not good for SXAP
1.2016
There was a major development in a lawsuit last week that every investor should know about — and worry about.
But nobody is paying attention.
A New York federal judge appointed three law firms to serve as lead counsels in a multitrillion-dollar litigation accusing Goldman Sachs, Barclays Capital and 18 other financial institutions of rigging the market for US government securities.
This is a civil case, but there is also a federal criminal investigation into this matter that will probably go nowhere because there are so many Goldman Sachs alumni in the Trump administration.
So the civil case, which is a class action, is the one to watch. And by appointing the law firms of Quinn Emanuel Urquhart & Sullivan and Cohen Milstein Sellers & Toll as well as Labaton Sucharow to handle the case, this litigation takes a tiny step forward even if the criminal probe is stagnant.
“Tiny” isn’t important here. The fact that this case will hang over the financial markets for years is what should be remembered.
What’s at stake?
A lot of money, to be sure. But even more important is the integrity of the US financial markets.
Back in May, The Post explained how the Justice Department was looking into whether Goldman Sachs, run by longtime Chief Executive Lloyd Blankfein, was getting preferential treatment during US government bond auctions. Goldman, according to a source, had astonishing success in winning auctions between 2007 and 2011.
I suspect there was collusion between Washington and Goldman, perhaps for noble reasons but largely to keep bond prices high and interest rates low, since the two move in opposite directions. Low rates help borrowers like the federal government and hurt savers.
As I’ve been saying for years, the government’s and Federal Reserve’s rigging of the bond market — especially during the quantitative easing period — has resulted in a secret tax on savers.
The law firms that were given jurisdiction over the civil suit are probably smart enough to realize that Washington doesn’t want any of this to come out. So the class-action litigants will have tremendous leverage as this case moves forward.
So keep an eye on this lawsuit. Small steps could mean death by a thousand cuts if the lawyers decide to make things difficult for the banks and the government.
article was out this week end but Uk was closed yesterday
From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: 08/26/17 17:40:44
Subject: Sky News : Chinese-backed fund closes in on bid for chipmaker ImaginationChinese-backed fund closes in on bid for chipmaker ImaginationCanyon Bridge has hired Citi to advise on a formal bid for the struggling British chipmaker Imagination, Sky News learns.A Chinese-backed fund is to test Theresa May's pledge to subject foreign takeovers of British companies to closer scrutiny by lodging a formal bid for the struggling chipmaker Imagination Technologies.Sky News has learnt that Canyon Bridge Capital Partners has hired advisers from the Wall Street bank Citi to work on an offer for Imagination, one of Britain's leading technology businesses.Sources said this weekend that Canyon Bridge had made significant progress during talks with Imagination in recent weeks, with a formal bid expected to be presented to the London-listed group in the next fortnight.They added that talks between Imagination and other unidentified parties were ongoing, and cautioned that Canyon Bridge could yet decide against making a formal bid.Canyon Bridge has offices in Silicon Valley and Beijing but is ultimately funded by entities connected to the Chinese government.Its interest in buying Imagination comes after the Hertfordshire-based company said in June that the loss of its contract to supply Apple with graphics technology for iPhones and iPads meant it would put itself up for sale.That move has left Imagination in dispute with Apple, with the British company telling the stock market last month that it had made "no progress" in resolving it.It also said that it was examining the sale of two of its divisions, MIPS and Ensigma, as well as listening to offers for the whole company.Imagination designs and makes chips for smartphone manufacturers, and also specialises in providing general purpose processing, where it counts the likes of Qualcomm and Broadcom among its key customers.Despite the decline in its stock market value, with its shares down more than 42% over the last year, Imagination continues to be regarded as one of the UK's most technology companies.That status was reinforced by the £24bn takeover of ARM Holdings, its fellow chip designer, by Japan's Softbank last year.The deal came shortly after Mrs May became Prime Minister, since when she has vowed in the pages of the Conservatives' manifesto to reform the rules governing mergers and takeovers."We will require bidders to be clear about their intentions from the outset of the bid process; that all promises and undertakings made in the course of takeover bids can be legally enforced afterwards; and the Government can require a bid to be paused to allow greater scrutiny," the manifesto said.It added that foreign ownership of companies controlling "important infrastructure" would not be allowed to undermine national security or "essential services".A forthcoming green paper is expected to set out the Government's thinking on these issues in greater detail, but City sources believe that a Beijing-backed bid for Imagination would force ministers to extract firm commitments about British technology jobs from Canyon Bridge.The private equity firm has already been struggling to persuade US officials that it should be allowed to own Lattice Semiconductor, a manufacturer of specialist microchips, for which it offered $1.3bn last year.Canyon Bridge has twice refiled an application to the Committee on Foreign Investment in the United States (CFIUS), which has a history of blocking sensitive takeovers of American assets.Imagination's investors will be watching closely for details of the value attached to any offers for the company.Its share price, which has fluctuated wildly in the last year, has left it with a market value of just £350m, down from about £2bn at its peak.Rothschild, the investment bank, is advising Imagination on the talks with bidders.Spokesmen for Canyon Bridge and Imagination both declined to comment this weekend.
