TheChek News Flow

- Heavy Russian attack on the Ukrainian front in northern Lugansk province. Heavy weapons used. Dead and wounded on both sides. Attack lasts for four hours now. At least one Ukrainian position temporarily overrun. Ukrainian reinforcements on the way.

* BioMerieux Raised to Buy at SocGen; PT 106 euros

* Carrefour Raised to Buy at Goldman; PT 20 euros~

* Caverion Oyj Raised to Hold at Carnegie (+)

* CompuGroup Raised to Buy at M.M. Warburg; PT 75 euros (+)

* CS Group SA Raised to Add at Gilbert Dupont; PT 5.30 euros (+)

* Deutsche Boerse Raised to Buy at Commerzbank; PT 174 euros (+)

* EDF PT Raised to 16 euros from 13 euros at Morgan Stanley

* Elmos Semi Raised to Buy at M.M. Warburg; PT 31.50 euros (+)

* President Raised to Buy at Peel Hunt

* REC Silicon Raised to Buy at Arctic Securities; PT 6 kroner

* Severn Trent Raised to Neutral at JPMorgan; PT 2,550 pence

* Siltronic PT Raised to 95 euros from 75 euros at Deutsche Bank

* Vivendi Raised to Buy at LBBW; PT 30 euros

* Wulff-Group Raised to Accumulate at Inderes; PT 2.15 euros (+)

>>> Down

* Alstom Cut to Neutral at JPMorgan; PT 47 euros

* Coca-Cola HBC Cut to Neutral at Citi (+)

* Danske Bank Cut to Underperform at BofA (+)

* Glaxo PT Cut to 1,840 pence from 1,930 pence at Liberum

* Krones Cut to Hold at Bankhaus Metzler; PT 73 euros

* Mobilezone Cut to Hold at MainFirst; PT 11.50 Swiss francs

* TOMRA Systems ASA Cut to Hold at Handelsbanken; PT 292 kroner

* UBI Banca Raised to Accumulate at Banca Akros (ESN) (+)

* Umicore Cut to Hold at Investec; PT 45 euros (+)

* Vicat Cut to Hold at SocGen; PT 42 euros

* Vopak Cut to Neutral at Credit Suisse; PT 53 euros

>>> Initiation

* Acciona Resumed Buy at Citi; PT 126.40 euros (+)

* Blancco Tech Rated New Buy at Investec; PT 290 pence (+)

>>> Call

* BHP 1H Ebitda in Line, Costs Guidance Unchanged: Citi (+)

* Carrefour at ‘Material Discount’ as Growth Accelerates: Goldman (+)

* Coca-Cola HBC Downgraded at Citi on Limited Catalysts Ahead (+)

* Deutsche Boerse 4Q Has No Surprises, Guidance In Line: Jefferies

* Kone CEO Says Upfront Fee for Elevators Too Risky: Kauppalehti

* Straumann’s New Product Rollouts Power Growth, Jefferies Says (+)

Deal would clear up uncertainty that had shrouded Legg Mason’s future for nearly a year

Franklin Resources Inc. BEN 0.62% is in talks to buy rival asset manager Legg Mason Inc., LM -0.10% according to people familiar with the matter, in a deal that could help two big players in an industry that is under pressure from shifting investor tastes.

Assuming it comes together, a deal for Legg Mason could be announced as soon as Tuesday, the people said. While the exact price and other terms couldn’t be learned, it would be sizable given Legg Mason’s market value of more than $3.5 billion and assets under management of $800 billion.

Legg Mason owns a portfolio of nine investment managers that operate under their own brands, including bond specialist Western Asset Management and stock picker ClearBridge Investments.

California-based Franklin Resources, with a market value of $12.1 billion, manages nearly $700 billion, including both stock and bond investments. The company operates under the Franklin Templeton brand.

Many so-called active asset managers including Legg Mason and Franklin Templeton have struggled to adapt to the flow of hundreds of billions of dollars in client money into low-cost funds that track popular indexes. The shift away from managers that actively pick stocks has crimped profits at those firms and forced them to hunt for new sources of revenue and ways to slash expenses, such as mergers.

