FT : Nordic payments processor Nets nears takeover decision and H&F is in pole p

Nordic payments processor Nets nears takeover decision and H&F is in pole position

Private equity deal mania is upon us, especially in Europe. Flush with cash, buyout firms are getting braver and bolder, while their targets are getting larger.

Case in point comes via a late-night scoop from DD's Arash Massoudi, Javier Espinoza and FT banking editor Martin Arnold that went up just a few hours ago.

US private equity firm Hellman & Friedman is the frontrunner to win the DKr31bn (~$5bn) race to take private Nets A/S, which is Scandinavia's largest payments processor. The two sides could enter exclusivity within the next day or two, DD understands. 

However, other suitors are watching closely and Nets is publicly traded so nothing is guaranteed. Read the full story on what would be the largest take-private in Europe in more than four years here. 

Nets was bought in 2014 by US private equity groups Bain Capital and Advent International, in a consortium with Danish pension fund ATP Group for DKr17bn. The consortium listed the business just last year.

The journey sounds remarkably similar to that of Worldpay, the UK-based payments processor that was bought by Bain and Advent back in 2010 and listed in 2015. Vantiv, a US rival, agreed to gobble up Worldpay in a £9.3bn deal earlier this month. See how Worldpay ranks against Nets here:


Meanwhile, CVC and Blackstone have sealed a £3bn take-private of UK digital payments company Paysafe.

What's driving all the deals in the payment processing space? Three things: the opportunity to consolidate a fragmented market, the chance to strip out duplicate costs and a shift away from cash and cheques towards digital payments.

>>> What to look at today -1st of Sept. 2017

Dow +0.25% S&P +0.57% Nasdaq +0.95% Russell +1%
US Equities closed higher again...nine of the eleven sectors settled the day in positive territory with the influential health care group (+1.7%) leading the charge after closing above its 50-day simple moving average (919.36) for the first time in three weeks on Wednesday. Biotech names showed particular strength, sending the iShares Nasdaq Biotechnology ETF (IBB 333.35, +9.03) higher by 2.8%.  top-weighted technology sector (+0.7%) also finished ahead of the broader market on Thursday as Apple (AAPL 164.00, +0.65) added another 0.4% to settle August with a monthly gain of 10.3%. The tech sector was the top-performer in the month of August, climbing 3.2% to extend its year-to-date advance to 25.3%. the heavily-weighted financial space (unch) settled with the telecom services sector (-0.5%) at the bottom of the sector standings, extending its monthly loss to 1.9%. crude oil climbed 2.6% to $47.14/bbl, breaking its four-session losing streak. Tropical Storm Harvey remains a key factor in the crude and gasoline futures market as it has forced the closure of many refineries along the Texas coast. Thursday reports indicate that Motiva Enterprises' Port Arthur refinery, the biggest in Texas, may be shut down for up to two weeks. SU After Hours  PANW +5.5%, NTNX +5.5% higher and TECD -19.2%, AMBA -9.3%, COO -1.9% lower following earnings / guidance; APVO surging 114% higher on hyperimmune commercial products sale / ph 1 prelim data news. With the US payrolls report due later today, Asian equity markets have generally seen little volatility. On data front, Japan’s Q2 CAPEX missed expectations and this has led to speculation that Q2 GDP could be revised lower from the preliminary annualized reading of 4.0%. China’s Aug Caixin Manufacturing PMI, which hit the highest level since Feb, had little noticeable impact on markets, as it followed Thursday’s release of the official PMI figures. PBoC reiterates 'prudent and neutral' monetary policy; Property market has become major source of financial risk; Cannot expect use of ‘pure’ monetary policies to address problems in the property market; China should keep tight property curbs in main cities; mulling measures related to home mortgage loan growth to reduce volatility related to property market prices; Reiterates property market tax reform should be included in broader tax reform considerations – Publication

