(Needham) Netflix: Negative implications for NFLX of DIS/FOXA deal

Netflix: Negative implications for NFLX of DIS/FOXA deal
Needham reiterates Hold. Firm notes that they believe DIS's announced acquisition of certain FOXA assets for $66B, including $52B of equity is negative for NFLX because it implies: a) more OTT competition; b) less hit content on NFLX; c) a deep-pocket competitor with a talent culture and great data and d) a more robust capital structure than NFLX. In addition to HULU, which is an existing competitor to NFLX, DIS has announced that it will introduce 2 new direct to consumer (DTC) services over the next 24 months, 1 for sports and 1 for entertainment. After DIS closes the Fox assets acquisition, these services should be more robust and both will directly compete with Netflix for viewers' time and OTT sub revenue. DIS's marketing skills are world class (our view), which implies DIS's new OTT services will give the dominant OTT service (NFLX) the biggest headache.

>>> US Early premarket gappers

Early premarket gappers
Gapping up:
  • PIXY +103.7%, DCIX +43.7%, EGLT +20.8%, DDR +13.1%, ACRS +9.2%, ALNY +7.6%, HES +6%, OHRP +5.3%, GLNG +5.1%, RENN +3.9%, JBL +3.8%, HST +2.5%, COST +2.4%, DISCA +2.3%, ADBE +1.7%, PBR +1.4%, TWO +0.7%.
Gapping down:
  • TROV -37.3%, CSX -9.5%, ORCL -6.4%, VSTM -5.5%, GBT -3.6%.

>>> Gemalto could receive bid by Atos of EUR 50 per share - iex.nl


Gemalto could receive bid by Atos of EUR 50 per share – report (translated)
15 DEC 2017

The Dutch digital security and services provider Gemalto [EPA:GTO] could receive a bid of EUR 50 per share from Atos [EPA:ATO], a France based information technology services company, the Dutch news site Iex.nl reported, based on a report from Bloomberg.

Eleven different, unnamed analysts told Bloomberg that they expect Atos to raise its bid to acquire Gemalto. On Wednesday, Gemalto rejected a bid made by Atos to acquire the company for EUR 46 per share.

On an average the analysts expect a new bid of EUR 50 per share, but one analyst told Bloomberg that Atos could place a bid as high as EUR 53.75 per share.

>>> Vectura attracts takeover interest from Astrazeneca - telegraph.co.uk


Vectura attracts takeover interest from Astrazeneca - speculative report
15 DEC 2017

Vectura Group [LON:VEC], a UK-based pharmaceuticals delivery devices manufacturer, has attracted takeover interest from the FTSE-100 pharma group AstraZeneca [LON:AZN], according to a speculative report in The Daily Telegraph on Friday, 15 December.

The newspaper’s market report section mentioned City rumours that AstraZeneca is one of the several parties interested in acquiring Vectura, but did not cite a source for the speculation.

The Daily Telegraph’s market report section on Thursday mentioned talk that one of Vectura’s partners may be about to launch a takeover bid for the company, naming the Swiss pharma group Novartis [VTX:NOVN] as one potential bidder. The report did not cite a source.

Vectura Group’s share price closed 8.1p up at 112.0p in London on Thursday, giving the company a market capitalisation of GBP 759m (EUR 865m).

>>> Millennium & Copthorne shareholders with combined 12.7% stake reject GBP 2bn


Millennium & Copthorne shareholders with combined 12.7% stake reject GBP 2bn improved takeover bid from City Developments Limited
15 DEC 2017

Millennium & Copthorne Hotels (M&C) [LON:MLC] shareholders International Value Advisers (IVA), MSD Partners and Classic Fund Management have rejected an improved GBP 2bn (EUR 2.28bn) takeover bid from M&C’s chairman Kwek Leng Beng, The Times reported. The newspaper cited an open letter from IVA, MSD and Classic to M&C’s independent directors on Thursday, 14 December for the information.

Kwek holds a 65.2% stake in M&C via his Singapore-based vehicle City Developments Limited (CDL) [SGX:C09]. M&C announced on 8 December that that its board and CDL had reached agreement on a recommended takeover offer for the M&C shares that CDL does not already own. CDL had increased the offer from 552.5p to 620p per share after M&C shareholders Aberdeen Standard Investments, Fidelity International, IVA and MSD had rejected its earlier offer.

IVA, MSD and Classic said in the joint letter that they would not accept the improved bid, despite Kwek saying he would make no further improvements to the offer and despite the recommendation of M&C’s independent directors, the report continued.

CDL needs acceptances from shareholders speaking for 50% of the M&C shares that CDL does not own, meaning that 17.4% of votes are required to prevent the deal going ahead, the newspaper said.

IVA, MSD and Classic hold a combined stake of 12.7% in M&C, or 37% of M&C shares that CDL does not own, the article said. However, one of the minority shareholders said tracker funds, which do not vote, hold a combined stake of up to 5% in M&C. Therefore, the threshold (required to block the deal) will be lowered, the item said.

One of the minority shareholders cited by the report said they were confident that the takeover will not proceed.

Fidelity and Aberdeen Standard have not yet commented on CDL’s improved offer, the newspaper said. CDL has yet to submit a formal bid and the outcome of the takeover battle may not be revealed until January, according to the report.

IVA, MSD and Classic said in the letter that CDL’s offer is still “highly opportunistic” and that it “fundamentally undervalues” the target company. The shareholders said the 620p per share bid is 25% lower than its 822p book value, the item added. The letter said the book value is outdated and is significantly lower than the M&C assets’ market value.