A deal would clear up uncertainty that had shrouded Legg Mason’s future for nearly a year, since activist investor Trian Fund Management LP took a stake in the company and secured representation on its board.

Trian executives said last year they would help Legg Mason cut costs and boost revenue to shore up profit margins that have lagged behind those of many of its peers. They also argued the firm could emerge as a buyer in an industry many executives and their advisers say is ripe for consolidation.

Trian’s chief executive, Nelson Peltz and its investment chief, Ed Garden, are Legg Mason directors. The firm previously owned Legg Mason stock from 2009 to 2016, and Mr. Peltz sat on its board then before stepping off in 2014.

Trian rebuilt a stake in Legg Mason as the money manager was seeking to repair frayed relationships with some of its affiliates.

In early 2019, Legg Mason Chief Executive Joseph Sullivan unveiled a plan to centralize an array of services and functions spread across the firm’s money-management affiliates. In doing so, he told analysts, Legg Mason could shed as much as $110 million in annual costs.

There was one problem: Many of the firm’s affiliates, including its biggest, Western Asset Management, resisted the move. And thanks to an agreement the bond manager had signed decades earlier, Western’s executives had little incentive to go along.

The affiliates pushed back at Mr. Sullivan’s efforts to centralize, arguing they would lose oversight of operations, human resources and other functions core to their success, people familiar with the matter have said. The affiliates use Legg Mason’s shared sales platform to distribute their funds to individual investors, but some, including Western, also rely heavily on their own teams.

Mr. Sullivan went public with his plan despite the pushback, triggering an uprising of sorts by the managers. He relented within days, narrowing the cost-cutting plan’s focus to the parent company’s operations. In May, he announced plans to slash 120 corporate jobs and shrink his management team.

From Lewandowski to Pulisic to Sancho, there is no team that spots value like Borussia Dortmund

Dortmund, Germany

Before Borussia Dortmund could be European soccer’s smartest talent spotter, it had to go almost broke.

It was 2005 and times should have been better. Dortmund was just eight years removed from winning the Champions League and three from a Bundesliga title. But in this normally staid corner of Germany, success bred recklessness. The club started spending euros like it was printing them. When it needed more, it launched a disastrous IPO. The share price lost half its value in the first year.

There is a specific German word for Dortmund’s situation in those days. That German word is unprintable.

“We were not dead,” sporting director Michael Zorc said in an interview here, “but nearly dead.”

Dortmund is back in the Champions League round of 16 on Tuesday, but back then it didn’t have a choice. The only players it could afford were young and unproven. And if the club was ever going to challenge Bayern Munich again, it needed to figure out which of them might have a future. What happened over the next 15 years became one of the greatest hunts for value in modern sports.

Though Zorc said the club still whiffs on plenty of young talent, no one seems to hit so spectacularly and so often as Dortmund. The list of teenage and early-20s sensations to pull on Dortmund’s black-and-yellow jersey is the envy of European soccer.

Over the years it has included Poland’s Robert Lewandowski, Germany’s Marco Reus and Mats Hummels, England’s Jadon Sancho, Gabon’s Pierre-Emerick Aubameyang, and the captain of the U.S. national team, Christian Pulisic—all acquired before their careers exploded. The latest member of that club is Erling Haaland, a 19-year-old from Norway who joined this winter. He’s still coming off the bench, but already has nine goals in six games. In January, he averaged one for every 11.8 minutes he spent on the field.

“They know that Borussia Dortmund is the hottest spot to be for a 17- or 18-year-old boy who wants to become a top player in Europe,” Zorc said.

Dortmund’s pitch is simple: Come to this post-industrial corner of Germany and play significant minutes, in bigger games, at a younger age than anywhere else. Because despite its commitment to youth, Dortmund still manages to keep itself in Bundesliga title races and qualifies for the Champions League.

Plus, Zorc tells them, it’s all going to happen in a bumping stadium packed with 81,000 of the loudest fans in Europe.

To hammer home the point, he slides a printout of Dortmund’s most recent starting lineup across the table and starts reeling off ages. “Look, he’s 20. He’s 19. He’s 17,” he tells targets. “It’s not a promise or a dream. That’s the reality we are facing every Saturday…And of course, we are still a massive club.”

