>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • CBK +18.3%, THO +10.8%, TECD +5.5%, AQ +1.8%, MTSC +1.6%, REDU +1.4%, UN +1.2%, (reaffirms FY17 sales outlook; confirms progress with its 2020 program at it annual Investor Event)
M&A news:
  • BWLD +6.6% (to be acquired by Arby's Restaurant Group for $157/share in cash)
  • EMR +1.2% (withdraws its proposal to acquire ROK for $225/share due to the Boards continued unwillingness to engage in discussions about a potential combination)
Other news:
  • APEN +26.3% (confirms FDA clearance for Overstitch)
  • ITUS +12.7% (announces that the United States Patent and Trademark Office issued a Notice of Allowance on the second patent filed by the company to protect its cancer detection technology)
  • EGLT +12.5% (announces positive top-line results from a phase 3 study evaluating the efficacy and safety of Egalet-002)
  • SRRA +9.4% (Perceptive Advisors affirms 7% passive stake)
  • VKTX +8.9% (announces positive results from a 12-week, Phase 2 clinical trial of VK5211)
  • ARDX +8.4% (Ardelyx and Kyowa Hakko Kirin announce license agreement for Tenapanor)
  • AEZS +6.8% (Aeterna Zentaris confirms the Marketing Authorization Application for Macrilen in the evaluation of adult growth hormone deficiency was accepted by the European Medicines Agency for regulatory review)
  • BY +6% (Byline Bancorp to acquire First Evanston Bancorp in cash/stock transaction valued at approx $169 mln)
  • RDS.A +3% (provides updates at Investor Day; to cancel Scrip Dividend Program from Q4)
  • UTSI +2% (after 30% move higher on Monday)
  • WGO +1.5% (THO sympathy)
  • RDUS +1.1% (Point72 Asset Management increases passive stake)
Analyst comments:
  • AQ +1.8% (initiated with a Buy at Deutsche Bank; initiated with Overweight at Barclays, among others)
  • MDP +1.2% (upgraded to Buy from Hold at Jefferies)
  • TPVG +1.1% (upgraded to Buy from Neutral at Compass Point)
  • IBKC +1% (upgraded to Buy from Hold at SunTrust)
  • AMZN +0.6% (target raised to $1450 from $1300 at Goldman (Street High))

NYT : WeWork to Buy Meetup, a Hub for Hobbyists

WeWork to Buy Meetup, a Hub for Hobbyists

Good Tuesday morning. Breaking: Emerson Electric has withdrawn its $29 billion takeover bid for Rockwell Automation, having been unable to persuade its target to come to the negotiating table. More to come on DealBook.
WeWork and Meetup: blending work and play.

The deal, which will be announced this morning, is part of WeWork’s plan to move beyond providing co-working spaces. The wildly ambitious company, which is already planning a kindergarten for budding entrepreneurs, wants to fit into more aspects of everyday life.

That’s why it is spending an undisclosed amount to buy Meetup, the 16-year-old social network that connects like-minded hobbyists.

“It’s like a magical puzzle that fits together,” Scott Heiferman, the chief executive and a co-founder of Meetup, told DealBook’s Michael J. de la Merced.

Having Meetups in WeWork spaces helps make use of office locations that tend to be busy during the day and less so after hours. But Shiva Rajaraman, WeWork’s chief product officer, asserted that the union was about building a bigger sense of community: “This is a great tool to introduce people to their passions.”


How it came together: Mr. Heiferman and his team, who hadn’t raised outside money in years, began looking for investments to finance international expansion. That eventually led to a meeting with WeWork’s co-founder and C.E.O., Adam Neumann.

(Mizuho) Crypto-Currencies Much Less Meaningful to Semis in 2018 (Full note)

Crypto-Currencies Much Less Meaningful to Semis in 2018

Summary
We hosted meetings with a crypto-currency expert looking at outlook for GPUs, CPUs and semiconductors in crypto mining. While the Blockchain software technology is here to stay, with applications in crypto-currencies, smart
contracts and multiple markets, we expect crypto-mining will be a much less meaningful market for AMD/NVDA in 2018 (~6-7% of revenues currently) underlining an increased need for AMD/NVDA to focus on core PC/NB/Data Center markets in 2018.

