital adequacy ratio if growth slowed to 4.15% - SCMP
- 992.HK Reports Q3 Net $258M v $233M y/y, Rev $14.1B v $14.0B y/y

North America
- ORCL Trump Administration said to support the company in its supreme court case vs. Google – Press
- MPC Japan's Seven & I said to be in exclusive talks to purchase Marathon Speedway for $22.0B - financial press
- LB Follow Up: Said to be close to deal to sell 55% stake of Victoria Secret to Sycamore Partners for $1.1B; Leslie Wexner is expected to step down as CEO and Chairman, but remain on board - financial press

Europe
- (DE) German Fin Min Scholz: no signs of Germany economy entering a recession; we'll stick to 2020 GDP growth forecast of 1.1% despite coronavirus risks

***Levels as of 12:15ET***
- Hang Seng -0.8%; Shanghai Composite +0.8%; Kospi -0.5%; Nikkei225 +0.5%; ASX 200 +0.2%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.2%, Dax -0.3%; FTSE100 -0.2%
- EUR 1.0816-1.0792; JPY 111.50-111.11; AUD 0.6696-0.6630; NZD 0.6395-0.6352
- Commodity Futures: Gold 0.0% at $1,611/oz; Crude Oil +0.4% at $53.72/brl; Copper -0.4% at $2.60/lb

WSJ : V ictoria’s Secret to Go Private at $1.1 Billion Valuation

Victoria’s Secret to Go Private at $1.1 Billion Valuation
Leslie Wexner is expected to step down as L Brands chairman and CEO after selling control of lingerie brand

L Brands Inc. is near a deal to sell control of Victoria’s Secret to a private-equity firm in a transaction that values the lingerie brand at about $1.1 billion, according to people familiar with the matter.

Sycamore Partners is expected to buy 55% of Victoria’s Secret and take the struggling business private, the people said. L Brands is expected to keep a 45% stake in the separate company, which will include the Pink chain. After shedding several brands in recent years, L Brands’ operations would be reduced to running the Bath & Body Works chain.

Leslie Wexner, the embattled billionaire who has run the retail company for more than 50 years, will step down from his roles as CEO and chairman, the people said. He is expected to remain on the L Brands board and retain stakes in both companies, they said. He currently owns about 17% of L Brands shares.


A deal could be announced as soon as Thursday, these people said. The Wall Street Journal first reported that L Brands was in talks with Sycamore and that Mr. Wexner was in discussions to step aside as chief executive of the company.

A $1.1 billion valuation would mark a sharp fall for a business that operates hundreds of stores, elevated the profiles of supermodels like Tyra Banks and Gisele Bündchen, and generated about $7 billion in annual sales in its last fiscal year.

L Brands ended Wednesday with a market capitalization of around $7 billion, down from $29 billion at its peak in 2015. The Columbus, Ohio, company has about $5.5 billion in net debt, which will be retained by L Brands, the people said.

Sycamore Partners has scooped up several troubled apparel brands and bricks-and-mortar chains, including The Limited, Hot Topic, Nine West and Staples. It bought a 51% stake in an apparel sourcing business from L Brands in 2011—the year Sycamore was formed—and bought the remainder in 2015.

Mr. Wexner, 82 years old, who built Abercrombie & Fitch, The Limited and Victoria’s Secret into national chains, would be handing over the job after a difficult stretch for his retail business and in his private life. Shares in L Brands have tumbled amid slumping sales at Victoria’s Secret and Mr. Wexner has come under scrutiny for his close ties to Jeffrey Epstein, his longtime money manager.


Mr. Wexner has said he regretted his involvement with Mr. Epstein and that he didn’t know about his alleged criminal behavior. He also said he cut ties with the financier more than a decade ago. Mr. Epstein was indicted last summer on federal sex-trafficking charges stemming from an alleged scheme to exploit underage girls. He died in August while in a New York City prison awaiting trial.

Victoria’s Secret, with its emphasis on supermodel “Angels” wearing padded bras, has long dominated the U.S. lingerie market but has struggled in recent years with falling sales. It has lost some women to upstart brands that promote comfort and inclusivity. Last year, Victoria’s Secret canceled its televised fashion show and later said the longtime architect of its overtly sexy marketing, Edward Razek, was leaving.

Last year, the New York activist hedge fund Barington Capital Group LP built a small stake in L Brands and urged the company to consider splitting the fast-growing Bath & Body Works chain from Victoria’s Secret. L Brands added two new directors and signed an agreement with Barington to have the fund serve as a special adviser.

In the nine months ended Nov. 2, Bath & Body Works accounted for about $3 billion of the company’s $8.2 billion of revenue. Bath & Body Works revenue rose 12% in that period from a year ago, while the rest of the company’s revenue declined.