After Hours Summary: AVAV +20%, PLAY +9%, VEEV -6% following earnings/guidance, TROX -10% on FTC challengeAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: AVAV +20.4%, PLAY +9.3% (also introduces new smaller store format of 15,000 to 20,000 square feet), FNKO +2.2%
Companies trading higher in after hours in reaction to news: NXTD +7.1% (Nxt-ID's Fit Pay and Garmin announced that the Garmin Pay contactless payment feature is now available for eligible Visa accounts), GLBL +4.8% (TerraForm Global exercised right to extend termination date under BAM agreement and plan of merger to March 6, 2018 from December 6, 2017), PICO +4.8% (ticking higher; Vidler Water Company to sell up to 15,000 Long Term Storage Credits to the Roosevelt Water Conservation District), AMC +3.1% (following CEO appearance on CNBC), TIVO +2.2% (CEO/Pres disclosed the purchase of nearly 56K shares), AEO +2.1% (ticking higher; declares unchanged regular quarterly dividend of $0.125 per share), CLVS +1.7% (FDA has accepted its sNDA for rucaparib and granted priority review status to the application with a PDUFA date of April 6, 2018), DISCA +1.7% (Guy Adami appeared on CNBC Fast Money with another 'Fast Pitch' -- this time on DISCA)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: LQDT -16.5%, VEEV -6.3%, VNET -2.9%, OXM -2.2%, (light volume), RH -1.8%, HQY -1.4%
Companies trading lower in after hours in reaction to news: VKTX -13.5% (intends to offer shares of common stock in underwritten public offering), TROX -9.9% (FTC issued an administrative complaint challenging the merger combining Tronox and Cristal would reduce competition; administrative trial is scheduled to begin on May 8, 2018), BBG -7.3% (Bill Barrett agrees to a strategic business combination with Fifth Creek Energy Company in a transaction valued at ~$649 million; to offer for sale 21 mln shares of its common stock in an underwritten public offering), CUR -6.1% (after closing near highs -- up 175%), EDIT -3.8% (commences $50 mln common stock offering), GWPH -2.6% (to sell $225 mln of American Depositary Shares in public offering), RVNC -1.6% (proposed offering of $175 mln in common stock and 600K shares by selling stockholders; also files mixed securities shelf offering), KSHB -0.9% (files for $100 mln mixed securities shelf offering)
Asia Market Update: Tech names continue to be weaker; PBOC uses MLF in place of OMO; BOJ Masai warns of downside risks to inflation
***Headlines/Economic Data***
-General Trend: Asian equities trade generally lower after US declines
-Profit warning from Samsung Heavy weighs on shipbuilders
-Volatility seen in shares of tech name Tencent
-NY Copper +0.6% (declined over 3% on prior session); Copper futures higher
Japan
-Nikkei 225 opened -0.4%; closed
-TOPIX Iron & Steel Index -2% (gained over 1.4% during prior session)
-Financials trade generally lower: TOPIX Securities index -2%
-Toshiba +2.5% (expected to hold settlement talks with Western Digital)
-BoJ Masai: Vital to show ‘determination’ to create stable prices; risks tilted to downside for prices, think downside risks to prices are 'big'
-MUFJ-MS sees Japan stocks heading for a "boom phase"
- (US) Japan govt plans to raise tax on heated tobacco to 80% of conventional tobacco tax over 5-yrs - Japan press
-Looking Ahead: 30-year JGB auction expected on Thursday
Korea
-Kospi opened flat
-Korean Won (KRW) -0.5%
-South Korea Finance Ministry: President Moon to visit China next week (Dec 13-16th)
-North Korea said to be showing some interest in Russia diplomatic initiative – press
-US to send B-1B bombers to South Korea for drills today - Korean press
-South Korea govt think tank (KDI) sees 2018 GDP at 2.9%, accommodative policy is needed
-Bank of Korea (BOK) sells KRW2.6T in 2-yr monetary stabilization bonds at 2.06%
