>>> Whitbread – M&A fizz could add to Costa/Coke pop

Whitbread – M&A fizz could add to Costa/Coke pop (MergerMarket.com

Whitbread’s [LON:WTB] half-year numbers, reported 23 October, were the first since it agreed to sell Costa Coffee to Coca-Cola [NYSE:KO] for GBP 3.9bn.

Presented on a continuing operations basis, it was investors’ first opportunity to look in detail at the future shape of the business now focused around the hotel chain Premier Inn.

Whitbread still trades at a low valuation relative to key peer Intercontinental Hotels [LON:IHG] , according to Flash analysis, so perhaps upcoming cash proceeds from Coke might prompt an opportunistic bid for the remaining Premier Inn assets.

Hotels owner-operator Whitbread trades at a price-to-earnings ratio of 11.6x after backing out cash expected to be received from the GBP 3.9bn sale. Intercontinental, its closest peer, according to a banker previously spoken to by this news service, trades at a PE ratio of 19.0x.

Whitbread’s market value is GBP 8.0bn but falls to GBP 4.1bn on the assumption that all cash is returned to shareholders. Management said following the deal it expects to return “a significant majority” of the Costa proceeds to shareholders. Some of the cash has been earmarked for Whitbread’s pension fund, though the vehicle already looks well-funded.

Premier Inn and Restaurants and Pubs, Whitbread’s remaining business, have GBP 4.2bn of tangible assets against net debt of GBP 881m and net defined benefit pension obligations of GBP 162m. Enterprise value ex-Costa proceeds is GBP 5.2bn for an EV/gross assets ratio of 1.3x.

Balance sheet figures may also underestimate the value of Whitbread’s assets and therefore overstate its valuation. Freehold property, which was carried at a book value of GBP 3.4bn at Whitbread’s 31 March year-end, has a market value in the region of GBP 4.1bn to GBP 5.1bn, according to comments by CEO Alison Brittain in a 31 August conference call.

Whitbread’s unadjusted EV/gross assets ratio of 1.2x compares to IHG’s 5.4x. Differing business models probably explain most of this: Whitbread is an owner-operator while IHG operates a franchise system. Even so, it seems fair to assume the Premier Inn brand would warrant some premium over book value in a buyout scenario.

Scenarios at Whitbread are of course wider than a third-party buyout. Management will update the market on Whitbread’s post-Costa capital structure, the future of its 727 pubs and restaurants which were barely mentioned at half-year results and possible M&A of its own.

Trading at a sizeable discount to IHG, and soon to receive half its market value in cash, it’s fair to assume property investors and rivals will be keeping a close eye on developments at Whitbread. Proceeds from the Costa deal are conditional on anti-trust approvals being received for the sale.

Reuters : Deutsche Bank pulls sale of Mexico unit to local bank

Deutsche Bank pulls sale of Mexico unit to local bank

MEXICO CITY (Reuters) - Deutsche Bank (DBKGn.DE) said on Sunday it planned to terminate an agreement to sell its Mexican assets to local bank Accendo Banco, without giving further details.

“We will continue to keep the best interests of our employees and clients in mind as we consider alternative options,” the bank said in a statement.

Accendo said in a statement that it did not agree with the plan to suspend the deal and that it was still analyzing it.

Accendo announced the deal in late 2016 but was forced to put it on hold after a shareholder was arrested in the United States on charges of laundering more than $100 million.

Mexico’s banking regulator last year cleared the bank of wrongdoing in connection with the U.S. charges, allowing the acquisition to continue, although it imposed $1.3 million in fines on the bank for lesser violations.

