>>> bebe stores says exploring strategic alternatives

bebe stores says exploring strategic alternatives (3.86 +0.29)
The co announced that its Board of Directors is exploring strategic alternatives for the company. bebe has retained B. Riley & Co. as its financial advisor and has also engaged a real estate advisor to assist with options related to its lease holdings. bebe said that there is no assurance that this process will result in any specific transaction, and it does not expect to disclose further developments during this process unless and until the Board of Directors has approved a specific transaction or otherwise determined that disclosure is appropriate.

>>> US Close Dow -0.03% S&P +0.19% Nasdaq +0.48% Russell -0.07%

Closing Market Summary: Investors Wrangled Financials to Push Stocks Higher on Wednesday

Wednesday's session was full of ambiguity as investors digested the stock market's Tuesday defeat, which was the steepest decline since October. Stocks ultimately put together a decent performance, but the win didn't feel secure until the closing bell as the financial sector (-0.2%) acted in a seesaw fashion that weighed on the sentiment of the broader market. The S&P 500 (+0.2%) and the Nasdaq (+0.5%) settled with modest gains while the Dow finished flat. Meanwhile, the small-cap Russell 2000 (-0.2%) underperformed.

As they have throughout the post-election rally, most sectors looked to the financial sector for leadership on Wednesday. This resulted in the market moving in tandem with the financial group, but unlike yesterday, the top-weighted technology sector (+0.8%) watered down financials' impact. The tech group propped up the broader market at times with gains from top components like Apple (AAPL 141.42, +1.58), Microsoft (MSFT 65.03, +0.82), and Facebook (FB 139.59, +1.08). Chipmakers also contributed to the cause, pushing the PHLX Semiconductor Index 1.1% higher along the way.

The technology group's bullish sentiment was persistent; at times, the sector was one of few to trade in the green. However, the persistence paid off in the final stretch as all but the financials (-0.2%), telecom services (-1.0%), consumer staples (-0.1%), and energy (-0.1%) sectors joined the technology group in positive territory. 

The energy sector very narrowly missed positive territory despite spending much of the trading day with a solid loss. Crude oil influenced the sector's struggle, slipping in response to a bearish EIA inventory report. However, the commodity was able to largely shake off the bigger than expected build (+5.0 million vs +2.8 million consensus) to close 0.5% lower at $48.05/bbl.

In corporate news, Nike (NKE 53.92, -4.09) reported upbeat earnings per share, but investors were disappointed in the company's lackluster worldwide futures orders. Conversely, future guidance is what saved FedEx (FDX 195.92, +4.08) from suffering the consequences of its earnings miss. The companies' respective sectors--consumer discretionary and industrials-- finished with modest gains of 0.1% and 0.4%, respectively.

In the Treasury market, U.S. sovereign debt capitalized on investors' cautious attitude to post its fourth consecutive advance. The benchmark 10-yr yield settled two basis points lower at 2.40%.

On the data front, investors received a handful of economic reports, including February Existing Home Sales, January FHFA Housing Price Index, and the weekly MBA Mortgage Applications Index:

  • Existing home sales for February decreased 3.7% from January to an annualized rate of 5.48 million units while the consensus expected a reading of 5.54 million.
    • The key takeaway from the report is that limited supply and weakening affordability conditions are preventing more robust selling activity in the market for existing homes.
  • The FHFA Housing Price Index for January was unchanged, which followed an unrevised increase of 0.4% in December.
  • The weekly MBA Mortgage Applications Index decreased 2.7% to follow last week's 3.1% uptick.

On Thursday, investors will receive Initial Claims (consensus 239,000) at 8:30 ET and February Existing Home Sales (consensus 560,000) at 10:00 ET.

  • Nasdaq Composite +8.2% YTD
  • S&P 500 +4.9% YTD
  • Dow Jones Industrial Average +4.6% YTD
  • Russell 2000 -0.9% YTD

FT : Akzo Nobel shareholders urge takeover talks with rival PPG

Akzo Nobel shareholders urge takeover talks with rival PPG
Call follows Dutch company rejecting revised €22.4bn bid from rival US group

Three large shareholders in Akzo Nobel have urged the company to enter into talks with rival PPG Industries after the Dutch paints and chemicals group rejected a revised €22.4bn takeover attempt from its US rival.

The latest unsolicited bid from PPG represented a €1.5bn improvement on an earlier offer, made on March 9, but Akzo Nobel’s two boards again rejected it unanimously. 

Akzo Nobel’s instant rebuff goes against the tide of large-scale consolidation sweeping the broader chemicals sector and drew criticism from several investors, with one warning that the management was “losing credibility”.