CDL claims that asset values are irrelevant as it does not plan to redevelop or sell any of its most important assets, the item said.

Millennnium & Copthorne’s share price closed 7.5p down at 579.5p in London on Thursday, giving the company a market capitalisation of GBP 1.88bn.

>>> U.S. Equities See Strong Inflows; HY Bonds Outflows, BofAML Says

U.S. Equities See Strong Inflows; HY Bonds Outflows, BofAML Says

Investors poured the most money in 26 weeks into U.S. equities as they reached record highs, taking money from European stocks, analysts at BofAML say in research note citing EPFR Global data for week ending Dec. 13.
  • Inflows strong for passive funds with second-largest week of inflows ever ($31.4b) into equity ETFs vs fourth-largest week ever of outflows from equity mutual funds ($22.7b)
  • U.S. equities see $7.8b of inflows, most in 26 weeks, while European stocks see $2.1b outflows, most in 65 weeks
  • Japanese shares see $2b inflows and EM shares $0.9b inflow
  • Overall, investors added $8.7b to equity funds, $1.2b to bonds, took $0.1b from gold
  • IG bond funds gain $2.7b in 51st straight week of inflows; $2.4b taken from HY funds in 7th straight week of outflows

>>> What to look at today - 15th of |Decembwer 2017

Dow -0.31% S&P -0.41% Nasdaq -0.28% Russell -1.15%
U.S. equities slipped on Thursday as investors continued to monitor tax reform developments in Washington. Ten of the eleven sectors finished Thursday in the red, with the health care (-1.1%), materials (-1.1%), and telecom services (-0.9%) groups being the weakest performers. Within the health care space, biotech names were especially weak, sending the iShares Nasdaq Biotechnology ETF(IBB 105.17, -1.55) lower by 1.5%.  steelmaker Nucor (NUE 59.54, -2.31) paced the material sector's retreat, losing 3.7%, after lowering its profit guidance for the fourth quarter. On the upside, the consumer discretionary sector (+0.3%) advanced on Thursday. 21st Century Fox (FOXA 34.88, +2.13) led the charge, adding 6.5%, after Walt Disney (DIS 110.57, +2.96) agreed to purchase select assets from the company, including its film division and much of its TV operations, for $52.4 billion in stock. DIS shares climbed 2.8%. US After Hours PIXY +109%, JBL +3%, COST +2%, ADBE +1.3%, ORCL -7% following earnings/guidance, DDR +9% on spin off plans. Asian Market :  Hong Kong stocks pared a weekly gain amid choppy trade as sectors from real estate to energy producers declined. China stocks dropped to a four-month low.  Topix closes 0.8% lower, led by telecom and shipping groups. Volume 3% above 30-day avg. Nikkei 225 -0.6%.

Nikkei -0.62% Hang Seng -1.29% CSI -0.90% Shanghai -0.64% Shenzen -0.61%

Eur$ 1.1784 CNH 6.6078 CNY 6.6080 JPY 112.28 GBP 1.3437 CHF 0.9886 RUB 58.9321 WTI$ 57.19

S&P +0.16% EuroStoxx -0.25% FTSE -0.1% SMI -0.17%

Macro :
- *VIX TO AVG 13-14 IN 2018 VS ABOUT 11 IN 2017: JPM'S KOLANOVIC
- Brexit Talks Set to Get Messy as EU Unity Passes High-Water Mark
- Draghi Says ECB Will Still Undershoot Inflation Goal in 2020 (1)99999

Keep an eye on :
- AIR FP : Airbus CEO Won’t Seek New Mandate Beyond 2019; COO to Leave Feb.
- AB1 GY : Lauda Weighs Niki Bid, Meets Insolvency Administrator Friday
- AKZA NA : PPG Authorizes $2.5 Billion Stock Buyback Program; Shares Rise
- CS FP : Axa Board Proposes 4-Yr Renewal for CEO Buberl, Chairman Duverne
- BP/ LN : BP to Buy 43% Stake in Lightsource for $200m Over 3 Years
- CGM FP : Cegedim Sells Cegelease for EU57.5M Plus Debt to SocGen’s Unit
- CRTO US : Criteo Could See Strategic M&A Interest at These Levels: Stifel
- DTE GY : Tele2, Deutsche Telekom to Combine Dutch operations
- EDF FP : EDF Delays Restart of Sizewell B1, B2 U.K. Reactors by 11 Days
- SFER IM : Salvatore Ferragamo Says It Can’t Confirm Outlook Given Feb. 3
- GTO NA : Atos Seen Improving Gemalto Bid After Rejection: European Tech
- HES US : Elliott Is Said to Seek Removing John Hess as Hess CEO: WSJ
- MRK GY : Mylan, Reckitt Are Said Bidding for Merck KGaA’s Consumer Health
- NOVN SW : Novartis Wins Ruling Upholding 2 Patents on Afinitor
- RB/ LN : Mylan, Reckitt Are Said Bidding for Merck KGaA’s Consumer Health
- RNO FP : Renault, Brilliance China Auto Form Joint Venture in Shenyang
- SAN FP : Sanofi Wants to Go It Alone -- Good Luck With That: Gadfly
- SNH GY : Steinhoff: Banks Enforced Security Rights Over About 98.4M Shrs
- SNH GY : Steinhoff Says Chairman Wiese to Resign From Supervisory Board
- TMG NA : Mediahuis Reports Stake of 95.04% in Telegraaf Media Group: AFM
- UNA NA : Unilever to Buy Portland, Oregon-Based Schmidt’s Naturals