WSJ : Akzo Nobel Rejects $22 Billion Offer From PPG

Akzo Nobel Rejects $22 Billion Offer From PPG
Dutch chemicals maker says offer substantially undervalues the company

Dutch paints and chemicals maker Akzo Nobel NV said Thursday it has rejected an unsolicited €20.9 billion ($22.1 billion) offer from U.S. peer PPG Industries Inc.

Amsterdam-based Akzo said PPG made an offer of €54 in cash and 0.3 PPG shares for each Akzo share, corresponding to a value of €83 a share.

Akzo, which counts Dulux, Sikkens, Interpon and Eka among its brands, said PPG’s proposal “substantially” undervalues the company and isn’t in the interest of its shareholders.


The company now plans to review options for the separation of its specialty-chemicals business, which generated revenue in 2016 of €4.8 billion.

Akzo said it would consider various alternative ownership structures for the specialty-chemicals business, including a new independent listed entity.

At close of business Wednesday, Akzo had a market capitalization of $17.12 billion, while PPG’s was $27.47 billion.

>>> What to look at today - 9th of March 2017

Dow -0.33% S&P -0.23% Nasdaq +0.06% Russell -0,64%
US Market closed lower, pushed by Crude. WTI$ closed at $50.40/bbl -5.3% after the EIA inventory report that show a much higher build than the consensus (8.2mil vs 2mil estimates)Energy closed the day at the bottom of the leaderboard with a loss of 2.5%. The rate-sensitive utilities (-1.5%) and real estate (-1.5%) groups also finished solidly lower amid an increase in interest rates following a better than expected ADP National Employment Report, which clobbered consensus estimates; the reading showed that a whopping 298,000 private-sector jobs were added in February (consensus 180,000).
Following today's economic data, the CME Fed Watch Tool now assigns an implied probability of 90.8% to a March rate hike, up from 81.9% on Tuesday. Furthermore, the market expects to see another rate hike by the September meeting. At the top of the day's sector standings were the health care (+0.3%) and consumer discretionary (+0.3%) sectors with the latter space receiving a boost from retailers. The technology (+0.1%), financials (unch), and materials (+0.1%) sectors finished near their flat lines while the telecom services (-0.4%), consumer staples (-0.3%), and industrials (-0.4%) groups finished with modest losses. US After Hours ELF +16%, SMTC +7% following earnings/guidance, APRI +34.2% on asset sale news/NDA update... TLRD -29%, SPPI -10%, WATT -7% following earnings/guidance. Asia indices are largely lower, tracking the 3rd consecutive down day in the S&P500. Nikkei225 is among the few gainers, helped by weaker JPY in the wake of a blowout ADP jobs report that sent US Treasury yields and USD higher across the board. In FX, USD/JPY approached 114.60 in Asia session, just shy of US hours high, while AUD/USD fell to 7-week lows near 0.75. NZD/USD was also sold off on USD strength, falling below $0.79 for the first time since early Jan. Feb PPI rose for the 6th straight month and to its highest level since Sept 2008 thanks to recent jump in commodity prices. Conversely, CPI fell m/m for the first time in 4 months, and y/y figure hit a 2-year low after a near-3-yr high last month. In Japan, Toshiba was hit especially hard on press speculation of expanded loss related to nuclear ops as well as rising challenges of meeting the deadline for releasing already delayed Q3 earnings report.

Nikkei +0.34% Hang Seng -1.31% CSI -0.82% Shanghai -0.88%

Eur$ 1.0537 CNH 6.9167 CNY 6.9171 JPY 114.47 GBP 1.2159 CHF 1.0154 RUB 58.8501 WTI$ 50.53 +0.52%

S&P -0.01% EuroStoxx -0.32% Dax -0.26% FTSE -0.46% SMI -0.22%

Macro :
- Draghi’s Forward Planning Keeps Bar High for Stimulus Change
- Oil Slumps to Lowest This Year as Traders Focus on Record Supply
- Bill Gross’s Bond Bear Market Looms as 10-Year Yield Nears 2.6%

