BFM-Business : Engie wants to regain control of Suez


The patron Isabelle Kocher wants to create a giant of the services to the energy. An idea that crystallizes tensions internally. His rival Veolia follows the record closely.
Engie seeks to recreate an environmental giant. According to several sources close to the group, her boss Isabelle Kocher wants to regain control of Suez, the water management subsidiary whose Engie (eg GDF-Suez) holds 33%. A project that has been ripening for several months. Last summer, she made the tour of the leading candidates of the right and middle school to introduce her idea of ​​"creating a major player in energy services around electricity, gas and electricity. Water "explains a close friend of one of the pillars of the primary. After Nicolas Sarkozy, Isabelle Kocher met Alain Juppé in June, although he was advised by his former rival Jean-François Cirelli, the former number two of Engie. After trying to see them again, she "sold" her project to François Fillon in September. "To each one, it unfolded its plan consisting in fine to regain control of Suez" decrypts another adviser of one of the three candidates. A political blank is essential while the state holds 33% of Engie. The group will decide on the future of Suez after the presidential election and by the end of 2018.
There are, however, some obstacles in his way. Buy Suez would cost about 5 billion euros. "It wants to invest part of the 15 billion euros of announced sales but it does not have enough money to do all these jobs," notes a banker close to Engie. One of the ideas would be to resell the activity "cleanliness" (Sita) of Suez to limit the invoice. Then, to tie the water management professions to Ineo, the fashionable energy saving subsidiary, to take advantage of Suez's commercial links with the cities. A few months ago, Isabelle Kocher entrusted the management of Ineo to Yann Rolland, an elder of ... Suez. Contacted, the management of Engie did not wish to comment on the information of BFM Business. Suez did not want to answer.
Heavy internal opposition
Another pitfall on his path: internal resistances. They are strong because Suez's general manager, Jean-Louis Chaussade is fiercely opposed to such an operation. This would also be the case for Gérard Mestrallet, president of both Engie and Suez, an unavoidable figure in such a project. "This project around Suez crystallizes the tensions between Kocher and Mestrallet" assures a close of the group. In recent months, there is a rumor that the president of Engie would like to separate from his director general, whom he has nevertheless knighted for three years.
Still, such a project resonates with competitors. The great rival Veolia follows suit closely. "His bankers have not waited to reveal the schemes of merger with Suez that they had arranged for two years," testify several sources close to Veolia who assure that there is no discussion. However, this option is still very complex in terms of competition. "It would make sense internationally," said Veolia, who is close to Veolia's management, "but it would create governance problems." The "double president" Gérard Mestrallet would also be opposed here. Ready to do everything to counter the projects of Isabelle Kocher, he would even imagine an improbable alliance between Suez and the great rival EDF. A financial meccano of which he alone has the secret.

BFM-Business : Engie veut reprendre le contrôle de Suez



La patronne Isabelle Kocher souhaite créer un géant des services à l’énergie. Une idée qui cristallise les tensions en interne. Son rival Veolia suit le dossier de près.

Engie cherche à recréer un géant de l’environnement. Selon plusieurs sources proches du groupe, sa patronne Isabelle Kocher souhaite reprendre le contrôle de Suez, la filiale de gestion de l’eau dont Engie (ex GDF-Suez) détient 33%. Un projet qu’elle mûrit depuis plusieurs mois. L’été dernier, elle a fait la tournée des grands candidats de la primaire de la droite et du centre pour leur présenter son idée de "créer un grand acteur des services à l’énergie autour de l’électricité, du gaz et de l’eau" explique un proche de l’un des piliers de la primaire. Après Nicolas Sarkozy, Isabelle Kocher a rencontré Alain Juppé en juin, même s’il était conseillé par son ancien rival Jean-François Cirelli, l’ancien numéro deux d’Engie. Après avoir tenté de les revoir à la rentrée, elle a "vendu" son projet à François Fillon en septembre. "À chacun, elle a déroulé son plan consistant in fine à reprendre le contrôle de Suez" décrypte un autre conseiller d’un des trois candidats. Un blanc-seing politique est indispensable alors que l'État détient 33% d'Engie. Le groupe décidera de l'avenir de Suez après l'élection présidentielle et d'ici fin 2018.

