Key Takeaway
CA’s industry backdrop remains challenged, and the margin reinvestment required to inflect sales momentum positively is still largely unknown. We doubt Q1 results will shed more light on either headwinds. We stay on Hold with a new TP of €16.6, reflecting recent incremental fx challenges.
Another tough quarter... is what we expect from CA on 11 April. We model for Q1 salesof €20.9bn, a YoY decline of 1.7%, with strongly pressured LatAm currencies the main factor
behind a 5.2% fx hit in the quarter. Looking at the major business units we expect continued
lag in French hypers (LFL -1%), with resilient sales at French supers (+1.5%). We forecast a
softer comp induced improvement in both Brazil (to LFL of +4%) and Spain (LFL +1.3%).
But we assume competition to have continued to weigh in Italy (LFL -1.3%). We expect the
cautious mgmt tone seen at the FY earnings to remain a feature given that: the path to
French mkt share inflection remains complex; Brazilian deflationary dilution is subsiding only
gradually; and tough competitive attrition remains a feature in many other major European
markets. Weak LatAm currencies represent an added complication.
...leading to more cautious estimates. We have better reflected some of the keymessages from the finals update. And we have also shifted to €BRL of 4.10 and €ARS of 24.
The consequent 8/10% downgrades assume that French margins already troughed at 1.9%
in 2017, but that the rebuild will be only gradual (especially in 2018, when loss reduction
from the deconsolidation of the most pressured Dia stores will be offset by sharper domestic
gross margin engagement). We similarly assume a tougher competitive context elsewhere
in Europe in 2018, and assume that the speed of ARS devaluation will make it extremely
difficult for Carrefour to rebuild local profitability this year.
Steering clear for now. We believe that the turnaround plan outlined by the new mgmtteam earlier this year () provides a sensible recovery framework.click here for more details
However, it is typically the case that entrenched, negative sales momentum tends to be
costly to inflect at grocers. And at this early stage of the recovery we cannot find solace in
valuation, historical FC or upcoming macro levers to support a braver stance on the stock.
Valuation/RisksValuation: €16.6 PT=14.3x 2019E P/E, mid-point of recent history to reflect depressed
margins but also lack of ST visibility. Risks: Weakening consumption, deteriorating
competition in key markets.
From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: 04/08/18 19:52:51
To: LAURENT CHEKROUN (MAKOR SECURITIES LO ) Subject: >>> Shire suitor Takeda says comments about potential offer aligned with previou
Shire suitor Takeda says comments about potential offer aligned with previous statements07 APR 2018Takeda Pharmaceutical Company Limited [TYO:4502] has said that reported comments made by its chief executive regarding a potential takeover bid for Irish rival Shire [LON:SHP] were aligned with its previous statements. The statement posted on Takeda's website on Friday, 6 April follows:Takeda Pharmaceutical Company Limited (“Takeda”) notes media reports about comments attributed to Takeda’s CEO Christophe Weber regarding the company’s possible offer for Shire plc (“Shire”). Takeda confirms that Mr Weber's comments were, however, aligned with the statements in our previous press releases. As set out in the press releases “Takeda Statement Regarding Shire plc” on March 28, 2018 in English and “Takeda’s official statement on Shire’s stock fluctuation” on March 29, 2018 in Japanese, clearly defined strategic and financial objectives are core to Takeda’s disciplined approach to acquisitions, including in relation to its dividend policy and credit rating, which are well-established. Any potential offer for Shire, if made, would have to align with this strict investment criteria.Please refer to the published press releases for details.In accordance with Rule 2.6(a) of the Code, Takeda must, by no later than 5.00 p.m. (London time) on 25 April 2018, either announce a firm intention to make an offer, subject to conditions or pre-conditions if relevant, for Shire in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for Shire, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the UK Panel on Takeovers and Mergers (the “Panel”) in accordance with Rule 2.6(c) of the Code.In accordance with Rule 26.1 of the Code, a copy of this announcement will be published on the Takeda website (https://www.takeda.com/newsroom/) by no later than 12 noon (London time) on 9 April 2018. The content of the websites referred to in this announcement is not incorporated into and does not form part of this announcement.Background:The Times reported on 6 April that Weber had informed analysts that Takeda was interested in acquiring Shire outright, rather than buying only certain assets. The report cited analysts who attended a meeting with Weber and Takeda’s chief financial officer Costa Saroukos in Tokyo on 5 April for the information.Link to original source
VEON to sell its Tacom business in Tajikistan to ZET Mobile (translated)
VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON), the international telecommunications holding headquartered in Amsterdam, is selling its business in Tajikistan, reported Russian newspaper Vedomosti citing VEON representative Maria Piskunenko.
VEON has reached an agreement for the sale of British Virgin Islands-registered Vimpelcom AG, which owns 98% of Tacom, the cellular operator in Tajikistan operating under the Beeline brand, according to Piskunenko. The buyer is ZET Mobile Limited, the owner of the remaining 2% stake in the operator, Piskunenko told the paper, without disclosing the value of the deal and the owners of ZET Mobile.
The transfer of the asset requires regulatory approvals, Piskunenko added.
Analysts cited by Vedomosti gave various valuations of the asset. A Raiffeisenbank analyst believes that Tacom could cost between USD 150m and USD 200m. An iKS-Consulting analyst gave a deal value of USD 120m, while an Otkritie Broker analyst provided a conservative valuation of USD 70m.
