Fortum eyes more M&A with unspent Uniper cash - Reuters News
01-Mar-2018 16:52:00
OSLO, March 1 (Reuters) - Finland's Fortum FORTUM.HE, which failed last month in its bid to win majority control of Germany's Uniper UN01.DE, is now considering other acquisitions, Chief Executive Pekka Lundmark said on Thursday.
After selling its distribution networks in 2015, state-controlled Fortum was left with about 10 billion euros in cash, much of which the company has said it could use for acquisitions.
Fortum received only a 47-percent stake in Uniper after bidding 8.05 billion euros ($9.80 billion) for a 100-percent stake. (Full Story)
"We are looking at different (acquisition) opportunities," the company's chief executive said, when asked how Fortum will use the funds that weren't utilised in its Uniper bid.
Lundmark declined to identify specific target companies, but said Fortum was looking at a variety of possible acquisitions and that district heating providers were among those being considered. (Full Story)
Possible targets will be in the Nordics, Latvia, Poland, Russia and India, all of which are Fortum's core markets, he added.
In February, following the outcome of the Uniper bid, Fortum announced acquisitions of three Latvian district heat producers, BK Energija, Sprino and Energy and Communication.
Renault, Nissan and Mitsubishi tighten ties
Alliance moves closer to single group with joint executives leading key functions
Renault, Nissan and Mitsubishi Motors will move ever closer to becoming a single company with joint executives leading all key functions, as the rival carmakers push towards aggressive savings targets from their global alliance.
The RNM Alliance, the world’s second largest vehicle maker by sales behind Volkswagen, is aiming to make joint savings of €10bn by 2022, up from €5bn in 2016, by working closer together and using more common parts across its vehicle range.
On Thursday, it announced an executive shuffle and added new areas, such as quality and car servicing, where its businesses will work together.
The savings will drive up profits and help the companies make the vast investments they need into electric vehicles and self-driving systems, at a time when global car manufacturers are facing rising costs from new technologies.
Carlos Ghosn, who is chairman of all three carmakers as well as being chief executive of the Alliance and Renault, said the decision was not intended to take power from leaders of each business.
“The CEO of each company is in charge of its own business, that is the bottom line,” he said. “This is not about change of responsibility, it’s about acceleration of the synergies that are not possible without working together.”
He added: “Everything we are doing here is about efficiency.”
Mr Ghosn was last month reinstated as Renault’s chief executive for another four-year term after a search for a successor that saw it consider internal and external candidates.
The group also promoted chief competitive officer Thierry Bolloré to become chief operating officer with responsibility for day-to-day management of the business, a position that looks increasingly like a chief executive role as the company’s finance and HR functions will report to him.
Renault and Nissan, which have been working together since 1999, three years ago began combining engineering, manufacturing and supply chain work.
They will deepen merged areas such as manufacturing and supply chain, and will launch new projects around quality, customer satisfaction, aftersales and business development, the Alliance announced on Thursday.
Mitsubishi will join the purchasing, business development, and quality organisations in April 2018, and will then gradually move towards full participation in engineering and manufacturing as well as aftersales starting from next year.
Each strand will have its own director at the Alliance level, the company said.
Currently Renault and Nissan own shares in each other, while Nissan has a stake in Mitsubishi.
Yet the group still remains held back from a full merger or even closer capital or legal integration by the French government’s shareholding in Renault, as well as disagreements over where the eventual business would have its shares and pay tax, Mr Ghosn said on Thursday.
He said that the savings from the Alliance would “turbo-charge” the individual businesses, rather than see them lose their brand identities.
WPP: old guard
Obsolescence due to new technology is biggest threat facing Sorrell’s ad empire
Once cheekily described as the “Napoleon of Adland”, Sir Martin Sorrell appears to be re-enacting the retreat from Moscow. Forces are massing against WPP, the advertising empire he pulled together from his far-ranging conquests. The biggest danger is obsolescence due to new technology. This, more than anything, has pushed the shares down 37 per cent in a year. A chilly outlook for 2018 contributed to the rout on Thursday.
Sir Martin is franker with the public than Boney. Disinclined to portray defeats as victories, he admits 2017 was “not a pretty year”. Though earnings rose by most measures, comparable billings fell 5.4 per cent to £55.6bn. Net sales were nearly flat at constant currencies at £13.bn.
Investors had got used to WPP’s revenues and profits compounding at a steady 7-8 per cent a year. They were shocked by Sir Martin’s warning that both are set to tread water in 2018. They have been well-served by his strategy of combining small agencies in a network able to service multinational clients worldwide.
Contrast that labour-intense expansion with the almost frictionless growth of consumer networks created by big tech groups. The world ad market depends on digital promotion for two-fifths of its estimated $530bn in sales. Google and Facebook account for half of that fast-growing sub-set.
Conventional analysis tells us WPP is undervalued. Ten times forward earnings is not a lot to pay for a group with operating margins of 12.5 per cent. The yield is a bulbous 5 per cent. But conventional analysis makes no allowance for technological disruption. Sir Martin blamed this for WPP’s mixed numbers in 2017, alongside the vapours that activism and zero-based budgeting induced in clients. An ugly word with ugly effects for WPP — disintermediation — has yet to have an impact, he added.
