FT : Toyota and SoftBank form mobility services joint venture

Toyota and SoftBank form mobility services joint venture
Carmaker looks to partner with technology groups to prepare for self-driving era

Toyota will form a joint venture with SoftBank to develop mobility services, as Japan’s largest carmaker looks to deepen its links with technology groups to adapt to the era of autonomous driving. 

The automaker has attempted in recent years to break out of traditional business groupings and alliances, looking to partner with technology companies such as Uber and Amazon to find ways of making money beyond manufacturing and delivering vehicles.

The latest partnership will combine Toyota’s connected vehicle technology with SoftBank’s platform for the internet of things, with the longer term aim of providing transport, delivery and logistics services using autonomous vehicles.

Earlier this year, SoftBank invested $2.25bn in Cruise, GM’s self-driving car unit, through its Saudi-backed $100bn Vision Fund. On Wednesday, Cruise secured another $2.75bn from Japanese carmaker Honda.

Masayoshi Son, SoftBank’s chief executive, has previously warned that cars will become “a commodity”, saying service providers such as Uber will play a crucial role in transport.

“This is a very unusual partnership. But . . . we decided to pair up with the hope that this Japan alliance can compete globally,” said Junichi Miyakawa, chief technology officer at SoftBank.

Shigeki Tomoyama, executive vice-president at Toyota, said it approached SoftBank because of its links to technology companies, especially ride-hailing providers. SoftBank has stakes in Uber, Didi Chuxing, Grab and Ola, which are seen as essential to Toyota’s vision for developing mobility services using autonomous vehicles.

Toyota is working on its own autonomous technology through the Toyota Research Institute, its artificial intelligence division, and has looked to partnerships to become a provider of mobility services to consumers.

At the Consumer Electronics Show in January, Toyota also said it would develop a driverless shuttle for both passengers and deliveries in partnership with Uber, as well as other companies including Amazon, Didi and Pizza Hut.

In August, the company also disclosed a $500m investment in Uber.

Shares in Toyota and SoftBank rose as much as 2.2 per cent and 3.3 per cent, respectively, on news of their joint press conference.

Toyota has historically had closer ties with KDDI, the Japanese telecoms group that is a SoftBank rival. Shares in KDDI fell 1.24 per cent shortly following the announcement of the deal.

FT : Which technologies will underpin the smart cities of the fu

Which technologies will underpin the smart cities of the future?
Range, cost and speed will determine the best tools for each job

The world of dumb objects from rubbish bins to water pipes is about to become smart. We are on the brink of a communications revolution, with the potential impact almost as great as the introduction of mobile phones and the internet.

Connectivity in 21st century societies will be completely different, says Rupert Pearce, chief executive of the satellite company Inmarsat. “We’re moving from person-to-person voice centric networks, to machine-to-machine data centric networks.”

In the so-called smart cities of the future, urban infrastructure will be interconnected; networked devices will be everywhere, from buses and cars to streetlamps, all linked to networks via the internet of things (IoT). Roads themselves will be online. Water and power grids will have smart sensors. All this should make our urban spaces more efficient and convenient, less polluted, safer and more liveable.

Plenty of real-life examples already exist. Seattle has a real-time rain prediction system called “Rainwatch” which anticipates precipitation at neighbourhood level and sends out flood warnings. The City of London has recently begun a programme to connect thousands of street lights to a mesh network (where individual lights act as nodes). This means greater ease of operation and that the lights will eventually form part of a network of sensors that can detect factors such as pollution.

Many of the applications are surprising and hidden. “One IoT application is putting sensors in concrete which feed back when the concrete is set,” says William Newton, president and Emea managing director of WiredScore, a company that provides a rating system for commercial property connectivity. “This means you don’t need to leave a margin of error and you can put up buildings much faster. A lot of the internet of things will be small improvements like that.”

The consultancy Gartner predicts that there will 11.2bn devices connected by the end of this year and 20.4bn by the end of 2020.

The choice of networks that power and enable this connectivity, says Mr Pearce, will depend on “use case” and market factors — ie who (or what) is using them and what business and commercial needs they answer. He adds: “We’re looking at heterogeneous networks, each of which has a sweet spot when you look at coverage, reliability security and efficiency.” It is a mistake, he explains, to think of 5G as just the next iteration of mobile rather than the future of communications more broadly.