Key Points
Increasing computing complexity makes semis less meaningful in 2018. The
crypto-currency market size is ~$240B with Bitcoin ~55%+ of the market, and
Ethereum the next largest at ~14%, as shown in Exhibit 1. There are over 600+
crypto currencies, but with the top 7 accounting for ~90% of the market, the
remaining 500+ are much more fragmented. Computing (Hash) complexity of
Bitcoin is now at a staggering 12 Million Trillion hash computations per second,
well outside the purview of individual miners with profitable mining now only
done through large pools of miners or cloud mining with broad ASICs. Bitcoin
uses ~100,000x more computing hash/second than Ethereum currently at ~120
Trillion hash per second (Exhibit 2), still using GPUs given smart contracts,
though GPU use could decline significantly in 1H18 as Ethereum moves to PoS
with Casper. There are, nonetheless, smaller crypto-currency applications that
could use GPUs .
Crypto mining moving to software PoS (Proof of Stake) away from GPUs
PoW (Proof of Work). We believe 1H18 could see Ethereum move from
current a Proof of Work (PoW) protocol, which requires GPU mining, to a Proof
of Stake protocol, which does not need GPUs or mining, through a software
upgrade to Metropolis and finally to Casper Fork in March, 2018. While the
miners can still use GPUs for other currencies, the overall use case beside some
enterprise mining might be very small for GPUs/CPUs.

AMD and NVDA have limited (and declining) exposure to crypto. We
believe AMD's exposure to crypto-focused (non video or headless) GPUs is ~
$500M/year or a HSD % of revenue. For NVDA it was ~$70M last quarter and
~$150M for the JulyQ. Given it is extremely difficult to figure if a gaming GPU
is also being used for crypto-mining, we believe exposure at AMD ~10% of
revenue and for NVDA ~6% of revenue (Exhibit 3). No change to estimates. We
believe it is increasingly important for AMD/NVDA to show traction in core
PC/NB, DT, Gaming and Data Center markets in 2018.

>>> US Early premarket gappers

Early premarket gappers
Gapping up:
  • APEN +31%, CBK +18.3%, EGLT +10.8%, THO +10.3%, SRRA +9.4%, ARDX +9.2%, AEZS +6.8%, BY +6%, TECD +5.7%, RDS.A +2.9%, UTSI +2.5%, REDU +2%, AQ +1.8%, MTSC +1.6%, WGO +1.5%, CYD +1.5%, UN +1.4%, RDUS +1.1%, BNS +0.9%
Gapping down:
  • EARS -57.6%, DPW -20.2%, ASC -9.7%, DCIX -6.4%, PETX -6.1%, CPRX -5.8%, MOMO -4.4%, GTN -3.7%, ISIG -3.4%, SGH -2%, UNH -1.5%, VNTR -1.3%, IQV -1%, WSTL -0.9%, BHP -0.9%

(Mizuho) NVIDIA: Crypto-currencies much less meaningful to semis in 2018

Mizuho - NVIDIA: Crypto-currencies much less meaningful to semis in 2018
Mizuho hosted meetings with a crypto-currency expert looking at outlook for GPUs, CPUs and semiconductors in crypto mining. While the Blockchain software technology is here to stay, with applications in crypto-currencies, smart contracts and multiple markets, firm expects crypto-mining will be a much less meaningful market for AMD/NVDA in 2018 (~6-7% of revenues currently) underlining an increased need for AMD/NVDA to focus on core PC/NB/Data Center markets in 2018.

>>> Emerson withdraws USD 225/share proposal for Rockwell Automation


Emerson withdraws USD 225/share proposal for Rockwell Automation
28 NOV 2017

Emerson (NYSE: EMR) today announced that it has withdrawn its proposal to acquire Rockwell Automation (NYSE: ROK) for USD 225 per share due to the Rockwell Board of Directors’ continued unwillingness to engage in discussions about a potential combination.

“The Rockwell Board again rejected our offer, which would have delivered approximately USD 30bn of value to Rockwell shareholders,” said Emerson Chairman and Chief Executive Officer David N. Farr. “We are disappointed that the Rockwell Board refused even to discuss the potential combination of our two great companies. Instead of engaging in constructive dialogue, the Rockwell Board decided to let this unique and value-generative opportunity go unexplored.”