Nikkei +0.23% Hang Seng -0.12% CSI -0.02% Shanghai +0.02% Shenzen +0.36%

Eur$ 1.1890 CNH 6.5833 CNY 6.5838 JPY 110.12 GBP 1.2916 CHF 0.9609 RUB 58.0644 WTI$ 46.88 -0.74%

S&P +0.08% EuroStoxx +0.23% FTSE -0.02% Dax +0.14% SMI +0.09%

Macro :
- French August New Car Registrations Rose 9.4% to 107,462
- Caixin China Aug. Manufacturing PMI 51.6; Est. 51

Keep an eye on :
- AC FP : Accor Confirms Etchandy-Stabile Leaving HotelServices France
- APPL US : Apple Sends Out Invitation for Sept. 12 Event in Cupertino
- GTO NA : Gemalto Sees Full Year Operating Profit EU293 Mln To EU323 Mln
- SIE GY : Siemens Is Said to Invite Advisers to Pitch for Healthineers IPO
- GLE FP : SocGen Scraps Management Layer as New Organization Goes Live
- ILD FP : Iliad First Half Net Income EU232.6 Mln
- VIV FP : Vivendi 2Q Rev. Beats Est.; Confirms FY Outlook
- VIV FP : Vivendi Proposed JV w/ Telecom Italia, Canal+ in Content, Has No Plans For UMG IPO Currently, CEO Says
- VIV FP : Vivendi 2Q Will Support Sentiment, 2H Looks Tougher, Citi Says
- VOLVO SS : Volvo Cars is Confident in E-Car Strategy, CEO Tells HB
- VOW GY : VW Wins Dismissal of Wyoming Diesel-Cheating Environmental Suit
- VOw3 GY : VW to Offer U.K. Drivers up to 7,000 Pnds in Diesel Rebate: FT

>>> Europe : Brokers Upgrades & Downgrades - 1st of Sept. 2017

>>> Up
* Acerinox Raised to Buy at Jefferies, PT EU15
* Airbus Raised to Neutral at BofAML, PT EU75
* Aker BP Raised to Equal-weight at Barclays, PT NOK175
* CMC Markets Raised to Overweight at Morgan Stanley
* K+S Raised to Neutral at MainFirst, PT EU21
* MTU Aero Raised to Neutral at BofAML, PT EU126
* MTU Aero Raised to Buy at HSBC, PT EU141
* Raiffeisen Raised to Equal-weight at Barclays, PT EU28.50
* Vivendi Raised to Equal-weight at Barclays, PT EU20
* Volvo Raised to Buy at DNB Markets, PT SEK155

>>> Down
* BioMerieux Cut to Neutral at Natixis
* Deutsche Boerse Cut to Equal-weight at Morgan Stanley
* Dixons Carphone Cut to Hold at Investec
* Flow Traders Cut to Equal-weight at Morgan Stanley
* Greene King Cut to Reduce at HSBC, PT GBP5.95
* J D Wetherspoon Cut to Hold at HSBC, PT GBP10.90


>>> Initiation
* DSM New Buy at HSBC, PT EU71
* Duke Royalty New Buy at Berenberg, PT 60p
* GrandVision New Equal-weight at Morgan Stanley, PT EU23.50
* Landis + Gyr New Buy at UBS, PT CHF90
* Marlowe New Buy at Berenberg, PT 500p
* Redde New Overweight at JPMorgan, PT 193p

>>> Call

>>> After Hours Summary: PANW +5.5%, NTNX +5.5% higher and TECD -19


After Hours Summary: PANW +5.5%, NTNX +5.5% higher and TECD -19.2%, AMBA -9.3%, COO -1.9% lower following earnings / guidance; APVO surging 114% higher on hyperimmune commercial products sale / ph 1 prelim data news