The maker of Dulux paint said the second offer, worth €88.72 per share and made on March 20, undervalued the company and its prospects. It also said the proposal did not address “the significant uncertainties and risks for shareholders and other stakeholders” and warned a tie-up would lead to substantial divestitures on competition grounds, as well as job cuts.

Combining the groups would be likely to attract stiff scrutiny from antitrust regulators because it would create a dominant group in the $130bn global paints and coatings market.

Activist investor Elliott Advisors, a top five shareholder with more than 3 per cent of the stock, said that while the offer price was inadequate, it provided a “credible basis for engagement”.

The hedge fund urged Akzo Nobel’s management “to engage with PPG immediately” to determine whether the US group was prepared to bid higher and address all relevant stakeholder considerations.

Two other top-20 shareholders echoed Elliott’s position, suggesting that Akzo Nobel’s chief executive, Ton Büchner, faces rising investor dissent as he attempts to see off a hostile buyout of one of Europe’s oldest industrial companies.

“We see strong logic in a combination of Akzo Nobel and PPG and the potential benefits this offers all stakeholders. Akzo needs to recognise this and engage,” said David Dudding, portfolio manager at Columbia Threadneedle.

John Bennett, head of European equities at Henderson Global Investors, said Akzo Nobel should “hear out” PPG on its proposal. “If you don’t think it’s right, present a recommendation to the board and shareholders [to vote on].”

“The management team is rapidly losing credibility,” he added.

VEB, an influential Dutch shareholder group, also called for the company to consider the deal. “They can’t just shut the door. I can understand them saying it is too low. But when a second bid comes in from a serious player, then you should talk to each other,” said Paul Koster, its director.



PPG’s new cash and stock offer was worth a total of €88.72 per share. Of this, €56.22 was in cash and 0.331 in PPG shares. Shares in Akzo Nobel fell 1.1 per cent to €75.75 on Wednesday.

However, there was some confusion over the actual value of the bid. PPG put the offer at €90 per share including a dividend, for a total value of €22.70, but Akzo Nobel said that included a payout which shareholders would receive regardless.

PPG’s advance has attracted criticism from politicians in the Netherlands, who are worried about job losses and the country’s corporate champions being picked off by larger rivals.

Their response was especially fierce as PPG’s first bid came during an election campaign and just weeks after Kraft-Heinz’s failed bid for Unilever, the Anglo-Dutch consumer group. Dismissing the new bid on Wednesday, Akzo Nobel’s management complained that there was a “significant culture gap” between the two companies.

In his defence, Mr Büchner said the company had “listened carefully” to shareholders and taken their views into consideration when arriving at the decision.


Analysts were doubtful whether PPG would return with a third offer.

Jeremy Redenius, analyst at Bernstein, said that a survey of investors carried out by the brokerage found investors had been hoping for €95 a share.

“We think PPG knew they needed a second bid in the €90s to get engagement from Akzo (eg, opportunity to do due diligence) and elected to not be aggressive enough, which calls into question their desire to return with a yet higher offer,” he wrote in a note.

Even so, the latest bid will pile pressure on Mr Büchner to explain his plans for the company, which is planning to sell or float its speciality chemicals business to focus on paints and industrial coatings.

During five years at the helm of the group, which traces its roots to Swedish inventor Alfred Nobel, Mr Büchner has concentrated on making Akzo Nobel a more efficient operation.

But analysts say the company’s stock trades at an earnings multiple discount to its peers, a situation that can make it more susceptible to takeover attempts.

If PPG returns with a higher bid, the Dutch group’s corporate governance has a decades-old provision that creates a foundation with priority shares, which acts as a poison pill to protect the incumbent board and prevent a hostile takeover.

But Elliott suggested it might attempt to convene an extraordinary general meeting, at which members of the management and supervisory boards can be voted out, should Akzo Nobel not accede to the shareholders’ requests for engagement.

FT : General Electric: target on his back

FT : General Electric: target on his back
Activist investor starts clock ticking on Immelt’s tenure at head of conglomerate

“Transformation Underway . . . but Nobody Cares.” That was how activist investor Trian Partners described General Electric’s pivot from financial services to industry in 2015, when it revealed a $2.5bn stake in the group. Not much has changed. The shares have risen only 15 per cent since. But Jeff Immelt, GE’s boss, is now officially on notice.

On Wednesday, GE said it would aim to reduce overheads in its core industrial business from $25bn to $23bn between 2016 and 2018, and hit a profit target of $17bn in 2017. To motivate management, existing cash bonus figures will rise 20 per cent if both targets are hit. If both are missed, bonuses will be cut 20 per cent. Hit one out of the two, and the status quo prevails.

While GE’s shift from financial services towards infrastructure has been celebrated, the financial results have been slow to materialise because of the fall in commodity prices and the strong dollar. Organic revenue growth for 2016 came in essentially flat, rather than at the 2-4 per cent that had been predicted at the end of 2015.

