J'ai/actelion: Deal Said Valued at $250-$260 Per Share, Including SpinCo

Johnson & Johnson (JNJ), Actelion (ALIOY) Deal Said Valued at $250-$260 Per Share, Including SpinCo - Sources

January 12, 2017 12:38 pm

Johnson & Johnson (NYSE: JNJ) and Actelion (OTC: ALIOY) are making progress toward finalizing 2017's first mega-deal, valued in the tens of billions of dollars, according to people claiming to have knowledge of the matter.

Under the arrangement being discussed, Actelion would split into two parts, with mature assets acquired by Johnson & Johnson, and the other assets held in a second public company. The amount of the cash component remains an open question but the total deal value is believed to be $250 to $260 per share, including the SpinCo. One person said Actelion investors would likely have the option to take all cash or shares in the new company.

Actelion and Johnson & Johnson in December announced that they entered exclusive talks, an arrangement that excluded Sanofi (NYSE: SNY), a drug company that had also shown interest in a deal with Actelion. While Sanofi is no longer involving in talks, the fact that there was a second bidder stirred rumors that Johnson & Johnson had sweetened its offer by a large sum, but the deal's structure may have played as large of a role as price and been the critical factor in allowing the process to move forward. Actelion's CEO Jean-Paul Clozel, a large shareholder, had pressed for the company's independence from the beginning.

While the terms of the new, complex arrangement may not include a major bump in price, it was described as a win for all parties involved -- Johnson & Johnson, Actelion, and shareholders.

FT : Covenant clause removal fires up US bond investors

Covenant clause removal fires up US bond investors
Orders surpass $25bn for Broadcom’s $13.55bn offer, the year’s largest corporate bond

US fixed income investors drew a line in the sand this week, forcing a number of companies to back away from weakening the terms of their debt sales at the expense of bondholders.

General Motors’ financial subsidiary, chipmaker Broadcom and the Brazilian pulp manufacturer Fibria Celulose dropped contentious language from their debt sales that sought to deprive investors of certain premiums should the companies breach their covenants and default.

The investor opposition, which one money manager characterised as a “groundswell”, also prompted Novolex — a maker of packaging products that private equity firm Carlyle is buying — to retreat from weakening its covenants.

“There is still power for the [bond] buyers,” said Matthew Brill, a portfolio manager with Invesco. This was “the start of a slippery slope. We said we had to hold the line.”

Bondholders are typically paid a premium if a company decides to pay off its debts before they are due.

The compensation, known as ‘make-whole’ redemptions, offset missed earnings when a bond is retired before initially agreed.

The make-whole provisions extend to breaches of covenants, which can occur if a group pays a dividend in excess to the bond document terms or if its debt eclipses agreed levels, triggering a technical default.

As the rebellion gathered momentum, there was concern among investors that they would simply miss out on deals if they sought to negotiate with underwriters on the language, which often reads: “No premium in respect of the notes shall be payable as a result of any default.”

The no-premium language first popped up in a corporate bond sale last October and has since featured in about a dozen deals.

Gautam Khanna, a portfolio manager with Insight Investment, noted that sharp inflows into US corporate credit had weakened investors’ hands.

“Often a deal is announced, particularly in the investment-grade space, and it is five-times oversubscribed in the first few hours and it gets done,” he said. “There's not much of an opportunity to push back on the covenant package.”

Insurance broker Marsh & McLennan, which successfully sold $1bn worth of debt earlier this week with the clause, amended its bond documents with US securities regulators on Wednesday to remove the language. 

After Broadcom removed the clause, underwriters counted orders in excess of $25bn for the $13.55bn offering — the year’s largest corporate issue so far and one of a handful of $10bn-plus acquisition-related bond sales expected in 2017. 

The sale, which was completed shortly after GM Financial’s $2.5bn debt was issued, came amid a wave of bond offerings that started the year on a record pace. 

“So far issuance has been extremely robust this month and we haven’t even gotten to earnings season, when most of the US banks will come,” said Andrew Forsyth, a portfolio manager with BNP Paribas Investment Partners who purchased some of the new seven-year Broadcom notes.

“There is a little bit of fatigue in the investment-grade market.”

WSJ : Apple Sets Its Sights on Hollywood With Plans for Original Content



From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: 01/12/17 15:43:02
Subject: WSJ : RTRS - U.S. ENVIRONMENTAL PROTECTION AGENCY WILL MAKE AN ANNOUNCEMENT AT
Apple Sets Its Sights on Hollywood With Plans for Original Content

Apple Inc. is planning to build a significant new business in original television shows and movies, according to people familiar with the matter, a move that could make it a bigger player in Hollywood and offset slowing sales of iPhones and iPads.
These people said the programming would be available to subscribers of Apple’s $10-a-month streaming-music service, which has struggled to catch up to the larger Spotify AB. Apple Music already includes a limited number of documentary-style segments on musicians, but nothing like the premium programming it is now seeking.
The technology giant has been in talks with veteran producers in recent months about buying rights to scripted television programs. It also has approached experienced marketing executives at studios and networks to discuss hiring them to promote its content, said people with knowledge of the discussions.