-South Korea raises corporate tax rate to 25% for the highest earning companies (as expected) from 22% - Korean press
-South Korea parliament approves KRW428.9T budget for 2018 (as expected) - South Korea press
- 010140.KR Guides FY17 Op loss KRW490B; Planning to sell KRW1.5T in shares, opens down over 20%
-005930.KR Begins mass producing flash memory for smartphones with doubled capacity to 512 GB from 256 GB – Nikkei; -1%
China/Hong Kong
-Markets open mixed: Hang Seng flat, Shanghai -0.4%
-Bourses later move lower: Hang Seng Materials Index 3.5%; Shanghai Copper opened down over 3% (below 200-day MA)
-Hang Seng Consumer Goods index -1.9% amid weakness in auto sector (Geely -6%, BYD -4%)
-Hang Seng Information Technology Index -1.5%; Volatility seen in shares of Tencent
-Hang Seng Property/Construction Index -1.2%, Financial Index -1.1%
- (CN) Moody’s: Expects China PBOC to leave policy unchanged in 2018
-PBoC skips open market operation for 4th straight session, elects to conduct 1-year MLF operation
-(CN) PBOC LENDS CNY188B V CNY404B PRIOR IN MEDIUM-TERM LENDING FACILITY (MLF) OPERATION; OFFERS 1-YEAR LOANS AT 3.20% V 3.20% PRIOR
-(CN) PBOC Open Market Operations (OMO): skips v skips prior (4th consecutive skip)
-(CN) China Financial News: PBOC expected to conduct MLF lending one more time this month and ahead of Lunar New Year 2018
- (HK) Moody's: Raises Hong Kong Banking System outlook to Stable from Negative
-(CN) China MoF sells 1-yr upsized bonds at 3.6975% v 3.62%e, bid-to-cover 1.72x; 10-yr upsized bonds at 3.8396% v 3.85%e, bid-to-cover 2.82x
-(CN) PBoC sets yuan reference rate at 6.6163 v 6.6113 prior (8th consecutive weaker setting, longest run since Nov 2016)
-(CN) China 2018 GDP growth seen at 6.7% ahead of Central Economic Work [**Note: On Dec 4th, the State Info Center (China think tank) recommended a 2018 GDP growth target of around 6.5%]
-(CN) China Vice Premier Wang Yang: World economy is recovering
-(CN) China researcher sees China GDP at 6.3% in 3-yrs - China Securities Journal
-(CN) China Banking Regulatory Commission (CBRC) vice chairman Wang Zhaoxing: Govt will further regulate financial markets and get tough on illegal financial activities
-(CN) PBOC deputy Gov Pan Gong-sheng: China authorities were right to rein in cryptocurrencies
- (CN) US Commerce Dept to collect duties up to 265.79% on China origin steel imported from Vietnam
- (CN) China MoF sells 1-yr upsized bonds at 3.6975% v 3.62%e, bid-to-cover 1.72x; 10-yr upsized bonds at 3.8396% v 3.85%e, bid-to-cover 2.82x
-China's HNA seeks extension related to CNY3B loan linked to acquisition of Gategroup – financial press
-Looking Ahead: China trade data released on Friday
Australia/New Zealand
-ASX 200 opened flat, later moved lower; close: -0.4%
ASX 200 Resources Index -1.5% (tracks Tuesday’s decline in copper prices)
-Aussie and Australian bond yields decline after GDP data
*(AU) AUSTRALIA Q3 GDP Q/Q: 0.6% V 0.7%E; Y/Y: 2.8% V 3.0%E; Prior GDP q/q revised higher from 0.8% to 0.9%
(AU) Australia Treasurer Morrison: Australia having strongest job growth in 40-yrs; Q3 GDP still places near the "top of the pack" for growth compared with other wealthy nations and was driven by investment
-Amazon said its first day launch orders in Australia were ‘higher than any other launch day’; ASX 200 Consumer Discretionary Index +0.2%
(AU) Morgan Stanley comments on Amazon’s launch Australia: Says range of products offered is relatively weak, pricing of certain products higher vs some competitors – US financial press
-(AU) Australia sells A$900M v A$900M indicated in 2.25% May 2028 Bonds, avg yield 2.5846%, bid to cover 2.59x
-(AU) Australia Nov Port Hedland Iron Ore Exports 41.3M tons v 41.0M m/m, iron ore exports to China 35.2Mt v 35.2Mt m/m
