Gapping down
In reaction to disappointing earnings/guidance:
- GME -2.6%, ASND -2.2%, OXM -1.1%
Other news:
- ZSAN -34.5% (after filing a Form EFFECT (Notice of Effectiveness) for an S-1 offering)
- MNOV -16.6% (announces that the Phase 2 clinical trial of MN-166 in methamphetamine dependence did not meet the primary endpoint of methamphetamine abstinence confirmed via urine drug screens during the final two weeks of treatment)
- ACXM -10.9% (Acxiom announces change to Facebook (FB) relationship, says FY18 revenue and EPS guidance remain unchanged, sees FY19 revenues and profitability impacted by as much as $25 mln)
- HRTX -3.8% (prices offering of 6 mln shares of common stock at $26.00)
- OPBK -2% (after closing near highs on first day of Nasdaq IPO)
Analyst comments:
- GME -3.3% (downgraded to Underperform from Neutral at BofA/Merrill)
- CLD -3.3% (downgraded to Underweight from Neutral at JPMorgan)
- DUK -1.2% (downgraded to Sell from Neutral at Goldman)
- SBUX -1% (downgraded to Neutral from Outperform at Wedbush)
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Gapping up
In reaction to strong earnings/guidance:
- MOV +11.1%, TITN +11.1%, VRNT +7.6%, PRGS +5.3%, SAIC +5.1%, PVH +4.8%
Other news:
- PSDV +17.8% (announces Transformative Acquisition of Icon Bioscience Inc. and Growth Capital Financing with Essex Woodlands Healthcare Partners)
- ARA +10.9% (ticking higher -- withdraws common stock offering announced on March 26, 2018; believes that current market conditions are not conducive for an offering)
- OSTK +6.6% (Overstock.com files U.S. Supreme Court brief in South Dakota v. Wayfair state tax case)
- CJ +5.1% (to join S&P SmallCap 600)
- PTCT +3.5% (prices offering of 4 mln shares of common stock at $27.04 per share)
- LITE +2.5% (to join S&P MidCap 400)
- SRNE +2.2% (issues update to stock holders; states co is in better position to execute on commercialization efforts), .
Analyst comments:
- NVAX +7.3% (upgraded to Buy from Neutral at Seaport Global Securities)
- MGEN +6.3% (initiated with a Buy at Jefferies)
- CGEN +3.8% (initiated with a Outperform at Oppenheimer)
- DCI +2.6% (upgraded to Buy from Hold at Edward Jones)
- YNDX +1.8% (upgraded to Buy from Neutral at Citigroup)
- BP +1.8% (upgraded to Buy from Neutral at Citigroup)
- HOG +1.7% (upgraded to Neutral from Underperform at Longbow)
- TAHO +1.7% (initiated with a Buy at Cantor Fitzgerald)
- NVTR +1.1% (initiated with a Buy at SunTrust)
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Early premarket gappersGapping up:
- PSDV +17.8%, TITN +11.1%, ARA +7.9%, VRNT +7.6%, OSTK +6%, MOV +5.4%, PRGS +5.3%, CJ +5.1%, PVH +4%, PTCT +3.4%, LITE +2.9%, EXC +1.6%, SRNE +1.1%, LFIN +0.9%
Gapping down:
- MNOV -14.7%, ACXM -10.9%, HRTX -4.5%, CLD -3.7%, GME -2.4%, ASND -2.2%, OPBK -2%, DUK -1.2%, OXM -1.1%, TCO -0.5%
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From: LCHEKROUN@makor-cm.com At: 03/29/18 11:27:52
To: LAURENT CHEKROUN (MAKOR SECURITIES LO ) Subject: >>> EXTEL 2018 SURVEY - VOTE MAKOR
From
EXTEL 2018 SURVEY - VOTE MAKOR!!!
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Chinese private equity firms see buyout opportunities in Europe mid-market space amid Trump’s tough stance on China
Analysis29 MAR 2018
• Leverage ratio lower than US peers
• One Belt One Road opportunity in CEE
• CFIUS concerns thwart Chinese investments in US
Chinese private equity firms are increasingly seeing buyout opportunities in the European mid-market space amid concerns that the US government has taken a hard line on trade and investments with China, according to several private equity sources.
Last week, US President Donald Trump proposed tariffs of 25% on up to USD 60bn of Chinese goods, partly in retaliation for China allegedly abusing US intellectual property rights, as reported. He has, however, suggested that the US could reconsider the proposal based on discussions with China.