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: PANW +5.5%, NTNX +5.5%

Companies trading higher in after hours in reaction to news: APVO +114.3% (Aptevo Therapeutics and MorphoSys end joint development and commercialization agreement for MOR209/ES414; Aptevo regains worldwide rights - preliminary phase I data show markedly lower anti-drug antibody titers; Aptevo also signs agreement for up to $74.5 million to sell hyperimmune commercial products; provides significant non-dilutive funding to execute R&D Strategy), IOVA +16.5% (FDA has granted Fast Track designation for LN-144, the adoptive cell therapy using its TIL technology, for the treatment of advanced melanoma), THC +2.8% (commences Board refreshment process, implements shareholder rights plan to protect NOLs), ETP +1.1% ticking higher; announces FERC approval to put Phase 1A of the Rover Pipeline in service; natural gas service to begin from Cadiz to Defiance August 31), AJRD +0.9% (ticking higher; Aerojet Rocketdyne unit will support Boeing with recently awarded Air Force contract for the Technology Maturation and Risk Reduction phase of the Ground Based Strategic Deterrent acquisition program), GE +0.7% (Charles Gasparino reporting Trian's Nelson Peltz may seek Board seat), NKE +0.6% and UA +0.5% (following LULU results), RGC +0.5% (announces $50 million share repurchase plan)

A few cybersecurity names are higher following Palo Alto Networks (PANW) earnings: FEYE +0.9%, VMW +0.7%, CYBR +0.6%

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: TECD -19.2%, AMBA -9.3%, COO -1.9%, OXM -1.4% (ticking lower)

Companies trading lower in after hours in reaction to news: MGNX -8.5% (announces termination of duvortuxizumab collaboration and license agreement with Janssen), PGNX -4.2% (Progenics Pharm announces study results that show treatment with AZEDRA produced clinically meaningful and durable responses across multiple study endpoints, including radiographic tumor response, tumor biomarker response, and overall survival)

>>> Asian Update

Asia Mid-Session Market Update: FX and equity markets generally quiet ahead of US payrolls; US Gasoline Futures pause after over 8% gain on Thursday with Labor Day weekend in focus; KRW firmer as Aug CPI hits over 5-year

***Asia Summary***
- With the US payrolls report due later today, Asian equity markets have generally seen little volatility. The S&P ASX 200 conducted its quarterly rebalancing (Charter Hall Long Wale Reit, NIB Holdings, Washington H Soul Pattinson added; Isentia, Sky Network TV and Virtus Health removed).

- On data front, Japan’s Q2 CAPEX missed expectations and this has led to speculation that Q2 GDP could be revised lower from the preliminary annualized reading of 4.0%. South Korea’s Aug CPI rose at the fastest pace in over 5-years and the government attributed the increase to temporary factors. China’s Aug Caixin Manufacturing PMI, which hit the highest level since Feb, had little noticeable impact on markets, as it followed Thursday’s release of the official PMI figures.
- (CN) PBoC reiterates 'prudent and neutral' monetary policy; Property market has become major source of financial risk; Cannot expect use of ‘pure’ monetary policies to address problems in the property market; China should keep tight property curbs in main cities; mulling measures related to home mortgage loan growth to reduce volatility related to property market prices; Reiterates property market tax reform should be included in broader tax reform considerations – Publication

***Key economic data***
- (AU) Australia AiG Perf of Mfg Index: 59.8 v 56.0 prior
- (AU) Australia Aug CBA Australia PMI Mfg: 53.5 v 54.4 prior
- (CN) CHINA AUG CAIXIN PMI MFG: 51.6 V 51.0E (Highest since Feb)
- (KR) SOUTH KOREA AUG TRADE BALANCE: $7.01B V $6.24BE; Exports Y/Y: 17.4% v 15.8%e (10th straight rise)
- (JP) JAPAN Q2 CAPITAL SPENDING Y/Y: 1.5% (3RD CONSECUTIVE RISE) V 7.9%E; EX-SOFTWARE Y/Y: 0.6% V 8.2%E
- (KR) SOUTH KOREA AUG CPI M/M: 0.6% V 0.2%E; Y/Y: 2.6% V 2.2%E (fastest rate in over 5-years)
- (KR) SOUTH KOREA Q2 FINAL GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.7% V 2.7%E
- (NZ) NEW ZEALAND Q2 TERMS OF TRADE INDEX Q/Q: 1.5% V 3.0%E