-(NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: +0.4% v -3.4% prior
-(NZ) New Zealand Ministry recommends Commerce Commission study into fuel market
- SCL.NZ Guides FY17 EBITDA to be at the upper end of NZ$55-62M; Guides initial FY18 NZ$58-65M; +6%
- AKP.AU Gives integration stage update; currently forecasts delivery time of wafers meeting required specifications for latter part of Q1 2018; -13%
- Looking Ahead: Australia Oct Trade Balance due for release on Thursday
Other Asia
-Moody’s: Sees 3 Fed rate hikes in 2018; Some Asian central banks to raise rates along with Fed; India may be among central banks that cut rates in 2018.
-(IN) Reserve Bank of India (RBI) due to release rate decision at 4 GMT (no changes expected)
-(MY) Malaysia Oct Trade Balance (MYR): 10.6B v 9.8Be; Exports y/y: 18.9% v 17.3%e
-(MY) Malaysia sells 2027 bonds; avg yield 3.946%
-(ID) Indonesia Central Bank Assistant Gov Waluyo: Won’t change policy rate if Rupiah and inflation within target; No reason to change rate at this time
North America
-US equity markets ended broadly lower: Dow -0.5%, S&P500 -0.4%, Nasdaq -0.2%, Russell 2000 -1%
-S&P500 Utilities Sector -1.3%, Industrials -0.9%; Technology flat
-Homebuilder Toll Brothers declined over 7% after reporting quarterly results
-UPS: Spokesperson: transit times for an unspecified number of deliveries have been extended by a day or two due to Cyber Monday sales, expects to have things back to normal by midweek
-M&A: Tronox: FTC challenges proposed merger of Tronox and Ti02 business of Cristal
-(US) Senate Banking Committee advances Jerome Powell nomination for Fed Chair by 22-1 vote – press; Nomination now heads to full Senate for confirmation vote
-(US) White House Press Sec Sanders: reports regarding subpoena sent to Deutsche Bank are totally false; still believe special counsel probe will wrap up soon
-(US) House Rules Committee Chair Sessions (R-TX): House plans vote Weds on short-term funding bill through Dec 22nd
-(US) Weekly API Oil Inventories: Crude: -5.5M v +1.8M prior
-UAE Oil Min Mazrouei: Sees crude demand increasing on cold winter; Sees 2018 oil demand at least at 2017 level
-Bank of America CEO: Trading Rev seen down 15% this quarter y/y
-Looking Ahead: US Nov ADP Employment Change, DoE Weekly Crude Inventories and Bank of Canada rate decision due for Wednesday
Europe
-(UK) EU official: UK must provide proposal on separation by Weds – press; If EU doesn't receive a proposal this week, EU won't have sufficient time to get ready for the beginning of talks on future trade agreement at the mid-Dec meeting
-(UK) Govt spokesperson: cabinet supports Prime Min May in making progress in Brexit talks; Does not believe PM May and DUP Leader Foster have not spoken yet
-(UK) DUP Leader Foster: told PM May yesterday that DUP would not support deal unless text of Brexit agreement was changed
-(UK) Ireland PM Varadkar: a huge amount of work remains on seeking border deal with UK; the ball is in London's court; very much regrets failure to reach accord; We must hold firm on the border issue
-(UK) Said to have been an Islamist suicide plot to assassinate PM May, which was foiled - Sky News
-M&A: Nestle: Confirmed agreement to acquire Atrium Innovations for $2.3B
***Levels as of 01:00ET***
- Nikkei225 -2.0%, Hang Seng -1.7%; Shanghai Composite -1.0%; ASX200 -0.4%, Kospi -1.1%
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.5%, Dax -0.2%; FTSE100 -0.3%
- EUR 1.1848-1.1816; JPY 112.63-112.10; AUD 0.7636-0.7572;NZD 0.6904-0.6871
- Feb Gold +0.3% at $1,269/oz; Jan Crude Oil -0.4% at $57.39/brl; Mar Copper +0.6% at $2.97/lb
Closing Market Summary: Broad Weakness Overpowers Tech OutperformanceThe S&P 500 (-0.4%) slipped for the third session in a row on Tuesday, with 10 of its 11 sectors finishing in the red.
