>>> Toshiba: Western Digital (WDC) willing to help bailout Toshiba, according to

Toshiba: Western Digital (WDC) willing to help bailout Toshiba, according to the Nikkei Asian Review


Western Digital ready to offer funds to help Toshiba
CEO declares his desire to continue partnership in letter to Nikkei, others

TOKYO -- Western Digital, opposing the sale of Toshiba's memory unit, has offered funds to bail out the struggling Japanese technology company.

In a letter to The Nikkei and other media, Western Digital CEO Steve Milligan said, "Our solution would provide Toshiba and its creditors with the necessary financial resources to emerge from the current crisis."

Regarding the plant in Yokkaichi, in western Japan's Mie Prefecture, which Toshiba operates in cooperation with the American computer data storage company, Milligan said: "Our shared fab complex at Yokkaichi would remain the centerpiece of our memory development and manufacturing for the long term as well."

"As long-term partners and supporters of Toshiba, it has been difficult for us at Western Digital to watch this great company go through this period of profound financial and strategic challenges.

"We are focused on helping to develop a solution that is consistent with our shared values and ensures the long-term interests of all of the stakeholders are protected, from employees to customers as well as shareholders and creditors," he said.

Western Digital has acquired Hitachi's hard-disk drive business and expanded its share of the market through a fusion of cutting-edge Japanese and U.S. technologies.

Referring to the joint memory business between Toshiba and Western Digital, Milligan said, "Our partnership started in 1999 and brought together the strong process and manufacturing capabilities of Japan with the technological innovation that is a hallmark of Silicon Valley.

"We believe that due to the trust we have built and the challenges we have jointly overcome, we can drive the innovation agenda in semiconductors, and face the uncertainties of the evolving geopolitical and macroeconomic landscape from a position of strength, together."

Western Digital purchased SanDisk, a U.S. flash memory maker, forming a partnership with Toshiba, for $17 billion as recently as May 2015. The purchase price was higher than Western Digital's annual sales, forcing the company to finance the deal with funds on hands and loans.

Some analysts say that as a result, Western Digital does not have the financial resources to help Toshiba pull out of its current financial crisis.

CEO declares his desire to continue partnership in letter to Nikkei, others

As Western Digital has sounded out U.S. investment fund Kohlberg Kravis and Roberts and other concerns about collaboration, negotiations between these parties are expected to open an new chapter in Toshiba's saga.

FT : Sanofi plays down need for pharma deals

Sanofi plays down need for pharma deals
High prices are creating ‘uncertainty’ over value of companies, says top scientist

Sanofi’s top scientist has warned uncertainty over pricing, particularly in the US, is making it hard to value acquisition targets, signalling the company will not rush into dealmaking at potentially inflated prices.

The comments from Elias Zerhouni, global head of research and development at the French drugmaker, come amid investor frustration over the drugmaker’s two recent failed attempts to acquire promising biotech companies.

“There is a lot of uncertainty right now in the values of all companies because of pricing issues in the US . . . in particular, but worldwide,” he said. “And so when you see the values that are being paid you question yourself as to the sustainability of those values, given the uncertainty in the pricing environment.”

A deal of some kind is widely seen as necessary to help offset declining revenues from Lantus, Sanofi’s one-time blockbuster insulin medicine. Analysts have estimated the revenues the drug generates will fall from $6bn a year in 2015 to $2.9bn a year in 2020.

Yet its pursuit of Medivation came to nothing after Pfizer agreed a $14bn deal in August last year to buy the US biotech. Meanwhile, it lost out to Johnson & Johnson this year in its bid for Swiss-based Actelion.

Sanofi received an important boost last month, however, when it received approval from the Food and Drug Administration for Dupixent, a medicine to treat intractable eczema, which is predicted to be the biggest drug launch of the year.

Dr Zerhouni played down the necessity of a merger or acquisition to secure the company’s future, however, saying Sanofi was developing new products and “clearly” had the ability to return to growth.

Dr Zerhouni added: “It’s not fair to say that we’re not interested, but we’re also very disciplined. There is an inflation of prices for these assets and they are quite unusual.”

Data from Dealogic show pharma industry deals this year and last were completed at a multiple of 21 times earnings before interest, tax, depreciation and amortisation. This is above the average of 19 times ebitda since 1995.