The move follows the Trump administration’s support for bills in Congress to broaden the US government’s power and strengthen foreign investment rules amid concerns over Chinese companies’ attempts to acquire US technology firms.
“We are increasingly directing our attention from the US to Europe…Europe is more lenient than the US in terms of regulatory concerns,” Yitian Luo, managing director at YunFeng Capital, a Chinese private equity fund backed by Alibaba’s Jack Ma, said last Thursday during a cross-border M&A forum hosted by Shanghai-based investment bank DealGlobe.
“We are not scared by CFIUS (Committee on Foreign Investment in the US), as there are plenty of opportunities in Europe,” Chairman of GSR Capital Sonny Wu told this news service. GSR Capital, a Chinese private equity fund specialized in clean energy and electric vehicle investments, had its USD 3.3bn acquisition of Lumileds, a US lighting division of Koninklijke Philips [NYSE:PHG], blocked by CFIUS in 2016.
Leverage ratio lower than US peers
Leverage in Europe’s mid-market space is much lower than its peers in the US as companies in Europe have exploited cheap debt amid quantitative easing. There are some family-owned companies in Europe that have never introduced private equity investors, while many US companies may already have private equity backers and therefore difficult to add further leverage, Luo said.
Sectors such as energy, information technology, basic materials, industrials, and retail in Europe are less leveraged compared with its counterparts in the US, according to a research report from BofA Merrill Lynch last March.
Lin Feng, founder and CEO at DealGlobe, during the same forum last Thursday noted that when family-run corporations do not have a next generation to succeed them, their best option is to sell the companies. There are many entrepreneurs in Germany and the UK between 50 to 70 years old who are facing succession issues in the next 10 years. A company with an annual profit of CNY 1bn (USD 159m) would be very attractive [to Chinese buyers], according to Feng.
Unlike the US where the market is huge, European companies’ local markets are relatively small, and each market is different. For instance, it can be very difficult for a German company to enter the French market. So Chinese buyers, investors or strategic partners would be of prominent value to [the European companies] compared with local investors, Feng said.
OBOR opportunities in CEE
Central and Eastern Europe are part of China’s modern Silk Road initiative where Beijing is hoping to carve out new export markets for its companies as the US has taken a tough stance on China’s trade and investment practices, according to a China-based private equity source.
In 2017, the deal value of China outbound M&A to Europe was USD 44.3bn, over 5x the deal value of China outbound M&A to the US, at USD 8.5bn, according to Mergermarket data. The deal value of China outbound M&A to Central and Eastern Europe was USD 9.3bn in 2017, up 415% from 2016’s deal value of USD 2.2bn.
The potential trade war between the US and China will likely accelerate the pace of Chinese companies seeking new export markets, and Central and Eastern Europe along the One Belt One Road provides opportunities for Chinese investment funds to invest in infrastructure, high-tech manufacturing and consumer goods sectors, the source said.
Compared to the US, Europe is heavily focused on manufactured goods and trade is better complemented with China’s market needs especially in utilities and energy, automobile, transportation and machinery-related sectors, the private equity source said.
“The deals there [in CEE] are less crowded,” the private equity source added.
“We think in Europe, family-run corporations still bring about huge opportunities. And European companies need the Chinese market. They need Chinese buyers to bring their companies to the next level,” according to Feng.
In November 2016, China set up a CNY 10bn investment fund called Sino-Central Eastern European Fund backed by ICBC that focuses on projects in Central and Eastern Europe for sectors such as infrastructure, high-tech manufacturing and consumer goods, as reported.
CFIUS concerns thwart Chinese investments in US
“We are fairly pessimistic about the North American market in the future. The US government has rejected a huge number of projects,” Feng said. The unpredictable policy environment under Trump’s administration is greatly discouraging investors from making acquisitions in the US, he noted.
CFIUS has scotched a string of US acquisitions, particularly from Chinese investors over concerns that China would transfer US technology know-how overseas.
In late 2017, legislation was introduced that sought to broaden CFIUS’ jurisdiction. The “Foreign Investment Risk Review Modernization Act of 2017” as currently drafted would expand the US government’s review of transactions in potentially sensitive sectors such as artificial intelligence, robotics, autonomous vehicles and cybersecurity creating mandatory filing requirements for investors with government ownership, and applying entirely new controls on technical collaboration between US and non-US companies, as reported.
In February, US regulators stopped Chinese state-backed group Sino-IC Capital, backed by China Integrated Circuit Industry Investment Fund, from acquiring Xcerra, a Massachusetts-based provider of equipment for testing computer chips and circuit boards.