For cities, this is likely to mean a mix of mobile, WiFi, fixed connectivity and other networks such as LoRa — a long-range, low-power wireless platform that is well suited to IoT networks. “In smart cities, no one solution meets all requirements,” says John Hicklin, an IoT expert at PA Consulting. Technological considerations such as range, cost, power consumption, bandwidth and latency (the delay in transferring data) will all inform which solutions are the most appropriate for any given task.

The backbone of all of this will be fibre, says Jeremy Chelot, chief executive of Community Fibre, a business providing internet connectivity to social housing in London.

“A single thread of fibre enables a torrent of data and will mean virtually unlimited capacity.” He points to the introduction of earlier communication networks such as landline phones as a guide to how things might play out: “If you look at the last hundred years, we rolled out copper cable to almost every premises. Fibre will eventually mean fibre to everything.”

It is the volume and speed this allows, he adds, that will make the greatest difference to our lives.

Some countries are already there. Singapore and South Korea have some of the world’s highest “fibre to the home” penetration. In the latter, it is possible to get home broadband with a speed of 2.5Gb per second. This is more than 50 times the UK average.

When it comes to building the networks to power smart cities, not everywhere is equal, though. “In the Middle East and Asia,” says Mr Hicklin, “cities are often being built from the ground up.” This has considerable advantages. Fibre can be laid everywhere without disruption to traffic and businesses. Moreover, the city builders can take a strategic overview of what is needed and existing legacy technologies do not need to be taken into account.

In developed-world cities, incorporating “smartness” tends to be more piecemeal; the organisations that look after rubbish collection, for instance, will not necessarily be linked to those who look after transport. There is also the challenge of having to fit new digital infrastructure around existing buildings, underground lines and sewers. A lot of this is hidden — older buildings often lack the space for the technology to ensure excellent WiFi and mobile coverage inside. Newer buildings can be designed to accommodate this.

For the developing world, the picture is different again. Here, cities are often going from very limited connectivity and networks to broadband and widespread mobile data coverage. They will be the ones that experience the greatest transformations — and may even be able to leapfrog the legacy technologies that in many cases hold back the developed world.

Mr Newton cites Somaliland as a “hotbed” of innovation for local telecoms companies, “especially widespread adoption of mobile money, because telecommunications companies can build masts everywhere and trial new products”.

ZH : Companies Are Suddenly Slashing Profit Guidance At A Record



From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: 10/03/18 23:33:17
Subject: ZH : Companies Are Suddenly Slashing Profit Guidance At A Record Pace
Companies Are Suddenly Slashing Profit Guidance At A Record Pace

