CHRISTIAN DIOR / LVMH (CDI FP / MC FP)
TENDER OFFER : NEXT STEP & RELATIVE VALUE SPREAD
On 28 July, B.Arnault through SEMYRHAMIS has bought 348 348 CDI shares at €247.0034.
Clearly, Semyrhamis is kind to increase its holding in CDI: bear in mind that SEMYRHAMIS is barred from launching a squeeze out on minority shareholders for the next 12 months as per offer document and French rules (section 1.3.5 of the offer document) but is allowed to buy shares in the market.
· July 28th was the first day after LVMH quiet period ended to act on CDI shares and represents surely a sign toward a possible squeeze out / delisting of CDI one way or another (there is no need to maintain CDI listed as the vehicle is not tax optimum, listing costs are inefficient)
Quick reminder of the Offer:
1 CDI FP = 172€ + 0.192 RMS FP (Principal offer)
Or
1 CDI FP = 260€ (Cash Tender subject to proration)
Or
1 CDI FP = 0.566 RMS FP (Share Offer subject to proration)
· Results of the Offer: Semyrhamis has secured 94.22% of the capital and 96.52% of voting rights. On the 46.308.068 shares targeted,
· 9.878.173 were tendered in the principal offer
· 24.561.463 were tendered to the cash offer
· And 1.924.227 were tendered into the share offer.
· What could happen next? Below we summarize French takeover rules and trading ideas either on a pure arbitrage view or relative / fundamental one.
Trading Recommendation: The €247 price paid gives a comfort zone (per French rules this would be the minimum price that Semyrhamis would have to pay in case of any delisting), adding a special dividend to be paid in 2018 following the payment of the €6.5B for Christian Dior Couture (see p4) we would recommend investors to set up CDI/LVMH at 10.5% discount as there is still value in the spread.
Unipol (UNI IM): Corporate Access
IR - Giancarlo Lana and Carlo Latini will be in London on September 12th – 9pm to 4pm;
Timing can be very interesting for clients as the company is in going through restructuring process which we have written about.
to book meetings please contact me/Yankel/Mat.
Have a great day!
Regards,
Dafna Yagur | Head of Research (Israel)
Makor Capital
Direct +972 3 5453747
Mobile +972 54 6655357
Fax +972 3 7162680
Exane is pushing to buy the telco and sell the media...not sure of that call as I don't see any improvement for telco without consolidation and that we continue to see biggest price war...the way mkt is moving in the US, with more consolidation and Content deal could drive a new logic in Europe...consolidation between Media & Telco could happen and in that way I will be long Media Short Telco have a look to the spread : {SXMP Index SXKp Index GRT D<GO>}See Exane note details below & Attached :- Two heavily underperforming sectorsBoth Telecoms and Media have been consistent underperformers over both 2016 and 2017 to date. There are fundamental headwinds for both sectors, but in this note we argue the risk/reward on Telecoms is materially better than that of Media, aided by the current market backdrop.- Telcos at an all-time relative lowIn performance terms, Telcos has never been at a lower ebb relative to the market. Earnings downgrades, a lack of consolidation and weak sentiment have played their part. But Q2 reporting season has been better, and we see a favourable top-down environment for outperformance.- This is a market for ‘Value’ and Domestic exposureAs we wrote recently in (Keeping it real) we see the risk of real yield expansion from a lack of inflationary pressures (underlying or otherwise). This is not positive for equity valuations, and should give relative protection to those sectors with higher ‘sustainable’ value. Coupled with the strengthening EUR this is a favourable stylistic backdrop for Telecoms.- Earnings, Value, FX, Structural outlook, SeasonalityRunning through the key facets of this relative debate, we see stark differences in the severity of headwinds facing the two sectors. Earnings risk, fundamentals and seasonal factors add to the topdown argument for a Telecom preference.- Upgrade Telecoms to OW, Downgrade Media to UWUnderperformance is not always a temporary state, but for these two formerly-Neutral-rated sectors we decide the risk remains biased to the downside for Media, with the converse true for Telecoms. This leaves us with both ‘Domestic Defensives’ (Utilities and Telcos) overweight along with fellow domestic sectors Banks, Construction and Travel & Leisure.