Meanwhile, last September, Trump’s administration blocked the proposed USD 1.3bn acquisition of New Jersey-based chipmaker Lattice Semiconductor by Canyon Bridge Capital Partners, which is wholly backed by the Chinese government, as reported.
CME to shake up bond and forex markets after buying Nex Group
Chief executive Michael Spencer to net £670m from the sale
CME Group, the world’s largest futures exchange, has agreed to buy Michael Spencer’s Nex Group for £3.9bn in a deal that heralds a shake-up in the world’s bond and foreign exchange markets.
The deal was confirmed on Thursday after several weeks of talks and the price is at the top end of analysts’ forecasts. If completed, the deal would be the CME’s largest overseas acquisition and its largest since it bought Nymex for $11bn in 2008.
A combination would put CME in pole position to potentially reform trading on the $500bn-a-day US Treasuries market, the main market for US government debt.
The CME dominates futures trading in its home US market but has few assets overseas. The deal “will transform our international profile and broaden our distribution network in spot and futures FX products as well as cash, repo and futures products in US Treasuries”, said Terry Duffy, CME chief executive.
CME said it would pay £10 a share for Nex, structured as a cash payment of 500p and 0.0444 new CME shares per Nex share. Nex said it would recommend the deal to shareholders.
It would also represent another big payday for Mr Spencer, who will net about £670m from the deal as Nex’s largest shareholder. He will also join the CME board and serve as a corporate ambassador. Mr Spencer, one of the City’s best-known entrepreneurs and former Tory party treasurer, has ridden the changes in the City since founding Nex’s predecessor ICAP in the mid-1980s.
It began as a punchy interdealer broker start-up in the nascent global swaps market and his brokers played a critical role as intermediaries in facilitating deals between banks in the over-the-counter market. Profits soared as markets globalised.
However, he saw the market changing after the financial crisis, and in the regulatory clampdown ICAP was fined £55m for its brokers attempting to manipulate Libor. Mr Spencer earned £200m from the sale of the broking business to longtime rival, Tullett Prebon. Nex was founded at the end of 2016 to focus on electronic trading and the arcane and crucial mechanics of market plumbing.
A CME purchase would mark the first time the same company owned the dominant markets for fixed income and forex futures, and their underlying securities. Nex operates some of the world’s largest currency and sovereign debt markets, and owns assets that process millions of derivatives, equities and currency deals.
Mr Spencer described the deal as “unique” and a “signal of tremendous support for Britain’s financial services sector”.
CME said it expected to generate cost synergies of $200m by the end of 2021 and to incur a one-off cost of $285m to achieve it. This would be in addition to the £40m of costs Nex is planning in coming years. Most will fall in IT and administration, which could affect about 750 jobs at Nex.
The deal would also unite CME’s FX futures business with Nex’s currency trading venue, as the CME targets the global FX swaps and forwards market, which trades a notional $3tn a day.
Nex shareholders will also receive a final dividend for the year to March 2018, which will not exceed 7.65p per share. Nex senior executives will also receive share options they are due to receive for the same financial year. The deal is expected to close in the second half of the year.
McCartney Talks Challenges, Dreams Ahead of Kering Split
The designer plans to remain a board member of the Kering Foundation, and collaborate closely with Kering on sustainability in fashion.
LONDON — Hello, goodbye.
Stella McCartney is ready to move on, with plans to split from her longtime partner Kering and take her namesake brand into new, independent territory.
In an exclusive interview she told WWD that it wasn’t an easy decision, but she’s eager to safeguard her name and her company’s future and is up for the challenge of running an indie brand.
“The future of the business is so bright, we have so much more to say and we have established ourselves in the fashion world with a point of difference. This time almost feels like the beginning for us,” said McCartney from her airy new offices near Westfield London.
Dressed in a languid, navy blue boiler suit and Velcro sneakers, McCartney said her option to buy back Kering’s 50 percent stake in the brand had been in her contract from Day One. She said she couldn’t turn it down.
“It is an incredible blessing and a once-in-a-lifetime opportunity that’s not awarded to many fashion designers with their name on the door. I have four children, I have the opportunity to take control of the business that bears my name and that is extraordinarily exciting. To be afforded that chance as a designer, as a woman, as a mother of four, it’s something I had to take on,” McCartney said.
She and her lawyers had put the option there when she launched her label as a 50-50 partnership with Kering, then known as PPR, in 2001.
