While the P&G Board and management team will review Trian’s ‘white paper’ in more detail, it remains clear Trian has an outdated view of our Company. The fact is P&G is a profoundly different Company than it was just a few years ago. We are much better positioned from all angles: portfolio, cost and productivity, innovation and with a more agile and accountable organization and culture. We are successfully executing a winning strategy, as evidenced by our strong fiscal year 2017 results. We remain focused on delivering our plan, while preventing anything from derailing the progress we are making to create value for all P&G shareholders. https://www.sec.gov/Archives/edgar/data/80424/000119312517278205/d442779ddefa14a.htm
Karla Otto and K2: fashion’s next big merger
Karla Otto, the queen of public relations, has joined forces with events guru Isabelle Chouvet. Their plan? To create a global brand management behemoth
“Our aim is to create the biggest luxury brand management agency in the world.” Karla Otto is talking about the announcement, this week, that the public relations company she founded in 1982 is to merge with K2, the Asian-based events, design and production company co-founded by the French entrepreneur Isabelle Chouvet in 2002.
It makes for a mighty combination, uniting one of the fashion industry’s most powerful public relations groups, with 35 years of experience and scores of luxury clients (including Valentino, Céline, Swarovski and Berluti), and an events company with a particular expertise in a notoriously tricky market. The merger will combine more than 400 experts from different fields and an enviable global reach. That its executives are both women, still a rarity in the male-dominated world of luxury leadership, is an extra boon.
Although each company will continue to operate under their respective brand names, the merger will see the emergence of a new group, The Independents, which will harness their diverse services to offer clients “a complete global communications, events and marketing service for the fashion, luxury, beauty and lifestyle industries”, says Chouvet. “We want to acquire other related agencies as well,” adds Otto. “This is the plan.”
In a way, the deal echoes the merger last year of the talent agency CAA with Global Brand Group (GBG), which created a “super”-agency for brands, creatives and event management in the entertainment space. Though smaller in scale, The Independents will offer a one-stop shop for luxury brands looking to co-ordinate their global profile.
“To take the best in class in the different fields in our industry, and group them together,” says Chouvet. “That’s what clients need today. The market is so big and so different, it’s too complicated for them. So that’s what we’re trying to answer.”
Otto and Chouvet started talking about the possibility of a merger two years ago, when they were introduced by mutual acquaintances. “Although we had circled the same areas for years, we had never met,” says Chouvet. Players on quite different stages, both women have come to hold a powerful influence within the worlds they occupy.
Otto is a sleek-haired German style arbiter who speaks multiple languages and began her career, in Tokyo, as a model before realising her future lay in communications.
“My first office was two rooms in a beautiful location in Milan, doing the international PR for Fiorucci in 1979 . . . ” she says. (Otto has always masterfully sidestepped the question of her age, but jokes that she “goes back a very long time”.) She began consulting for the Japanese market shortly after, and started her own agency after having worked with Adriano Goldschmied, who had a series of brands, including Diesel, Katharine Hamnett and the shortlived but successful Bobo Kaminski. “That’s how I started,” she says. “Totally casually.” As grand a character as many of the names she looks after — she’s always recognisable during fashion month for her chameleon-like ability to quick change between the brands she represents — she has enjoyed a three-decade reign and cultivated a peerless portfolio of clientele.
Chouvet started her career at the French employers’ federation Medef, where she was in charge of managing the business events in the Middle East and Asia. She co-founded K2, with her husband and a third partner, in Tokyo, at a time when brands were only first beginning to realise the potential of the Asian market, and opened a second agency in Shanghai almost immediately. She now commands a unique understanding of the local attitudes and markets that characterise the area’s different territories. “In Asia we’re the only company able to create and execute across the whole region,” she says. “Imagine, you’re launching a new lipstick or you have a new high jewellery collection coming up and you need to do an event in Japan, one in China and one in Korea, and you need to make sense between those three. It’s much easier to brief one agency who has the production capabilities in those three countries than one in each country.”
The mistake brands make in trying to penetrate Asia, she continues, is in the lack of synergy in their planning. “Most brands still brief agencies in each country. And that’s very difficult to control. That’s why they are interested in what we’re proposing. We have an existing team who know the needs of the clients and who are able to adapt any global proposition with a very local execution.”
