Gemalto: Atos prepared to deal with any ‘white knight’ defence
14 DEC 2017
Gemalto considering range of defense options
Ingenico denies prospect of making rival bid
Price negotiation seen as most viable option
Atos [EPA:ATO] is “prepared” to deal with any rival bid for Gemalto [AMS:GTO], a spokesperson for the company said.
Gemalto is considering a range of ways to defend itself against the unsolicited approach from Atos, a source close to the target said. It rejected Atos’s EUR 46 per share offer yesterday, 13 December, expressing concerns about valuation, deal certainty and the nature of the approach. Atos responded by saying it would pursue the deal.
Gemalto sees the proposal from Atos as very opportunistic, coming at a time when Gemalto’s share price is at a low point, the source said. The offer from Atos does not reflect the upside potential in the Gemalto stock, the source added.
One of Gemalto’s defence options is to solicit a white knight bidder, two bankers and lawyer following the deal said.
Both bankers and the lawyer pointed to Ingenico [EPA:ING] as a potential white knight. A tie-up between the two has often been speculated, but any company in payment-systems technology and fibre security will be eyeing the asset, the first banker said.
A spokesperson for Ingenico categorically denied the prospect of it making a rival bid for Gemalto.
Advent-backed Oberthur or another private equity group could step in, but may find it difficult to formulate a counter offer in the next month or so, the second banker said. There are parts of Gemalto that private equity would not find attractive as it has some non-growth assets, he said.
The approach from Atos is not ‘friendly’ as its statements to the press suggest, the first banker and a person briefed said. The offer, as well as being opportunistic, was made months before Gemalto’s investor day in March, the banker noted. This means Gemalto has not had a chance to convince shareholders of its stand-alone strategy, the banker said.
Gemalto yesterday said its transition from traditional banking and smartcard markets to government enterprise & cybersecurity and machine-to-machine markets “is yet to be reflected in the company’s share price as its strategy and positioning around these growth segments will be detailed during the forthcoming Capital Markets Day”.
The main issue for Gemalto is price, the source close said. But, Gemalto is not best placed to negotiate a higher offer from Atos after successive profit warnings, the lawyer said. It could try pressuring Atos to raise its bid by dragging out the negotiations by demanding certain conditions such as job commitments, the lawyer said.
Gemalto shareholders are open to a deal due to the company's performance and hit on its share price, the second banker added. Atos could well succeed without raising its price, he said.
But, negotiating a higher price was Gemalto's most realistic option versus a white knight or pushing its standalone strategy, this banker agreed.
Bpifrance Participations, the state-controlled investment bank, which has a 8.23% stake in Gemalto, is looking at the tie-up favourably, a spokesperson told this news service on Tuesday.
Gemalto declined to comment.
If Disney and Fox combine, they’ll dominate the box office — owning 40 percent of this year’s top hits
Together they brought in more than $3 billion in domestic box office revenue this year.
Disney’s $52 billion Fox acquisition would mean Disney takes a bigger share of declining box office revenues.
In 2017, a combined Disney Buena Vista and 21st Century Fox would represent 40 percent of the top 15 highest-grossing movies in the U.S. and 31 percent of total domestic box office revenue, according to Box Office Mojo.
Adding Fox films like “Logan” and “Boss Baby” to Disney blockbusters “Beauty and the Beast” and “Guardians of the Galaxy Vol. 2” would give the combined company over $3 billion in gross box office revenue this year. Alone, Disney’s Buena Vista raked in $1.8 billion, while Fox totaled $1.3 billion so far this year.
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+12%
From: elaumann@oscargruss.com At: 12/14/17 15:42:14
To: elaumann@oscargruss.com, lanreder@oscargruss.comSubject: FOX or FOXA - DIS -- OG Risk Arb's Initial Deal View 12-14-17
DISCLAIMER This information represents neither an offer to buy or sell any security nor, because it does not take into account the differing needs of individual clients, investment advice. Those seeking investment advice specific to their financial profiles and goals should contact their Oscar Gruss & Son Incorporated sales representative. Oscar Gruss & Son Incorporated believes this information to be reliable, but no representation is made as to accuracy or completeness. This information does not analyze every material fact concerning a company, industry, or security. Oscar Gruss & Son Incorporated assumes that this information will be read in conjunction with other publicly available data. Matters discussed here are subject to change without notice. There can be no assurance that reliance on the information contained here will produce profitable results. A security denominated in a foreign currency is subject to fluctuations in currency exchange rates, which may have an adverse effect on the value of the security upon the conversion into local currency of dividends, interest, or sales proceeds. The value of securities and depositary receipts of foreign issuers that are denominated in United States dollars are also influenced by fluctuations in currency exchange rates. © 2017 Oscar Gruss & Son Incorporated. All rights reserved.
21C Fox/Sky: Takeover Panel says Disney deal does not alter Fox's obligations for Sky bid
14 DEC 2017
The Panel Executive notes the announcement earlier today by Disney [NYSE:DIS] of its definitive agreement to acquire 21st Century Fox [NASDAQ: FOXA, FOX], after a spin-off of certain businesses (the “Acquisition”). That announcement does not alter 21st Century Fox’s obligations under the Takeover Code with respect to its existing pre-conditional offer for Sky [LON:SKY] announced on 15 December 2016.