The paper also reported that VEON is selling its Tajik subsidiary after tax claims were imposed on the company. In late January, Nustratullo Davlatzoda, the head of the Tax Committee under the Government of Tajikistan, announced that Tacom owes USD 18.9m in taxes, the article reported. Vedomosti also reported that in March 2017, Mikhail Gerchuk, former Head of Eurasia at VEON, had announced that the company was presented with tax claims in Tajikistan, which its unit in Tajikistan did not agree with and explained its position to the Tajik side.
Link to original source (report behind paywall)
AveXis to be acquired by Novartis for USD 8.7bn
09 APR 2018
AveXis, Inc. [NASDAQ:AVXS] announced today that it has entered into an agreement and plan of merger with Novartis pursuant to which Novartis [VTX: NOVN] will acquire AveXis for USD 218 per share or a total of USD 8.7 billion in cash. This offer represents a premium of 88 percent to AveXis’ closing price on April 6, 2018, and a 72 percent premium to the company's 30-day volume-weighted average stock price. The transaction was unanimously approved by the Boards of Directors of both companies.
“The commitment, drive and expertise of the entire AveXis team has created significant stockholder value, and we are pleased that Novartis recognizes that value in the potential of AVXS-101, our first in class manufacturing capabilities and our gene therapy pipeline, all of which serve to transform the lives of people devastated by rare and life threatening neurological diseases such as SMA, Rett syndrome and genetic ALS,” said Sean Nolan, President and Chief Executive Officer of AveXis. “With worldwide reach and extensive resources, Novartis should expedite our shared vision of bringing gene therapy to these patient communities across the globe as quickly and safely as possible.”
Novartis plans a smooth transition of AveXis operations and the integration of AveXis’ talented and dedicated employees into the Novartis organization to continue the mission of bringing AVXS-101 to patients worldwide.
Completion of the transaction is expected in mid-2018, pending the successful completion of the tender offer and all other closing conditions. Until that time, AveXis will continue to operate as a separate and independent company.
AveXis’ financial advisors are Goldman Sachs & Co. LLC and Centerview Partners LLC, and Cravath, Swaine and Moore LLP and Cooley LLP are acting as legal counsel for AveXis.
Transaction Details
Under the terms of the agreement and plan of merger, Novartis has formed an acquisition subsidiary, Novartis AM Merger Corporation (“Purchaser”), that will commence a tender offer no later than April 17, 2018, to purchase all outstanding shares of AveXis for USD 218 per share in cash and AveXis will file a recommendation statement containing the unanimous recommendation of the AveXis board that AveXis stockholders tender their shares to Novartis. Following the completion of the tender offer, Novartis expects to promptly consummate a merger of Purchaser and AveXis in which shares of AveXis that have not been purchased in the tender offer will be converted into the right to receive the same cash price per share as paid in the tender offer (other than shares held by stockholders who properly demand and perfect appraisal rights under Delaware law).
The tender offer and the merger are subject to customary closing conditions, including the tender of at least a majority of outstanding AveXis shares on a fully diluted basis and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The merger agreement includes customary termination provisions for both AveXis and Novartis, including a right for either party to terminate if the transactions have not been completed by July 6, 2018 (such date, the “Outside Date”). Novartis is permitted under specified antitrust related circumstances to extend the Outside Date to October 6, 2018. If Novartis elects to extend the Outside Date, the offer price will increase from USD 218 per share to USD 225 per share in cash.
The merger agreement provides that, in connection with the termination of the merger agreement under specified circumstances, including termination by AveXis to accept a superior proposal, AveXis will be required to pay to Novartis a fee equal to USD 284 million. The merger agreement also provides that, in connection with the termination of the merger agreement under specified antitrust related circumstances, Novartis will be required to pay to AveXis a “reverse termination fee” equal to USD 437 million, which fee increases in the event Novartis elects to extend the Outside Date in accordance with the terms of the merger agreement.
Link to release (AveXis).
Link to release (Novartis).
Smith & Nephew could sell woundcare unit; KCI, Coloplast tipped to bid - report
09 APR 2018
Smith & Nephew [LON:SN], the UK-based medical devices group, could seek a buyer for its wound care business, The Daily Telegraphreported, citing a City source. The unidentified source said they would expect a bid battle to emerge among trade bidders such as San Antonio, Texas-headquartered KCI (Acelity) and Denmark-based Coloplast (named Chloroplast in the report).
Smith & Nephew remains a potential target for a full takeover, the source said, tipping US competitors Medtronic [NYSE:MDT], Johnson & Johnson [NYSE:JNJ] and Stryker [NYSE:SYK] as possible acquirers.
Morgan Stanley analyst Michael Jungling suggested Smith & Nephew is unlikely to sell its wound care operation as that market is very attractive for the business. The hip and knee unit which forms part of Smith & Nephew’s orthopaedics arm is a more likely candidate for disposal, the analyst said, pointing out that the company is not among the most significant players in that market.
Smith & Nephew announced last week that Namal Nawana will take over when chief executive Olivier Bohuon retires in May. A person with close links to the business noted Nawana’s history of successfully seeking out M&A deals, the report said.
The original article appeared in print; Page 4 (Business & Money section)