***Speakers and Press***
China
- (CN) China Communist Party expected to convene National Congress on Oct 18th - Xinhua

Other
- (JP) Japan Fin Min Aso: Will not travel to the US on Sept 4 due to North Korea risk; Says his comments on Hitler were unrelated to cancellation of US trip.
- (US) US President Trump to propose initial $5.9B in Harvey aid; said to consider linking debt limit increase to Harvey aid - US financial press
- (US) US Transportation Sec: Signed executive order allowing expedited fuel deliveries to Texas from 25 other states
- (US) Pemex: Due to port closures in Houston, importing fuel shipments from Bermuda, US East Coast and Alabama
- (US) Houston Port: Heavy current into Houston Ship Channel making it unsafe to bring in vessels
- (US) Explorer Pipeline planning to start lines on Saturday and Sunday - US financial press
- (US) EIA: In June, US gasoline consumption 9.77M bpd, +1.1% y/y (record)

***Asian Equity Indices/Futures (00:30ET)***
- Nikkei flat, Hang Seng +0.4%, Shanghai Composite +0.6%, ASX200 +0.2%, Kospi flat
- Equity Futures: S&P500 flat ; Nasdaq +0.1% , Dax +0.1% , FTSE100 flat

***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.1186-1.1923; JPY 109.93-110.15; AUD 0.7937-0.7957; NZD 0.7169-0.7189
- Aug Gold +0.2% at1,324 /oz; Aug Crude Oil -0.6% at $46.95/brl; Sept Copper flat at $3.10/lb, Gasoline Futures -0.1%
- GLD SPDR Gold Trust ETF daily holdings flat at 816.4 metric tons
- (CN) PBOC SETS YUAN REFERENCE RATE AT: 6.5909 V 6.6010 PRIOR (yuan set stronger for 5 straight sessions, today's fix strongest since June 24, 2016)
- (CN) PBoC skips OMO v skipped 7 and 14-day prior; Drains net CNY50B v CNY40B prior
- (JP) Bank of Japan (BoJ) announces amounts to buy in QE operation: Cuts 3-5 yr JGB purchases to ¥300B from ¥330B prior
- (AU) Australia sells A$500M in 2.00% Dec 2021 Bonds, avg yield 2.1575%, bid to cover 7.82x; Says one buyer purchased all of the 2021 notes at the auction.

***Equities notable movers***
Australia
- Virtus Health, VRT.AU Removed from S&P ASX 200 Index; -2.4%
- Sky Network TV, SKT.AU Removed from S&P ASX 200 Index; -3.5%
Hong Kong/China
- Sunac China, 1918.HK Reversed opening gains seen after earnings, commented on its exposure to Wanda;-2.5%
- GD Power Development Co, 600795.CN Higher on M&A; +10%

***US markets on close: Dow +0.3%, S&P500 +0.6%, Nasdaq +1.0%, Russell +1.0% ***
- Best Sector in S&P500: Health Care +1.7%
- Worst Sector in S&P500: Financials flat
- At the close: VIX 10.59 ( -0.63 pts); Treasuries: 2-yr 1.33% (flat), 10-yr 2.119% (-2.5bps), 30-yr 2.725% (-2bps)

***US Market Summary***
- Stocks rose again today, helped by strong jobless data and low CPE data. Mnuchin's comments on tax reform and the aim to pass a bill by year end gave investors hope. Crude turned the recent sell-off around, rising 2.5%, with CLV7 trading above $47 at close. Treasury yields declined after weak inflation data seemed to confirm inaction from Fed for the rest of year; the 10-year yield was down 2 bps from yesterday at 2.12%, 10s30s curve spread unchanged from yesterday at 60 bps. Weak inflation data also saw gold continue its bullish trend, as the Fed seems even less likely to raise rates before year end.