“It was there for a reason. I’m very protective and very aware of my name. It has a lot to do with my heritage, a lot to do with how I’ve looked at the world growing up,” the designer said. “I’ve understood the value in the name — and the emotional value — so this was a very patrimonial decision. It’s about the ability to control my name and, hey, who knows what happens in the future? I guess having that security means that whatever happens, you’re going to have the ultimate say.”
In a statement released on Wednesday evening after the Paris and London stock markets closed, François-Henri Pinault, chairman and chief executive officer of Kering, said it was the right time for McCartney to move on.
“Kering is a luxury group that empowers creative minds and helps disruptive ideas become reality. I am extremely proud of what Kering and Stella McCartney have accomplished together since 2001,” he said, adding that McCartney and her team had brought far more than business to Kering.
“Stella knows she can always count on my friendship and support,” he said, echoing McCartney.
“I have had an incredible relationship with Kering and, first and foremost, the Pinault family, whom I consider to be great friends. I’m incredibly close to them. We had such a successful business together, an incredible partnership,” she said during the interview.
Both parties have promised a “smooth transition” in order to maintain the brand’s momentum in the market.
The handover process will take two years: The first 12 months will see the financial transaction completed, while Kering and McCartney have given themselves a further year to work together and sort out the final details.
In Kering’s 2018 financial report, Stella McCartney will be listed as a discontinued operation, while the profit-and-loss statement for 2017 will be restated to reflect the brand’s new status within the Kering stable.
collaborate closely with Kering on sustainability in fashion.
By Samantha Conti on March 29, 2018
Stella McCartney
Stella McCartney
Mary McCartney
LONDON — Hello, goodbye.
Stella McCartney is ready to move on, with plans to split from her longtime partner Kering and take her namesake brand into new, independent territory.
In an exclusive interview she told WWD that it wasn’t an easy decision, but she’s eager to safeguard her name and her company’s future and is up for the challenge of running an indie brand.
“The future of the business is so bright, we have so much more to say and we have established ourselves in the fashion world with a point of difference. This time almost feels like the beginning for us,” said McCartney from her airy new offices near Westfield London.
Dressed in a languid, navy blue boiler suit and Velcro sneakers, McCartney said her option to buy back Kering’s 50 percent stake in the brand had been in her contract from Day One. She said she couldn’t turn it down.
“It is an incredible blessing and a once-in-a-lifetime opportunity that’s not awarded to many fashion designers with their name on the door. I have four children, I have the opportunity to take control of the business that bears my name and that is extraordinarily exciting. To be afforded that chance as a designer, as a woman, as a mother of four, it’s something I had to take on,” McCartney said.
She and her lawyers had put the option there when she launched her label as a 50-50 partnership with Kering, then known as PPR, in 2001.
“It was there for a reason. I’m very protective and very aware of my name. It has a lot to do with my heritage, a lot to do with how I’ve looked at the world growing up,” the designer said. “I’ve understood the value in the name — and the emotional value — so this was a very patrimonial decision. It’s about the ability to control my name and, hey, who knows what happens in the future? I guess having that security means that whatever happens, you’re going to have the ultimate say.”
In a statement released on Wednesday evening after the Paris and London stock markets closed, François-Henri Pinault, chairman and chief executive officer of Kering, said it was the right time for McCartney to move on.
“Kering is a luxury group that empowers creative minds and helps disruptive ideas become reality. I am extremely proud of what Kering and Stella McCartney have accomplished together since 2001,” he said, adding that McCartney and her team had brought far more than business to Kering.
“Stella knows she can always count on my friendship and support,” he said, echoing McCartney.
“I have had an incredible relationship with Kering and, first and foremost, the Pinault family, whom I consider to be great friends. I’m incredibly close to them. We had such a successful business together, an incredible partnership,” she said during the interview.
Both parties have promised a “smooth transition” in order to maintain the brand’s momentum in the market.
The handover process will take two years: The first 12 months will see the financial transaction completed, while Kering and McCartney have given themselves a further year to work together and sort out the final details.
In Kering’s 2018 financial report, Stella McCartney will be listed as a discontinued operation, while the profit-and-loss statement for 2017 will be restated to reflect the brand’s new status within the Kering stable.
McCartney said her licenses and partnerships — which include Kering for eyewear, Italy’s Isa SpA for men’s and women’s swimwear and lingerie, P&G Prestige Beauty for fragrances and the Adidas by Stella McCartney collection — will remain in place. McCartney also plans to remain on the board of the Kering Foundation, which aims to improve women’s lives, and said she will continue to work alongside Kering on fashion sustainability.