The bigger the slice of advertising budgets absorbed by tech groups, the greater the likelihood they will deal directly with consumer goods groups. These might still need creatives in thick-rimmed spectacles to think up ads for them. They may not need WPP account handlers to secure ad space.
One Napoleonic-era cavalry regiment had the motto “Or Glory”. Death was the unspoken alternative. Having achieved glory, WPP must show it can adapt its business model to avoid that gloomy, if still distant, fate.
Gapping down
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- CLNS -22.8%, PTLA -17.3%, BOX -14.2%, WPP -11.9%, CCRN -11.2%, PDCO -10.4%,MNST -7.8%, BLDP -7.8%, EPR -6.4%, LB -6.2%, HLIT -5.8%, HK -4.1%, CODI -3.9%,RVNC -3.9%, (Revance Therapeutics and Mylan (MYL) announced a global collaboration and license agreement for the development and commercialization of a proposed biosimilar to BOTOX), KTOS -3.3%, (Kratos Defense and Security executes definitive agreement to sell Public Safety and Security divisions to Securitas Eletronic Security for approx $70 mln; KTOS will be reporting earnings shortly), ITCI -3.1%, LOXO -2.9%, PEGI -2.5%, PF -2.5%, PEIX -2.4%, CPG -2.1%,AMBC -1.9%, BSTI -1.8%, BGNE -1.3%, IPXL -1.2%, CBPO -1.1%, GEF -1%
Other news:
- OSTK -10.3% (discloses in regulatory filing that the SEC is investigating its tZERO unit)
- ATRA -6% (prices offering of 4,285,714 shares of its common stock at $35.00 per share)
- SFUN -4.7% (lower on block trade pricing)
- CORI -3.1% (announces proposed offering of $100 mln of convertible senior notes, provides update on fda feedback on pilot bioequivalence study )
- SC -2.4% (indicated lower after filing its 10-K disclosing it received Civil Investigative Demands in August)
- AST -2.3% (provides additional data from the company's ongoing Phase 1/2a SCiStar study designed to evaluate the safety and potential efficacy of AST-OPC1 in the treatment of severe cervical spinal cord injury)
- CCI -2% (Crown Castle commences offering of 7,765,000 shares of common stock pursuant to an effective shelf registration statement )
- GDDY -1.7% (announces public offering of 16,916,000 shares of Class A common stock by stockholders pursuant to an effective Registration Statement), AGN -1.4% (notified by the FDA that the review of the New Drug Application for ulipristal acetate will be extended)
- FCAU -1.3% (Fiat Chrysler says reviewing potential separation of Magneti Marelli in the second quarter of 2018 )
- HLNE -1% (prices 3.94 mln shares of common stock at $34.25 per share)
Analyst comments:
- CPB -1.7% (downgraded to Underweight from Neutral at Piper Jaffray)
Gapping up
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- DDD +13.6%, BNED +13.2%, HIIQ +10.3%, QEP +10.2%, TWNK +8.3%, HABT +7.5%,ECR +6.8%, ILG +6.1%, GDP +6%, BLDR +5.4%, ITRI +5%, BBY +4.8%, BUD +4.5%,CVEO +4.2%, MYL +3.3%, MMSI +3.3%, UHS +3.3%, CRM +3.2%, AMC +3%, BID +2.9%,HGV +2.5%, RTIX +2.4%, KSS +1.3%, OCLR +1.1%, AXGN +1%, ABEV +0.6%
M&A news:
- AFSI +12.4% (to be acquired by Evergreen Parent for $13.50/share in cash)
- FLY +5.9% (to acquire major aircraft portfolio AirAsia Berhad)
Other news:
- NVAX +24% (announces 'positive' top-line results from its Phase 1/2 clinical trial in older adults of its NanoFlu recombinant influenza vaccine compared to the leading licensed egg-based, high-dose influenza vaccine for older adults)
- NWL +6.3% (Acitivist investor Carl Icahn is said to have recently built a stake in Newell, according to the NY Post)
- FGEN +1% (FDA has granted Fast Track designation for the company's anti-CTGF antibody, pamrevlumab, for the treatment of patients with locally advanced unresectable pancreatic cancer)
Analyst comments:
- CRZO +3% (upgraded to Buy from Hold at Jefferies)
- TWLO +1.4% (initiated with a Buy at BofA/Merrill)
Burberry appoints Riccardo Tisci as creative chief
Former Givenchy designer replaces Christopher Bailey at UK fashion house
Luxury goods company Burberry has appointed Riccardo Tisci as chief creative officer to succeed Christopher Bailey, who injected new life into the venerable British brand but then stumbled as chief executive.
Shares in Burberry rose 5 per cent on the news. The announcement ends the uncertainty that followed Mr Bailey’s announcement in October that he was quitting the company after 17 years — the last four as both chief executive and creative director.
The appointment of the former Givenchy designer means that the two top jobs at Burberry are now held by Italians — Marco Gobbetti took over from Mr Bailey as chief executive in October.