One of the more peculiar features of the last financial crisis, is that it took place at such a breakneck pace, most corporations were unprepared for the carnage that would ensue, and few companies even had the time to cut profit guidance into the Lehman abyss.
This time, things are different.
As we reported last week, Factset found that after a spectacular Q1 and Q2 earnings season, which blew away expectations, corporations have turned decidedly sour on their own prospects, and as they head into the start of Q3 earnings season, 76% (74 out of 98) of companies have issued negative EPS guidance, which is not only above the five-year average of 71%, but if 76% is the final percentage for the quarter; it would also mark the highest percentage of S&P 500 companies issuing negative EPS guidance for a quarter since Q1 2016 (79%).
The Factset report promptly went viral across Wall Street desks, which after the earnings bonanza in the past 2 quarters have been especially sensitive to any suggestion that the dreaded "peak earnings" moment in the S&P500 is upon us.
To be sure, so far such worries have proven to be unfounded: In Q1, earnings soared 24% Y/Y; a number which was also repeated in the second quarter. And while most sellside estimates predict another blowout quarter in Q3, any time there is a major divergence between company guidance and analyst optimism, the market immediately pays attention... and in this case the divergence between company and analyst outlooks is remarkable.
And it's not just Factset: according to Bloomberg, led by high-profile warnings from Netflix and Applied Materials, the number of S&P 500 companies saying profits will trail analyst estimates outnumbered those saying they’ll beat them by a ratio of 8-to-1 in the third quarter. That’s the most in Bloomberg data which goes back to 2010.
While several conclusions are possible, not all are concerning; one is them that analysts - who saw their predictions beat at record rates in the first half - got tired of being wrong and lifted estimates to unrealistic heights. Or, as Bloomberg notes, "it could be that companies, which hate merely to match estimates, are making room for the quarterly ritual in which they beat every forecast by a penny."
However, while it possible that there is perfectly innocent explanation, for skeptics looking for evidence income growth is peaking, a more ominous take-away has emerged, and comes as a consequence of global trade at a time when everything from rising costs to weakening overseas demand threaten to damp growth, according to Citi's equity strategist, Tobias Levkovich.
"Given ebullient investor sentiment, we do not think there is much room for companies to disappoint without taking a hefty toll on share prices. Notably stronger dollar and higher interest rates plus some softness in emerging economies all intimate the potential for misses."
He's right, because with companies expected to earn $42.11 a share in the third quarter - which would be a new quarterly record - and with valuations (especially for the median company) already at nosebleed levels, the margin of error is getting thin. Consider that among the 19 S&P 500 companies that have reported results early this season, all but two exceeded profit estimates: their stock dropped an average 2.8% in first-day reactions.
Meanwhile, there is another reason why everyone's attention is focused on earnings: with everything else in the world on edge, amid growing fears over higher rates, populist politics, escalating geopolitcal conflicts and outright trade war, strong and rising US earnings have been the backbone behind the S&P's record price. So any sign that this is changing is an especially acute threat. Miller Tabak's Matt Maley explained it best:
"Strong earnings have been the most important factor that has enabled the stock market to ignore the headwinds it has faced this year. If the projection for future earnings suddenly become less bullish, it could/should be enough to upset the balance between the bullish & bearish macro factors that are facing the markets right now."
What is troubling is that as sellside analyst projections have remained bubbly, management sentiment slumped in the second quarter according to UBS. Such negative guidance language is likely to accelerate during this reporting season given the uncertainty around trade talks between the U.S. and China, said Keith Parker, the firm’s head of U.S. equity strategy.
The question in such as a situation, as usual, is what do management teams know that analysts don't (a rather simple answer is "everything") and why are they turning so pessimistic (this should be self-explanatory). What didn't help is that those analysts who were cautious on company earnings in Q2, ended up looking like fools. Bolstered by tax cuts and a strengthening economy, more than 80% of S&P 500 companies delivered better-than-expected profits during last reporting season, a record high rate. Q2 earnings were so strong that they topped forecasts by a whopping 5.2%.
However, that record pace of beats is unlikely to continue, said QMA chief investment strategist Ed Keon,
"You’re going to go to a slower trajectory. You’ll see the second quarter will turn out to be the peak in terms of growth rates."
The ominous message sent by management teams who are slashing guidance at a near record pace, and which the market is so far ignoring, is that Keon is right.

FT : Vodafone chief warns governments on ‘artificial’ 5G auction

Vodafone chief warns governments on ‘artificial’ 5G auctions
European countries urged not to follow short-term thinking of Italian spectrum sale

Nick Read, the new chief executive of Vodafone, has warned governments not to gouge the struggling telecoms sector by designing “artificial” spectrum auctions designed to boost their cash-strapped coffers.

The comments were made in the wake of the Italian 5G auction, which set a record price for 5G spectrum. The 14-day auction, which closed Tuesday night, generated €6.5bn but has led to fears that the country’s four mobile networks will need to raise prices or invest less in 5G upgrades to offset the high acquisition cost.

Mr Read, in his first week as chief executive of Vodafone, was forced to sign a €2.4bn cheque for his Italian business. He hit out at the short-term approach taken by the Italian government.

“Auctions should be designed to balance fiscal requirements with the need for investment to enable economic development . . . It is critical that European governments avoid artificial auction constructs which fail to strike a healthy balance for the industry,” he said.

Italian networks paid eight times more per megahertz for spectrum than networks did in Spain in its 5G auction earlier this year and 10 times more than in Finland, which had its auction this week.

Some networks fear that the Italian approach could set a dangerous precedent for other countries looking to the airwaves to fill holes in the budget. That could undermine the European Union’s dream of a booming digital economy based on 5G technology.

“5G needs to be at scale. If countries opt-out and try to cash in then Europe is going to miss out on the vision of creating a pan-European 5G network of scale,” said the head of spectrum at one of Europe’s largest telecoms companies.

The Italian government structured the 5G sale so that most of the spectrum was sold in two very large blocks with two much smaller lots offered to the bidders that missed out. That meant that the country’s three largest networks — Telecom Italia, Vodafone and Wind Tre, which is owned by CK Hutchison — had to compete fiercely for the largest blocks alongside Iliad, the new entrant that forced the price up.

