>>> Don’t Turn Safran Into Volkswagen, TCI Partner Ben Walker Says (bbg)

Don’t Turn Safran Into Volkswagen, TCI Partner Ben Walker Says
A merged Safran/Zodiac Aerospace will have corporate governance similar to Volkswagen, a co. “generally thought to have the worst corporate governance in Europe,” TCI partner Ben Walker says in emailed comments.
  • Message to other Safran shareholders is “do not turn Safran into Volkswagen": Walker
  • Reiterates that TCI, and other shareholders would just like a vote on the merger before the cash tender offer
    • Adds that this is the only way to have a ‘‘free, open and fair vote on the merger’’
      • TCI had said in letter dated Feb. 27 that Safran governance will get worse after the deal, as Zodiac founding families, French state, Peugeot family and FSP fund will sign an agreement giving them effective control
  • The deal structure, with the merger vote taking place after the tender offer, is ‘‘specifically and intentionally designed to disenfranchise Safran shareholders’’: Walker
  • TCI is acting independently and does not seek to work in concert with any other shareholders, Walker says
    • Don’t see a reason why any of the large Safran shareholders, would like the price paid, deal structure/sequencing or the negative impact it would have on corporate governance: Walker
  • Reiterates Zodiac price being paid is too high, especially when considering the undervaluation of Safran stock, the real price being offered to the Zodiac family is EU49
  • TCI Fund holds 4% of Safran shares, and has a small holding in Zodiac
  • Note that VW holds capital markets day today, short interest has been rising ahead of meeting
    • May 6: TCI called for Volkswagen to cut management pay

>>> What to look at today - 14th of March 2017

Dow -0.10% S&P +0.04% Nasdaq +0.24% Russell +0.37%
US Market closed lower, but very close from the flat line again. The energy sector (unch) closed just above its flat line following crude oil's fifth consecutive retreat. WTI crude finished Monday trading at $48.40/bbl. INTC agreed to pay $15.3 billion, or $63.54 per share, in cash for Mobileye, which represents a 34.0% premium over MBLY's closing price on Friday.
The technology sector (+0.1%) profited from the chipmakers' solid performance, finishing the day with the financials (+0.1%), consumer discretionary (+0.2%), materials (+0.3%), utilities (+0.2%), telecom services (+0.2%), and real estate (unch) groups in the green. The remaining sectors--industrials (-0.1%), health care (-0.2%), and consumer staples (-0.1%)--closed with modest losses. US After Hours Ruby Tuesday (RT) +20% on strategic alternatives exploration, Valeant (VRX) -10% as Ackman closes out position Asia equity markets are seeing compressed volatility as the quiet before the Wednesday FOMC decision envelops sentiment. Oil remains under pressure near 3-month lows, while US airline stocks hit some turbulence ahead a massive snowstorm bearing down on the northeast. Dollar majors were similarly contained in narrow ranges - AUD/USD saw the most notable decline after a retreat in NAB business confidence/conditions from multi-month highs last month.