“We remain confident in the strategic plans we have in place, and in Emerson’s ability to create a global automation leader with a technology portfolio to meet evolving customer needs across process, hybrid and discrete product lines. Our Company is in a great position – we have successfully repositioned our portfolio over the last two years, and have market-leading platforms in Automation Solutions and Commercial & Residential Solutions, both of which are performing well and have very attractive growth outlooks. Our future is bright, and we remain focused on accelerating core growth through new market penetration, technology innovation and strategic bolt-on acquisitions.”

“We are also committed to returning capital to shareholders through our strong and growing dividend and our share repurchase program. Management believes the Company's shares are an attractive investment opportunity. Accordingly, we plan to accelerate repurchases over the next month and buy back up to USD 1bn over the next 12 months. We look forward to executing on this strategy to drive near- and long-term value creation for all Emerson stakeholders.”

Conference Call

Today at 9:00 a.m. ET, Emerson management will discuss the withdrawn bid for Rockwell and Emerson’s standalone plan during a conference call. Access to a live webcast of the discussion will be available at www.emerson.com/financial at the time of the call. A replay of the conference call will remain available for 90 days.

>>> MAKOR VIEW ON -LIN GY/LINU GY - PX US: MORE WIDENING AHEAD

MAKOR VIEW

 

Following Linde’s announcement of the provisional results of the Tender Offer, at least 90% of shares have been tendered (awaiting the final results), what would happen to the non-tendered shares LIN GY ?

 

According to section 9.5.3 of the offer document, Linde Plc and/or Linde AG may, depending on the percentage of Linde shares acquired by the Bidder in the exchange offer, effect a transfer of the Linde shares by way of a Squeeze out pursuant to either 327a of the German Stock Corporation, Section 39a Takeover Act or section 62 para.5 German Transformation Act.

 

Per Section 9.5.5 of the Offer document, Linde may also pursue a Down listing / Delisting to effect a removal of Linde Shares from the Frankfurt Stock Exchange.

 

So the question is what could we expect for the non-tendered shares pursuant to these rules ?

 

  • Section 327a German Stock Corporation Act: Transfer of shares for cash compensation.
    • The shareholders meeting may resolve upon request of a shareholder holding 95% of the shares the transfer of the other minority shareholders shares to the principal shareholder against the payment of adequate cash compensation that must reflect the circumstances of the corporation at the time the resolution is adopted.
    • Therefore under this rule, there is no minimum cash compensation required, and any disagreement on the price paid might be challenged in Court.

 

  • Sections 39a Takeover Act: Squeeze out.
    • If at the end of the offer period, the Bidder holds more than 95% of the Linde shares, it might implement a squeeze out procedure in cash within 3 months after the end of the acceptance period.
    • Comments: In this deal, this rule seems difficult to apply as far as there has been less than 95% shares tendered and more importantly the deal is expected to close in 2H 2018 so out of the 3 month period following the end of the Tender offer.

 

  • Section 62 para.5 German Transformation Act:
    • Per this article, where at least nine tenths of the share capital is held by the acquiring stock corporation, a merger agreement might be proposed at the General meeting but solely for information as far as no merger resolution need to be adopted.
    • Comments: Following completion of the tender offer, Linde might propose such a merger based on the same Exchange offer terms without any shareholder able to contest such a decision as far as the do hold more than 90% of the shares.

 

  • Down listing / Delisting: Following the settlement of the offer, the Bidder could agree with Linde to effect either
    • A removal of Linde shares from the sub segment of the regulated market while maintaining the listing of Linde shares (Segment Change)
    • A removal from the regulated market with effect Linde shares could still be traded on the OTC market (Down Listing) or
    • A removal of Linde shares from stock exchanges (delisting).
    • Comments: in the 1st solution, under German Law no protection is afforded to Linde Shareholders. In the 2nd & 3rd one, the consideration offered must be in cash and cannot be less than (i) the 6 months VWAP prior to the publication of the decision to launch the public offer or (ii) the highest consideration agreed by the bidder for the acquisition of Linde shares within the last 6 months prior to the publication of the offer document.