Dow -0.02% S&P +0.05% Nasdaq +0.28% Russell +0.35%
US Market was quiet. APPL helped the sentiment with news of 12th of Sept keynote. Biotech was strong in the wake of an announcement from Gilead Sciences (GILD) that it is going to acquire Kite Pharmaceuticals (KITE 178.05, +38.95, +28.0%) for approximately $11.9 billion, or $180.00 per share, in cash. (29% Premium). Energy sector (-0.5%) was one of the day's biggest laggards, but it did manage to cut its losses in half after oil prices rebounded off their lows of $46.15.financial sector (-0.5%) was the other key laggard of the day. Us After Hours Gold/silver related names are higher following the launch of North Korea missile over Japan
Asian equity markets opened mixed as early in the morning North Korea launched a mid-range ballistic missile that crossed over Japan’s air space (1st since 2009) before landing in the sea. S&P futures opened sharply lower, gold rose as geopolitical tensions rose to a new level. Crude is higher as hurricane Harvey continues to impact oil refineries and we may soon see impact on retail distribution as trucks are redirected to rescue and relief efforts. South Korea President Moon has ordered military to stage a show of force; 4 F-15K jet fighters conducted bomb-dropping drill. While Japan PM Abe and President Trump agreed to increase pressure on North Korea; want to call on China and Russia to play a role in North Korea. UN Security Council will hold a meeting later today.
Nikkei -0.42% Hang Seng -0.41% CSI -0.32% Shanghai -0.05% Shanzen -0.24%
Eur$ 1.1975 CNH 6.6136 CNY 6.6109 JPY 108.84 GBP 1.2945 CHF 0.9526 RUB 58.4732 WTI$ 46.78 +0.45%
S&P -0.54% EuroStoxx -0.79% Dax -0.73% FTSE -0.69% SMI -0.51%
Macro :
- Paris Mayor Says She Was Threatened By Diesel And Car Lobbies
- Abe Says Agreed With Trump in Increasing Pressure on N. Korea
Keep an eye on :
- ABE SM : Abertis suitor ACS sounds out Hong Kong-based funds for counterbid
- AB1 GY : Air Berlin Assets to Be Taken Over by Lufthansa, Easyjet: Bild
- ALLN SW : Allreal 1H Rental Income Rises 1.2% to CHF87.5m
- AAPL US : Apple Said to Hold Product Launch Event Sept. 12: WSJ
- ATC NA : Altice To Stay ’Reasonable’ On Bidding For Sports TV Rights: CEO
- EDF FP : France’s Le Maire Rules Out Privatization of EDF, La Poste, SNCF
- ENEL IM : Enel Chile’s Generacion Tender is a Win-Win Deal: Street Wrap
- HLAG GY : Hapag-Lloyd Second Quarter Ebit Beats Estimates
- LIN GY : Linde/Praxair to divest by continent, sector sources say
- MUV2 GY : Too Early to Assess Harvey Damages, Munich Re, Hannover Re Say
- NDA SS : Nordea Says Being Under EU’s SSM Would Increase Trust in Bank
- PSM GY : Prosiebensat.1 Media: Group Finl Outlook FY 2017 Confirmed
- RNO FP : Renault, Nissan, Dongfeng Motor to Form China EV Venture
- KEMN NA : Van Lanschot Kempen First Half Underlying Profit EU69.6 Mln
- VIV FP : Streaming Market Forecast Raised 16% to $28b by 2030: Goldman
- VOLVB SS : Cevian Capital could be looking to reduce stake in Volvo - report