Meanwhile the premiums being paid by acquirers, at 37 per cent this year and 38 per cent last year, are the highest since 2008 and 2009, and compare with a 22-year average of 32 per cent. This suggests buyers are having to pay high premiums over share prices to acquire targets.

However, one large life sciences investor with a stake in Sanofi dismissed the comments as coming from a company that had been “left at the altar two times in a row”

“I think M&A needs to be part of the strategy for them given the gaps in the pipeline,” he added.

The investor was critical of Sanofi’s approach of trying to buy Medivation and Actelion, saying: “They always start a bidding war against guys with bigger pocket books.”

Sanofi should instead focus its efforts on a string of smaller acquisitions, or target a company that is unlikely to draw rival bidders, such as rare diseases drugmaker Alexion, the investor argued.

FT : Aluminium emerges as top performing industrial metal in 2017

Aluminium emerges as top performing industrial metal in 2017
Signs that China will curb production raise hopes the market will swing to a deficit

Aluminium has emerged as the best performing industrial metal of 2017, as growing confidence that China will take steps to end a supply glut pushes prices to the highest level in almost three years.

The industrial metal, which is used in everything from drinks cans to cars to girders for construction, has climbed close to 15 per cent this year, outpacing the 2.7 per cent increase for zinc and 3.1 per cent advance for copper. Aluminium for delivery in three months is currently trading at $1,933 a tonne.

Since the financial crisis, a glut of supply has cast a shadow on the market as Chinese producers have spent billions investing in new capacity and the latest smelting technology. Now, after tackling excess capacity in coal and steel industries, there are signs Chinese authorities are turning their focus to the lightweight metal.

“There has been a big shift in China’s approach to aluminium supply,” said Eoin Dinsmore, an analyst at commodity consultancy CRU in London. “And in commodity markets nobody wants to bet against the Chinese government.”

That is raising hopes among investors the market could finally swing to a deficit, where demand outstrips supply. The metal is a key source of revenue for several major mining companies such as Rio Tinto, Norsk Hydro and Vedanta Resources.

Earlier this year, authorities in China issued a directive that will shut down aluminium capacity during the winter in areas surrounding Beijing, in an effort to cut air pollution.

China’s top economic planning agency, the National Development and Reform Commission, then announced plans to crack down on illegal projects in the aluminium industry, instructing local governments to inspect smelters built after 2013 to test if they meet environmental regulations.

Then last week Changji, a city in the north-western region of Xinjiang — the new hub of China’s aluminium industry — said they had suspended the construction of three new smelters with 2m tonnes per year of capacity.

“Pollution control and supply-side reform are the main priorities of China’s central government,” analysts at Morgan Stanley noted. “The aluminium industry has been unprofitable and a key contributor to pollution in China with 90 per cent of its power from coal-fired plants.”

In spite of the signals emerging from China, some analysts believe the run-up in prices has been overdone. According to Mr Dinsmore, there are plenty of new projects ramping up in China and state-owned companies have been active in announcing new projects.

“It’s not like coal where you get a big reduction in output, it will just be slower growth in the future,” he said.

Positioning also looks overextended. Data from the LME show hedge funds and other speculators have amassed a near record number of bets on higher prices. An announcement of actual production cuts is likely to be needed to drive prices above $2,000 a tonne.

“If such production cuts do not materialise over the second half of this year, price pressures are likely to mount given the domestic market surplus [in China],” analysts at Standard Chartered warned.