The new company, which has received a first investment of more than $60m from the private equity firm Cathay Capital, with additional support from European Capital and Tikehau, will allow them to fill any gaps in their portfolio. Both women have resisted investment in the past and will remain the largest shareholders of the new company, along with Otto’s long-term partner Alexander Werz.
Otto was persuaded to take investment because she felt she “couldn’t take the business any further” on her own. Chouvet feels similarly liberated. “You know, at some point or other, entrepreneurs feel they cannot continue alone,” explains Chouvet. “By being together in a group you can, of course, bring more value to your clients, but also to the people working for you, which is the key. I really wanted to move on, because the way we’ve developed our business is to answer client needs, and our clients kept saying to me: ‘OK, what you’re doing now in Asia is great. Why can’t you help us in Europe or the US?’ ”
The pair are quickly drawing up a shopping list of possible acquisitions. Chouvet is especially interested in developing new business in the US, which is still “the biggest market with the biggest growth this year. I have a big territory to play with now,” she adds, “because we have all these offices in Europe and in the US, so that is the main target for now.” She’s also keen to get her hands on Otto’s guest lists.
Otto, meanwhile, is looking towards Asia: “Let’s just say, in communication, we’re focusing on Japan.” She has never opened a Tokyo office, something she says she should “have done 20 years ago at least”, and she strongly believes the future lies in Asia. “We just had the figure from Nielsen. In the next 10 years, 60 per cent of total global economic growth will come from China.” Reports aside, the potential is palpable. “We both work there. We can feel it. We can see it. I hear people say: ‘Oh, the growth in China is not as strong. But it’s still much stronger than anywhere else.’ ”
She’s also eyeing other office spaces nearer home. In the post-Brexit landscape, I suggest Frankfurt might be a starter. “I don’t know why I never opened an office in Germany,” she shrugs. “And I’m German.” Or what about Dublin? “No,” she recoils. “It’s raining too much.”
As to whether the union will put a strain on the executive order, both women are confident they will work well together. The last time I did an interview about a significant fashion merger, between Yoox with Net-a-Porter, the question of seniority became quickly contentious. This deal establishes Chouvet as chief executive of The Independents and Karla Otto as its co-chair. Otto will remain chief executive of her namesake company. So, who’s the boss here?
“Who’s the boss?” echoes Otto. “I don’t know.” For the time being, they are describing their relationship as “a partnership”. And a relief.
“Until about seven, eight years ago, I worked very much on my own,” says Otto. “I was the only senior person in my company. I opened seven offices. Alone. Believe me, it’s a lot of work. For both of us, this is a means for us to stay important. To offer more services and become even more important to our clients. That doesn’t mean a client who’s working with Karla Otto necessarily needs to take the services of K2.” Or vice versa, adds Chouvet. “It’s just we offer that,” continues Otto.
However it works out, they’re planning long-term. “We’re preparing for the next 50 years,” says Chouvet. And they’re ready for the challenge.
“When you always work in the same company,” says Otto. “You need to . . . ” Shake it up? I suggest. “Yes”, they reply, in unison. Watch out boys.
Activist Raises Specter of Hudson’s Bay Co. Private Transaction
Jonathan Litt’s Land and Buildings suggested Hudson’s Bay has or will engage bankers to explore a buyout.
Is Richard Baker looking to follow the Nordstroms’ lead and make Hudson’s Bay Co. a private party?
Investors are hopeful and drove shares of the Saks Fifth Avenue parent up 8.2 percent to 12.19 Canadian dollars on the Toronto Stock Exchange after an activist investor suggested the company could be engaging bankers to potentially go private. The stock jump left Hudson’s Bay with a market capitalization of 2 billion Canadian dollars.
In a statement Wednesday, activist Jonathan Litt’s Land and Buildings blasted Hudson’s Bay’s “vague commitment” to address “deep undervaluation” and hinted at some boardroom activity around the possibility of a buyout.
“Concerned parties have informed Land and Buildings that the company’s board has retained, or is in the process of hiring, J.P. Morgan as financial advisor to an independent committee of the board,” the activist investor wrote. “If true, this would further bolster recent reports that the board is evaluating a potential go-private offer from management, which we understand is being advised by Bank of America.”