Quelques obstacles se dressent pourtant sur sa route. Racheter Suez coûterait environ 5 milliards d’euros. "Elle veut y investir une partie des 15 milliards d’euros de cessions annoncées mais elle n’a pas assez d’argent pour faire tous ces métiers" note un banquier proche d’Engie. Une des idées consisterait à revendre ensuite l’activité "propreté" (Sita) de Suez pour limiter la facture. Puis d’arrimer les métiers de gestion de l’eau à Ineo, la filiale à la mode d’économie d’énergie, pour qu’elle profite des liens commerciaux de Suez avec les villes. Il y a quelques mois, Isabelle Kocher a d’ailleurs confié la direction d’Ineo à Yann Rolland, un ancien de… Suez. Contactée, la direction d’Engie n’a pas souhaité commenter les informations de BFM Business. Celle de Suez n’a pas souhaité nous répondre.

Lourdes oppositions internes

Autre embûche sur son chemin: les résistances internes. Elles sont fortes puisque le directeur général de Suez, Jean-Louis Chaussade est farouchement opposé à une telle opération. Ce serait également le cas de Gérard Mestrallet, président à la fois d’Engie et de Suez, personnage incontournable dans un tel projet. "Ce projet autour de Suez cristallise les tensions entre Kocher et Mestrallet" assure un proche du groupe. Ces derniers mois circule la rumeur selon laquelle le président d’Engie souhaiterait se séparer de sa directrice générale, qu’il a pourtant adoubée depuis trois ans.

Reste qu’un tel projet résonne chez les concurrents. Le grand rival Veolia suit l’affaire de près. "Ses banquiers n’ont pas attendu pour ressortir les schémas de fusion avec Suez qu’ils avaient rangés depuis deux ans" témoignent plusieurs sources proches de Veolia qui assurent qu’il n’y a aucune discussion. Cette option reste pourtant très complexe à réaliser en termes de concurrence. "Cela aurait du sens à l’international, reconnaît un proche de la direction de Veolia. Mais cela créerait des problèmes de gouvernance". Le "double président" Gérard Mestrallet y serait, là aussi, opposé. Prêt à tout pour contrer les projets d’Isabelle Kocher, il imaginerait même une alliance improbable entre Suez et le grand rival EDF. Un meccano financier dont lui seul a le secret.

>>> Europe : Brokers Upgrades & Downgrades - 20th of December 2016

>>> Up
*Axel Springer Raised to Buy at HSBC, PT EU52
*Grenke Raised to Buy at HSBC, PT EU175
*Michelin Raised to Neutral at BofAML
*Osram Raised to Buy at UBS, PT EU55
*UBM Raised to Add at Peel Hunt

>>> Down
*BBVA Cut to Hold at Fidentiis Equities, PT EU6.95
*BMW Cut to Equal-Weight at Morgan Stanley, PT EU81
*H&M Cut to Underperform at Credit Suisse, PT SEK224
*Saipem Cut to Neutral at Mediobanca

>>> PT Change


>>> Initiation
*Grenke Raised to Buy at HSBC, PT EU175
*Italgas Rated New Overweight at Barclays, PT EU4

>>> Call

>>> What to look at today - 20th of December 2016

Dow +0.20% S&P +0.20% Nasdaq +0.37% Russell +0.55%
US Market closed higher helped by the tech names. Investor sentiment soured during late afternoon action after it was reported that nine people were killed and at least 50 were injured after an assailant drove a truck into a crowd at the Christmas market in Berlin. This followed a morning report from Ankara, where the Russian Ambassador to Turkey was assassinated by an off-duty Turkish policeman. The two developments likely contributed to afternoon profit taking. energy (-0.5%) struggled amid a volatile day in crude oil. WTI crude alternated between gains and losses before ending higher by 0.3% at $52.12/bbl. Volume were in line with average with 900mil shares. US After Hours CNAT +110% on Novartis pact. Volatility across regional indices and FX majors is seasonably compressed despite the geopolitical jitters in Europe. Bank of Japan policy decision was out exceptionally early today as the BOJ kept its yield control policy settings unchanged. Also as speculated in Japan press, the BOJ raised its assessment for overall economy as well as the Exports component, noting continued moderate recovery trend. USD/JPY was up about 30pips on the BOJ release, rising above 117.50. Fitch said China housing sales to decline by 15% in 2017.

