Reuters : Bayer AG said seeking bids for its majority stake in chemical park ope


FRANKFURT (Reuters) - Bayer is inviting financial investors to bid for its 60 percent stake in chemical park operator Currenta after initially failing to agree a sale to its former chemicals subsidiary Covestro, three people familiar with the matter told Reuters.


Bayer, which is focusing on healthcare and crop protection after the takeover of U.S. seed maker Monsanto, has mandated Morgan Stanley to help with the transaction. Buyout firms and infrastructure investors have been asked to put in initial bids by the middle of October, the sources said.
Currenta, which operates infrastructure facilities at German chemical complexes in Leverkusen, Dormagen and Krefeld-Uerdingen, could be valued at upwards of 1 billion euros ($1.2 billion) and possibly more than 2 billion, according to one of the sources.
Covestro, Morgan Stanley and Bayer declined to comment.


Currenta’s three industrial sites were once dominated by Bayer but after the drugmaker’s staggered exit from the production of industrial chemicals and plastics, Bayer no longer plays a major role among Currenta’s more than 70 customers.
Bayer needs to rebuild its financial firepower after the $63 billion takeover of U.S. seeds maker Monsanto.
It is competing with larger pharma rivals as it bids for the rights to promising new treatments from biotech firms to try to strengthen its drugs development pipeline.
Despite the widened group of prospective buyers, a sale to Covestro, whose products include transparent plastics for road-side noise barriers and panoramic car roofs, can still not be ruled out.
“Covestro is half in, half out. They’re just not finding any common ground,” said one of the sources, describing the state of negotiations with Bayer.

Currenta mainly supplies Bayer’s former subsidiaries Covestro and the special chemicals company Lanxess, which owns the remaining 40 percent in Currenta, with electricity, steam and natural gas.
It also provides services including transportation, maintenance, waste management and workers’ safety and employs 3,200 staff.
Even prior to Covestro’s 2015 carveout from Bayer and subsequent stock-market listing, no internal agreement could be reached about transferring Bayer’s Currenta stake to Covestro, even though the subsidiary was set to replace its parent as Currenta’s main customer, the sources said.
Standard & Poor’s cut its credit rating of Bayer to triple-B in the wake of the Monsanto deal and Bayer has vowed to pay back debt to return to a single A rating over the long run.
Covestro, in turn, is buying back shares and has bolstered its investment ambitions, banking on stable demand for specialty materials even beyond the industry’s current upswing.

The maker of transparent polycarbonate plastics and chemicals for padding foam in mattresses and car seats expects to rake in more than 2 billion euros in cash flow after investment expenditure this year, boosted by stronger-than expected demand. ($1 = 0.8579 euros)

FT : New Air France-KLM CEO vows to invest half of salary into airline shares

The new head of Air France-KLM has pledged to reinvest half of his salary back into the airline as he looks to lay the groundwork for an agreement with unions.

Benjamin Smith, who was made the first non-French chief executive in August, will put half of his €900,000 fixed salary back into Air France-KLM shares.

The group — formed by Air France’s 2004 merger with Dutch KLM — had been without a permanent leader since the resignation of previous chief Jean-Marc Janaillac in May after he lost a staff vote over a pay deal that had already been rejected by Air France unions.

Twelve days of strikes cost the airline €335m in the first half of the year and one of Mr Smith’s first jobs will be to broker a deal with those unions.

“I’ve already made one personal investment by moving my family to France. Today I’ve decided to make another and invest half of my fix salary in the shareholding of the group. It is a commitment to my belief in the future success of Air France-KLM,” said Mr Smith in a video to staff on Monday, his first day on the job.

“We cannot afford to be arrogant and assume we have any more of a right to our customers than our competitors do — we have to earn their business each day. Fighting our competitors, not ourselves, is our ticket to success”, added Mr Smith.

According to people familiar with the company, Mr Smith spent his first day meeting staff at Air France-KLM headquarters and at its main hub, Charles DeGaulle airport. He also met with unions, including the pilots union, seen by many as the main obstacle to a deal.