In its 2015 slides, Trian said GE shares should trade over $40 by the end of 2017, a target that seems implausible with the shares under $30. The figure that matters most now is $2.00 — the earnings per share that the Mr Immelt has pledged to reach in 2018.

GE’s new profit and cost targets delineate the path to hit that figure. Such reverse engineering to meet an arbitrary yardstick is part of the hustle of being a public company. That GE can simply find another $1bn of fat to cut as revenue growth stagnates only underscores the farce.

Mr Immelt’s tenure, now at a lengthy 15 years, has, overall, been a disappointment for shareholders. Recent reports suggest Trian has become frustrated with him. On Wednesday it voiced support for the new targets and pay plan. It cares deeply about how the next nine months proceed. The GE boss needs to show similar commitment if he wants to stick around.

(BFW) Alitalia’s Plan Includes EU2b In Equity, Credit Lines: Calenda

“The plan submitted by Alitalia on March 16 includes equity and credit lines amounting to 2 billion euros,” Economic Development Minister Carlo Calenda tells lawmakers in Rome.
  • Under plan, EU900m will be provided by Etihad and EU1.1b by shareholders and Italian creditors
  • “Alitalia is and must remain a private company and the impact on state finances must be contained to the bare minimum, that not only to comply with EU rules, but also because we are aware of the results obtained in the past also under public management and of the costs sustained by Italian taxpayers”

FT : Dijsselbloem under fire after saying eurozone countries wasted money on ‘al

Jeroen Dijsselbloem, the head of the eurozone’s finance ministers, is facing calls to resign after refusing to apologise for saying crisis-hit European countries had wasted their money on “drinks and women”.

The Dutch policy chief – whose Labour party suffered a punishing defeat in national elections last week – was dubbed “insulting” and “vulgar” by MEPs for remarks made in an interview with German newspaper Frankfurter Allgemeine Zeitung.

At a European parliamentary hearing in Brussels on Tuesday, Mr Dijsselbloem said he would “not apologise” after coming under pressure to distance himself from remarks perceived as an attack on the bloc’s southern countries such as Spain, Portugal, Italy and Greece.

In comments reported by the Spanish press, Mr Dijsselbloem told FAZ:

During the crisis of the euro, the countries of the North have shown solidarity with the countries affected by the crisis.
As a Social Democrat, I attribute exceptional importance to solidarity. [But] you also have obligations. You can not spend all the money on drinks and women and then ask for help.
Despite being given repeated opportunities to apologise, Mr Dijsselbloem stood firm, insisting that “solidarity” in the eurozone meant all governments should stick by promises to adhere to the EU’s budgetary rules on debt and deficit limits.

“The concept that when I am being stern on the rules and regulations… and taking them seriously, that this is an attack, is a huge mistake” he told MEPs.

Greece, Ireland and Portugal were bailed out by the EU and International Monetary Fund in 2010, while Spain’s banking system was rescued with creditor funds in 2012.

Spanish MEP Gabriel Mato said the comments were “absolutely unacceptable” and an “insult” to member states, claiming Mr Dijsselbloem had lost his “neutrality” as Eurogroup chief.

The criticism is likely to heap pressure on Mr Dijsselbloem’s position as chair of 19-member Eurogroup. He is currently the Netherlands interim finance minister after his centre-left party suffered a collapse in support in national elections last week.

Mr Dijsselbloem’s mandate as president ends in January 2018. Before today he hinted at staying on in the position until a formal coalition is appointed in the Netherlands.

Responding to MEPs criticism, Mr Dijsselbloem said: “Don’t be offended, it is not about one country but about all our countries. The Netherlands also failed a number of years ago to comply with what was agreed [on financial rules]. I don’t see a [conflict between] regions of the eurogroup”.

“If you want to maintain public and political support throughout the EU for solidarity you must always also talk about what commitments and what efforts must be made by everyone to maintain that solidarity.”

Portugal’s minister for foreign affairs, Santos Silva, called on Mr Dijsselbloem to resign.

“It seems that the president of the Eurogroup has spent all these years without understanding what really happened to countries like Portugal, Spain or Ireland”, he said.

Gianni Pitella, head of the Socialist grouping in the European parliament, questioned whether Mr Dijsselbloem was “fit” to hold the Eurogroup chair:

Dijsselbloem went far beyond by using discriminatory arguments against the countries of southern Europe. There is no excuse or reason for using such language, especially from someone who is supposed to be a progressive.
In the parliament, Spanish MEP Ernest Urtasun‏ told the Dutch minister: “Maybe it is funny for you, but I don’t think it is. I would like to know if this is your first statement as a candidate to renew your post as president of the Eurogroup.”