Exane is pushing to buy the telco and sell the media...
not sure of that call as I don't see any improvement for telco without consolidation and that we continue to see biggest price war...the way mkt is moving in the US, with more consolidation and Content deal could drive a new logic in Europe...consolidation between Media & Telco could happen and in that way I will be long Media Short Telco have a look to the spread : {SXMP Index SXKp Index GRT D<GO>}
See Exane note details below & Attached :
- Two heavily underperforming sectors
Both Telecoms and Media have been consistent underperformers over both 2016 and 2017 to date. There are fundamental headwinds for both sectors, but in this note we argue the risk/reward on Telecoms is materially better than that of Media, aided by the current market backdrop.
- Telcos at an all-time relative low
In performance terms, Telcos has never been at a lower ebb relative to the market. Earnings downgrades, a lack of consolidation and weak sentiment have played their part. But Q2 reporting season has been better, and we see a favourable top-down environment for outperformance.
- This is a market for ‘Value’ and Domestic exposure
As we wrote recently in (Keeping it real) we see the risk of real yield expansion from a lack of inflationary pressures (underlying or otherwise). This is not positive for equity valuations, and should give relative protection to those sectors with higher ‘sustainable’ value. Coupled with the strengthening EUR this is a favourable stylistic backdrop for Telecoms.
- Earnings, Value, FX, Structural outlook, Seasonality
Running through the key facets of this relative debate, we see stark differences in the severity of headwinds facing the two sectors. Earnings risk, fundamentals and seasonal factors add to the topdown argument for a Telecom preference.
- Upgrade Telecoms to OW, Downgrade Media to UW
Underperformance is not always a temporary state, but for these two formerly-Neutral-rated sectors we decide the risk remains biased to the downside for Media, with the converse true for Telecoms. This leaves us with both ‘Domestic Defensives’ (Utilities and Telcos) overweight along with fellow domestic sectors Banks, Construction and Travel & Leisure.
CS
Allianz M/P LV confirms in talks, £500m investment for Allianz
Aviva +1% H1 Op Profit 1465m, 1.4% ahead of cons, Life/P&C beating
Arkema -1% CS DOWNGRADE to NEUTRAL (Valuation)
AXA +1-2% H1 Underlying earnings 5% ahead, all areas look ahead
Beiersdorf +1% Op profit 561m vs cons 564m, was hit by Cyber attack
Bic -2-3% Cuts FY sales growth target to 3-4% from mid single digit
BMW +2-3% Q2 EBIT 5% beat, revs inline, guidance up slightly
Bucher +1-2% Orders 5% ahead, EBIT slightly ahead
Cobham +2-3% H1 sales £1bn vs cons £925m, pretax £69.5m vs cons 62.3m
ConvaTec -2-3% Numbers slightly light and management change
Credit Ag +2% Adj Net a 25% beat vs cons, lower costs and CoR
Deut Tel +1-2% Q2 Rev EU 18.9bln est EU 18.7bln. Raises FY EBITDA target
Duerr -3-4% Q2 sales €859.9m vs cons €874.4m, FY rev guidance inline
Eni -1-2% CS DOWNGRADE to NEUTRAL (Valuation)
Esure Group +1-2% H1 Adjusted Pretax inline, dividend better
Evonik M/P Q2 adj EBITDA inline, Op cash flow slightly light
Fraport -1-2% EBITDA a small beat €282.7m vs cons €279.8m