Nikkei -0.12% Hang Seng -0.20% CSI -0.04% Shanghai +0.07%

Eur$ 1.0644 CNH 6.9076 CNY 6.9191 JPY 115.14 GBP 1.2137 CHF 1.0092 RUB 58.9850 WTI$ 48.35 -0.10%

S&P -0.07% EuroStoxx +0.06% Dax-0.05% FTSE +0.2% SMI +0.01%

Macro :
- FOMC Expected to Meet as Planned Tues.-Wed. Amid Snowstorm

Keep an eye on :
- ABI BB : AB InBev Chief Integration Officer Almeida Buys $9.15m of ADRs
- ANTO LN : Antofagasta FY 2016 Ebitda $1.63b, Beats Estimate of $1.59b
- CTXS US : Citrix Said to Work With Goldman Sachs on Potential Sale Process
- CBK GY : Commerzbank Loses Case Over Dresdner Bank Cum-Ex Trades: HB
- DIREN FP : Direct Energie FY Net Jumps; Sees Higher 2017 Operating Income
- ILD FP : Free Says Roaming to Be Included in EU15.99/Month Plan
- INTC US : Intel Should Buy Its Own Stock Rather Than Mobileye: Street Wrap
- IGY GY : Engie Said to Eye Bid for $19.8 Billion Green Utility Innogy, RWE Doesn’t Comment on Innogy Interest, Can Cut Stake to 51%
- KPN NA : KPN to Swap 6% of Telefonica Deutschland for Stake in Telefonica
- NOVN VX : Novartis Kisqali Gets FDA Approval for Metastatic Breast Cancer
- OCDO LN : Ocado 1Q Sales Meet Estimates, Sees Change in U.K. Food Pricing
- P1Z GY : Patrizia Raises 2017 Operating Income Guidance to EU60m-EU75M
- PUB FP : Publicis Groupe Has Put In Place a Share Repurchase Agreement
- RWE GY : RWE’s Net Income Guidance May Lead to Re-Rating, Goldman Says
- SAN FP : Sanofi’s Gaucher Disease Pill Is Too Expensive: U.K.’s NICE
- SY1 GY : Symrise Profit Beats Estimates; Raises Dividend for 7th Year
- UHR VX : Swatch Sales Have Been Gaining This Year, Hayek Tells L’Agefi
- TEF SM : KPN to Swap 6% of Telefonica Deutschland for Stake in Telefonica
- UCG IM : UniCredit Says Marina Natale Leaving Bank

>>> Europe : Brokers Upgrades & Downgrades - 14th of March 2017

>>> Up
*Acacia Mining Raised to Hold at Peel Hunt
*Akzo Nobel Raised to Neutral at BofAML, PT EU76
*BASF Raised to Add at AlphaValue
*Clariant Raised to Hold at HSBC, PT CHF17.30
*Lonza Raised to Buy at Baader-Helvea
*Rexel Raised to Overweight at Morgan Stanley, PT EU19
*UniCredit Raised to Equal-Weight at Barclays, PT EU13
*VIEL & Cie Raised to Add at AlphaValue

>>> Down
*ACEA Cut to Neutral at MainFirst, PT EU12
*Amec Cut to Neutral at Citi, PT 580p
*CIR IM Cut to Hold at Kepler Cheuvreux
*Lundin Mining Cut to Equal-Weight at Morgan Stanley, PT SEK48
*Rubis Cut to Hold at Portzamparc
*Standard Life Cut to Hold at Jefferies, PT 398p
*Virbac Cut to Neutral at MainFirst, PT EU170

>>> Initiation
*BMW Rated New Market Perform at Bernstein, PT EU85
*Continental Rated New Outperform at Bernstein, PT EU240
*Daimler Rated New Outperform at Bernstein, PT EU85
*Ferrari Rated New Underperform at Bernstein, PT EU50
*Fiat Rated New Market Perform at Bernstein, PT EU11
*Peugeot Rated New Outperform at Bernstein, PT EU24
*Renault Rated New Underperform at Bernstein, PT EU75
*Strax Rated New Buy at Fondsfinans, PT SEK7.50
*Valeo Rated New Outperform at Bernstein, PT EU75

>>> US After Hours Summary: Ruby Tuesday (RT) +20% on strategic altern


After Hours Summary: Ruby Tuesday (RT) +20% on strategic alternatives exploration, Valeant (VRX) -10% as Ackman closes out position

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: RT +20.1% (Additionally says will explore strategic alternatives), REN +3%, SCYX +2.3%, GRBK +1.2%, TRHC +0.9%.

Companies trading higher in after hours in reaction to news: DRWI +43.5% (Signs new Master Sales and Services Agreement with Ingram Micro Australia), TDW +27.4% (Receives additional limited waiver extensions from its lenders and noteholders), SBOT +17% (Enters into a technology transfer and purchase agreement with Matrivax Inc related to Stellar's proprietary Clostridium difficile technology), RTTR +4.7% (Discloses holding a a Type C informational meeting with the FDA), COKE +3.5% (To join the S&P SmallCap 600), GEO +1% (To join the S&P MidCap 400). 