Keep an eye on :
- ABI BB : AB InBev Co-Controlling Holder Patrinvest Buys EU50.7m of Stock
- AC FP : Accor Sells 62 Hotels to SNI, to Own Majority of HotelF1 Assets
- AKZA NA : PPG Industries Said to Explore Potential Deal With Akzo Nobel, Chemical Peers Jump as PPG Said to Explore Deal With Akzo Nobel
- AKZA NA : PPG Deal Likely to See Heavy Anti-Trust Scrutiny: Seaport Global
--> Akzo Nobel Rejects Unsolicited Indicative Proposal From PPG
- ATC NA : Altice 4Q Adj. Ebitda Jumps 16%; Co. Sees Profit Growth in 2017
- ALT FP : Altran Technologies Sees Profitable Growth in 2017
- AMG NA : AMG 4Q Revenue Rises 8% to $238m, Ebitda More Than Triples
- SPR GY : Axel Springer 2016 Organic Revenue Growth 4.1%; Raises Dividend
- BOSS GY : Hugo Boss Profit May Rise This Year as Turnaround Takes Shape
- BPOST BB : Bpost Profit, Dividend Forecast Trails Ests.; 4Q Ebit in Line
- BT/A LN : BT to Name Rio Tinto’s Jan Du Plessis as Chairman: FT
- CA FP : Carrefour 2016 Recurring Op. Income EU2.35B; Est. EU2.39B
- CSGN VX : HSBC Sells More U.S. Mortgages to Credit Suisse for $3.4b
- DBK GY : Deutsche Bank’s Qatar, China Investors Said to Back Rights Offer
- DBK GY : Deutsche Bank Will Struggle to Reach ROTE Above 5%: Berenberg
- ELIOR FP : Elior Largest Shareholders May Vote Against CEO Pay: L’Agefi
- ENGI FP : Engie to Take Part in Suez’s Capital Increase for About EU240m
- EOAN GY : EON to Post 2016 Net Loss of More Than EU12.4b: Handelsblatt
- HSBA LN : HSBC Sells More U.S. Mortgages to Credit Suisse for $3.4b
- LIN GY : Linde 4Q Profit Misses, Says Praxair Deal on Schedule
- MMB FP : Lagardere Expects ’Good Year’ in 2017, CEO Says
- MOR GY : MorphoSys FY Rev. Misses Est., Cash Position EU359.5m at yr end
- PLT IM : Lactalis’ Sofil Raises Offer Price on Parmalat to EU3/Share
- SCAB SS : Carnegie Raises SCA Stake, Wants to Split Company in Three: DI
- SEV FP : Suez and CDPQ to Buy GE Water for EU3.2b Enterprise Value
- SEV FP : Engie to Take Part in Suez’s Capital Increase for About EU240m
- SFR FP : SFR FY Ebitda Slips 0.6%; Co. Sees Revenue Stabilizing in 2017
- SYNN VX : SYT/ChemChina Mofcom Review Said to See Little Opposition: PaRR
- TRE SM : Tecnicas Reunidas Raised to Neutral at Credit Suisse, PT EU34
- UN01 GY : Uniper Forecast 2017 Adj. Ebit to Fall to EU0.9b-EU1.2b, Uniper Hedged >80% of 2018 Sweden Outright Power at EU21-25/MWh
- LANS NA : Van Lanschot Client Assets Rise 10%, Dividend More Than Doubles

>>> Europe : Brokers Upgrades & Downgrades - 9th of March 2017

>>> Up
*Admiral Raised to Overweight at JPMorgan, PT 2100p
*Air France-KLM Raised to Buy at SocGen, PT EU9
*CaixaBank Raised to Buy at UBS, PT EU3.95
*Cobham Raised to Buy at UBS, PT 155p
*DSM Raised to Neutral at JPMorgan, PT EU60
*Ericsson Raised to Buy at Goldman
*IAG Raised to Buy at Liberum, PT 700p
*Lagardere Raised to Equal-Weight at Barclays
*Proximus Raised to Outperform at Macquarie, PT EU30
*Sopra Steria Group Raised to Buy at AlphaValue
*Telefonica Raised to Buy at Deutsche Bank, PT EU11.40
*Vivendi Raised to Outperform at Exane, PT EU21

>>> Down
*Deutsche Telekom Cut to Underperform at Macquarie, PT EU14
*EDF Cut to Sell at AlphaValue
*Ei Towers Cut to Neutral at Macquarie, PT EU50
*Kinepolis Group Cut to Hold at Berenberg
*Melia Hotels International Cut to Reduce at Intermoney Valores
*Melrose Industries Raised to Buy at Liberum
*Vodafone Cut to Underperform at Macquarie, PT GBP1.70