GAM Holding +1-2% AuM CHf131.3b (cons 130.6b), net inflows ahead
Inmarsat -1-2% 2Q REV. $356.0M est $346.0M, weaker maritime
LSE -1% adj op profit £408m cons 398, had a good run
Merck KGaA UNCH Q2 Sales EU 3.89b est EU 3.91b, Cuts FY net sales forecast
Mondi -1% EBIT 497m Cons 500m, guidance inline
Miners +0.5% Copper -0.25%, Brent -0.10%, Iron Ore +1.30%, China +0.50%
Next +3-5% Total sales 0.7% vs our -1.7% & cons -2.8%, retail poor
Neste -3% 5% EBIT miss and 9% miss at net income vs cons
ProSieben R 2Q adj EBITDA EU270M est EU266.8M
Post Italy M/P H1 broadly inline with market expectations
Randgold +3% Production 5% ahead of CS, top line also 5% ahead
Repsol -1-2% CS DOWNGRADE to UNDERPERFORM (Valuation)
Rhienmetall +4-5% H1 sales inline, op profit 7% beat, raises guidance
Serco +1-2% Tax rate better and pipeline looking good
Siemens -1-2% Q3 sales 4% miss, business profit 5% miss, margin light
Tenaris UNCH Q2 EBITDA 213m, Cons 213m, Guidance mixed across regions
TGS +1-2% Revs slightly light but EBIT 7% above consensus
Unicredit +3-5% Pre provision profit 9% beat, guidance strong
Yoox +1-2% Solid 1H results, FX only cloud, short interest >20%
MainFirst Pre Mkt Indications
*CREDIT AG-Q2 Net 1.35b(1.02),107m gain from Eurazeo sale,CET1 +ve...+1%
*CREDIT AG-Q2 Net 1.35b(1.02),107m gain from Eurazeo sale,CET1 +ve...+1%
*FRAPORT-H1 Rev 1.36b(1.33),Ebitda 420m(414),FFT passengers up.......-0.5%
*MERCK-Q2 Net 3.89b(3.91),Ebitda 1.09b(1.1),EPS 1.54(1.56)...........-0.5%
*EVONIK-Q2 Ebit 429m(422.6),Ebitda 635m(626),NI 289m(262.3)..........+0.5%
*SIEMENS-Q3 Sales 21.4b(21.8),IPO H/Care H1-18,Kaeser ext to '21.....-1%
*DTE-Q2 Ebitda 5.94b(5.81),Rev 18.9b(18.7),FY Adj Ebitda 22.3b.......+1%
*UNICREDIT-Q2 NI 945m(587.4),NII 2.65b(2.58),Rev 4.86b(4.68).........+2%
*TGS-Q2 Rev 108m(118.2),Ebit 18m(15.2),Div 15c,Guidance unch.........-2%
*AXA-H1 Net 3.27b(3.15),SR 201%,P&C Rev 21b,L&S Rev 31.1b............+1%
*YOOX-H1 Rev 1b(1.02),Ebitda 98m(90),Net 38m(41),Short Int 36.8%.....+3%
*POST ITALIANE-H1 Rev €18.02b(17.71),NI €510m(507.5),SI 7.4%.........+2%
*BIC-Adj Ebit 138m(132),OG 3.9%,Cuts FY Sales Growth,citing Brazil...-2%
*STADA-Q2 576.9m,Ebitda 129.2m,Net 60.8m,Confirms FY f/casts.........-0.5%
*RHEINMETALL-Auto Sales 726.5m(728),Def 729.7m(731),Ebit 84m(76).....+3%
*DUERR-Q2 Sales 859.9m(874.4),Ebit 56.5m(65),FY outlook light........-5%
*ALLIANZ-Said to buy stake in LV(49%),would value LV at £1bln........-0.5%
*BMW-Q2 Sales 25.8b(26.05),Ebit 2.93b(2.87),Auto Margin 9.7%(9.4)....+1%
*TENARIS-Q2 NI 73m(43.7),Sales 1.24b(1.21),EPS 6C(4),Op Inc 51m(42)..+1%
*BUCHER-H1 Sales 1.3b(1.29),Ebit 115m(111),Ebit 1-off 5m,FY ok.......+1%
*ADIDAS-Q2 finals out,prelim figs released 27/7,FY o/lk raised.......U/C
*GAM-H1 NNM 6.4b(4.6),NP 58.7m(54.7),AUM 131.9b,FICC Fees +ve........+2%
*MORPHOSYS-Q2 Rev 11.7m(11.9),OP -15.4m(-19),NI -16.1m(-18)..........+1%
*NORDEX-Ord intake 572m(541),Sales 853m(836),Ebitda 117.5m(66).......+5%
*BEIERSDORF-H1 Sales 3.51b(3.57),Ebit 561m(562.5),NI 388m(393).......-1%
*PRO7-Q2 Ebitda 270m(266.8),Sales 962m(956.8),Confirms f/c for FY....+1.5%
*DIC ASSET-Raises FY f/c,H1 FFO 29.8m,sees FFO €59m-€61m............+1.5%
*R/KLIN-H1 Rev 598.4m,Ebitda 50.2m,still see FY Rev 1.2b-1.23b.......-0.5%
RBC PRE-MKT INDICATIONS
ACCOR/IHG +1% Positive read from WYNDHAM announcment & US RevPar data.