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: PPHM -12.8%, TLYS -12.8%, APRI -11.7%, RYI -8.4%, PETX -6.5%, AMPH -5.2%, BLCM -3.5%, GBT -3.2%, COUP -1%.

Companies trading lower in after hours in reaction to news: ANTH -28.7% (To offer and sell shares of its common stock and warrants to purchase shares of its common stock in an underwritten public offering), ADPT -17.2% (Amends credit agreement, hires chief restructuring officer and financial advisor to advise the Board and management as they explore various strategic alternatives), CBIO -12.6% (Files for $12 mln offering of Class A Units consisting of common stock and warrants and Class B Units consisting of shares of Series A Preferred Stock and warrants), AUPH -10.9% (Commences common stock offering), VRX -10% (Ackman's Pershing Square sells its stake), LNTH -10% (To sell 3 mln shares of its common stock to be offered by certain of its existing stockholders), KNDI -4.6% (Determines that some previously issued financial statements should no longer be relied upon), CORT -3.5% (Files for $200 mln mixed securities shelf offering, as well as 349k share offering by selling stockholders), DOC -3.2% (Commences offering of 15 mln common shares of beneficial interest), ON -1.7% (To offer $500 mln convertible senior notes due 2023 in a private offering.

>>> Asian Update

Asia Mid-Session Market Update: China retail sales growth disappoints while industrial output and asset investment top forecasts

***US Session Highlights***
- (US) President Trump to meet with auto execs in Detroit on Weds regarding review of vehicle emissions regulations - press
- (LY) Libya crude output said to have declined to 609K bpd from 620K bpd on Friday - press
- (KW) Kuwait govt would support extension of OPEC cuts agreement past June, but it's still early for a decision from OPEC - Kuwaiti press
- (US) Atlanta Fed confirms selecting Raphael Bostic as new president to replace Dennis Lockhart; to take office June 5th - press
- (US) New York Fed Consumer Expectations Feb survey: 1 -year food inflation forecast is at record low of 4.4%

***US markets on close: Dow -0.1, S&P500 flat, Nasdaq +0.2%***
- Best Sector in S&P500: Materials
- Worst Sector in S&P500: Healthcare
- Biggest gainers: CTXS +6.8%, WYNN +4.8%, DPHI +4.0%, CPK +3.5%, RIG +2.9%
- Biggest losers: URBN -3.8%, AAL -3.5%, UAL -3.4%, GPS -3.0%, NRG -3.0%
- At the close: VIX 11.4 (-0.3 pts); Treasuries: 2-yr 1.38% (flat), 10-yr 2.61% (+3bps), 30-yr 3.19% (+2bps)

***US movers afterhours***
- RT: Reports prelim Q3 R$225.7M (no ests), SSS -4.0%; To Explore Strategic Alternatives; +17.8% afterhours
- PPHM: Reports Q3 -$0.04 v -$0.03e, R$10.7M v $14.0Me; -8.9% afterhours
- VRX: Pershing Square sold its entire 27.2M share stake at $11.00/shr and Ackman to leave the board; -9.7% afterhours
- TLYS: Reports Q4 $0.22 v $0.21e, R$160.2M v $160Me; Guides Q1 -$0.15 to -$0.07 v -$0.04e; SSS to decrease by a low to mid single-digit percentage; -12.5% afterhours

***Politics***
- (US) CBO scores American Health Care Act (AHCA): 14M more people would be uninsured in 2018 and 24M more by 2026
- (US) Speaker Ryan (R-WI): recognizes concerns about access to health care coverage following CBO report
- (FR) France former PM Valls planning to endorse Macron - French press

***Asia Key economic data:***
- (CN) CHINA JAN-FEB RETAIL SALES Y/Y: 9.5% V 10.6%E (multi-year low)
- (CN) CHINA JAN-FEB INDUSTRIAL PRODUCTION Y/Y: 6.3% V 6.2%E (6-month high)
- (CN) CHINA JAN-FEB FIXED ASSETS EX RURAL YTD Y/Y: 8.9% V 8.3%E (8-month high)
- (AU) AUSTRALIA FEB NAB BUSINESS CONFIDENCE : 7 V 10 PRIOR; CONDITIONS: 9 (3-month low) V 16 PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.1 v 113.9 prior