>>> Initiation
*Amgen Rated New Neutral at UBS, PT $185
*Essilor Rated New Overweight at Barclays, PT EU130
*Gilead Rated New Neutral at UBS, PT $72
*Glaxo Rated New Reduce at Kepler Cheuvreux, PT 1500p
*Incyte Rated New Neutral at UBS, PT $140
*Itron Rated New Market Outperform at JMP, PT $75
*Novartis Rated New Buy at Liberum, PT CHF85
*Regeneron Rated New Buy at UBS, PT $435
*Roche Rated New Hold at Liberum, PT CHF274
*Sanofi Rated New Hold at Liberum, PT EU86

FT : Hedge funds adopt novel methods to hunt down new tech talent

Hedge funds adopt novel methods to hunt down new tech talent
Wall St tries coding competitions and data challenges to find new recruits

Graphic novels, coding competitions, mammoth pay packets and even entire university research centres are just some of the tactics hedge funds are turning to as they seek to win an intensifying war for technology talent.

So-called quantitative hedge funds and investment banks have long fought with Silicon Valley for the brightest programmers and data scientists, but traditional asset managers are now throwing themselves into the fray, in a big bet that the future of investing is machine intelligence and Big Data, not human nous and quarterly corporate results.

“The talent war is unprecedented,” said Yin Luo, head of quantitative research at Wolfe Research and a former top strategist at Deutsche Bank. “It’s nearly impossible to find people with experience in both computer science and finance. So it’s all about raw talent.”

To unearth this raw talent, investment groups are trying unorthodox approaches such as coding competitions and freestyle data challenges to unearth hidden gems outside the usual elite universities.

Two Sigma, one of the biggest quant hedge funds, is running a competition on Kaggle, an online platform popular with data scientists, where contestants will have three months to code a trading algorithm based on four gigabytes of financial data provided by the US hedge fund. The winner will soon pocket $100,000.

Ostensibly the aim of the contest is to raise awareness and interest in finance, but the hedge fund also hopes to find some potential hires among Kaggle’s 730,000 user base from across the world.

Instead of a traditional but staid leaflet, potential hires at Two Sigma are given a graphic novel that explains the hedge fund’s approach and benefits, such as a “Monte Carlo Hill Climbing Lunch”, where a Monte Carlo algorithm once a week selects four “Sigmas” to invite. If at least three accept, the lunch is arranged. “As if there were a better way to pick people to eat with,” the graphic novel says.

“While attracting talent is never easy, we find that our culture and people are a differentiator as we speak with potential candidates,” said Scott Grabarski, head of engineering human resources at Two Sigma.

The Kaggle competition follows in the footsteps of WorldQuant, a hedge fund that manages $4.5bn for Izzy Englander’s Millennium Management. It runs a “WorldQuant Challenge” designed to give “curious and strategic-minded individuals the opportunity to learn about quantitative finance, compete with global participants and potentially earn a research consultant position” at the hedge fund.

Underscoring the battle for talent as new players enter the space, WorldQuant late last year sued a former data scientist for breach of contract when he left to join Dan Loeb’s Third Point, alleging that he had been promised a tenfold increase in his salary to $2m. The case was quickly settled out of court.

Several UK hedge funds have led the way in partnering with universities to access the talent pipeline directly. For example, Man Group has financed a centre for “machine learning” — a field of artificial intelligence — at Oxford university, and last year Cambridge university opened the Cantab Capital Institute for Mathematics of Information, funded by Cantab Capital.

For smaller firms the challenges in finding good staff can be particularly intense. “The talent is the hardest part. A lot of my time is simply spent cultivating people,” said Scott Borgerson, the head of CargoMetrics, a Boston-based quant hedge fund. “World class people are very sought-out.”

>>> Asian Update

Asia Mid-Session Market Update: China inflation data diverge with a pop in wholesale and a slump in retail

***US Session Highlights***
- Appaloosa's David Tepper: market on multiple basis is kind of full, but seeing synchronized growth globally; short bonds, long US and European stocks; thinks Central Banks, ECB in particular, will have to play catch-up following French elections
- (US) FEB ADP EMPLOYMENT CHANGE: +298K V +187KE; Jan revised higher, weather helped
- (US) Q4 FINAL NONFARM PRODUCTIVITY: 1.3% V 1.5%E; LABOR COSTS: 1.7% V 1.6%E
- (US) JAN WHOLESALE INVENTORIES (FINAL) M/M: -0.2% V -0.1%E; WHOLESALE TRADE SALES M/M: -0.1% V +0.5%E
- (US) DOE CRUDE: +8.2M V +1.5ME; GASOLINE: -6.5M V -1.5ME; DISTILLATE: -2.7M V -1.5ME (largest weekly drop in gasoline stocks since 2011); total production rose by 56K bbls