Representatives for J.P. Morgan and Bank of America declined to comment.
A spokeswoman for Hudson’s Bay said: “We are confident that our model of combining world-class real estate assets with the company’s diverse retail businesses in North America and Europe is the right path for long-term value creation, and we expect a substantial impact from our Transformation Plan in the second half of this year. Our management and board have deep expertise in retail, real estate and finance, and are highly qualified to oversee the successful execution of the company’s strategy. We welcome feedback from all of the company’s shareholders, and share Land & Buildings’ view that the public markets do not fully reflect the intrinsic value of HBC’s global businesses, powerful brands and unique assets. To drive shareholder value now and over the long term, we are actively evaluating the best use of our retail and real estate portfolio and are focused on making the right decisions to improve performance, grow through our all-channel strategy, and identify opportunities for accretive real estate transactions.”
If Baker, executive chairman and governor of Hudson’s Bay, is mulling a buyout, there’s plenty of precedent for him to follow. Department stores and the rest of retail are in the state of great flux and pressuring stores to change rapidly. Such changes are usually much more easily accomplished away from the spotlight of the public markets.
In June, the Nordstroms decided to at least consider going it alone and said they might buy the roughly 70 percent of Nordstrom Inc. that floats on the public market.
Land and Buildings suggested there were several ways for the company to boost its value.
The activist said it believed “there is a highly qualified third-party buyer with serious interest in the company’s European banner, Galeria Kaufhof, at a value approaching 10 Canadian dollars per share and at a premium to what Hudson’s Bay paid several years ago.”
The statement is the latest volley in a campaign to spur on Hudson’s Bay.
Land and Buildings started ratcheting up the pressure on Baker in June, publicly urging the company’s board to “evaluate all strategic alternatives to maximize shareholder value.”
The investor bought a 4.3 percent stake in Hudson’s Bay and zeroed in on the fact that the retailer still owns the vast majority of its real estate, which it pegged at worth 35 Canadian dollars a share — more than three times where the stock was trading.
Hudson’s Bay reported second-quarter results late Tuesday that showed losses of 201 million Canadian dollars on a retail sales gain of 1.2 percent to 3.3 billion Canadian dollars.
The company has been pushing to elevate productivity and pushing out new concepts to its Saks Fifth Avenue, Gilt, Lord & Taylor and Kaufhof, which for instance is adding Sephora and Topshop outposts to its stores in Germany.
On a conference call with analysts, Baker said: “We are optimistic about the remainder of the year. The current retail environment provides both challenges and opportunities, and while it was a tough second quarter as expected, we continue to take the actions necessary to succeed in this rapidly evolving landscape.”
Earlier this year, Hudson’s Bay put in place a “transformation plan” that shifted its corporate offices, cutting 2,000 jobs and saving 350 million Canadian dollars annually.
In Wednesday’s statement, Land and Buildings said: “Hudson’s Bay’s vague commitment as part of second-quarter results to address its deep undervaluation relative to the Company’s stated 35 Canadian dollars per share estimated value, which utilizes third-party real estate valuations, demonstrates a lack of urgency given the rapidly changing retail landscape. This is why we believe HBC must act boldly and decisively for the good of all shareholders to unlock the substantial value currently trapped in its real estate.
“While Chairman Richard Baker stated that HBC ‘continue[s] to evaluate all opportunities to generate value from HBC’s extensive real estate portfolio,’ the reality is these words simply amount to another request for shareholders to give the company more time to turn things around while pursuing its current fundamental strategy — a turnaround which we do not believe is coming given the continued rapid evolution of the department store industry.”
What is the Price of Marvel & Star Wars Franchise if today investors a ready to pay between $2 & $5b for james Bond...
see read across for Disney...Still a Buy for me...
Apple and Amazon have jumped into the bidding war for the James Bond movie rights, according to a report.
While Warner Bros. is seen as the front-runner, the tech giants, with their deep pockets, could upend the process by making a play for the entire franchise — valued at between $2 billion and $5 billion, the report said.
“Apple’s and Amazon’s inclusion in the chase would indicate that more is on the table than film rights, including the future of the franchise,” according to the Hollywood Reporter, which first noted the tech companies’ interest.
