>>> US Early premarket gappers

Early premarket gappers
Gapping up:
  • CLVS +40.9%, SPLK +5.9%, WKHS +4.9%, ADMP +3.8%, JD +3.1%,AAOI +3%, CAMT +2.2%, CRAY +1.9%, MU +1.5%, AMD +1.2%, NVDA+1%, ERIC +1%, NFLX +1%, CTRP +0.9%, AMZN +0.9%, AAPL +0.9%,MSFT +0.7%, TSLA +0.7%, FB +0.5%
Gapping down:
  • TSRO -13.4%, BBRY -4.6%, MZOR -1.6%, PI -1.5%, MDRX -1.1%, GOLD -1%

NY POSt : Whole Foods has been forgetting the customer

Whole Foods chief John Mackey has finally lost control of his company, which he calls his “baby.” Friday, he sold it to Amazon for 25 percent less than its 2015 value. Irony is, Mackey could’ve avoided this outcome if he’d stuck to the principles of “conscious capitalism” he espouses.
For two years, investors have pressured Whole Foods. Last week, Mackey slammed a hedge fund for pushing him to sell, telling Texas Monthly that “greedy bastards” were “putting a bunch of propaganda out there.” He has a point: many investors want a short-term buck.
But he brought this on himself. His firm committed a common sin: over-expansion during the good times. In 2010, Whole Foods had 299 stores. By last year, it had 456. Demand, as measured by store traffic, has been falling since 2015.
Whole Foods faces tougher competition, too: online purveyors as well as Walmart and Kroger offering organic food.
But Whole Foods’ biggest flaw — one that even agitated investors have missed — is that it stopped respecting its customers. The company can’t deal with busy stores or empty stores.
Take an example of the latter. The store on South Carolina’s Hilton Head Island is vast, shiny and relatively new. It’s also devoid of customers.
The store has dealt with this by taking away what its customers want: perishable food. One day in late May, its fish counter featured one sad cod slab and 12 shrimp. The shrimp were farmed, and from Vietnam.
The clerk duly tried to sell these shrimp — arguing that Whole Foods’ verification system ensured that the Asian shrimp are less polluted that Atlantic shrimp. But other issues aside, this argument doesn’t make sense in the Whole Foods world. The store was saying: Most of our stores have American shrimp, but it’s a good thing we don’t, because it’s polluted.
It also doesn’t make environmental sense to ship frozen shrimp across the planet when the Atlantic Ocean is a 15-minute walk away. So I went to Kroger across the street — which had five types of domestic wild shrimp, and where the clerk, unprompted, told me which one had come in off that day’s boats.
Another problem was apparent on other visits: unpredictability. Sometimes the store had American shrimp, sometimes they didn’t.
OK, so what about a successful Whole Foods — like Manhattan’s Columbus Circle? When the store opened in 2004, it became famous for its crowds and its lines. That was, it seemed, a good thing: People love the brand so much they’ll fight Penn Station-like hordes to stand in line for 15 minutes.
The crowds and lines still exist, sometimes. But the customers look more like they’re lamenting being stuck at a 1990s Kmart because of their own poor daily planning instead of happy to participate in an organic community.
Whole Foods’ aisles are too cluttered with marketing booths and stocking carts, making shopping there stressful. And the way the store manages its lines invites conflict.
People constantly get the numbered system wrong, and go to the wrong register, leaving everyone confused and annoyed.
Inconsistency abounds here, too: sometimes Whole Foods has a clerk to manage the lines, sometimes it doesn’t. Sometimes the store has every register manned and is looking vaguely concerned about its customers’ wait time, sometimes it doesn’t.
The same thing happens at busier stores’ meat and fish counters. The stores can’t manage customer flow, forcing customers into conflict with one another.
As for same-store sales: it can’t help the bottom line that when clerks can’t figure something out, they give up and give the item to the customer. This happens a lot — and with expensive stuff (thanks!).
To be fair, Whole Foods sometimes gets it right, as in Boston, Chicago and London. And — usually — the produce, meat and fish are still better than competitors’.
Mackey, who’ll continue to run the Amazon-owned firm, is one of those CEOs who isn’t satisfied with running a business. He’s out on book tours talking up “conscious leadership” and “value for all stakeholders” and such. But “conscious leadership” might involve incessantly walking your stores.