Separately, Disney has informed the Executive that it does not believe that completion of the Acquisition should trigger a mandatory bid obligation under Note 8 on Rule 9.1 of the Takeover Code (the “chain principle”) upon Disney as a result of 21st Century Fox’s stake of approximately 39% in Sky.
In accordance with its usual practice, the Executive will seek the views of the independent directors of Sky before reaching a determination on this issue.
A further announcement will be made in due course in relation to the chain principle.
Lonmin/Sibanye-Stillwater: Buyer confident of successfully closing Lonmin deal
14 DEC 2017
Sibanye Stillwater [JSE:SGL], the South Africa-based precious metals miner, is confident that the company will successfully close its acquisition of London-listed platinum miner Lonmin [LON:LMI], said Chief Executive Officer Neal Froneman on today’s deal announcement call.
The deal, which does not have a break or cancellation fee, is expected to be completed in the second half of 2018, he said. Should Sibanye Stillwater shareholders fail to approve the deal, the parties have reached an agreement to discuss an acquisition at asset-level, said Froneman. Nonetheless, Froneman noted that there is a high probability that the current deal will close.
The all-share deal would see Lonmin shareholders receive 0.967 new Sibanye shares for each Lonmin share and values Lonmin at some GBP 285m. Lonmin has committed to paying down its current debt facilities prior to closing. As a result, no debt will be added to the Sibanye balance sheet, said Froneman. The company remains committed to deleveraging its balance sheet and reducing net debt/EBITDA from 2.6x to 1x in the medium term, he added.
Key conditions precedent for the deal include shareholder approval, certain competition and regulatory approvals and no cancellation of any prospecting or mining right held by Lonmin.
Upon completion of the deal, Sibanye will decommission Lonmin’s older mine shafts that are coming to the end of their lives. This process could result in the retrenchment of about 12,600 employees over the next three years, said Froneman. However, he stressed that these anticipated job losses would not be merger-related.
Sibanye will also implement a revised mining plan for Lonmin’s operations, which will reduce the capital expenditure needed to maintain Lonmin’s production levels, said Froneman. The conservative mining plan is more suitable for current economic and platinum mining conditions, he said.
However, this revised mining plan could result in the potential retrenchment of a further 890 people, he said.
Saudi Arabia unveils $19bn stimulus for private sector
Move comes as government tries to revive economy hit by decline in oil revenue
Saudi Arabia unveiled a $19bn stimulus package on Thursday aimed at supporting the struggling private sector next year as the government tries to revive an economy battered by low oil prices and austerity measures.
The package was approved by King Salman and includes subsidised loans for housebuyers and developers, fee waivers for small businesses and financial support for distressed companies, the state news agency reported.
It is the first big part of a broader three-year SR200bn ($53bn) stimulus planned by Riyadh as Crown Prince Mohammed bin Salman tries to balance pushing ahead with an ambitious reform programme with the need to implement tough austerity measures as the budget deficit widens.
The decline in oil revenue over the past three years has pushed the economy into recession and forced the government to slash expenditure, raise debt and spend more than $250bn of its foreign reserves. The private sector, which is dependent on state spending, has borne the brunt of the economic shock, prompting businessmen to call for more government assistance.
But economists said there were doubts about whether the stimulus package, which relies heavily on loans, subsidies and indirect support, will do enough to boost demand in the economy to help companies.
“Finally seeing signs of the plan is clearly positive, however, the success of the stimulus framework is dependent on how well it integrates private sector capabilities with the government’s development objectives,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “A framework that provides funding or support for the private sector investment would likely not drive a pick-up in activity given the weak domestic backdrop.”
The International Monetary Fund is forecasting “close to zero” growth this year, with government spending down from 38.6 per cent of gross domestic product in 2016 to 34.3 per cent this year.
The investment climate has been further clouded in recent weeks by Prince Mohammed’s crackdown on corruption in which more than 200 royals and businessmen have been detained.
Those arrested include Prince Alwaleed bin Talal, the billionaire who is one of the kingdom’s most prominent investors, Waleed al-Ibrahim, the founder of Middle East Broadcasting Center, which owns the Saudi satellite television channel Al Arabiya, and Bakr bin Laden, chairman of the Saudi Binladin construction group.
The arrests have rattled the business community and foreign investors just as the government is hoping to attract investment to back Prince Mohammed’s drive to reduce the economy’s dependence on oil.
In a speech this week, King Salman described the suspects detained as a “small group”, adding that the government had “decided to confront [corruption] with justice and firmness so that our country can enjoy the renaissance and development that every citizen aspires for”.
The stimulus package is one of several government initiatives announced ahead of next week’s budget, which is set to be expansionary.
Riyadh unveiled details of a cash transfer programme this week that is designed to compensate low- and middle-income Saudi families and cushion the impact of austerity measures as the authorities prepare to cut energy subsidises next year.
The government will also introduce value added tax next month.
Analysts say the introduction of new taxes and raising energy prices risks creating political tensions in the kingdom as ordinary Saudis feel the brunt of the downturn.