 

What is Linde expected to do ? Pursuant to Section 9.5.4 of the Offer document “ Description of intended reorganization transaction” the bidder intends to pursue a post completion reorganization depending on the percentage of Linde shares tendered:

 

  1. If the Bidder holds at least 75% but less than 90%, the Bidder intends to enter into a dmoination agreement : NOT IN THIS CASE

 

  1. If the Bidder holds at least 90% but less than 95%, the Bidder intends to conduct a cash merger Squeeze out under Section 62 para.5 German Transformation Act : DEFINITELY OUR CASE HERE

 

 

  1. If the Bidder holds at least 95% of the shares, it intends to pursue either a corporate squeeze out under section 327a German Stock Corporation Act or a takeover Squeeze out under Section 39a Takeover Act. Not in our case for the time being, but it should be noted per the offer document that the bidder holding more than 90% but less than 95% can do open market transaction to reach the 95% threshold and then launch a Squeeze out procedure. In this case, the Bidder would have to offer the same price paid in the open market.

 

 

CONCLUSION

 

Completion of the transaction is still not a done deal with the major anti trust authorities having to give their green-lights. Per the companies timeline, the offer should not close before 2H 2018. We are the view of the completion of the transaction will be made through a cash compensation for minority shareholders, but during this long time frame we would recommend investors to set up the LIN GY / PX spread above 10% gross eventually with a hedge with the SX4P.

 

 

 

 

Henri DUMENY

Senior Event Driven Analyst

Makor Securities London Ltd
7 Savile Row

London

W1S 3PE

United Kingdom

Tel:  +442072905795

 

hdumeny@makorsecurities.com

www.makor-capital.com

 


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>>> Doctolib raises EUR 35m from Eurazeo and Bpifrance


Doctolib raises EUR 35m from Eurazeo and Bpifrance (translated)

Doctolib, the French privately-owned website that allows to find and book an appointment with a doctor, has raised EUR 35m from investment funds Bpifrance and Eurazeo [EPA:RF], French daily Le Figaro reported. The report cited Doctolib Chairman Stanislas Niox-Chateau as confirming the news. Doctolib has 380 employees.

(MS) Globasl Technology : Time For a Pause (from yesterday)

We think now is the time to reduce exposure to NAND and
Asian semiconductor names as the industry has benefitted
from sizeable demand tailwinds and unprecedented pricing
power, which we see reversing soon. We downgrade Samsung,
TSMC and WDC to EW; initiate Phison at UW.

We believe the NAND cycle is entering a downturn for the first time since 1Q16
while the DRAM cycle should remain strong through 1Q18. Our channel checks
last week suggest that NAND pricing is likely to fall earlier than the market
expects, with early signs of demand destruction from mobile content and
accelerating supply overwhelming enterprise SSD demand. This translates to
poor risk-reward for NAND stocks, and with valuation restrained by pricing risk,
we make several downgrades.

Downgrade Samsung, TSMC and WDC to EW; initiate Phison at UW: Given our
view of the cycle, we cannot recommend the sector until the market recognizes
mounting pressure on NAND prices and slowing logic chip growth momentum in
the near term. The long-term NAND story remains attractive and stocks can
manage through a period of reduced prices and returns, but both factors argue
against a premium rating. Our quantitative analysis of prior memory cycles
suggests that the best time to reduce exposure to stocks is 3-6 months ahead of
the peak of DRAM prices, as market skepticism hinders share-price performance
closer to the turning point. This will play out in the next 1-2 quarters, we think.
We expect DRAM to remain strong in 2018... We maintain our bullish view on
DRAM as our short-term checks stay robust, especially for server, and would add
to Micron positions on any NAND-related weakness. Unlike NAND, we see strong
conditions persisting through 1H18 for DRAM as capital spending has been strong
but not excessive and demand should remain healthy, with large content
increases in servers and phones offsetting modest downward pressure from PCs.
Moving into 2019-20, we expect a period of oversupply as capital spending will
ramp to excessive levels during 2018, leading to significant increases in supply
towards the end of the year.

...but a lot may be priced in and there are potential headwinds: We often hear
that 'DRAM is fundamentally different because of THE CLOUD'. Simply put, the
market is effectively taking the opposite stance from the December 2015 trough,
when extreme bearishness prevailed but being overweight the sector would have
paid huge dividends. Using the same argument, one should do the opposite by
selling the rally now that DRAM stocks are up 182% since then. While the market
firmly believes history will not repeat, we identify risks that could impact the
87% of the DRAM market that is non-cloud, including: (1) demand pull-in from
iPhone X and Chinese smartphone content changes, (2) supply growth impact
from technology migration challenges, and (3) Samsung's pace of supply growth.