The new CEO’s salary had become a point of contention with the unions — Mr Smith is to be paid a maximum €4.25m, including the €900,000 as a base salary and the remainder dependent on meeting all long-term and short-term performance objectives. His pledge shift upwards the performance based portion of his pay.

“We operate in a fiercely competitive global marketplace. We need to act, we need to adapt, and we need to be prepared for both, but remember that I’m not here to do this on the backs of any of you,” said Mr Smith in the video.

FT : Coca-Cola exploring cannabis drinks business

Coca-Cola exploring cannabis drinks business
Increasing interest in sector comes a month before Canada legalises recreational use

Coca-Cola is exploring entering the budding cannabis drinks business, as the iconic beverage company seeks new opportunities to offset slowing soda consumption.

The world’s largest beverage group by revenue is “closely watching” the cannabis drinks sector, which uses the non-psychoactive chemical in marijuana as an ingredient for wellness drinks, the group said in a statement.

“The space is evolving quickly,” it said.

Coke is the latest in a series of mainstream consumer beverage companies to start focusing on the fast growing cannabis sector as it seeks to capitalise on the legalisation of weed in North America and Europe.

Its plans were first reported by BNN Bloomberg.

Corona beer maker Constellation Brands recently invested under $4bn into Canadian cannabis group Canopy Growth, lifting its stake to 38 per cent. Diageo, the liquor conglomerate behind Johnny Walker whiskey, has also been exploring investment opportunities in the cannabis sector in recent weeks, according to people close to the company.

The increasing interest in the sector comes a month before Canada legalises recreational cannabis use on October 17. More than a dozen countries have legalised weed for medical purposes, including Germany and Australia, and several others are evaluating decriminalisation.

Pot has been legalised in more than half of America’s 50 states, despite cannabis being illegal under federal law. Nine states, including California, Colorado and Massachusetts, as well as Washington DC, have approved recreational marijuana. Analysts with ArcView and BDS Analytics expect global cannabis spending to reach $32bn in 2022, up from $9.5bn last year.

Greater legalisation prospects have fuelled a wave of deals in the sector, including several acquisitions by Canopy, as well as Aurora Cannabis’s $2bn takeover of MedReleaf in May, which was the largest deal in the industry at the time.

Bloomberg reported that Coke held talks with Canada’s Aurora Cannabis, but a spokesperson for the Atlanta-based company said that no decision had been taken about a deal yet.

Cannabis-focused companies have seen their equity values reach record highs in recent months as consumption liberalisation has further brightened the prospect of growth.

Coke shares were up 0.4 per cent ahead of the bell.

FT : Warner Music buys German merchandise retailer EMP for $180m

Warner Music buys German merchandise retailer EMP for $180m
World’s third largest record company seals its largest takeover in five years

Warner Music has acquired EMP Merchandising, the German retailer that sells T-shirts featuring rock bands like Nirvana, in its largest takeover in five years.

Sycamore Partners, the private equity group that has bought struggling retailers like Staples, agreed to sell EMP for $180m, according to people close to the deal. 

Warner, the third largest record company and home to artists including Ed Sheeran, has made a string of deals in the past year as music revenues soared and streaming services like Spotify have grown. The company has aimed to diversify its business beyond selling music, as merchandising and touring account for a bigger slice of artists’ income in the streaming era. 

EMP, founded in 1986 as a mail order music store, sells merchandise from bands including Pink Floyd, Metallica and AC/DC. 

As album sales shrink, artists have piled into merchandise as the primary physical purchase for music fans. Merchandise is “a big part of how music has visible and physical impact”, said Max Lousada, Warner’s chief executive for recorded music.

Previously a smaller part of a musician’s income, merchandise sales have surged in recent years, bringing in millions for the biggest stars. In its most recent tour, US rock band Panic! At the Disco made 30 per cent of its profits from merchandise, according to a Rolling Stone report, while Kanye West claims to have sold $780,000 of merchandise at a single New York concert.