FT : Britain’s €100bn Brexit bill in context

Britain’s €100bn Brexit bill in context
How EU demands compare with public debt, current contributions and economic impact

The negotiations over Britain’s Brexit bill are about to begin, even as debate flares up about what kind of exit from the EU Britain will seek after a general election in which Theresa May’s Conservative party failed to win a majority.

As it forges ahead with the divorce process, the European Commission has sent London its formal position papers for the negotiations. These outline its view that Britain will need to make a gross financial settlement of up to €100bn to “respect in full the financial obligations resulting from the whole period of the UK membership in the union”.

Brussels has not made public its estimation of the final sum but wants substantial progress on the bill before negotiations can move on to discussing future trading relationships between the EU and UK. It is also willing to discuss the timing of payments in a second stage of the negotiations.

For Britain, an important question is whether it has a legal obligation to make a settlement. Philip Hammond, chancellor, has often said that he thinks any bill would be small, but promised that Britain is “a nation that honours its obligations”. The more combative Boris Johnson, foreign secretary, thinks Brussels’ negotiating position is “absurd”.

More to the point, as Theresa May’s government seeks to regroup its Brexit policy, is a simpler question — just how big is the Brussels bill?

Is Brussels really asking for €100bn?

By one count, yes. The principles the negotiating teams have outlined provide a good basis to estimate the amounts in question. FT calculations show that the gross amount requested is likely to be about €100bn, but there are assets the UK will be able to claim to offset that amount.

Depending on the exact calculation the net bill to be presented to the UK is likely to be in the region of €55bn to €75bn, reflecting Britain’s share of the EU’s property and cash assets, some elements of Britain’s budget rebate negotiated by Mrs Thatcher in 1984 and the UK’s share of spending in the current budget period running to 2020.

Previously undisclosed commission estimates suggest that €64bn in gross terms (€40bn net) might at the end of the day be enough for Brussels, since they would prevent adjustments to the EU’s current budget (which runs until 2020) and cover Britain’s less contentious longer-term commitments.

Call it €60bn. Is that a big or small number?

A number six with 10 noughts on the end is huge for any individual and enormous if you think the financial settlement should be zero. But in sterling terms it is £53bn, which is only 2.5 per cent of Britain’s annual economic output.

If the UK borrowed the money today, public sector debt would rise from 86.6 per cent of national income in 2016-17 to 89.2 per cent. Compared with the damage wrought by the financial crisis, which raised Britain’s debt to its current daunting levels from 35.5 per cent in 2007-08, it is a drop in the ocean.

And Britain would make some savings through Brexit, right?

Britain’s annual net contributions to the EU budget vary year-by-year but over the past five years, once account is taken of Britain’s rebate and EU spending programmes in the UK, the country contributed an average of £7.75bn. That works out at £150m a week, far below Vote Leave’s misleading campaign figure of £350m a week.

If Britain were to stop making any net contributions to the EU, it could pay off the net bill in seven years. After that, in 2026, the pure budgetary maths says there would be net savings to the exchequer.

But that is not the whole story is it?

No. The big question for the public finances is not the size of a one-off bill, but whether Brexit harms or improves Britain’s economy and tax receipts in the longer term. Each 1 per cent hit to the economy from Brexit would cost roughly £14bn every year in perpetuity, so any hit to the UK economy more than roughly 0.5 per cent will wipe out any budgetary savings from Britain’s current EU net contribution.

On cautious assumptions the Institute for Fiscal Studies calculated the Brexit hit to the public finances was likely to be between £20bn and £40bn every year. A big hit to the economy would produce even larger estimates of the financial damage of Brexit.