***Asia Session Notable Observations, Speakers and Press***
- Asia equity markets are seeing compressed volatility as the quiet before the Wednesday FOMC decision envelops sentiment. Oil remains under pressure near 3-month lows, while US airline stocks hit some turbulence ahead a massive snowstorm bearing down on the northeast. Dollar majors were similarly contained in narrow ranges - AUD/USD saw the most notable decline after a retreat in NAB business confidence/conditions from multi-month highs last month.
- Jan-Feb economic data from China were the key risk events for the session, coming in mixed. Retail sales growth disappointed with a multi-year low of 9.5%, despite recent comments from Beijing that economy is making progress in transition to consumption-driven growth. Industrial output rise hit a 6-month high however, with 6.3% increase in power generation, 5.8% rise in crude steel production, and 8% decline in crude oil output. Fixed Asset investment hit an 8-month high rate of growth, driven by 8.9% rise in property investment amid 26% increase in property sales value. Speaking after the data release, NBS noted business environment is still much better as fundamentals of economy are improving. Stats bureau also noted consumption will remain stable this year and CPI will rebound after last month's surprise decline.
- NAB business conditions hit a 3-month low after printing a 9-year high last month. NAB noted it is more concerned about the longer term picture as contributions from LNG exports and construction activity fade, forecasting another RBA rate cut this year.
- Japan's Toshiba was down over 7% after press reports swirled that the company will again delay earnings that were expected out today as auditing firms compute the impact of Westinghouse write-down. Shares were off their lows late in the day, as the company affirmed delay in Q3 release but also affirmed write-down amount of ¥712.5B and disclosed consideration for sale of overseas nuclear operations.

China
- (CN) China Stats Bureau (NBS): Fundamentals of real economy are improving, business environment much better than this time last year; PPI may have peaked in Feb
- (CN) PBoC Official: seeing slower home mortgage growth - Chinese press

Japan
- (JP) Japan Fin Min Aso: Financial regulations and taxation will be topics at G20; plan to explain Japan's economy and listen to others opinions

Australia
- (AU) RBA Assistant Gov Bullock: Calming effect of tighter rules on housing lending might be fading; ready to impose more restrictions if necessary to head off risks in the market

Korea
- (CN) China military plans to counter THAAD deployment in South Korea with anti-radar equipment - Chinese press citing former deputy commander of China's Nanjing Military Region
- (KR) South Korea Ministry of Employment and Labor: Feb manufacturing jobs fell 1.7K to 3.58M, declining for 3rd straight month - Korean press
- (KR) South Korea Finance Ministry: Prepared to take market stabilizing measures in the event of volatility following Fed meeting - press


***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.1%, Hang Seng +0.1%, Shanghai Composite +0.1%, ASX200 -0.1%, Kospi +0.7%
- Equity Futures: S&P500 -0.1%; Nasdaq flat, Dax flat; FTSE100 -0.1%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0645-1.0660; JPY 114.75-115.00; AUD 0.7550-0.7575; NZD 0.6910-0.6930
- Apr Gold flat at $1,203/oz; Apr Crude Oil +0.1% at $48.43/brl; May Copper +0.2% at $2.63/lb
- SPDR Gold Trust ETF daily holdings rise 6.8 tonnes to 832.0 tonnes; first rise since Mar 2nd
- (CN) China to cut retail gasoline and diesel prices by CNY85/tonne, effecitve March 31st
- USD/CNY (CN) PBOC SETS YUAN MID POINT AT 6.9118 V 6.8988 PRIOR
- (CN) PBOC to inject combined CNY40B v CNY30B prior in 7,14, and 28-day reverse repos
- (JP) Japan's MoF sells ¥1.0T in 0.7% (0.6% prior) 20-year JGBs; Avg yield: 0.673% v 0.669% prior; bid-to-cover: 3.78x v 4.05x prior
- (AU) Australia sells A$150M in 2.5% inflation indexed 2030 bonds; avg yield 1.1256%; bid-to-cover 3.37x