>>> JAB to review strategic options of Bally

JAB to review strategic options of Bally

JAB Luxury GmbH (JAB Luxury), a Swiss luxury goods distributor and a subsidiary of the Luxembourg-based consumer goods holding JAB Holdings B.V., today announces a review of its strategic options relating to its investment in Bally International AG (Bally), including a possible sale of the company.
Bally is a leading luxury footwear company with a growing product portfolio including handbags, small leather goods, eyewear and other accessories.
Founded in Schönenwerd, Switzerland in 1851, Bally was established with a vision to create exquisite footwear from the finest leather, using the most innovative craftsmanship techniques. The Bally brand has a unique heritage, coupled with a strong global presence, first opening stores in Geneva, London and Paris in the late 19th Century.
Since investing in Bally in 2008, JAB Luxury has continued to support the long-term development of the company and its leading brand. JAB has however made significant investments in coffee and related areas in recent years, and as a result, now considers its investment in luxury as non-core. JAB has therefore made the strategic decision to focus on its successful core businesses of consumer goods, including Coty Inc.
The Bally review process will commence shortly, and is expected to complete in the second half of the calendar year. JAB Luxury does not intend to comment further until a decision on possible strategic options has been made.
Enquiries in relation to this process should be addressed to BofA Merrill Lynch or Citi.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • CYOU -8.3%, SOHU -4.2%, KMB -1.8%
M&A news:
  • BDX -4.5% (C.R. Bard (BCR) to be acquired by Becton Dickinson and Co (BDX) for $317.00 per share)
Select metals/mining stocks trading lower with Gold Futures -1.5% and Silver -0.6%:
  • AUY -3%, GOLD -3%, SBGL -2.7%, AG -2.5%, IAG -2.3%, ABX-2.3%, GDX -2.2%, SLW -2.2%, HMY -2.1%, GG -2%, MUX -2%,NEM -1.8%, GLD -1.3%, SLV -1.1%
Other news:
  • XOMA -4.9% (received notice from Novo Nordisk (NVO) of its termination of an exclusive license agreement due to strategic and business reasons)
  • EYEG -4.3% (files for $11.5 mln common stock offering)
  • TRUE -1.3% (expects to offer 1,000,000 shares of common stock in the offering and certain existing stockholders of the co are expected to offer 7,500,000 shares in the offering)
  • VRAY -1.3% (files for $100 mln mixed securities shelf offering)
Analyst comments:
  • GFI -6.2% (downgraded to Underperform from Sector Perform at RBC Capital Mkts)
  • AU -3.9% (downgraded to Sector Perform from Outperform at RBC Capital Mkts)
  • GRPN -1.3% (downgraded to Underweight from Equal-Weight at Morgan Stanley)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • IBCP +6.5%, PHG +5%, HAS +4.9%, EDU +4%, HAL +1.8%, PDS +1.6%, ITW +1.6%, OPB +1%, SYT +0.7%, TRST +0.6%
M&A news:
  • BCR +19.3% (C.R. Bard (BCR) to be acquired by Becton Dickinson and Co (BDX) for $317.00 per share)
Select financial related names showing strength post French elections:
  • DB +10.2%, BBVA +7.4%, ING +7%, SAN +6.4%, BCS +5.7%, CS+4.9%, RBS +2.8%, C +2.4%, HSBC +2.4%, MS +2.2%, BAC +2.1%,JPM +2%, GS +2%
Select EU stocks trading higher with regional indices higher by 2-5%:
  • ORAN +6%, SNY +5.1%, MT +4.6%, ERIC +4.3%, NOK +4.2%, STM+4%, SAP +3.6%, ALV +3.5%, ASML +3.2%, UN +2.9%, RACE+2.9%, MTL +2.9%, BBL +2.9%, CCE +2.6%, BHP +2.2%, RIO+2.2%, ABB +2%, NVO +1.8%, GLPG +1.4%
Select oil/gas related names showing strength:
  • AEG +5.2%, TOT +4.8%, RDS.A +2.2%, BP +1.8%, WLL +1.7%
Other news:
  • OPTT +44.8% (co's PB3 PowerBuoy was deployed off the coast of Kozu-shima Island in Japan as part of its first lease agreement with Mitsui Engineering and Shipbuilding)
  • AMDA +18.4% (granted marketing clearance for its Valeo interbody fusion devices in Australia)
  • DRRX +15.7% (clinical data on DUR-928 were presented )
  • HTGM +5.4% (enters into a research collaboration agreement with Instituto Valenciano de Oncología)
  • PRTK +3% (presents data from its Phase 3 study of omadacycline)
  • NVS +1.5% (reports new data confirming benefit of Gilenya on 4 key measures of disease activity in relapsing MS)
Analyst comments:
  • MLCO +4.1% (upgraded to Buy from Hold at Union Gaming)
  • AKS +3.1% (upgraded to Outperform from Neutral at Macquarie)
  • XLNX +2.4% (upgraded to Outperform from Neutral at Credit Suisse)
  • NUE +2.3% (upgraded to Neutral from Underperform at Macquarie)
  • X +2% (upgraded to Neutral from Underperform at Macquarie)
  • AMZN +1.1% (target raised to $1250 at Wedbush)