The club it is facing on Tuesday couldn’t make the contrast any clearer. If Dortmund is Europe’s shrewdest investor, Paris Saint-Germain might be its most extravagant. The PSG tandem of Neymar and Kylian Mbappé alone cost over $430 million. That’s more than Dortmund’s entire first 11.

Dortmund’s rebuilding project after the crisis happened to coincide with a larger rethinking of talent development in German soccer. Everyone was suddenly investing in its academies and promoting from within.

Then, in 2008, Dortmund found a bearded, bespectacled coach from the Black Forest with a penchant for hugging to nurture the talent. His name was Jürgen Klopp. At the time, he’d only ever managed Mainz 05, a team that yo-yoed between the top two divisions.

Klopp and Dortmund became the only club to unseat Bayern in the 2010s, winning back-to-back Bundesliga titles in 2011 and 2012. His lineups in those days were, on average, younger than 24.

That unflinching commitment to youth remained a condition for every one who followed Klopp, from Thomas Tuchel (now of PSG) to current head coach Lucien Favre.

“For me, it’s not a contradiction,” Zorc said. “You can use young players to win.”

Especially when they graduate from Dortmund’s own youth academy, one of the finest finishing schools in soccer. This is where Pulisic came to hone his craft after leaving Hershey, Pa., at the age of 15. Another young American, Gio Reyna, who happens to be the son of former U.S. national team captain Claudio Reyna, arrived last January at age 16 after being spotted at a youth tournament. “Born in 2002!” shouted Zorc, who has children older than Reyna.

The transition from academy to first-team happened so early that Reyna won’t move out of the academy dorms until the end of the season. “Are you really still living here?” Manager Lucien Favre asked him outside his building this month.

Dortmund’s track record means that convincing young players to move to the North Rhine rather than, say, Catalonia or Manchester or London, where teams can more readily sign expensive players in their primes, is easier today than it was a decade ago. Zorc said he is offered a couple of dozen players every week.

“Most of the work is to say, ‘No, no, no, no,’” Zorc said. “It’s easier only on the one hand, because we can show what we did…But on the other hand, there are so many clubs now going for the same player.”

Dortmund’s latest coup was beating Manchester United to signing Haaland, the 6-foot-4, 192-pound scoring machine from Norway. Though United could offer the kid more money, greater global reach, and even a Norwegian manager, Haaland said he’d had his eye on Dortmund forever. Dortmund, in turn, had been watching him since he was crushing other teenagers in Norway three years ago.

The challenge once Dortmund identifies and signs those players is keeping them for a few years. And unlike American sports, the club rarely has much say. French forward Ousmane Dembelé spent only one season, from age 19 to 20, before forcing a move to Barcelona.

“But at least it was well rewarded,” Zorc said. Dortmund received $135 million for him. Twelve months earlier, it had paid just 12% of the price.

Over the past decade, Dortmund has pulled one of the most improbable feats in top-level soccer: coming out ahead in player trading. (The club is up in excess of $120 million in transfer fees, according to TransferMarkt.)

Pulisic left for Chelsea last January for around $75 million. Sancho, who came to Germany from Manchester City for around $10 million, could leave this summer for 15 times as much, according to reports in the U.K.

Not that the balance sheet matters much to supporters. They trust Dortmund to keep the talent rolling in.

“If you have 81,000 fans in our stadium, they are not interested in our bank account,” Zorc said. “They want to win. They want to watch good football.”

Rival auto makers struggle to become more Tesla-like

As longtime auto makers try to sell investors on their visions for the future, they keep hearing the same thing: What about Tesla?

Investors increasingly see the future of the car as electric—even if most car buyers haven’t yet. And lately, those investors are placing bets on Tesla Inc. to bring about that future versus auto makers with deeper pockets and generations of experience.

Tesla’s stock is up 91% this year through Friday. That rise has been attributed to Chief Executive Elon Musk showing some leadership stability and executing on some promises, including two consecutive quarters of profit. And also to trader overexuberance.

But investors and analysts also say it reflects a view that the moment for electric vehicles is arriving.