Kering and McCartney declined to confirm the value of the deal, or the overall size of McCartney’s company. Kering does not break out the financial results of its smaller brands.
McCartney also declined to comment on how she plans to finance the buyback, although it is understood her famous father Sir Paul McCartney will not bankroll the deal. She added that there were no plans for an initial public offering and no intention to take on a new business partner right now. Industry sources say that prospective investors have been circling and that the designer has been conducting exploratory talks.
“This has been a very mindful and serious option for me to look at, and I looked at it from every single angle,” said McCartney of her decision to split from Kering. “Fundamentally, if I didn’t think that we could do this, I would not be doing this. It’s a decision based on patrimony and also based on the fact that I feel we are really equipped to take this on. I’m a designer, but I’m also an independent businesswoman, and we are a healthy business.”
The time is certainly right to be raising money: Be they private equity or sovereign wealth funds, trade buyers, family investment businesses or high-net-worth individuals, investors are looking to put their money to work while interest rates remain low.
Investors are also using their cash to beat a path to Millennials, and looking for companies with strong social media strategies, direct-to-consumer plays and sustainable products.
Were McCartney to pursue new investors she’d be in good company: Dries Van Noten is said to have hired Elsa Berry’s Vendôme Global Partners to bring in an investor. It is understood a number of discussions have taken place in recent weeks with a variety of potential partners.
As reported, Acne has given a mandate to Goldman Sachs to look for buyers, while Tresalia Capital is said to have hired the same bank to handle the sale of its 20 percent stake in Tory Burch.
According to documents filed at Companies House, the official register of U.K. businesses, turnover at Stella McCartney’s U.K. division rose 31 percent to 41.7 million pounds in the 12 months to Dec. 31, 2016. Profits in the period were up 42.5 percent to 7 million pounds.
Those numbers refer solely to Stella McCartney’s U.K. business and the brand’s worldwide licensing revenue. They do not take into account wholesale sales or turnover from the brand’s directly operated stores outside the U.K. The collections are available in more than 100 countries at wholesale and through 51 freestanding stores worldwide.
Asked what more she feels she can do with an independent brand, McCartney said she never felt constricted by Kering in the nearly two decades they worked together, so the plan is to proceed with business as usual.
As reported, the label will move its flagship from Bruton Street to 23 Old Bond Street, in the former Joseph space, at the end of May. The following month McCartney plans to stage a presentation of her spring 2019 men’s collection and her women’s pre-spring 2019 collection in Milan.
In June, she’ll also launch The Loop, a glue-free sneaker for men and women with components that fit together like Lego pieces (as a mother, she’s well acquainted with the plastic bricks).
Asked about breaking free from Kering during such uncertain times for luxury fashion, McCartney acknowledged that it was a massive period of change for the industry.
“Everyone’s exploring different methods and different means of expanding their businesses. We are, too, and I look at it as a great challenge, as something that’s exciting. When you are creative person, you never want to just fit into a mold or stand still. At Stella McCartney we pride ourselves on exploring new techniques, new technologies, new ways of looking at an industry. We certainly don’t fit into a mold and we see opportunities going forward. We also don’t have these preconceived ideas that we have to sit in a certain price point, or territory. We are responding as well as respecting,” she said.
The no-fur, no-leather label has recently made a number strides on the raw material front, including winning Cradle to Cradle Certified Gold level certification last year for using pesticide-free, safer wool yarns in cooperation with Zegna Baruffa.
McCartney’s team is working with the Israel-based start-up developer and manufacturer TIPA on environmentally friendly plastic, and with Bolt Threads, a U.S.-based biotech company that makes fibers from scratch based on proteins found in nature. For Stella McCartney, Bolt Threads created silk using yeast, making the textile vegan-friendly.
McCartney added that, going forward, she plans to continue creating an annual environmental profit and loss account. The EP&L measures the impact of the business and supply chain on the environment. Hers was the first company in the Kering stable to do so.
While McCartney is fired up, she’s also apprehensive about her big leap.
“Of course, this has elements of fear attached to it. But I’m a glass-half-full person, so even fear for me is exciting and challenging and part of a reason to stay alive. I think it’s an opportunity for us, for everyone at Stella McCartney to have an incredible new moment, fresh air. This is an extraordinary opportunity afforded to very few, and to take the opportunity feels exciting, and like the right decision at the right time.”