For a while, it appeared that a bounce-back performance from the top-weighted technology sector, which dropped 1.9% on Monday, might be enough to overpower losses from most other groups. However, the sector weakened as the day wore on, finishing with a modest gain of just 0.2%.
At their best marks of the day, the tech sector held a gain of 1.4%, and the tech-heavy Nasdaq Composite--which ended lower by 0.2%--held a gain of 0.9%.
Meanwhile, the Dow Jones Industrial Average and the small-cap Russell 2000 finished lower by 0.5% and 1.0%, respectively.
As for the other ten sectors, losses ranged from 0.2% to 1.8%. The lightly-weighted telecom services group (-1.8%) finished at the bottom of the sector standings, trimming gains from a largely uninterrupted three-week rally; the group advanced 13.2% from November 14 to December 4.
The utilities sector also showed relative weakness, losing 1.2%, with Edison (EIX 70.00, -10.26) being the group's worst-performing component. The energy provider dropped 12.8% after announcing that more than 260,000 customers in Southern California had lost power due to a fast-moving wildfire in the Ventura County area.
Retailers weighed on the consumer discretionary sector (-0.8%), evidenced by the 1.0% decrease in the SPDR S&P Retail ETF (XRT 44.07, -0.45), while transports led the industrial sector lower by 0.9%; the Dow Jones Transportation Average lost 1.4%, reducing its six-session gain to 6.6%.
Also of note, the heavily-weighted financial sector lost 0.6% amid yet another curve-flattening trade in the bond market.
U.S. Treasuries finished Tuesday's session mixed, cutting the 2yr-10yr spread by five basis points. The yield on the benchmark 10-yr Treasury note slipped three basis points to 2.35%, while the 2-yr yield climbed two basis points to 1.83%. Yields move inversely to prices.
Elsewhere, equities slipped in Asia and Europe, with Hong Kong's Hang Seng (-1.0%) and France's CAC (-0.3%) showing relative weakness in their respective regions.
Reviewing Tuesday's economic data, which included the ISM Services Index for November and the Trade Balance for October:
- The ISM Services Index for November declined to 57.4 (consensus 59.3) from an unrevised reading of 60.1 in October.
- The key takeaway from the report is that business activity in the non-manufacturing sector is still expanding, but at a somewhat slower rate that is still consistent with 3.0%+ real GDP growth.
- The October trade balance showed a deficit of $48.7 billion (consensus -$47.4 billion). The September deficit was revised to $44.9 billion from $43.5 billion.
- The key takeaway from the report is that trade will be accounted for as a negative input in fourth quarter GDP models considering that the real trade deficit of $65.3 billion is 5.3% higher than the third quarter average real trade deficit of $62.0 billion.
On Wednesday, investors will receive the weekly MBA Mortgage Applications Index at 7:00 ET, the ADP Employment Change Report for November (consensus 190K) at 8:15 ET, and the revised readings for third quarter Productivity (consensus +3.3%) and Unit Labor Costs (consensus +0.2%) at 8:30 ET.