***US markets on close: Dow -0.3%, S&P500 -0.2%, Nasdaq +0.1%***
- Best Sector in S&P500: Healthcare
- Worst Sector in S&P500: Energy
- Biggest gainers: HRB +14.9%, TRIP +6.1%, PPG +6.0%, COH +33%, M +3.1%
- Biggest losers: MRO -8.7%, MUR -6.7%, DVN -6.5%, CHK -6.1%, NFX -5.4%
- At the close: VIX 11.9 (+0.4pts); Treasuries: 2-yr 1.37% (+4bps), 10-yr 2.55% (+4bps), 30-yr 3.15% (+4bps)

***US movers afterhours***
- APRI: Announces sale of Ex-U.S. Vitaros Assets and Rights to Ferring Pharmaceuticals; +32.3% afterhours
- VVUS: Reports Q4 $0.54 v -$0.09e, R$81.8M v $15.3M y/y; +26.9% afterhours
- ELF: Reports Q4 $0.19 v $0.13e, R$76.4M v $74.4Me- Guides initial FY17 $0.40-0.43 v $0.36e, R$285-295M v $281Me; Adj EBITDA $61-64M; +16.2% afterhours
- SMTC: Reports Q4 $0.37 v $0.35e, R$140M v $138Me; Guides Q1 $0.39-0.43 v $0.37e, Rev $138-146M v $141Me, gross margin 58.6-59.7%, capex $10.0M; +7.1% afterhours
- TGTX: Announces Proposed Public Offering of Common Stock for an indeterminate amount through Jefferies; -3.4% afterhours
- CWH: Reports Q4 $0.14 adj v $0.09e, R$670M v $676Me; -4.8% afterhours
- RATE: Reports Q4 $0.16 v $0.18e, R$113.6M v $122Me; Guides Q1 adj EBITDA $26-28M, R$115-118M v $113Me; -10.5% afterhours
- TLRD: Reports Q4 -$0.19 v -$0.11e, R$793M v $824Me; Guides FY17 $1.47-1.75 v $2.12e; -29.2% afterhours

***Politics***
- (US) Former US Ambassador to China Jon Huntsman said to accept Pres Trump's offer to serve as Ambassador to Russia - press
- (US) Pres Trump said to consider sending up to 1K troops to Kuwait to serve as reserve force in a battle against ISIS - press

***Asia Key economic data:***
- (CN) CHINA FEB CPI M/M: -0.2% (first decline in 4 months, biggest decline in 9 months) V +1.0% PRIOR; Y/Y: 0.8% (2-year low) V 1.7%E
- (CN) CHINA FEB PPI Y/Y: 7.8% V 7.7%E; 6th consecutive and biggest increase since Sept 2008
- (JP) JAPAN DEC LABOR CASH EARNINGS Y/Y: 0.5% V 0.4%E ; REAL EARNINGS (EX-INFLATION) Y/Y: 0.0% V +0.1% PRIOR
- (JP) JAPAN FEB M2 MONEY STOCK Y/Y: 4.2% (highest since Aug 2015) V 4.2%E; M3 MONEY STOCK Y/Y: 3.6% V 3.6%E

***Asia Session Notable Observations, Speakers and Press***
- Asia indices are largely lower, tracking the 3rd consecutive down day in the S&P500. Nikkei225 is among the few gainers, helped by weaker JPY in the wake of a blowout ADP jobs report that sent US Treasury yields and USD higher across the board. Benchmark 10-year yield rose as high as 2.58% - the highest level of 2017 - while Fed Funds futures now price in over 40% chance of 2 rate hikes in the first half of the year.
- In FX, USD/JPY approached 114.60 in Asia session, just shy of US hours high, while AUD/USD fell to 7-week lows near 0.75. NZD/USD was also sold off on USD strength, falling below $0.79 for the first time since early Jan.
- Energy sector was the worst performer on the S&P500 for the 2nd straight day, remaining in the doldrums in the wake of the latest inventories data that showed little evidence of production curbs - DOE increase was the 9th straight build and also the highest in 3 weeks. Weakness in the energy space in Australia and Hong Kong reflected falling oil prices.
- China inflation data was the highlight of the economic calendar for the session with what is now a trifecta of surprises, following unexpected trade deficit overnight and return of FX reserves about $3T earlier. Feb PPI rose for the 6th straight month and to its highest level since Sept 2008 thanks to recent jump in commodity prices. Conversely, CPI fell m/m for the first time in 4 months, and y/y figure hit a 2-year low after a near-3-yr high last month. Food component shrank sharply, down 4.3% after rising 2.7% previously, as NBS noted that the number of tourists declined last month with seasonality around the timing of Lunar New Year continuing to play a part in data distortions. Also of note, PBoC skipped its daily open market operations in reverse repos, claiming that liquidity in the banking system basically stable while also setting CNY weaker for the 3rd straight day.
- In Japan, Toshiba was hit especially hard on press speculation of expanded loss related to nuclear ops as well as rising challenges of meeting the deadline for releasing already delayed Q3 earnings report.
China
- (CN) China listed banks NPL ratio may reach 1.8% in 2017 v 1.7% prior - Chinese press
- (CN) ANZ: Expect China to move back to trade surplus in the coming months - Chinese press
- (CN) China regulators said to have ordered banks to inspect their internal controls - Chinese press