Other countries broke the spectrum lots into much smaller pieces so that all the competing networks could amass enough spectrum without any one company dominating the auction. The Italian method, according to a person directly involved in the auction, was the equivalent of a children’s game of musical chairs where there were fewer chairs, and prizes, than there were people playing.

Dhananjay Mirchandani, an analyst with Bernstein, said that a “two-tier market structure” was now entrenched in Italy with Vodafone and Telecom Italia securing the most spectrum, paying €2.4bn and €2.5bn, respectively. Wind Tre now faces long-term market share decline given its lack of radio frequencies, according to the analyst. Wind Tre paid €517m, while Iliad spent €1.2bn.

Stephane Beyazian, an analyst with Raymond James, said the “crazy auction” was disastrous for all of the Italian operators as it would add about 15 per cent of debt to already strained balance sheets. He pointed to a 2012 spectrum auction in the Netherlands that had forced KPN, the local incumbent, into a distressed rights issue as a precedent.

The next big 5G auction is set to take place in Germany in the spring, but telecoms companies are reassured that local regulators have taken a pro-industrial view in the run-up to the sale. Other 5G auctions coming up include Australia, Romania, Hungary, the Czech Republic and the UK.

>>> What to look at today - 4th of October 2018

Asian equities and currencies sank as a spike in U.S. Treasury yields to levels unseen since 2011 tests investors’ nerves.
The climb in what’s effectively the world’s benchmark risk-free rate is challenging appetites for other assets. The S&P 500 Index pared its gains Wednesday afternoon, and futures fell Thursday as bond yields extended gains. Stocks slid from Seoul to Hong Kong, though Japanese shares outperformed thanks to the yen’s earlier drop to its weakest against the dollar since November. The South Korean won and Thai baht led Asian currency declines; India’s rupee is set to test another record low. While China’s markets are shut, the yuan slid past 6.9 per dollar in offshore trading.
US After Hours RECN +19%, HPQ +2.3% are higher, while RTEC -12% and SNX -7% are lower following earnings/guidance; HDP +24% / CLDR +22% on merger news

Nikkei -0.64% Hang Seng -1.82% CSI +1.04% Shanghai +1.06% Shenzen +0.83%

Eur$1.1472 CNH 6.9114 CNY 6.8688 JPY 114.35 GBP 1.2931 CHF 0.9922 TRY 6.0782 RUB 66.1035 WTI$ 76.24 -0.24%

S&P -0.53% EuroStoxx +0.68% FTSE -0.30% Dax -0.37% SMI -0.38%

Macro :
- JPMorgan Downgrades China Stocks to Neutral on Trade; ETF Drops
- Fed’s Harker Says U.S. Labor Market Has Little Slack Left

