TheChek News Flow

The fight between the two sides of newly merged EssilorLuxottica escalated sharply on Wednesday with the French company warning its Italian partner against a “take over with no premium to shareholders of Essilor.”

Essilor, the biggest manufacturer of lenses in the world, agreed to merge with Luxottica, the world’s leading consumer eyewear group, at the beginning of 2017. But the merger has been mired by suggestions of a governance clash between the founder-run Italian family business and the French publicly run company.

That clash has intensified since November when the 83-year-old chairman of the combined group and its largest shareholder, Leonardo Del Vecchio, told Italian media that he would put his confidant Francesco Milleri “forward as the CEO of EssilorLuxottica.”

That move raised hackles at Essilor with the Financial Times reporting that the French company sees Mr Milleri as too inexperienced to lead the combined group of over 150,000 employees and more than €16bn in revenues.

People close to Essilor have said that a scheduled search for a “professional CEO” has been stalled due to the conflict and suggested Hubert Sagnières, Essilor’s 63-year-old chairman and vice-chairman of the group, could also take the reins temporarily.

On Tuesday evening, in an apparent attempt to lower tensions, a spokesperson from Delfin, the holding company of Mr Del Vecchio, said that the Italian businessman’s comments “shouldn’t be interpreted as his desire to appoint” Mr Milleri as CEO.

Rather Mr Del Vecchio was “expressing his desire to delegate to Mr Milleri some operational functions of his role as executive chairman of EssilorLuxottica to be exercised jointly with Mr Sagnières”, and that “it is understood that this proposal would not alter the balance of powers between Mr Del Vecchio and Mr Sagnières”.

However, on Wednesday evening, a spokesperson for Essilor said that the “delegation of such power” by Mr Del Vechhio alone is not addressed in the “business combination agreement” between the two companies, and would need the agreement of Mr Sagnières.

“Only the [EssilorLuxottica] board will decide for the key executives including the CEO. A unilateral nomination by the Executive Chairman is a sign of take over with no premium to shareholders of Essilor by Delfin,” added the spokesperson.

EssilorLuxotica will hold a board meeting next Monday where the governance issues will be discussed, said people familiar with the matter.

Delfin, responding to Essilor, said it was “ surprised by Essilor’s reaction” and reiterated its statement of Tuesday to fully comply with the provisions of the combination agreement.

Asian stocks traded mixed Thursday as investors digested a slew of economic data from the U.S. and China. The pound gave back some of Wednesday’s surge as traders positioned for the next steps in the Brexit saga.

Shares fluctuated in Hong Kong and Japan, and declined in China after its retail sales data was in line with expectations and industrial production data slightly below. European futures were little changed. Earlier, the S&P 500 Index climbed to a four-month high after U.S. business equipment orders increased by the most in six months and a producer price index signaled modest pressure on inflation. Treasury yields ticked higher with the dollar and the yen weakened.

US after Hours MDB +19%, DOMO +13%, TLRD -18%, CLDR -13% among the notable earnings/guidance movers

Nikkei -0.02% Hang Seng -0.08% CSI -0.69% Shanghai -1.20% Shenzen -2.31%

Eur$ 1.1318 CNH 6.7185 CNY 6.7132 JPY 111.59 GBP 1.3262 CHF 1.0043 RUB 65.4696 TRY 5.4707 WTI$ 58.39 +0.22%

S&P -0.13% EuroStoxx -0.09% FTSE -0.06%

Macro :

-China’s Slowdown Hits Employment Even as Recovery Signs Emerge

Keep an eye on :

- AALBA NA : Aalberts Industries Plans to Name Arno Monincx as Finance Chief

- ABN NA : ABN Amro Management Given Areas of Improvement by ECB: Telegraaf

- ARGX BB : Argenx to Get $30M Milestone Payment from AbbVie for ABBV-151

- AST IM : Salini Is Said to Face Pressure to Rescue Construction Industry

- PSOT AV : Austrian Post Full Year Ebit Meets Estimates

- AV/ LN : Maciej Karasinski to Take Over as CEO of Aviva’s Polish PTE Unit

- BATS LN : BAT Responds to Flavoured Product Statement, to Work With FDA

- GBB FP : Bourbon Says Oil, Gas Majors Boosting Investment Commitments

- CARLB DC : Carlsberg Freezes CEO Pay After Criticism, Borsen Reports

- CA FP : Carrefour Lures West Africa Shoppers From Markets Into Malls (1)

- CO FP : Casino Raises Asset Disposal Plan to at Least EU2.5b by 1Q 2020

- CERV IM : PE Firms Are Still Interested in Cerved, CTFN Says

- COTN SW : Comet Can’t Make Forecast Due to Poor Chip Market Visibility

- DEZ GY : Deutz Full Year Dividend Per Share Matches Estimates

- DUFN SW : Dufry Full Year Sales Meet Estimates

- ELG GY : Elmos Semi Full Year Revenue Meets Estimates

- FRU GY : Ferratum Full Year Revenue 1.7% Above Estimates

- GTO NA : Thales Sets March 28 as End Date of Gemalto Acceptance Period

- G IM : Generali Full-Year Profit Increases on Disposals, Life Insurance

- G1A GY : GEA Raises ’19 Oper. Ebitda View On Accounting Change

- ICAD FP : Icade Names Frédéric Thomas Chairman to Replace Martinez

- SDF GY : K+S Sees ‘Significantly Higher’ Earnings as 2018 Beats Estimates

- KCO GY : Kloeckner Loses Final Sell Rating as Lampe Sees IFRS 16 Support

- KOMN SW : Komax Sees 10%-20% Drop in Order Intake and Revenue in 1H

- MMB FP : Lagardere Sees 2019 Recurring Ebit Up 4%-6%

- LDO IM : Leonardo Results Beats Guidance, Revenue Rises to EU12.4b (1)

- LXS GY : Lanxess ’18 Adj. Ebitda Matches Ests, Sees Similar Level in ’19

- LNZ AV : Lenzing Sees 2019 Profit Stable; Net Income Misses Estimate

- LLBN SW : Liechtensteinische LB Full Year Operating Income CHF399.7 Mln

- LHA GY : Lufthansa Sees 2019 Eurowings Result at Break-Even Level

- MOR GY : MorphoSys Fourth Quarter Ebit Loss Wider Than Estimates

- RAA GY : Rational Full Year Dividend Per Share Misses Lowest Estimate

- RNO FP : Mitsubishi Motors: No Plans for Capital Investment in Alliance

- RRTL GY : RTL Sees 2019 Revenue +2.5% To +5%

- G24 GY : Scout24 Holder Pulver BidCo Reports 3.41% Voting Rights

- RWE GY : RWE to Raise 2019 Dividend in Challenging Year for Fossil Power

- LNSX GY : Sixt Leasing Sees Op. Revenue, Pretax Stagnating in 2019, Sixt Leasing Cuts Operating Rev. and EBT Target For 2021

- SREN SW : Swiss Re CEO Mumenthaler Gets 11% Raise on Higher Variable Pay

- SZU GY : Shrinking in EU Sugar Output May Be Hitting Hiccups, CBA Says

- SWEDA SS : Swedish FSA, U.S. Embassy Held Meeting About Laundering, DI Says

- TUI LN : TUI Dividend Covered, Valuation Attractive, Morgan Stanley Says

- VIFN SW : Vifor Pharma Sees 2020 Net Sales Exceeding CHF2B

- WAC GY : Wacker Neuson 2019 Revenue View Midpoint 2.0% Above Est.

* Aryzta Upgraded to Buy at Baader Helvea; PT 1.60 Francs