ACCOR/IHG +1% Positive read from WYNDHAM announcment & US RevPar data.
ADIDAS 0% Have pre-announced but full Q2 earnings inline with that thus far
AMERISUR -2% Prod. suspended in Colombia due to Peace Process implementation
ANTOFAGASTA 0% CEO positive on Copper price, Q2 production last week
AXA +1% H1 net ahead, preparing for IPO of US business
BEIERSDORF -1% H1 sales inline, EBITA and net both a touch light.
BMW +1% Q2 earnings a tad better, sales inline and legal settled.
COBHAM +2% H1 revenue beat and confirming FY guidance
CREDIT AG. +1% Q2 net ahead due to low tax rate, lower loan loss charges.
DT. TEL +2% Q2 beat and raisig guidance due to strong US biz & Germany.
ESURE +2% H1'17 results beat, dividend ahead of expectations, FY unch.
EVONIK +2% Q2 EBIT a toudh ahead of expecatations, net income ahead.
FRAPORT +2% Q2 EBITDA ahead, net profit better, Passengers +5% v +4% previous
GAM +1% H1 operating income inline, margins ahead, AUM 131.3 v 130.6 exp
LSE +1% H1 earnings ahead, LCH minorities limit EPS upgrades
MERCK -1% Q2 sales light and cutting FY sales guidance.
NEXT +2% Q2 retail sales -7.4% v -6.7% expected, Directory better though
RANDGOLD +2% Q2 sales ahead and positive on outlook
RICHEMONT +1% Positive read from YOOX earnings.
RHEINMETAL +3% H1 operating earnings ahead, FY organic sales growth beats.
SERCO 0% H1 results EBITDA inline and FY guidance maintained.
SIEMENS -2% Q3 miss, orders light, Industrial Profit 3% miss -Healthcare IPO.
TGS -2% Q2 revenues miss and EBIT 2% miss versus consensus.
UNICREDIT +5% Q2 net operating profit 19% beat to consensus and capital beat
YOOX +2% Strong H1 revenues, org. Growth beat and margins ahead
Jeffries
BMW: Q2 EBIT €2.93bn-BETTER, sales €25.8bn-IN LINE, settles SKF legal dispute, reits FY17 mrgn tgts
UNICREDIT: #s GOOD - net well ahead, CET1 better vs f/c, NPL's down ... called +2% to +3%
CREDIT AGRICOLE: #s decent beat, IB ahead + retail better ... called +2%
NATIXIS should be better after our upgrade too ... call them +1%
DIC ASSET: BEATS & RAISE - significant rise in FFO at mid-yr and UPS FY f/c
AXA: 1H net BETTER at €3.27bn, revs €54.283bn, readies IPO of US biz ... called +1%
YOOX NET A PORTER: SOLID #s - sales in line, BIG mrgn beat, another robusy performance ... should be +2% to +3%
SIEMENS: Q3 net BEAT, sales/orders MISS, but reits o/lk, Healthcare IPO 1H18
PROSIEBEN: 2Q sales and Adj EBITDA slight beat, confirming FY guidance
Investec Euro Pre Mkt Indications
*ADIDAS-Q2 numbers confirmed, pre announced and raised guidance last wk.....+1% *ALLIANZ-set to buy stake in LV= insurance, cld value co. at £1bn(Sky)......+1%
*AXA-H1 net 4% beat vs cons, on track for cost savings target...............+1%
*BIC-H1 reported, cut FY sales gth est to 3%-4% from mid-single digit.......-3%
*BMW-Q2 ebit 1.5% beat, seems to be no meaningful guidance change...........+1%
*BEIERSDORF-H1 sales look small miss,ebit in line,comment to follow.........-1% *CONTI-results due *CREDIT AG-Q2 big beat but lots of one offs, looks priced in................-1% *DIC ASSET-reports H1 and raise FY FFO forecast.............................+1%
*DTEL-Q2 small beat,€400m BT impairment,sml raise f/casts(in line w/cons)...+2%
*EVONIK-Q2 beat across board, confirms FY f/casts...........................+2%
*FERROVIAL-said to rule out bid for ABERTIS(U/C) -Cinco Dias................+1%
*FRAPORT-H1 rev & ebitda beat,raises FY passenger f/casts (5% vs 2-4% prev).+2%
*GAM-H1 net inflows Chf1.9bn................................................+2%
*IDORSIA-H1 released, only listed in June so s/b no surprises...............U/C
*MERCK-Q2 sales/eps small miss, cuts FY net sales est by c1.5% on FX........-2%
*NORDEX-H1 beat, strong momentum in Q2, reits guidance .....................+4% *POSTE ITALIA-H1 sales and net inc look top end (limited range of ests).....+2%