In these circumstances, a £53bn bill to leave the EU would be the least of Britain’s worries.

WSJ : Investors Ignoring Easy Money in Huntsman-Clariant Deal

Investors Ignoring Easy Money in Huntsman-Clariant Deal
U.S. chemicals company stock trades at puzzling discount to merger value

Sometimes people really do leave free money lying around. In the merger of chemicals companies, Huntsman and Clariant ,CLZNY 1.48% investors have left a lot on the table.
Huntsman of the U.S. and Clariant of Switzerland announced their $14 billion all-stock merger on May 22. The initial reaction to the deal, which offered no pricing premium to either side, was good. But both stocks have since slipped. Investors began to question the gains available from combining two groups with little overlap.
But the strangest thing is the difference between Huntsman’s stock price and its value under the terms of the deal, which turns each Huntsman share into the equivalent of 1.2196 Clariant shares.

Huntsman has fallen further than Clariant. That has left each Huntsman share worth 5.9% less than its value in Clariant stock as of Friday morning in Europe.
That discount has been fairly consistent in the weeks since the deal. The gap has been as wide as 8% at the end of last week and has averaged 6%. If the deal closed tomorrow, owners of Huntsman stock would make a handsome immediate gain, currently about $360 million.
There is little antitrust or regulatory risk because there is such little product overlap. There is very little noise around potential third-party bidders coming in to disturb the deal by bidding for one of these two.
Typically, a valuation gap like this ought to be traded away by arbitrage investors buying the cheap stock and selling the more expensive one. So what gives?
Of the two, Clariant might be marginally more likely to attract an outside bidder because rivals have looked before, including Evonik of Germany. This is encouraging a few investors to buy Clariant and sell Huntsman, pushing the two prices apart, according to one broker.

But there are problems with this trade: Clariant has a group of family shareholders from a company it bought in 2011 who, like the management, don’t want to sell the business. The trade also assumes Huntsman shares would fall if the merger was off.
In fact, Huntsman shares might rally if the deal collapsed. The reason is that the U.S. company is spinning off and listing its volatile pigments and additives business, Venator, which is expected to bring in about $2 billion. The proceeds are now due to be shared between Huntsman and Clariant shareholders. If the deal didn’t work out, Huntsman investors would get the lot.

So, there seems a decent chance that Huntsman stock should rise relative to Clariant stock or absolutely whether the deal goes ahead or not. It is a real puzzle why there aren’t more investors looking to exploit that valuation gap.
With the deal due to close by the end of 2017, more investors should be tempted to pick up this free money in the months ahead.

(Exane) Danone An Acquisition

WHY YOU SHOULD READ THIS REPORT

Investor interest in what the recent shift in the French political landscape may mean for Danone appears to be
increasing. Keeping this in mind, with this report we explain why we believe that longstanding investor wisdom
that Danone is immune from a take-out is no longer valid and critique potential suitors.

Danone: no longer immune from a take-out
Investor interest in what the recent shift in the French political landscape may mean for
Danone appears to be increasing. Keeping this in mind, in this report we outline our
assessment of the situation and critique potential suitors.

Dairy players are too small and Nestle would face too much anti-trust
Analysing the Dairy industry, we draw a blank through size. Nestle aside, Danone simply
dwarfs all of the other Dairy industry incumbents. As to Nestle, we very much doubt whether it
would have interest and in any case, it would face material anti-trust issues.

Danone makes sense for Kraft Heinz and it could afford a large premium
Danone would make sense for Kraft Heinz for it would enable it to acquire a relatively cheap
under-earning asset, with poor short-term but good long-term growth credentials. Ring any
Unilever bells? While a Kraft Heinz approach would likely be as welcome to Danone as it was
to Unilever and we struggle to envisage a hostile offer, the relatively extreme valuation of
Danone presents an opportunity for Kraft Heinz to offer a large premium. Doing so would avoid
one of the key failures of Kraft Heinz’s Unilever approach (offering a modest initial premium).