Keep an eye on :
- AI FP : Air Liquide Sees Forex Impact on FY 2018 Sales Around -4%
- MT NA : India Top Court Allows Arcelor, Numetal to Bid for Essar Steel
- AML LN : Aston Martin Fails to Dazzle Despite Whirlwind Pre-IPO Hype
- AST IM : Salini Says Looking at Astaldi Among Other Growth Opportunities
- AST IM : Astaldi Says Company Not In Default, Projects Still in Progress
- BARN SW : Barry Callebaut to Buy Russia’s Inforum; No Terms Disclosed
- BIOPOR DC : BioPorto Sees FDA Decision on NGAL Test Postponed to Mid-2019
- BMPS IM : Paschi Said in Advanced Talks With Warburg to Sell Belgian Unit
- BMW GY : VDL Nedcar to Cut 1,000 Jobs as BMW Trims Production: Limburger
- CABK SM : CaixaBank Seeks to Sell Torre Sevilla: El Confidencial
- DANSKE DC : Danske Bank Has Put Forward Jacob Aarup-Andersen as CEO: Finans
- ELTA LN : Electra to Sell Photobox, Knight Square; Reports Special Div
- EKT SM : Euskaltel denies Citi mandate to analyse possible M&A deals
- EVT GY : Evotec, Sanofi in Drug Discovery Partnership
- FXI US : JPMorgan Downgrades China Stocks to Neutral on Trade; ETF Drops
- GLEN LN : Zambia Chamber of Mines Says Taxes Make Zambia "Uninvestable"
- GOCO N : Toscafund Cuts Gocompare.com Voting Rights to 12.31% From 22%
- GRF SM : Grifols Says It Strongly Disagrees With UBS Report: Filing
- KORI FP : Korian Momentum Sustainable, Raise to Outperform: Credit Suisse
- MAERSKB DC : Maersk Volumes Not ‘Materially Impacted’ by Trade War: Borsen
- NDX1 GY : Nordex Builds First Larger Wind Farm With New N149 Turbines
- NDA SS : Nordea Says It Has Upgraded Systems to Fight Laundering Risks
- NDA SS : Browder Says Laundering Scandal Involves Other Nordic Banks: DI
- OMV AV : OMV Gazprom Accord Potential Purchase 24.98% Interest Achimov
- CFR SW : Richemont Valuation Attractive, Momentum Likely Improving: MS
- ROG SW : Roche Wins Challenges to Two Cancer Patents, Loses a Third
- ROG SW : Positive Phase III Results for Baloxavir Marboxil: Roche
- SAND SS : Sandvik Mining Head Sees Potential for More Improvements: DI
- SAN FP : Evotec, Sanofi in Drug Discovery Partnership
- SCR FP : Exor Says PartnerRe Has No Interest in Scor
- SRCG SW : Swisscom Preferred to Sunrise as Morgan Stanley Switches Ratings
- SCMN SW : Swisscom Preferred to Sunrise as Morgan Stanley Switches Ratings
- SNH GY : Steinhoff Bondholders to Inject ~$300m Into Mattress Firm: WSJ
- WDI GY : Wirecard Sees Potential Market Cap at More Than EU100 Bln: HB
- YOU LN : YouGov Made Content to Possibly Influence Iraq Vote: Telegraph

>>> Europe : Brokers Upgrades & Downgrades - 4th of October 2018

>>> Up
* AB Foods Upgraded to Buy at Berenberg
* Ferrexpo Upgraded to Overweight at Barclays; PT 3 Pounds
* Korian Upgraded to Outperform at Credit Suisse
* Mercialys Upgraded to Neutral at Kempen & Co; PT 14 Euros
* Merlin Upgraded to Buy at Kempen & Co; Price Target 13.40 Euros
* Shaftesbury Upgraded to Neutral at Kempen & Co; PT 9.50 Pounds
* Swisscom Raised to Equal-weight at Morgan Stanley; PT 515 Francs
* Telekom Austria Raised to Accumulate at Erste Group; PT 8 Euros
* Tullow Upgraded to Buy at Citi

>>> Down
* Norsk Hydro Downgraded to Neutral at JPMorgan; PT 40.50 Kroner
* Saipem Downgraded to Neutral at Citi
* Spire Healthcare Downgraded to Underperform at Jefferies
* Sunrise Cut to Underweight at Morgan Stanley; PT 95 Francs
* Swedbank Downgraded to Neutral at JPMorgan; PT 210 Kronor

>>> Initiation
* A2A Reinstated at Goldman With Neutral; PT 1.60 Euros
* Accor Reinstated at Exane With Neutral; PT 42 Euros
* Akzo Nobel Rated New Outperform at Exane; PT 99 Euros
* Alfen Beheer BV Rated New Buy at Berenberg
* Arkema Rated New Outperform at Exane; PT 144 Euros
* BASF Rated New Outperform at Exane; PT 100 Euros
* CFT Rated New Buy at Corporate Family Office; PT 11.10 Euros
* Clariant Rated New Neutral at Exane; PT 28 Francs
* Croda Rated New Outperform at Exane; PT 58.10 Pounds
* DSM Rated New Neutral at Exane; PT 100 Euros
* Evonik Rated New Underperform at Exane; PT 34 Euros
* Gecina Rated New Overweight at Barclays; PT 168 Euros
* ICADE Rated New Equal-weight at Barclays; PT 80 Euros
* InterContinental Reinstated Outperform at Exane; PT 53.30 Pounds
* Johnson Matthey Rated New Neutral at Exane; PT 37 Pounds
* Lanxess Rated New Neutral at Exane; PT 74 Euros
* Neste Rated New Outperform at RBC
* RHI Magnesita Rated New Buy at Berenberg
* Solvay Rated New Neutral at Exane; PT 134 Euros
* STV Group Rated New Buy at Shore Capital
* Tekcapital Rated New Corporate at Finncap; PT 19 Pence
* Vesuvius Rated New Hold at Berenberg
* Yara Rated New Neutral at Exane; PT 440 Kroner
* Wacker Chemie Rated New Neutral at Exane; PT 130 Euros
* Whitbread Reinstated at Exane With Neutral; PT 46.60 Pounds