- Nasdaq Composite +25.6% YTD
- Dow Jones Industrial Average +22.4% YTD
- S&P 500 +17.5% YTD
- Russell 2000 +11.8% YTD
Cyfrowy Polsat launches tender offer for 34% in Netia at PLN 5.77 a share
Cyfrowy Polsat [WSE: CPS], the Polish provider of telecommunication and satellite TV services, has announced that it launched a tender offer for a 34.24% stake in telecom operator Netia [WSE:NET] at PLN 5.77 (USD 1.62) a share.
Company announcement
The management board at Cyfrowy Polsat S.A. (the “Company”) reports that on 5 December 2017 the Company announced a tender offer to place subscriptions for the sale of 119,349,971 ordinary bearer shares, each with the nominal value of PLN 1.00, issued by Netia S.A. (“Netia”) carrying the right to 119,349,971 votes at the General Meeting of Netia, representing 34.24% of the Netia share capital and 34.24% of the total number of votes at the General Meeting of Netia (the “Tender Offer”).
The Tender Offer has been announced under the conditions precedent formulated in clauses 29 and 30 of the Tender Offer document. After one of the conditions precedent reserved in the Tender Offer is satisfied, that is after the General Meeting of Netia adopts a resolution on a decrease in the share capital of Netia by PLN 13,102,314.00 [USD 3.69m] through the redemption of 13,102,314 treasury shares held by Netia, representing 3.76% of the share capital of Netia (the “Capital Decrease”) and registration of the Capital Decrease by the competent registry court before the end of the subscription period for the sale of the shares under the Tender Offer, the Tender Offer will concern 110,702,444 shares of Netia carrying the right to 110,702,444 votes at the General Meeting of Netia, representing 33% of the share capital of Netia and 33% of the total number of votes at the General Meeting of Netia.
The Tender Offer has been announced pursuant to Article 73 Section 1 of the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies of 29 July 2005 (consolidated text in Dziennik Ustaw of 2016 item 1639, as amended).
The Tender Offer price for one share of Netia is PLN 5.77 (five zloty and 77/100).
Unless the subscription period for the sale of Netia shares in response to the Tender Offer is prolonged, the subscription period for the sale of Netia shares will commence on 30 January 2018 and end on 5 March 2018.
Due to the restrictions arising under the existing finance documents of the Company (the “Finance Documents”), which permit the Company to acquire a limited number of Netia shares under the Tender Offer, Netia shares will be acquired by the Company and its affiliate - Karswell Limited with its registered office in Nicosia, Cyprus (“Karswell”).
In the Tender Offer Karswell intends to acquire Netia shares, which cannot be acquired by the Company due to the restrictions imposed by the Finance Documents, that is no more than 84,687,926 shares of Netia carrying the right to 84,687,926 votes at the General Meeting of Netia, representing 24.30% of the total number of votes at the General Meeting of Netia and 24.30% of the share capital of Netia.
After one of the conditions precedent reserved in the Tender Offer is satisfied, that is the Capital Decrease is effected and registered by the competent registry court before the end of the subscription period for the sale of the shares under the Tender Offer, Karswell intends to acquire no more than 76,040,399 shares carrying the right to 76,040,399 votes at the General Meeting of Netia which will represent 22.67% of the total number of votes at the General Meeting of Netia and 22.67% of the share capital of Netia.
In this respect, on 5 December 2017 the Company and Karswell concluded the Agreement on the Joint Acquisition of Shares in a Tender Offer and Preliminary Share Purchase Agreement (the “Acquirer’s Agreement”). Immediately after the conditions precedent for the Acquirer’s Agreement have been satisfied, i.e. specifically immediately after amending the Finance Documents or their replacement with other agreements in a manner making it possible for the Company to acquire all shares under the Tender Offer, Karswell shall sell all the shares to the Company acquired for the price paid by Karswell for shares under the Tender Offer.