Acquisition of Danone would help both PepsiCo and Coke to keep 3G Capital at bay
Leaving Kraft Heinz aside, to our mind the only other credible suitors are PepsiCo and Coke.
While both typically focus on bolt-on acquisitions, Danone would make sense for both. Most
notably, acquisition of Danone would facilitate B/S re-leverage and thus help to keep 3G
interest at bay.

Danone embeds no acquisition premium, we believe this is wrong
While we believe that the probability of a Danone take-out is not high (we put it at 20%), its
current share price embeds nothing for such an eventuality.

We revise our estimates to reflect updated FX translation
With this report we revise our FY17e/FY18e/FY19e EPS by -3% due to updated FX translation.

>>> Tikehau Capital Plans to Raise EU500M in Share Sale

Tikehau Capital Plans to Raise EU500M in Share Sale

Tikehau expects to sell new shares at EU22 each, investment firm says in statement.
  • Co. has received “strong interest” from some current shareholders and other institutional investors
  • Tikehau’s controlling shareholders plan to buy EU165m of shares in capital increase
  • Capital increase will provide Tikehau with resources to finance development, accelerate growth, co. says
  • Tikehau plans to expand its asset-management business, and pursue organic growth of existing and new investment strategies to reach EU20b under management by 2020
  • Co. will use market visibility to “accelerate opportunities in M&A in both existing and new strategies and geographies
  • Tikehau could make acquisitions of up to EU200m-EU300m, says Tikehau co-founder Antoine Flamarion on conference call
  • Capital increase depends on mkt conditions, approval of prospectus by AMF
  • Tikehau has received expressions of interest from holders of 2022 ORNANEs wishing to tender about 79% of the bonds originally issued; once repurchase completed, Tikehau will begin five-day offer for other bonds at same price
  • NOTE: Tikehau market value at Fri close was EU1.68b, and co. manages EU10.3b of assets.

LÉxpansion : WILL MACRON SELL THE CROWN JEWELS? (Google trasnlate)

WILL MACRON SELL THE CROWN JEWELS?

Google Translate : http://bit.ly/2sr9fgJ
Original in Spanish : http://bit.ly/2tE0sYa

The second round of the legislative session is held in France tomorrow, withEmmanuel Macron leading the polls with ease after winning Le Pen in the presidential elections and beating in the first round on 11 June. Since the result seems obvious, I will not bother you with redundant arguments. However, I want to talk about the mechanics of the state's shares of the Gallic state and the repercussions that the arrival of the young President of the Republic can undertake.
The new government in France, with a more liberal character, I think could lead again to the reopening of the controversy about whether or not the Executive has an investment portfolio as it currently has.
Said holding company is valued at about 80,000 M¤. In this list of companies we find 12 names where the French Government is present through its sovereign fund ( FSI ), the French banking system or through various financial arms ( CDC and BPI ).