>>> Call

>>> Euskaltel denies Citi mandate to analyse possible M&A deals (translated)

Euskaltel denies Citi mandate to analyse possible M&A deals (translated)
04 OCT 2018
Euskaltel [BME: EKT] denied yesterday (3 October) a mandate to Citi to analyse possible corporate transactions, Expansion reported, citing a spokesman for the Spain-based telecom operator. Sources with knowledge of the process, however, told the paper that Euskaltel is on the look out for a corporate deal.

Among the options is a possible merger with rival MásMóvil [MAS:SM], Spain’s fourth operator, which has a market capitalisation of EUR 2.17bn, the Spanish-language paper said. Euskaltel’s market valuation stands at EUR 1.193bn

>>> US After Hours Summary: RECN +19%, HPQ +2.3% are higher, while RTE


After Hours Summary: RECN +19%, HPQ +2.3% are higher, while RTEC -12% and SNX -7% are lower following earnings/guidance; HDP +24% / CLDR +22% on merger news

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: RECN +18.7%, HPQ +2.3% (sees FY19 EPS in-line, announces 15% dividend increase)

Companies trading higher in after hours in reaction to news: HDP +23.9% / CLDR +22.1% (to combine in an all-stock merger; HDP shareholders will receive 1.305 common shares of Cloudera for each share of Hortonworks stock owned), BKS +21.6% (announces strategic alternatives process), BLRX +8.2% (continued strength), EGLE +1.8% (initiated with Buy at B. Riley FBR), CMG +0.5% (initiated with Overweight rating at KeyBanc Capital Mkts)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: RTEC -11.9% (lowers Q3 guidance due to expansion delays from front-end metrology customers), SNX -6.9%, PIR -5.8%, ATRC -3.5% (commenced offering of 2.5 mln shares of common stock and reported prelim Q3 sales above consensus)

Companies trading lower in after hours in reaction to news: TLRY -5.8% (commences $400 mln private placement of Convertible Senior Notes due 2023), MNR -5.3% (commences public offering of 8.0 mln shares of common stock), SRPT -5% (pulling back after reporting updated results from the four children dosed in its gene therapy micro-Dystrophi trial in individuals with Duchenne muscular dystrophy), IIPR -4.5% (commences public offering of 2.0 mln shares of common stock), WLDN -4% (light volume; Willdan Group to acquire Lime Energy [LIME] for $120 mln in cash or approx 10x Lime's estimate of EBITDA for 2018; also announces follow-on offering)

>>> Randgold/Barrick deal could show path to motherlode of mining M&A

Merger Market

Randgold/Barrick deal could show path to motherlode of mining M&A
Analysis03 OCT 2018
• Industry needs further consolidation, says Sibanye CEO
• Randgold merger is largest sector deal globally in two years