Karswell shall receive an additional premium for the period between the settlement date on which Karswell acquired the last share under the Tender Offer and a date on which the shares acquired by Karswell under the Tender Offer will be sold to the Company (the “Interim Period”) in an amount equivalent to the average weighted cost of financing of the Company’s capital group provided by financial institutions, prorated to the specific portion of the price paid by Karswell for shares under the Tender Offer for each day of the Interim Period. The premium is intended to compensate the burden related to committing Karswell’s working capital to the Tender Offer.
Additionally, during the Interim Period Karswell shall exercise the voting rights attached to the Netia shares acquired in the Tender Offer as instructed by the Company. Other significant terms and conditions of the Acquirer’s Agreement are summarized in the Tender Offer document.
Also on 30 November 2017 the Company executed, with one of the significant shareholders of Netia, i.e. FIP 11 Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych with its registered office in Warsaw (the “Shareholder”), a preliminary agreement under which the Shareholder undertook to place a subscription in the Tender Offer to sell no less than 37,325,134 shares held thereby during the first two days of the subscription period.
The Shareholder, unconditionally and irrevocably, undertook that it would neither withdraw from, nor cancel its subscription to sell shares in Netia in the Tender Offer, also if a tender offer for the sale or exchange of shares in Netia is announced also by another entity prior to the end of the subscription period for the sale of the shares under the Tender Offer.
The Tender Offer has been announced for the purpose of implementing the transaction announced by the Company in its current report No. 23/2017 of 4 December 2017.
The full Tender Offer document has been published in the relevant Polish Press Agency service.
Trigon Dom Maklerski (Trigon) is the offer manager, according to a separate filing posted today on the Warsaw Stock Exchange (WSE).
Netia has a market cap of PLN 1.47bn (USD 414.3m), the WSE data show.
Link to original source (Cyfrowy Polsat announcement)
Link to original source (tender offer announcement on WSE in Polish)
The pressure on packaging giant Bemis Co. to sell itself is growing both internally and externally, The Post has learned.
Bemis, the largest US maker of flexible plastic food packaging — like bottles for Pepsi and tubes for Colgate — has hired Goldman Sachs to explore its options, two sources close to the situation said.
The 159-year-old Neenah, Wisc., manufacturer, whose profits and revenues have slipped in recent years, is likely to draw plenty of interest from rivals should it decide to put itself on the bloc, sources said.
In fact, British-based DS Smith, a maker of corrugated packaging, is working with Citigroup and is interested in pursuing the $4.2 billion market cap Bemis, a source close to the situation said.
There were reports in September that Zurich-based Amcor Ltd., the world’s largest maker of flexible plastic packaging, was working on an offer for Bemis as it looks to expand it US operations.
Amcor is working with investment bank UBS, a source said.
Bemis this summer told shareholders it would need to sell itself in 12 months if it could not execute a turnaround, an industry source said.
Now, six months later, the turnaround has not happened and it will be hard for the company to reject offers, the source said.
“Results from the ongoing turnaround effort have been checkered at best,” BMO Capital Markets said in a Nov. 15 report. “During 2017, they cut guidance three quarters in a row and reduced long-term growth targets.”
Part of the problem for Bemis is that it’s focused on the biggest food companies, and many of them have been losing market share. Rising resin prices are also not helpful.
Meanwhile, shareholder activist Starboard Value disclosed last month it had become a top-10 Bemis holder.
“Starboard held large stakes in two chronic underperformers in our [packaging] sector, Wausau Paper and MeadWestvaco,” BMO said. “In both cases, the endgame was a sale of the company.”
In the nine months ended Sept. 30, Bemis reported profits fell 23.3 percent from the previous year on flattish revenue. Since 2014, Bemis’ profits from continuing operations has been flat while revenue has dipped 8 percent over that period.
Bemis shares are up less than 1 percent over the last two years. They closed Monday at $46.67, up 17 cents.
BMO forecast that Amcor, if it bought Bemis, could pay $60 a share.
Bemis, DS Smith and Amcor did not return calls.
Goldman and Citigroup declined to comment.