- VOW3 GY : Audi Revamps Management Board, Names Seitz CFO
- FHZN SW : Zurich Airport First Half Ebitda CHF271.6 Mln
>>> Up
* 4imprint Raised to Buy at Berenberg
* Beiersdorf Raised to Buy at Bankhaus Lampe
* Computacenter Raised to Buy at Berenberg
* Genel Energy Raised to Hold at Jefferies
* Handelsbanken Raised to Buy at SEB Equities, PT SEK128
* Hostelworld Raised to Buy at Berenberg
* IC Group Raised to Hold at SEB Equities, PT DKK145
* Lufthansa Raised to Equal-weight at Morgan Stanley, PT EU22
* Millennium & Copthorne Raised to Hold at Berenberg
* Nordea Raised to Buy at SEB Equities, PT SEK116
* Premier Oil Raised to Buy at Jefferies
* Rational Raised to Buy at Berenberg
* Swedbank Raised to Hold at SEB Equities, PT SEK210
* Wendel Raised to Buy at SocGen, PT EU153
>>> Down
* Airbus Cut to Reduce at AlphaValue
* Banca Generali Cut to Sell at Citi, PT EU26
* EDP Cut to Hold at Berenberg
* Havas Cut to Accept The Offer at Invest Securities, PT EU8.10
* ProSieben Cut to Neutral at Goldman
* Restaurant Group Cut to Reduce at Peel Hunt
* Softcat Cut to Hold at Berenberg
* Telecom Italia Cut to Market Perform at Bernstein, PT EU0.90
* Tullow Cut to Hold at Jefferies
>>> Initiation
* Anima Resumed Neutral at Citi, PT EU6.70
* NKT New Underweight at Barclays, PT DKK370
>>> Call
Gilead finally strikes a mega deal. But did it overspend for Kite?
Gilead Sciences is back with a mega deal. But hours after the Californian drugmaker announced its $12bn acquisition of Kite Pharma, some analysts and investors were quick to criticise the drugmaker for having paid too much to buy the cutting-edge cancer treatment asset.
Out of 112 Gilead investors surveyed by Mizuho Securities soon after the deal was announced, 59 per cent said they thought that Gilead had overpaid for Kite.
That's exactly what happened six years ago after Gilead acquired Pharmasset for $11bn. Back then a majority of analysts accused the giant biotech group of making a "risky bet" on next generation hepatitis C treatments (if you need a reminder you should read this negative note of the deal by Morning Star).
But the naysayers were proved wrong as Gilead's 2011 deal turned out to be truly transformational (here is a good piece on the success of Sovaldi, which is the reason it acquired Pharmasset).
Can Gilead repeat itself? Or has it acted in a hasty way under pressure from investors to do a deal?
Umer Raffat at ISI Evercore issued this investor note:
Max Nisen, a smart biotech and pharma writer at Bloomberg Gadfly, was also critical about the deal. Here is what he had to say:
DD spoke to people close to Gilead and they say they will be proved right once again (no surprise here). Their argument is that they are getting in early on a drug that will revolutionise the fight against cancer. By buying the asset ahead of regulatory approval they will also be in a better position to price and market the drug once it's approved (which is 99.9 per cent likely to happen within the next year).