The positive market reaction to Barrick Gold's [NYSE/TSX:ABX] proposed acquisition of Randgold [LON:RRS] could lead to a wave of M&A in the gold mining space, according to industry executives and advisors.
By crafting an all-stock deal with no premium that creates a USD 18.3bn company, Barrick and Randgold circumvented arbitrage players that have typically pulled down the share price of acquiring mining companies in recent years, the advisors said. Those market forces have left many miners afraid to make deals, the industry sources largely agreed. In this instance, shares in Randgold have rallied 7.4% since the deal’s announcement, while Barrick’s have rallied 11.8% as of this writing.
"It's been like a school dance and everyone was waiting to see who is the first to ask someone to dance," Paul Benson, CEO of SSR Mining, said last week on the sidelines of the Denver Gold Forum in Colorado Springs, Colorado. "Now they're up and if it works out, you'll see more people take a chance. But if it doesn't, you'll see them standing even closer to the wall."
The acquisition of Randgold represents the largest deal in the mining sector since October 2016 across all geographies, according to this news service’s data. In 2018 through today (3 October), there were 164 mining sector deals globally, accounting for a total deal value of EUR 35bn. Over the same period last year, the deal count in the mining sector was 19% higher, totalling 195, with a 25% lower total value of EUR 26bn, data show.
Intermediates producing between 200,000 and 1m ounces of gold are the most likely to be looking for a dance partner, a first sector advisor said. The no-premium structure “may be what it takes to get mining deals done,” said a second advisor. Companies may find more value in “shuffling the deck of assets,” sharing the upside and finding synergies, he said.
A third advisor said Endeavour Mining [TSX:EDV] is "well-placed to lead consolidation." Endeavour’s portfolio in Africa could make it a logical acquirer for Centamin [LON:CEY], a sector executive noted.
In December 2016, the Financial Times reported that Egypt-focused gold miner Centamin, was the subject of takeover speculation.
The report noted that the shares were cheaper than rival gold miners at the time, partly due to a drawn-out legal challenge over the company’s mining license.
The market’s continued devaluation of gold miners creates opportunities for consolidation, the sector executive said. The same number of companies and management teams increasingly oversee fewer dollars of corresponding value, he said.
A second sector executive flagged OceanaGold, Guyana Goldfields and New Gold as among the handful of companies that could take part in M&A if the pace of deals picks up. OceanaGold has the potential to be a consolidator in Austrailia, according to the second executive, and its CEO told this news service last year it has the capability to do a large deal similar in size to its 2015 acquisition of Romarco for CAD 856m. Guyana Goldfields told this news service last week at Denver Gold that the company sees itself as a target for a larger producer if it can push up production. And Reuters reported last month that BMO Capital Markets is advising New Gold as it ponders a sale process.
"Industrywide, there is definitely a need for further consolidation. It's the right time to do it," Sibanye CEO Neal Froneman said on the Denver Gold sidelines. "It would be good for the industry, good for investors and good for sustainability."
Sibanye has announced two significant deals over the last two years; , a cash-heavy deal for platinum group metals producer Stillwater in December 2016 and a yet-to-close all-stock buy of Lonmin announced in December 2017.
A sector investor said when acquirers pay no premium, investors have to judge the deal on its fundamentals and merits, and they in turn give a clearer signal of what the market thinks of a deal.
"When you have a premium, half the stock end up in the hands of arbitrageurs that churn the market for 6 months," the investor said. "I hope other companies get this."
The EUR 4.6bn Randgold takeover, is followed in size by Indonesia Asahan Aluminium’s EUR 3.3bn acquisition of a 42% stake in Freeport Indonesia announced last Friday (28 September), and by the EUR 2.7bn sale of Australian Coal & Allied Industries by Rio Tinto to Yancoal Australia Limited in January 2017.
Barrick is using M. Klein and Co. and Morgan Stanley as financial advisors. Davies Ward Phillips & Vineberg, Freshfields Bruckhaus Deringer, Cravath, Swaine & Moore and Carey Olsen are its legal advisers.
CIBC and Barclays are financial advisors to Randgold. Its legal advisors are Norton Rose Fulbright, Stikeman Elliott and Ogier.

>>> Shire suitor Takeda shareholder group sends letter requesting clarification

Shire suitor Takeda shareholder group sends letter requesting clarification on pending deal- report (translated)
03 OCT 2018
A Takeda Pharmaceutical [TYO:4502] shareholders group has sent a letter to President Christophe Weber seeking more detailed clarification on the pending USD 62bn deal to acquire Ireland-based Shire [LON:SHP], the Nihon Keizai Shimbun reported.
Without providing a source, the Japanese-language report cited Takeda as acknowledging it has received the letter from the roughly 130-member shareholder group, which includes former executives of Takeda. Collectively, the group holds around a 1% stake in Takeda, the report said.
In addition to requesting more detailed information on the deal, the letter calls for Takeda to publicize the minutes from board of director meetings, as well as statements by board members, in relation to the Shire deal, the report said.
At Takeda’s general shareholders meeting in June, the group proposed that any deal in excess of JPY 1trn (USD 8.7bn) require shareholder approval, but the proposal was defeated with support from less than 10% of shareholders, the report said.
The shareholders group is requesting that prior to the extraordinary shareholders meeting Takeda explain in detail the basis and reasoning behind the acquisition of Shire, the report said. Although Takeda is not legally bound to reply, the shareholder group is seeking a response to the letter by the end of October, the report said.