Our estimations suggest that between 50 and 60 bn¤ could be sold, even counting with EDF and ENGIE , although for the latter it would be necessary to modify the current legislative system. A breakthrough in this sense, would be seen by the market as a positive signal, even though it does not serve him too much to reduce the debt of 2.2 Tn¤. Given that this new government comes with new ideas, I am of the opinion that soon we will begin to see these positive signs with a special wink both to the market and investors.
In fact, one of the governmental companies in charge of the management of state shares, Bpi France , announced a few weeks ago the sale of 5.67% of the construction and concessionaire EIFFAGE . The history was one of those that are not forgotten. In its day Eiffage had to defend itself of a hostile attempt of purchase on the part of the Spanish SACYR . One of the most remembered cases in the market in which the workers came to the rescue of his company. The presence of the French Government, both in its shareholding and on the other side of the table when granting concessions, made its role very contradictory, as we have so often criticized since AlphaValue.
If you think so, let's go on a case by case basis:
EDF: For the French utility , if it were not for the support of the Executive, it would have been almost impossible to find the necessary financing to continue its activity, since both the long-term obligations in its pension plans and the costs of Dismantling of their nuclear plants, would have been insurmountable slabs to deal with their current structure of cash flows. The 84% of government participation guarantees its future and hides the financial disaster with which it coexists. The progressive sale of the part that can be sold (since there is a large part that can not legally), is the only viable way out with which to try to stop the gigantic losses that it drags.
* CNP: The French life insurer plays with the particularity that it does not need to have a distribution network, since its products are sold through its savings bank ( Caisses d'Epargne ) and its Treasury offices. The French also has presence in Brazil, Italy and Spain. In this sense, we do not see the need for the government to keep the insurer under its umbrella, hence we see it as one of the clearest options for divestment.
* ORANGE: Nor does it make sense here that the State controls 27% of the capital. The business is competitive enough that it can be managed without state protectionism. To this must be added the opposition that has always shown Brussels to any type of state intervention in this area. Therefore the participation in Orange could also be sold without problems and with luck this way to facilitate the consolidation of the sector in France. It should be remembered that last year the operation between Orange and BOUYGUES subsidiary Bouygues Telecom was cut short. It has even been speculated that both Orange and ILIAD would have held talks to share their assets.
* ENGIE: The old Gaz de France seems to have recovered something of value since it has begun its turn towards the business of renewable energies and environmental services. But in this case, the gas is tied hand and foot due to the law that obliges the state to have a third of the capital, in addition to the gold action. The most beneficial would be a legislative change, although we see something utopian due to the few political benefits that would entail. Although gold action is banned in the EU, it seems that France has its own "golden share" in Brussels. But apart from protecting the local industry, what it does is being inefficient and uncompetitive.
* AIRBUS: Another clear example of easy and justified divestment. The management of the aerospace manufacturer and defense equipment has demonstrated over the last few years how competent it has been. It would even be much more without the presence of governments, both German and French.
* PARIS AÉROPORT: The airport operator has a regulated business whose framework is imposed by the Government itself. We do not see the need for the Executive to remain here, there would even be a clear candidate like VINCI who would fit that participation perfectly, given that he currently holds 10% of Paris Aéroport voting rights and has increased in recent years Portfolios of airport concessions.
* THALES: Strong exposure to the defense sector makes participation a sensitive issue. But it has been seen that, while preserving the golden share , it is sufficient to maintain the interests of the Government in defense matters. For this reason we believe that here too the new executive should sell the 27% he owns in the capital.
* PEUGEOT: It is true that the Government gave in its day the necessary financial support to solve the different financial problems. But today we believe that the time has come to propose the exit of 12.9% of the capital.
* EUTELSAT: Another story where we do not understand well the presence of the State in the shareholder. It could have made sense years ago, when the project emerged as an intergovernmental operation. But today, when the sector has developed remarkably and has become a much more competitive, we do not believe that any kind of protection is necessary. The current state presence reaches 25.6%.
* AIR FRANCE-KLM: The airline is the perfect example to see how things can go worse and worse when a government acts not only as a shareholder, but also as the person in charge of appointing management positions. To this must be added the open confrontation with the unions. It becomes necessary and urgent that the Executive disposes of the 17.6% that it has in the airline.

Recode.net : Amazon’s Whole Foods buy removed nearly $22 billion in market value

Amazon’s Whole Foods buy removed nearly $22 billion in market value from rival supermarkets

Amazon’s Friday morning announcement that it was acquiring Whole Foods sent the high-end grocery’s stock soaring. This was bad news for Whole Foods’ grocery competitors, who now face a fierce battle with Amazon.
Target, Kroger, Costco, Walmart, Dollar General, SuperValu and Sprouts lost a combined market value of $21.7 billion in one day — 6 percent of their total worth, according to data from FactSet.
Whole Foods, on the other hand, gained more than $3 billion in market cap, up 29 percent, from Thursday to Friday and nearing its $13.7 billion purchase price.