***US Afterhours Movers***
-LULU Reports Q2 $0.39 v $0.35e, Rev $581.1M v $568Me; Guides Q3 $0.50-0.52 v $0.52e, Rev $605-615M v $601Me; SSS mid single digits increase; +7.1% afterhours
-PANW Reports Q4 $0.92 v $0.79e, Rev $509.1M v $487Me; Guides Q1 $0.67-0.69 v $0.69e, Rev $482-492M v $487Me; +6.8% afterhours
-TECD Reports Q2 $1.74 v $2.06e, Rev $8.88B v $8.71Be; Guides Q3 $1.84-2.04 v $2.20e, Rev $9.0-9.35B v $8.6Be; -19.4% afterhours

>>> US Close Dow +0.25% S&P +0.57% Nasdaq +0.95% Russell +1%

Closing Market Summary: Bulls Rack Up Another Win Ahead of Friday's Jobs Report

Equities moved higher once again on Thursday, extending the S&P 500's winning streak to five sessions in a row. The Russell 2000 (+1.0%) and the Nasdaq (+1.0%) finished comfortably ahead of the benchmark S&P 500 (+0.6%) while the Dow Jones Industrial Average (+0.3%) underperformed. For the month, the benchmark index ticked up 0.1%.

Investors were happy to dial back their rate-hike expectations on Thursday following yet another tepid inflationary report. The latest reading of the core PCE Price Index showed that consumer prices decelerated on a year-over-year basis in July--dropping to +1.4% from +1.5% in June--and remain well below the Fed's longer run target of 2.0%.

Treasury yields ended the day lower across the curve following Thursday's economic data with the benchmark 10-yr yield dropping two basis points to 2.12%. Likewise, the U.S. Dollar Index (92.61, -0.23) slipped, losing 0.3%. As for the fed funds futures market, the implied probability of a December rate hike now sits at 36.4%, slightly lower than where it stood at this time last week (38.7%).

In the equity market, nine of the eleven sectors settled the day in positive territory with the influential health care group (+1.7%) leading the charge after closing above its 50-day simple moving average (919.36) for the first time in three weeks on Wednesday. Biotech names showed particular strength, sending the iShares Nasdaq Biotechnology ETF (IBB 333.35, +9.03) higher by 2.8%.

Like the health care space, the top-weighted technology sector (+0.7%) also finished ahead of the broader market on Thursday as Apple (AAPL 164.00, +0.65) added another 0.4% to settle August with a monthly gain of 10.3%. The tech sector was the top-performer in the month of August, climbing 3.2% to extend its year-to-date advance to 25.3%.

The lightly-weighted materials space (+0.7%) also outperformed on Thursday, but the remaining advancers finished with gains of no more than 0.5%. On the flip side, the heavily-weighted financial space (unch) settled with the telecom services sector (-0.5%) at the bottom of the sector standings, extending its monthly loss to 1.9%.

Elsewhere, crude oil climbed 2.6% to $47.14/bbl, breaking its four-session losing streak. Tropical Storm Harvey remains a key factor in the crude and gasoline futures market as it has forced the closure of many refineries along the Texas coast. Thursday reports indicate that Motiva Enterprises' Port Arthur refinery, the biggest in Texas, may be shut down for up to two weeks.

Political news was fairly light on Thursday, but Treasury Secretary Steven Mnuchin did say the White House has a "very detailed" tax plan ready that will be released to the public by the end of September.

Reviewing Thursday's economic data, which included July Personal Income, Personal Spending, core PCE Prices, Initial Claims, August Chicago PMI, and July Pending Home Sales:

  • Personal income ticked up 0.4% in July (consensus +0.3%) after an unrevised reading of 0.0% for June. Personal spending rose 0.3% (consensus +0.4%), while the prior month's reading was revised to 0.2% from 0.1%. The core PCE Price Index, which excludes food and energy, increased 0.1% (consensus +0.1%).
    • The key takeaway from the report was that inflation pressures remained subdued, which suggests to market participants that expectations for another rate hike this year can also remain subdued.
  • The latest weekly initial jobless claims count totaled 236,000, as expected. Today's tally was above the revised prior week count of 235,000 (from 234,000). As for continuing claims, they declined to 1.942 million from an unrevised count of 1.954 million.
    • This report marks the 130th straight week that initial claims have been below 300,000, which is reflective of an environment in which employers are reluctant to let go of their workers.
  • Chicago PMI for August hit 58.9, unchanged from July and in line with the consensus.
    • All of the barometer components, with the exception of employment, were above their year-ago levels.
  • Pending Home Sales for July declined 0.8% (consensus +0.5%). Today's reading follows a revised 1.3% increase in June (from +1.5%).