Distribution rights to the Bond franchise have been up for grabs since Sony’s two-picture deal ended with the release of “Spectre” in November 2015.
The next outing for 007 — who’ll again be played by Daniel Craig — is slated for November 2019.
In addition to Warner Bros., Fox, Sony and Universal also are bidding for Bond rights, THR reported.
While few movie franchises have the pop-cultural appeal of Bond — an image nurtured since the release of “Dr. No” in 1962 — even fewer have as much untapped potential.
“The franchise, by only limiting itself to theatrical movies, remains vastly under-utilized by 21st-century standards, where expectations are to exploit [intellectual property] across all mediums,” THR said.
Efforts by Apple or Amazon to win over MGM and Eon Productions, which control the rights to Bond, are consistent with the tech giants’ aggressive entry into the production of video content.
Trump reaches deal to fund US government until December
Donald Trump has reached a deal with Republicans and Democrats that will fund the US government until December 15 and provide a short-term increase in the debt ceiling, in a temporary measure that pushes back a bruising battle over must-pass legislative measures.
After a White House meeting with Mr Trump and their Republican counterparts, Nancy Pelosi and Chuck Schumer — the top Democrats in the House and Senate — said they had reached a deal to ward off a government shutdown, avoid a debt default and provide Hurricane Harvey-related aid.
Gapping down
In reaction to disappointing earnings/guidance:
- N/A.
M&A news:
- YUME -3.1% (to be acquired by RhythmOne plc for $185 mln)
- UTX -1.5% (Rockwell Collins (COL) to be acquired by United Technologies for $140.00 per share)
Select China related names showing weakness:
- MOMO -2.1%, CTRP -1.2%, BZUN -1%, WB -1%, JD -0.9%, BIDU -0.5%
Other news:
- CLLS -30.3% (receives notice of clinical hold by FDA on both UCART123 ongoing Phase 1 studies)
- RADA -8.2% (files for 3,549,071 ordinary share offering by holders)
- CYTX -7.3% (announced 'substantial' corporate restructuring intended to significantly reduce expenses)
- JUNO -2.9% (modestly pulling back following last week's 36% advance), PTGX -2.6% (files $200 mln mixed securities shelf offering)
Analyst comments:
- CLMT -2.4% (downgraded to Neutral from Buy at Janney)
- PANW -1.2% (initiated with a Underperform at Credit Suisse)
- TEF -0.7% (downgraded to Neutral from Overweight at JP Morgan)
Gapping up
In reaction to strong earnings/guidance:
- N/A.
M&A news:
- COL +1% (Rockwell Collins to be acquired by United Technologies (UTX) for $140.00 per share)
Other news:
- INSM +107.1% (positive top-line results from Phase 3 CONVERT Study)
- APOP +31.4% (FDA grants orphan drug status to Cellect's ApoGraft for Acute GvHD and Chronic GvHD)
- CDZI +23.2% (announced that the California State Senate set aside AB 1000 following a hearing of its Appropriations subcommittee)
- ORMP +15.6% (reports of successful meeting with FDA regarding its oral insulin)
- BCRX +13% (announces 'positive' results from its APeX-1 Phase 2 Trial in HAE)
- PRQR +3.8% (confirms QRX-421 was granted orphan drug designation by the FDA and EMA)
- PSTI +3.4% (announces that its Phase III study of PLX-PAD cells to support recovery following surgery for femoral neck fracture has been awarded an $8.7 million non-dilutive grant from the Horizon 2020 program)
- ORLY +1.5% (announces additional $1 billion share repurchase authorization)
Analyst comments:
- XOMA +8.7% (upgraded to Outperform at Wedbush)
- LOW +3.1% (initiated with a Buy at BofA/Merrill)
- X +2.6% (upgraded to Buy from Neutral at BofA/Merrill)
- ZEAL +2.4% (initiated with a Overweight at Morgan Stanley)
- SWKS +1.6% (upgraded to Buy from Sell at Citigroup)
- ALXN +0.8% (upgraded to Overweight from Neutral at JP Morgan)
- ORCL +0.6% (initiated with a Outperform at Credit Suisse)
- DIS +0.5% (upgraded to Outperform from Market Perform at Wells Fargo)