Japan
- (JP) Japan Fin Min Aso: Keeping FY20 primary budget surplus a goal
- (JP) Japan foreign min Kishida: North Korea to be important theme of US State Sec Tillerson's visit; Aware that all options are on the table - press

Australia/New Zealand
- (AU) Australia PM Turnbull: Political friction causing a risk to AAA rating: Australia has a credible path to a surplus to help maintain its AAA rating - AFR
- (AU) Australia Newcastle Feb coal exports -12.2% m/m at 11.6M tons - financial press
- (NZ) BNZ lowers New Zealand Q4 GDP forecast to 0.4% from 0.6% following weak manufacturing report - press

Korea
- (KR) Economic Research Institute of Industrial Bank of Korea: Economic retaliation by China to Korea's THAAD system may cost Korea GDP about 1.1pct - Korean press
- (KR) South Korea Finance Ministry monthly report: Export recovery to continue; Domestic demand remains weak

***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +0.3%, Hang Seng -1.0%, Shanghai Composite -0.9%, ASX200 -0.3%, Kospi -0.1%
- Equity Futures: S&P500 flat; Nasdaq flat; Dax flat; FTSE100 flat

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0530-1.0547; JPY 114.30-114.60; AUD 0.7510-0.7535; NZD 0.6895-0.6915
- Apr Gold -0.4% at $1,205/oz; Apr Crude Oil +0.6% at $50.59/brl; May Copper flat at $2.59/lb
- SLV: iShares Silver Trust ETF daily holdings fall to 10,303 tonnes from 10,350 tonnes prior; 11-month low
- (CN) PBoC skips open market operations for today's session v injecting CNY30B yesterday
- (CN) PBOC SETS YUAN MID POINT AT 6.9125 V 6.9032 PRIOR; 3rd straight weaker setting; weakest CNY setting since Jan 12th
- (JP) Japan MoF sells ¥2.21T in 0.1% 5-year JGB bonds; avg yield -0.118% v -0.089% prior; bid-to-cover 2.86x (lowest since Oct 2015) v 4.26x prior
- (AU) Australia 10-yr govt bond yield rises to 2.84%; 15-month high

***Asia equities / Notables / movers by sector***
- Consumer discretionary: 419.HK Huayi Tencent Entertainment Company -4.8% (FY16 guidance); TTS.AU Tatts Group +2.6% (ACCC comments); NEC.AU Nine Entertainment +2.7% (Macquarie raises rating)
- Financials: 832.HK Central China Real Estate -4.8% (profit warning)
- Industrials: 3808.HK Sinotruk -2.0% (FY16 guidance); 9064.JP Yamato Holdings +1.8% (Nomura raises rating); 6472.JP NTN Corp +2.4% (Mizuho raises rating)
- Technology: 6502.JP Toshiba Corporation -6.9% (Japan press speculates co. having difficulty in preparing Q3 earnings before deadline and nuclear writedown may rise); YPB.AU YPB Group +6.5% (receives order); QMS.AU QMS Media +2.2% (APN shows interest)
- Materials: 2362.HK Jinchuan Group International Resources -1.1% (guidance); WHC.AU Whitehaven -4.4% (Spot coking coal firms on China buying before contract talks)
- Energy: 931.HK China LNG Group -6.0% (profit warning); 883.HK CNOOC -2.1%, WPL.AU Woodside Petroleum -1.2%, BPT.AU Beach Energy -1.8%, STO.AU Santos -3.3% (oil falls over 5% in US session); 5017.JP Fuji Oil Co -2.2% (SMBC cuts rating)
- Utilities: 6841.JP Yokogawa Electric Corp -2.8% (Credit Suisse cuts rating)