Mr Gobbetti said Mr Tisci was “one of the most talented designers of our time”, describing his creations as having “an elegance that is contemporary”.
He said his fellow Italian had a “skill in blending streetwear with high fashion” that is “highly relevant to today’s luxury consumer”.
The two worked together at LVMH, the French luxury goods company, where Mr Gobbetti hired the designer when he was a relatively untested talent.
Mr Tisci was Givenchy creative director from 2004 to 2017. Mr Gobbetti was chief executive of Givenchy between 2004 and 2008.
Rogerio Fujimori, analyst at RBC Capital Markets, said Mr Tisci would be “ a good fit for Burberry”, which he said was seeking “to position itself firmly in luxury, with more fashion content and stronger presence is accessories”.
He had worked well with Mr Gobbetti at Givenchy, he added.
“This increases the chances of a successful CEO-creative director partnership at Burberry, which is an essential ingredient of successful turnround stories in the luxury sector.”
The 43-year-old Mr Tisci, who will present his first collection for Burberry in September, is a graduate of Central Saint Martins, the London art and fashion school. He has designed stage outfits for Madonna, worked with performance artist Marina Abramovic and created artwork for the Watch the Throne album by Jay Z and Kanye West.
Mr Tisci said he had “enormous respect for Burberry’s British heritage and global appeal” and said he was excited about the potential for “this exceptional brand”.
The pair will seek to restore the fortunes of the company, which has been hit by a slowdown in demand particularly from China, following a crackdown by Beijing on conspicuous consumption and limits on foreign travel.
Fashion industry analysts had been speculating about Mr Tisci’s next move after he quit LVMH in February last year. There were reports he was heading for a job at Versace, the rival Italian fashion house. But it emerged that contractual negotiations had irrevocably broken down between Mr Tisci and Donatella Versace, the artistic director and vice-president of Versace, which is still 80 per cent family-owned.
Mr Tisci has been enjoying his time off. A keen user of social media, his Instagram feed shows him in Portofino, at a yoga retreat in Tuscany and at Madonna’s birthday party in Puglia.
Burberry, which once made trenchcoats for the British army, is the UK’s biggest luxury company. In his early years at the label, Mr Bailey jettisoned the trademark check, which had long been associated with the sort of fashion seen on UK football terraces.
But the check is now firmly back in favour and even adorns Burberry baseball caps, as seen at Mr Bailey’s farewell collection during London Fashion Week last month.
Whitbread activist Sachem Head demands taking on GBP 1bn debt to finance share buyback - report
The activist investor Sachem HeadCapital Management has demanded that the FTSE-100 leisure company Whitbread [LON:WTB] should take on GBP 1bn (EUR 1.28bn) of debt to finance a share buyback, the Financial Timesreported. The newspaper cited people with knowledge of a meeting between Sachem Head’s founder Scott Ferguson and Whitbread Chief Executive Alison Brittain in October 2017 for the information.
The report went on to cite others close to Sachem Head, who denied the claim about Ferguson’s demand. Whitbread currently has GBP 862m of debt, the item said, citing data from S&P Global.
The people were quoted in a longer report about Whitbread’s strategy in the face of an activist campaign by Sachem Head.
Ferguson also demanded that Whitbread sell or spin off its Costa chain of coffee shops and sell and lease back properties, the item said.
The people cited by the report said Ferguson seemed to be demanding that Whitbread implement all of his demands, rather than presenting a range of options.
People with knowledge of the meeting said Brittain informed Ferguson that she would not consider selling and leasing back assets.
Sachem Head and Whitbread refused to comment on the discussions’ details, the article continued.
Brittain has indicated that she held a further meeting with Ferguson this month in New York, describing the meeting as “courteous,” the report said. However, neither Brittain nor Ferguson altered their positions, the item added, citing people familiar with the discussions.
Whitbread’s large shareholders include Massachusetts Financial Services, OppenheimerFunds, Fiduciary Management, Longview Partners, Standard Life Aberdeen and Walter Scott & Partners, the newspaper said. The investors refused to comment, the report added.
The item went on to cite people close to the discussions who said Brittain has held meetings with some of Whitbread’s biggest investors over the past few weeks and was confident that she will come out on top. The article added that investors have contacted Ferguson for clarity on his position.
One analyst cited by the report estimated that Costa could sell for up to GBP 2.5bn. Costa contributed GBP 1.2bn of Whitbread’s GBP 31bn group revenues in 2017, the item added.
The report estimated a valuation range of GBP 4bn to GBP 5bn for Whitbread’s properties. Whitbread owns Premier Inn, a UK hotel company.
Whitbread is pressing on with a strategy of international expansion, the report said, noting the company’s announcement on Wednesday, 28 February that it had bought 19 German hotels from Foremost Hospitality.
The deal value was not disclosed. However, the report cited analysts who estimated a sale price of about GBP 250m.
Background:
A report in The Times on 19 January quoted Brittain, who said the Whitbread board was “very open-minded” about splitting its Costa and Premier Inn businesses, but added that the time was not right for such a move.
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