La Tribune : Fréquences 5G : le régulateur veut éviter une flambée des prix

C'est parti. Vendredi dernier, l'Arcep, le régulateur des télécoms, a donné le coup d'envoi d'une consultation publique concernant l'attribution des prochaines fréquences 5G. Dans les semaines à venir, les opérateurs télécoms, mais aussi tous les acteurs concernés de près ou de loin par cette nouvelle génération de communication mobile, sont invités à répondre à un long questionnaire. Leurs réponses permettront, au final, à l'Arcep de proposer au gouvernement différentes solutions pour attribuer ces fréquences. Lesquelles constituent des ressources vitales pour les Orange, SFR, Bouygues Telecom et Free, dont les premiers déploiements commerciaux de la 5G sont attendus en 2020.
Surtout, l'Arcep, qui souhaite que l'appel d'offres pour ces fréquences intervienne à la mi-2019 - comme Sébastien Soriano, son président, l'a indiqué à La Tribune le mois dernier - veut éviter un « scénario à l'italienne ». Récemment, les enchères pour les fréquences 5G ont atteint des sommets de l'autre côté des Alpes. Les opérateurs ont déboursé plus 6,5 milliards d'euros. Un montant astronomique, qui a laissé pantois analystes et observateurs. A leurs yeux, cette flambée des prix pourrait déboucher sur un « bain de sang » dans l'industrie du mobile. Etant donné que celle-ci devra, d'une manière ou d'une autre, se débrouiller pour rentabiliser cette énorme dépense.
Une « martingale » à trouver
Selon Reuters, Sébastien Soriano cherche « la parade », écrit l'agence économique, pour ne pas se retrouver en France dans une situation similaire, tout en se montrant prudent.
« Je ne peux pas encore vous dire que pour moi, l'Italie est un contre-exemple tant que je n'ai pas complètement trouvé la martingale pour qu'on fasse les mêmes choses, affirme-t-il à Reuters. Il y a une loi d'airain qui est celle de la rareté. Plus il y a d'acteurs qui veulent une ressource limitée, et plus cela crée une attribution qui est compétitive. »
Il renchérit :
« Il y a une équation encore à résoudre. Pour éviter que la compétitivité de l'attribution ne se transforme en prix élevés, il faut être inventif. »
Un temps évoquée, la possibilité d'un nouveau « New Deal », où l'Etat céderait des fréquences en échange d'importantes obligations de couverture semble écartée. Pour autant, le gouvernement ne serait pas dans une logique de faire payer le plus possible les Orange, SFR, Bouygues Telecom et Free. Lesquels bataillent dans un marché ultra-concurrentiel, et sont en parallèle confrontés à de très lourds investissements dans la fibre et dans la 4G. Cet élément est fondamental. Si les enchères se sont enflammées en Italie, c'est d'abord parce que Rome a délibérément mis en place un règlement pour récupérer un maximum d'argent.
Eviter des enchères « irrationnelles »
Reste que l'Arcep est confrontée à plusieurs défis pour définir les modalités de l'appel d'offres et les obligations à venir des opérateurs. En particulier, plusieurs bandes de fréquences concernées ne seront pas disponibles tout de suite. Certaines sont, par exemple, déjà utilisées par des chaînes de télévision, les ministères de l'armée et de l'Intérieur, et ne pourrait pas être libérées avant 2023, voire 2026. Le risque, c'est qu'au moment des enchères, les fréquences disponibles soient jugées insuffisantes aux yeux des opérateurs pour déployer leurs services.
Du côté des cadors du mobile, on multiplie les signaux d'alerte pour éviter un scénario à l'italienne. Fin septembre, alors que les enchères crevaient le plafond en Italie, Didier Casas, directeur général adjoint de Bouygues Telecom, a tiré la sonnette d'alarme. « En Italie, le mécanisme des enchères des fréquences est dangereux, a-t-il affirmé lors d'un forum sur les télécoms organisé par Les Echos. Les enchères montent de manière irrationnelle. » Même son de cloche chez l'opérateur historique. En Italie, « on hésite entre le sapeur Camember ou les Shadoks », a tweeté Ramon Fernandez, directeur général délégué d'Orange, mi-octobre.

>>> US Gapping down


Gapping down
In reaction to disappointing earnings/guidance:

  • TSEM -15.2%, FDC -9.3%, KR -3.1%, WFT -2.9%

M&A news:

  • IBM -3.8% (to acquire RHT for ~$34 bln)

Other news:

  • WPP -1.6% (continued weakness)

Analyst comments:

  • N/A.

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • DAN +7.6%, HSBC +6.2%, ON +6.1%, YNDX +6%, BLMN +1.2%, CTB +0.6%

M&A news:

  • RHT +51.5% (to be acquired by IBM (IBM) for $190.00/share in cash)

Select Brazil related names showing strength:

  • GGB +10.7%, PBR +8.4%, ITUB +6.7%, CIG +5.2%, VALE +4.1%, ABEV +3.6%

Select metals/mining stocks trading higher:

  • MT +4%, BBL +2.7%, RIO +2.6%, FCX +2.5%, BHP +2.4%, HMY +1.5%, . 

Select tech related names showing strength/rebounding:

  • HDP +6% (also may be in response to RHT news) SPLK +4.5% (also may be in response to RHT news) AMD +3.2%, DATA +3%, MU +2.4%, CRM +2.3%, FB +2.2%, NFLX +2%, AMZN +1.5%, MSFT +1.4%, BABA +1.1%,

Other news:

  • DRNA +36.5% (Dicerna Pharmaceuticals & Eli Lilly (LLY) enter global licensing and research collaboration -- Dicerna to receive upfront payment of $100 mln and equity investment of $100 mln)
  • INNT +10.1% (announces positive effect of larazotide acetate on reducing intestinal permeability in NASH preclinical study)
  • GRFS +8.7% (presents AMBAR (Alzheimer Management by Albumin Replacement) top line results)
  • ESPR +7.4% (announces 'positive' top-line results from its global, pivotal Phase 3 clinical study of bempedoic acid)
  • TXMD +7.1% (FDA approval of TX-001HR: BIJUVA capsules for the treatment of moderate to severe vasomotor symptoms due to menopause)
  • TOO +6.1% (reaches settlement agreement with Petróleo Brasileiro S.A. (PBR) with respect to various disputes relating to the previously-terminated charter contracts of the HiLoad DP unit and Arendal Spirit unit for maintenance and safety)
  • GSK +3.8% (announces positive phase 3 results for daprodustat in patients with anaemia associated with chronic kidney disease)
  • RGNX +3.8% (reports additional positive interim Phase I Trial update for RGX-314)
  • CGC +2.6% (issued 43,517 common in the Corporation to acquire certain brand licensing rights for product formats anticipated to be included in the next wave of legal regulated cannabis products for human and animal consumption)
  • LCI +2.3% (provides Cody API business sale update; expects impairment charge of $27-33 mln)
  • AKRX +2.1% (received a new ANDA approval from the FDA for Clobetasol Propionate Lotion)
  • NVS +2% (Two-year data for Novartis brolucizumab reaffirm superiority versus aflibercept in reducing retinal fluid in patients with nAMD)
  • AMGN +1.8% (reports new FOURIER analysis showing benefit with Repatha)