In addition to TV, Apple indicated to these people that it is considering offering original movies, though those plans are more preliminary.
Executives at Apple have told people in Hollywood they hope to start offering original scripted content by the end of 2017.

The shows Apple is considering would likely be comparable to critically acclaimed programs like “Westworld” on Time Warner Inc.’s HBO or “Stranger Things” on Netflix.
Because it is looking at just a handful of carefully selected shows, and potentially films, it doesn’t appear Apple is preparing to spend the hundreds of millions or even billions of dollars it would need to spend annually to become a direct competitor to Netflix Inc., Amazon.com Inc.’s Prime Video or premium cable networks.
Rather, it would escalate the arms race between Apple Music and Spotify, which both offer essentially the same catalog of tens of millions of songs, by adding other content that could distinguish Apple’s service.

Nonetheless, the entry of the world’s most valuable company into original television and films could be a transformative moment for Hollywood and mark a significant turn in strategy for Apple as it starts to become more of a media company, rather than just a distributor of other companies’ media.
In addition to its music-related nonfiction shows and documentaries, Apple Music already has bought the rights to a half-hour version of “Carpool Karaoke,” which is currently a segment on CBS’s “The Late Late Show with James Corden.” It is also making a quasi-biographical series about Dr. Dre, the rap star and Apple Music executive, which is slated to premiere later this year.
But it hasn’t yet bought scripted content from outside producers, a more expensive and riskier endeavor that takes it further onto the turf of entertainment companies. The series and movies Apple is now considering buying don’t have any particular relationship to music, according to the people familiar with the matter.

One reason Apple hasn’t yet completed a deal to buy a scripted series is because it is still working out details of its business strategy built around original content. But it has told producers that a key advantage it hopes to offer is that it would share data on how many people watch its original content and some demographic data on them. Netflix doesn’t share any such information with its content creators, which has been a source of contention among some in Hollywood.
Apple has been flirting for years with whether and how it should enter the entertainment business. It held talk with television companies about offering a “skinny bundle” of networks over the internet, but was never able to reach terms. It also approached Time Warner Inc. last year about a possible merger before that company agreed to be acquired by AT&T Inc.
The move into original content comes as Apple is grappling with a slowdown in its traditional business. Last year it missed its own internal revenue targets for the first time in at least seven years as sales of the iPhone 6s fell short of expectations. Sales of the iPhone, which turned Apple into the world’s most profitable company, have slowed amid rising competition, particularly in China.
Apple Music has become a key piece of the company’s services business, which has been growing as iPhone sales slow. Revenue from Apple Music rose 22% in the quarter ended Sept. 24, but the service’s subscriber base is still dwarfed by Spotify’s.
Apple Music said in December that it had more than 20 million subscribers, most of whom pay $9.99 a month; Spotify counted more than 40 million paying subscribers in September.

WSJ : RTRS - U.S. ENVIRONMENTAL PROTECTION AGENCY WILL MAKE AN ANNOUNCEMENT AT

Apple Sets Its Sights on Hollywood With Plans for Original Content

Apple Inc. is planning to build a significant new business in original television shows and movies, according to people familiar with the matter, a move that could make it a bigger player in Hollywood and offset slowing sales of iPhones and iPads.
These people said the programming would be available to subscribers of Apple’s $10-a-month streaming-music service, which has struggled to catch up to the larger Spotify AB. Apple Music already includes a limited number of documentary-style segments on musicians, but nothing like the premium programming it is now seeking.
The technology giant has been in talks with veteran producers in recent months about buying rights to scripted television programs. It also has approached experienced marketing executives at studios and networks to discuss hiring them to promote its content, said people with knowledge of the discussions.

In addition to TV, Apple indicated to these people that it is considering offering original movies, though those plans are more preliminary.
Executives at Apple have told people in Hollywood they hope to start offering original scripted content by the end of 2017.

The shows Apple is considering would likely be comparable to critically acclaimed programs like “Westworld” on Time Warner Inc.’s HBO or “Stranger Things” on Netflix.
Because it is looking at just a handful of carefully selected shows, and potentially films, it doesn’t appear Apple is preparing to spend the hundreds of millions or even billions of dollars it would need to spend annually to become a direct competitor to Netflix Inc., Amazon.com Inc.’s Prime Video or premium cable networks.
Rather, it would escalate the arms race between Apple Music and Spotify, which both offer essentially the same catalog of tens of millions of songs, by adding other content that could distinguish Apple’s service.