***Asia equities / Notables / movers by sector***
- Consumer discretionary: BGR.NZ Briscoe Group +0.2% (FY16 result); DMP.AU Domino’s -3.8% (Citi cuts to rating); 7733.JP Olympus Corp +0.6% (Macquarie raises rating)
- Financials: 604.HK Shenzhen Investment +2.9% (Feb result); ABP.AU Abacus Property Group -1.0% (Shaw & Partners cuts rating)
- Industrials: 3399.HK Guangdong Yueyun Transportation Co -5.4% (FY16 result); 7011.JP Mitsubishi Heavy Industries +5.9% (considers spinoff); 5108.JP Bridgestone Corp -1.1% (Daiwa cuts rating)
- Technology: 6502.JP Toshiba Corporation -7.3% (delays earnings)
- Materials: 2233.HK West China Cement -0.9% (FY16 result); BKW.AU Brickworks +6.8% (Raises at Bell Potter); FMG.AU Fortescue +1.5%, RIO.AU Rio Tinto +0.7%, BHP.AU Billiton +0.7% (iron ore rises); 2168.HK Yingde Gases -1.6% (Origin water sold stake)
- Energy: ORG.AU Origin Energy +2.7% (Credit Suisse raises rating)
- Healthcare: 1177.HK Sino Biopharmaceutical -4.2% (FY16 result)

>>> US Close Dow -0.10% S&P +0.04% Nasdaq +0.24% Russell +0.37%

Closing Market Summary: Minimal Movement on Monday

A belated winter storm stirred up an extreme case of the Mondays as investors left the major averages largely unchanged to start the week. The S&P 500 finished the session relatively flat while the Nasdaq (+0.2%) and the Dow (-0.1%) closed on opposite sides of the benchmark index.

Monday's session was range-bound throughout as sectors failed to deviate from their respective flat lines; all eleven closed the day within 0.3% of their unchanged marks.

The energy sector (unch) closed just above its flat line following crude oil's fifth consecutive retreat. However, today's loss for the energy component was relatively small (0.2%), especially in light of the commodity's 8.8% plunge in the latter half of last week, which was in response to a bearish EIA inventory report. WTI crude finished Monday trading at $48.40/bbl.

Chipmakers started the week on a positive note, pushing the PHLX Semiconductor Index higher by 0.8%, following Intel's (INTC 35.16, -0.75) acquisition of Mobileye (MBLY 60.62, +13.35), an Israeli autonomous driving software company. INTC agreed to pay $15.3 billion, or $63.54 per share, in cash for Mobileye, which represents a 34.0% premium over MBLY's closing price on Friday.

The technology sector (+0.1%) profited from the chipmakers' solid performance, finishing the day with the financials (+0.1%), consumer discretionary (+0.2%), materials (+0.3%), utilities (+0.2%), telecom services (+0.2%), and real estate (unch) groups in the green. The remaining sectors--industrials (-0.1%), health care (-0.2%), and consumer staples (-0.1%)--closed with modest losses.

Tomorrow will mark the start of the two-day Federal Open Market Committee (FOMC) meeting. It's pretty much a given that the Fed will announce a rate hike in its official decision, but the timing of the announcement may be up in the air considering the impending winter storm that is projected to dump eight to twelve inches of snow on Washington D.C. and a foot, or more, on New York City, Boston, and Philadelphia.

The rate hike decision is currently scheduled for 2:00 pm ET on Wednesday, and with no communication from the Fed to indicate otherwise, that is the time investors are still anticipating.

However, regardless of timing, the real focus will be on the Fed's updated rate projections for 2017 and beyond. In its latest set of projections, the Fed forecast three rate hikes in 2017.

Investors did not receive any economic data on Monday. On Tuesday, February PPI (consensus 0.1%) will cross the wires at 8:30 ET.