On Friday, the Employment Situation Report for August will be released at 8:30 ET and has the power to jolt, or further dampen, the chances of a December rate hike. The consensus expects that the report will show the addition of 183,000 nonfarm payrolls, an increase of 0.2% in average hourly earnings, and an unemployment rate of 4.3%.

In addition, investors will receive several other pieces of economic data on Friday, including the August ISM Manufacturing Index (consensus 56.8), July Construction Spending (consensus 0.5%), and the final reading of the University of Michigan Consumer Sentiment Index for the month of August (consensus 97.1)--all of which will be released at 10:00 ET.

Also of note, August auto and truck sales will be released throughout the day.

  • Nasdaq Composite +19.4% YTD
  • Dow Jones Industrial Average +11.1% YTD
  • S&P 500 +10.4% YTD
  • Russell 2000 +3.6% YTD

FT : Vivendi profits dip despite strong performance at Universal Music

Vivendi profits dip despite strong performance at Universal Music
UMG revenue boost not enough to offset continued woes at pay-TV arm Canal Plus

A strong performance at Universal Music Group drove a 5 per cent increase in revenues at Vivendi in the first half of 2017 — but it was not enough to halt a slide in profits at the global media group controlled by French billionaire Vincent Bolloré.

A 45 per cent rise in subscription and streaming revenues, combined with a string of hits including the release of a 50th anniversary edition of The Beatles’ Sgt Pepper’s Lonely Hearts Club Band, helped lift revenues at Universal to €2.6bn.

Although that 14 per cent increase helped the group’s overall revenues rise to €5.4bn, Vivendi’s earnings before interest, taxes, and amortisation (Ebita) fell 11 per cent to €352m, mainly because of the continued decline of the company’s pay-TV arm Canal Plus.

Vivendi said revenues at Canal Plus were falling at a slower rate, but the business was still being hit by the longer term fall in pay-TV subscriptions in France.

At the same time, advertising revenues generated by Canal Plus’s three free-to-air channels have also been hit by an industry-wide slump in ad spending, contributing to a near 42 per cent drop in operating profits at the TV group to €171m.

Nevertheless, the strong performance at Universal is likely to fuel speculation that Mr Bolloré will push ahead with an initial public offering for the music group — something he confirmed he was considering earlier this year. The move would capitalise on the optimistic valuations being heaped on the global music business.

A new report this week from Goldman Sachs raised growth forecasts 16 per cent to predict global revenues from paid music streaming would hit $28bn by 2030.

The report came as Goldman increased its valuation of Universal by 16 per cent to €19.5bn ($23.5bn) from €16.8bn.

Vivendi used its trading update on Thursday to reiterate its statement to Italian regulators earlier this month that its 24 per cent stake in Telecom Italia does not give Bolloré’s media group de facto control over the company.

The company also confirmed it would be launching a simplified tender offer in the coming weeks for the remaining interest in advertising group Havas. In May, Vivendi offered €2.3bn in cash to buy a 60 per cent stake in Havas from the billionaire’s family holding company.

But some analysts have accused the media mogul of overpaying. Last week, Havas, run by Vincent Bolloré’s son Yannick, reported a 34 per cent drop in profit for the first half, partly because of bigger than expected cuts in advertising spending.

Analysts at Citi said that despite the performance of Universal they were “circumspect” about the more “muted trends” facing other parts of the business.

“The acquisition of Havas and the uncertainty in Italy makes the investment case even more complicated still,” Citi said in a note.