*PRO7-Q2 sales/ebitda small beat confirms o/look(digital offset weaker TV)..+1% *RHEINMETALL-reports H1, raise FY organic sales est to 6% from 4-5%.........+3%
*SIEMENS-Q3 sales/profit sml miss, healthcare IPO in 2018 (had been rmrd)...-2%
*STADA-H1 released, confirms FY, nothing really to note.....................U/C
*UNICRDIT-Q2 net huge beat,NII more modest,transformational plans on track..+3%
*YOOX-H1 ebitda 8% beat, Q2 organic sales +20% vs +19% in Q1................+1%
* Due later/after close: BPER BANCA, CMAPARI, IAG(Traffic)
Steven Cohen’s Point72 faces regulatory rebuff in UK
FCA indicates family office would not receive regulatory approval
The family office of Steven Cohen, the billionaire banned from running a hedge fund in the US, has run into a regulatory roadblock in the UK.
Point72, which manages about $11bn of Mr Cohen’s personal fortune, has been told in recent months that it would not receive regulatory approval in the UK by the Financial Conduct Authority, said people with knowledge of the situation.
One of the people added that it was not clear what Point72 was seeking approval for, but regulatory lawyers said the main reason family offices seek FCA authorisation is to accept and manage other investors’ money.
Family offices are allowed to trade in the UK without the FCA’s blessing, but must be approved to oversee anyone else’s money. According to regulatory lawyers, family offices may also need FCA approval in order to implement certain changes to the way a fund is structured.
Mr Cohen has given indications he may be planning to raise money for a hedge fund launch next year. He appeared at the annual hedge fund conference Salt in Las Vegas this year, even though he was not scheduled to speak, and told the New York Times in an interview last year he was “leaning” towards opening to outside investors.
The 61-year-old Mr Cohen has been focused on overseeing Point72 since his fund, SAC Capital, was banned by the Securities and Exchange Commission from managing clients’ money after admitting to trading on inside information.
A spokesman for Point72 said Mr Cohen has not yet decided whether he will reopen to manage outside money next year, and declined to comment on the FCA’s position.
The notification by the FCA does not represent a formal refusal for regulatory approval. Instead, the regulator seeks to give those applying an indication as to whether or not they will be approved, which means that official rejections are rare. The FCA declined to comment.
Once the SEC lifts its ban on Mr Cohen next year, Point72 would have to again seek authorisation from the FCA before opening to outside money in the UK if Mr Cohen decides to reopen to investors.
Point72 opened the London office for its family business early last year and hired Will Tovey, formerly the head of Barclays’ equities distribution business in Europe, to run it. Point72 president Douglas Haynes said the office was launching with seven analysts and portfolio managers, but could grow to as large as 70 to 80 people.
Earlier this year, Point72 hired Drew Gillanders, a merger arbitrageur at Och-Ziff Capital Management, to work in London.
SAC pleaded guilty to insider trading in 2013 and paid a record $1.8bn in fines. Mr Cohen was never personally charged with insider trading but several of his portfolio managers were convicted of the crime and sentenced to prison terms.
Mr Cohen has tried to rehabilitate his image through Point72 by using social media, hosting Smart Woman Securities and setting up a trading academy to train college graduates on becoming analysts for the 1,100-employee family office in Stamford, Connecticut.
In April last year, Mr Cohen began laying the groundwork for a return to the hedge fund industry by opening a new vehicle called Stamford Harbor Capital, which shares the same management team as Point72 and is located next-door.