Nonetheless, the entry of the world’s most valuable company into original television and films could be a transformative moment for Hollywood and mark a significant turn in strategy for Apple as it starts to become more of a media company, rather than just a distributor of other companies’ media.
In addition to its music-related nonfiction shows and documentaries, Apple Music already has bought the rights to a half-hour version of “Carpool Karaoke,” which is currently a segment on CBS’s “The Late Late Show with James Corden.” It is also making a quasi-biographical series about Dr. Dre, the rap star and Apple Music executive, which is slated to premiere later this year.
But it hasn’t yet bought scripted content from outside producers, a more expensive and riskier endeavor that takes it further onto the turf of entertainment companies. The series and movies Apple is now considering buying don’t have any particular relationship to music, according to the people familiar with the matter.

One reason Apple hasn’t yet completed a deal to buy a scripted series is because it is still working out details of its business strategy built around original content. But it has told producers that a key advantage it hopes to offer is that it would share data on how many people watch its original content and some demographic data on them. Netflix doesn’t share any such information with its content creators, which has been a source of contention among some in Hollywood.
Apple has been flirting for years with whether and how it should enter the entertainment business. It held talk with television companies about offering a “skinny bundle” of networks over the internet, but was never able to reach terms. It also approached Time Warner Inc. last year about a possible merger before that company agreed to be acquired by AT&T Inc.
The move into original content comes as Apple is grappling with a slowdown in its traditional business. Last year it missed its own internal revenue targets for the first time in at least seven years as sales of the iPhone 6s fell short of expectations. Sales of the iPhone, which turned Apple into the world’s most profitable company, have slowed amid rising competition, particularly in China.
Apple Music has become a key piece of the company’s services business, which has been growing as iPhone sales slow. Revenue from Apple Music rose 22% in the quarter ended Sept. 24, but the service’s subscriber base is still dwarfed by Spotify’s.
Apple Music said in December that it had more than 20 million subscribers, most of whom pay $9.99 a month; Spotify counted more than 40 million paying subscribers in September.

Reuters - QE opponents voiced rare dissent at ECB Dec meeting, minutes show

Opponents of the European Central Bank's money-printing programme openly voiced their dissent at the ECB's latest meeting, when the bank extended its stimulus programme despite improving economic conditions, accounts showed on Thursday.
With euro zone inflation rebounding, the ECB is facing calls, particularly in Germany, to pare back of its 2.3 trillion euros (£1.99 trillion) bond-buying scheme.

In a rare sign of open opposition, the minutes of the Dec. 7-8 meeting of the ECB's Governing Council showed that "a few members" rejected both proposals on the table to continue purchases beyond March.

"A few members could not support either of the two options that had been proposed, while welcoming the scaling down of purchases," the minutes showed.

Bundesbank President Jens Weidmann, the most prominent hawk on the ECB's council, has publicly expressed scepticism about the bank's purchasing of government bonds, which he sees as an emergency measure.

But the Frankfurt-based central bank, due to review its policy again next week, is unlikely to change tack soon, in a year fraught with political risk, including elections in key euro zone countries and the start of Britain's negotiations to leave the European Union.

Overall, the minutes struck a balanced tone.

Policymakers highlighted risks, such as political uncertainty and bond market volatility.

But they also listed potential positives for the euro zone economy, including greater fiscal spending by Donald Trump's new U.S. administration or even in the currency bloc itself.

"Against this background it was emphasised that, in such an uncertain and volatile environment, monetary policy was best advised to follow a 'steady-hand' approach that protected financial conditions in the euro area over the period ahead and allowed the recovery to mature and strengthen," rate setters said in the minutes.

France, the Netherlands, Germany and possibly Italy will hold general elections this year, at a time when scepticism towards the euro project and globalisation is on the rise.

OPTIONS

The ECB's board had tabled plans to either extend purchases until December at 60 billion euros per month or until September at 80 billion euros, the minutes showed, confirming a Reuters report from the day after the meeting.

The first option was eventually chosen. It was interpreted by some economists as a first step towards winding down the programme, an idea that ECB President Mario Draghi has already dismissed.

In fact, the ECB said in the minutes it could raise the pace back to 80 billion euros per month or extend the scheme further if the economic outlook worsens or financing conditions tighten too far, as already reported by Reuters.

But it added that changes to how much of the debt of a single country or of any individual bond issue it can buy were not considered because they would raise legal, communication and reputational problems.

The central bank will decide on its policy again on Jan. 19, with no new move expected.

But pressure from Draghi's critics to change the ECB's course is mounting after December's inflation readings for the euro zone showed a jump to a three-year peak of 1.1 percent.

As the bounce was mainly due to oil prices, board member Yves Mersch said last week it was too early to declare victory.