Globally, music merchandise revenues grew 9.4 per cent to $3.1bn in 2016, according to the Licensing Industry Merchandisers’ Association.

Warner, owned by billionaire Len Blavatnik’s Access Industries, has been in dealmaking mode under Mr Lousada, who was promoted to the company’s top creative job last year after running the UK business. 

A year ago Warner bought Dutch dance label Spinnin’ Records for more than $100m. Other deals have looked to broaden the label’s scope beyond recorded music. Warner last month bought Uproxx, the pop-culture website, and earlier this year acquired Sodatone, a machine learning start-up, in a bid to use data to find new artists.

Warner made $1.92bn in revenues in the first half of 2018, up 10 per cent from a year ago, amid an industry-wide recovery.

>>> US Gapping down


Gapping down
In reaction to disappointing earnings/guidance:

  • N/A.

Select China related names showing weakness:

  • JD -3.2% (weakness in Shanghai overnight) BABA -1.8%, BIDU -1.5%, MOMO -1.4%, SOGO -0.7%

Other news:

  • RMTI -2.2% (files $200 mln mixed securities shelf offering)
  • AABA -0.5% (announces new share repurchase authorization of $5.75 bln, reaches agreement in principle to settle consumer class action litigation related to the Yahoo data breach)

Analyst comments:

  • PBYI -4% (initiated with a Sell at Goldman)
  • ARNC -1.1% (downgraded to Neutral from Buy at Longbow)
  • TMO -1% (downgraded to Neutral at Goldman; also removed from Conviction Buy List)
  • HRL -0.6% (downgraded to Market Perform from Outperform at BMO Capital Markets)
  • V -0.5% (removed from Conviction Buy List at Goldman)


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>>> US Gapping up


Gapping up
In reaction to strong earnings/guidance:

  • N/A.

M&A news:

  • SIR +17.1% (Select Income REIT & Government Properties Income Trust (GOV) announce merger)

Other news:

  • NEPT +20.4% (received a Confirmation of Readiness letter from Health Canada in regard to its application to become a Licensed Producer under the ACMPR)
  • ARGX +12.5% (announces positive topline results from its Phase 2 proof-of-concept clinical trial of efgartigimod in adult primary immune thrombocytopenia patients)
  • TEVA +8.4% (receives FDA approval for AJOVY)
  • MRSN +4.7% (announces that the FDA has lifted the partial clinical hold on the Phase 1 study of XMT-1522) GLW +2.1% (continued strength)

Analyst comments:

  • BBBY +3.5% (upgraded to Mkt Perform from Underperform at Raymond James)
  • MBUU +2.3% (upgraded to Buy from Neutral at B. Riley FBR)
  • A +1% (added to Conviction Buy List at Goldman)
  • MA +0.9% (added to Conviction Buy List at Goldman)
  • AVGO +0.9% (upgraded to Buy from Neutral at Nomura)
  • AXP +0.9% (upgraded to Overweight from Equal-Weight at Stephens)
  • PXD +0.7% (upgraded to Positive from Neutral at Susquehanna)

>>> US Early premarket gappers


Early premarket gappers

Gapping up:

  • SIR +17.1%, XTLB +12.5%, TEVA +6.6%, ICL +4.9%, MBUU +2.3%, GLW +2.1%, TGT +1.9%, BBBY +1.8%, OI +1.7%, ALV +1.7%, BBVA +1.4%, BT +1.4%, OXLC +1.4%, WPP +1.2%, TS +1.2%, SAN +1%, ABX +1%, AVGO +0.7%

Gapping down:

  • JD -3.1%, GFI -3%, AU -2.7%, IBN -2.5%, FRO -2.1%, TAL -1.8%, VALE -1.6%, SOGO -1.6%, MU -1.2%, MOMO -1.2%, IHG -1.1%, STM -1.1%