A spokesman for Stamford Harbor said at the time that while Mr Cohen owned the entity, he will not supervise the fund because of the ban.
Big asset managers struggle to meet Mifid II deadline
Large investment houses yet to decide how they will pay for investment research
At least 12 of the world’s biggest fund houses, including BlackRock and JPMorgan Asset Management, are yet to make a decision on how they will pay for investment research despite a looming deadline to comply with new European rules.
Under the sprawling Mifid II directive that comes into force in January, asset managers must split out the cost of investment research and trading for the first time.
They will also have to tell investors how much of their money is being spent on analyst research. This has prompted some asset managers, such as Jupiter and Woodford Investment Management, to decide it will be simpler to cover the payments themselves.
But in a sign of how complicated asset managers are finding the new rules, many large investment houses are still deliberating on research payments.
Franklin Templeton, Allianz Global Investors, Fidelity International, Natixis Global Asset Management, Old Mutual Global Investors, Axa Investment Managers, Ashmore, Royal London, Candriam and Aviva Investors all told FTfm they are still considering whether to pay for the cost of research internally or to pass it on to investors.
Chris Turnbull, co-founder of Electronic Research Interchange, a research provider, said it is likely that some fund houses will not be ready for the January deadline.
“Time is pressing on. It is quite clear there is still a lot of work to be done. There are a lot of people who haven’t grasped all the elements they have to,” he said.
For many large investment houses with global operations, the decision on how to pay for research has been hampered by divergent rules in the US and Europe. In the US, brokers are prevented from receiving direct payment for research unless they are registered as investment advisers.
A spokesperson for Allianz Global Investors, which oversees €500bn in assets, said: “Being a truly global rather than a local or regional company makes answering the question of research and Mifid II a little more complicated and less simple to answer than we would like.
“The treatment of research fees under Mifid II is at odds with that in the US. Such regulatory divergence is less than ideal for genuinely global investment managers.”
Like many asset managers, Allianz is in the process of trying to put a price on research. Banks and investment houses are locked in tense negotiations over the value of research, with some of the world’s largest banks asking for more than $1m for annual access to research platforms.
Joshua Maxey, managing director of Third Bridge, a research company, said asset managers are making “sharp cuts to their research budgets and doing an inventory of what they really need versus nice-to-have products”.
“They simply haven’t taken a view on [whether to pay for research themselves or charge investors] yet, largely because they have not been able to discuss this topic with all of their investors,” he added.
According to a poll of 562 asset managers by RSRCHXchange, a research provider, in June, 36 per cent of fund houses had not decided how to pay for research, down from 50 per cent at the end of 2016.
Vicky Sanders, co-chief executive of RSRCHXchange, said choosing a payment method was not easy, because fund houses have to factor in issues such as strategy, the type of client and research requirements.
“It is like peeling an onion with more and more layers to work through the further companies investigate payment methods,” she said.
Axa expected to make its decision shortly, adding that it was waiting to see if national regulators implemented the rules differently.
Fidelity said: “We are currently discussing this internally. No decision has been made and we will be in a position to disclose our plans later this year.”
Ashmore said the “matter is being considered like all ongoing regulatory developments”.
We see further tactical downside, but re-iterate our Stoxx 600 year-end target of 375
European equities have fallen by almost 5% from their mid-May peak (from 396 to 378). We think this pull-back has further to go, as Euro area PMIs fade from elevated levels and a strong euro weighs on European earnings. Our tactical Stoxx 600 model points to a local trough of around 360 by late October (around 5% below current levels). This is based on the assumption that: a) Euro area PMIs fall from the current 55.5 to 53.3 by year-end (consistent with 0.5% qoq GDP growth in Q4, or 2% annualised, in line with the recent upward revision from our economists); b) the euro trade-weighted index rises by a further 1% (in line with our FX strategists' forecasts); and c) real bond yields increase by a further 40bps (based on our fixed income strategists' rates projections). The expected drag from these factors is only partly offset by a projected further fall in Europe's political uncertainty index (from the current level of 220 to the 10-year average of 175) and a further rise in the oil price to $55/bbl (in line with our commodity analysts' projections).