Analyst comments:

  • F +4.3% (upgraded to Buy from Neutral at Goldman)
  • MRTX +3.9% (upgraded to Buy from Neutral at Guggenheim)
  • PFPT +2.9% (upgraded to Buy from Neutral at Goldman)
  • LEN +2.6% (upgraded to Outperform from Neutral at Wedbush)
  • ECHO +2.2% (upgraded to Buy from Hold at Loop Capital)
  • CERN +1.8% (upgraded to Outperform from Mkt Perform at Leerink Partners)
  • AAPL +1.5% (initiated with a Buy at Jefferies)
  • NOV +1.2% (upgraded to Outperform from In-line at Evercore ISI)
  • COP +1% (upgraded to Buy from Neutral at BofA/Merrill)

>>> Takeda appoints JPMorgan Chase to explore EUR 1bn European over-the-counter

Takeda appoints JPMorgan Chase to explore EUR 1bn European over-the-counter assets sale - report
29 OCT 2018
Takeda Pharmaceutical [TYO:4502] is discussing with JPMorgan Chase on a possible sale of EUR 1bn (USD 1.1bn) European over-the-counter assets, a newswire reported, citing sources privy to the process.
According to Reuters, the Japan-based company is exploring divestitures to cut the debt from its Shire Plc's[LON:SHP] USD 62bn acquisition.
The sale could be launched next year near, though no decision has been taken yet, the report added.

FT : Commodity trader Noble Group warns of more losses in third quarter

Commodity trader Noble Group warns of more losses in third quarter

Troubled commodity trader Noble Group, which almost blew up in an accounting and debt scandal before pushing through a dramatic financial restructuring in August, will report another loss in the third quarter.

The Singapore-listed commodity house, which was founded by British born trader Richard Elman, is expected to report an overall net loss of $90-$115m, the company said on Monday. It blamed financing and restructuring costs and losses from discontinued operations as it has done in previous quarters.

Noble Group once had ambitions to be an Asia-based version of Glencore, buying up mining and agriculture assets and growing to become a full-scale international commodity trader.

But over the past three years questions about its accounting and huge debts led to its near collapse, before its creditors agreed a major haircut in a debt-for-equity swap that left shareholders with a much smaller slice of the restructured company. Shareholders have also backed the restructuring, which is now pending court approval.

Noble, which has retrenched substantially back to its core Asia-focused coal and metals businesses, said that its profit from its operations before interest, tax and restructuring expenses would be $20-$35m for the quarter.

One of its few remaining assets, a joint venture running the Jamalco alumina smelter in Jamaica, has provided the company with an unexpected boost this year after the price of the key ingredient in aluminium spiked following the imposition of US sanctions on Russia’s Rusal.

Noble said its overheads for selling, administrating and operating the shrunken company have fallen towards $100m annually, which it expects to achieve in the fourth quarter.

Total cash and cash equivalents were $580m, down from $621m at the end of the second quarter, a drop the company said was down to restructuring expenses and increases in working capital. Of that figure, $175m has pledged as collateral for credit facilities.

Noble said losses from discontinued operations, including its global oil trading business that it sold to Vitol in January, were $55m. Noble said talks about the final closing date for the deal were “ongoing”.

Chief executive Will Randall, an Australian, made no comment in the release.

The group’s results for the first nine months will be released on November 13.

>>> TomTom rumoured to be takeover target

TomTom rumoured to be takeover target - report (translated)
29 OCT 2018
Netherlands-based navigation specialist TomTom [AMS:TOM2] is rumoured to be a takeover target, De Financieele Telegraaf reported. The Dutch daily cited a report of ING Bank analysts, who in turn cited an article by TMT Finance.
These rumours are not surprising now that TomTom is looking to sell its Telematics division and the company recently lost some important clients, the report said.
US-based companies Trimble [NASDAQ: TRMB] and Apple [NASDAQ:AAPL]would be logical potential candidates for a takeover of TomTom, the report said, adding that Apple already collaborates with the Dutch company. An acquisition by another firm would be a risk.
A takeover by HERE, an Amsterdam-headquartered specialist in mapping and location services, seems unlikely because of competition issues, De Financieele Telegraaf cited the analist of ING.
TomTom can only be bought with the consent of the founders who still own a 44% stake, the item added.
TomTom is valued at EUR 2bn - EUR 2.5bn.
Link to report.