We asked the FT's in-house pharma expert David Crow about what he made of the deal and his answer is probably the most balanced:
Linde/Praxair to divest by continent, sector sources say
28 AUG 2017
- FTC’s Mergers 1 likely handles review
- Helium units may draw specific scrutiny
Linde [ETR:LIN] and Praxair [NYSE:PX] will likely result in divestiture packages along geographic lines as the industrial gases giants look to address antitrust concerns, said a sector advisor and two industry executives.
North American assets are expected to be the largest package, these sources said. There is also expected to be an Asia and Australia package; and a Europe, Africa and the Middle East package, they added.
The companies may also create a smaller South American package to address Praxair’s dominance in Brazil, said the executives, each of whom has experience with M&A involving antitrust issues.
Each package will probably include merchant liquid plants, or air separation units that produce atmospheric gases, as well as liquid carbon dioxide plants; on-site plants and pipelines; and packaged gas facilities, the executive said. This news service previously reported that the companies will likely have to divest all or most of Linde’s assets in the US given high levels of antitrust problems in the country.
Germany-based Linde and Connecticut-based Praxair, which announced plans to merge in June, have not yet communicated details to potential divestiture buyers, the first advisor said. A second sector advisor said he has heard the sale process could start in mid-fall.
The entire collection of divested assets may fetch more than USD 8bn, the second sector advisor said, based on more than USD 700m to USD 800m in divested EBITDA.
The USD 65bn deal faces antitrust reviews in multiple jurisdictions around the world. The Federal Trade Commission (FTC) issued a second request in early August.
Linde and Praxair have committed to divest assets worth up to USD 3.7bn in revenue and USD 1.1bn in EBITDA to close the transaction.
The North American assets are expected to attract considerable attention from private equity (PE) firms but suitors may have limited interest in the rest of the assets, the first sector advisor said. The US assets may have around USD 250m in EBITDA, second sector advisor said.
Large private equity firms like The Blackstone Group or KKR could acquire the entire global package but are unlikely to offer high valuations for non-North America assets, the second sector advisor said.
The FTC would likely want to see the global package sold to a single buyer, the executives said. This may be challenging to pull off since antitrust enforcers would also want this buyer to be a large strategic or receive backing from a private equity firm, they said.
“Having multiple packages doesn’t preclude one guy from buying all of them,” the first executive said. “Because the business is geographic, as gases can’t be shipped long distances, it’s logical to break them up by regions with each package sufficiently large enough for a buyer to compete,” he said.
Media reports have said that Germany’s Messer Griesheim, which has operations worldwide excluding the US, and private equity firm CVC Capital Partners have held talks over a possible joint offer. The Carlyle Group and Advent International have also been floated as potential suitors.
In many past deals, merging companies have agreed to regional divestiture packages, the executives said. They cited several cases including Linde’s 2006 purchase of BOC Group; and Air Liquide’s 2004 purchase of part of Messer Griesheim.
The first executive said the FTC staff handling this deal is highly experienced with industrial gases M&A. The agency’s Mergers 1 shop is likely handling Linde/Praxair, said two independent antitrust attorneys.
Mergers 1, which issued a consent decree for Air Liquide’s [EPA:AI] 2016 purchase of Airgas, has issued several other consent decrees in recent years. This includes a June 2016 settlement with HeidelbergCement over its acquisition of Italcementi.
In some past deals, including the BOC/Linde transaction, regulators have specifically scrutinized merging firms’ helium businesses. Helium is a small but critical part of Linde and Praxair's product lines, the executives said.
There are few other companies with Linde’s or Praxair’s infrastructure including helium refineries, vast distribution networks, and overall capabilities with the product, the industry executives said. It is unlikely that the FTC would allow the merged firm to retain all of the two companies’ helium business, they said.
Linde’s helium business—which includes contracts for raw helium supplied by ExxonMobil [NYSE:XOM] as well as a helium refinery in Otis, Kansas—could be carved out for a separate sale, the executives said.
Linde and Praxair did not respond to requests for comment. The FTC declined to comment.