Tesla, to a large extent, has become the purest proxy for betting on electric vehicles. Early on it ditched plans for a hybrid electric car—the kind of part-gas, part-electric half-measure favored by traditional auto makers for improving fuel efficiency. More than just selling an electric car, Mr. Musk has crafted an aura around Tesla with a stated mission of accelerating the world’s transition to sustainable energy.

The excitement around Tesla’s stock signals the market believes the company will be “the sole winner” in the move to electric vehicles, Brian Johnson, an analyst for Barclays, told investors in a note this month. He also compared the stock run-up with the overvaluations of the tech boom of the 1990s.

When Tesla on Thursday announced it would issue new shares to raise more than $2 billion, shares rose more than 4%. The money gives Tesla more financial muscle to fund models and factories.

Meanwhile, top executives at rivals such as General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV in recent days have faced pointed questions about the Silicon Valley electric-car maker as Tesla’s market value continued its meteoric rise.

When Tesla was founded 16 years ago, the idea of electric cars competing, let alone replacing gas guzzlers, seemed far fetched. But more recently, falling battery prices, pressure from governments such as China to reduce pollution through a shift to electric vehicles and an increasing focus on climate change more broadly have heightened expectations that adoption might be attainable.

Tesla wasn’t the first car maker to embrace electric cars. GM seemed to be cutting a new path in the 1990s with the development of the EV1 only to be cast as a villain when it killed off the two-door car years later to the anger of loyal California customers.

As a startup, Tesla focused on more than just swapping a gasoline engine for an electric motor. It developed expertise in software and battery technology and pioneered a direct sales model (skipping franchise dealers) that once seemed largely impossible in the U.S. It made costly missteps, too: Its extreme focus on automating the assembly line and battery factory almost led to the collapse of the company in 2018 as it worked to untangle the mess.

But many investors have been willing to overlook the fits and starts, especially as 100-year-old car giants have struggled with their own existential challenges—bankruptcies, fatal recalls and emissions-cheating scandals.

Tesla’s Model 3 compact car, which fueled its 50% delivery growth last year, has helped show a market exists for fully electric cars, and analysts predict Tesla could turn its first full-year profit this year.

Tesla global deliveries last year represented a fraction of world-wide new vehicle sales but almost one in four of full-electric deliveries. Supporters believe that means there is exponential growth ahead, while others question if customers really want EVs. Fully electric vehicles represented just 1.9% of sales last year while researcher LMC Automotive predicts that share could grow to 11% in 2027.

All that has led senior executives at traditional auto makers to race to put Tesla-killers on the road in coming years. Volkswagen AG ’s luxury-car brands Audi and Porsche and GM’s GMC brand showed off electric vehicles on Super Bowl Sunday. Ford, BMW AG and others also plan electric-vehicle model releases this year.

“If Tesla proves to be profitable…we think this removes one of the biggest impediments for why legacy [auto makers] were hesitant to go ‘all in’ on EVs,” Adam Jonas, a Morgan Stanley analyst, wrote in a note to investors last week.

Tesla rivals first tried to compete with modest models. The Chevrolet Volt and Nissan Leaf targeted buyers who executives believed would be motivated by environmental concerns or desires for gas savings. Mr. Musk bet performance and cool would win out.

Now the industry is moving in that direction, too, offering sport-utility vehicles, high-end sedans and sports cars. Car companies have announced $225 billion in electric-vehicle investments by 2023, according to AlixPartners LLP, a consulting firm. So far, however, none of the offerings from GM and Volkswagen’s Audi and Porsche have ignited the same kind of excitement or sales as Tesla’s Model 3.

Even when legacy car makers embrace electric vehicles, they can stumble. Daimler AG , the maker of Mercedes-Benz, blamed part of its fourth-quarter loss on the challenges and costs of switching over to electric-powered cars. The problem for electric cars remains similar to what it was back with GM’s EV1: battery cost. Tesla has found ways to reduce those costs, but it is still a battle for all.

Following another disappointing quarter earlier this month, Ford CEO Jim Hackett tried to assure skeptics that he was preparing the auto giant for the future. “Tesla’s now worth over 5x the market cap of Ford,” an analyst pressed him. “What’s the message the market’s sending Ford?”