Nikkei +0.53% Hang Seng -0.70% CSI -1.03% Shanghai -0.91%

Eur$ 1.0378 CNH 6.9477 CNY 6.9510 JPY 117.95 GBP 1.2387 CHF 1.0294 RUB 61.96 WTI$ 52.88 ( -0.34%)

S&P +0.09% EuroStoxx +0.00% Dax -0.01% SMI +0.10% FTSE -0.04%

Macro :
- Italy to Ask Parliament to Clear EU20B Debt Boost to Aid Banks
- Value ETF Gets Week’s Biggest Factor Inflow, Posts Biggest Loss
- Italy Said to Weigh Increase in Public Debt for Bank Aid
- Banks May Not Have a Lot of Upside: Guggenheim’s Wasserstrom
- CVC Said to Get EU25b-EU30b of Demand for Latest Buyout Fund: FT

Keep an eye on :
- ABI BB : Brito Family Foundation Sells $2.09m Anheuser-Busch InBev ADRs
- BMPS IM : Quaestio Capital Agrees to Terms for Paschi Senior Bridge Loan
- CABK SM : CaixaBank Makes Further Revision of Pilar III Data: Filing
- CWI AV : Vonovia Says Succeeds With Bid to Purchase Austria’s Conwert
- CSGN VX : U.S. proposed $5-7 billion penalty for Credit Suisse on toxic debt - http://reut.rs/2i2qfHp
- FCT IM : Fincantieri Finalizes Accords for 3 Cruise Ships for Virgin
- GSK LN : GlaxoSmithKline Says Phase III HIV Studies Met Primary Endpoint
- IIA AV : Immofinanz 1H Operating Result Rises Y/y as Reports Net Loss
- LHA GY : Lufthansa Says Eurowings Unit to Add More Than 60 Routes: SZ
- LSE LN : LSE Confirms Exploring LCH.Clearnet Sale, in Talks With Euronext
- NOVN VX : Novartis to Buy Encore Vision to Bolster Ophthalmology Pipeline
- NOVOB DC : Novo Nordisk Gets FDA Approval of Tresiba for Use in Children
- NOVOB DC : Ophthotech Top Holder Novo A/S Reports 0% Stake
- OHL SM : Businessman Gilinski Bids for OHL Canalejas Stake: Expansion
- RKET GY : Rocket Internet-Backed HelloFresh Reduces Valuation on New Round
- SEV FP : Engie Wants to Take Control of Suez, BFM Business Reports
- SYNN VX : Chemchina Extends Public Tender Offer for Syngenta to March 2
- UCG IM : Fortress to Buy Non-Performing Italian Loans From UniCredit
- VIV FP : Fininvest Asks Italy Regulator to Interfere in Vivendi Case
- VIV FP : Vivendi Plans to Lift Mediaset Stake Within Limit of 30%
- VOLVB SS : Volvo Cars to Sell SK5b in Pref Shares to 3 Swedish Investors
- DIS US : Walt Disney Studios Says It Will Have Industry’s First $7b Year

>>> Asian Update

Asia Mid-Session Market Update: BOJ keeps Yield Curve Control targets intact, raises assessment; RBA minutes show neutral policy stance


***US Session Highlights***
- (DE) Several dead, at least 50 reportedly injured after truck drives into Christmas market in Berlin, Germany; local police spokesman points to terrorism as motive - press
- (TR) Russia Ambassador to Turkey has died from gunshot wound in Ankara after being shot by off-duty Turkish special operations police officer - Russia press
- (US) Fed Chair Yellen: economic gains are finally raising most living standards; productivity growth has been disappointing; US jobs market is strongest in nearly a decade; job creation continues at steady pace, layoffs low
- (US) DEC PRELIMINARY MARKIT SERVICES PMI: 53.4 V 55.2E (lowest since Sept)

***US markets on close: Dow +0.2%, S&P500 +0.2%, Nasdaq +0.4%***
- Best Sector in S&P500: Technology
- Worst Sector in S&P500: Healthcare
- Biggest gainers: NPG +4.5%, HCP +4.0%, O +3.4%, LM +2.6%, LRCX +2.4%
- Biggest losers: MOS -6.1%, ALXN -4.6%, CF -4.0%, BIIB -2.7%, HUM -2.5%
- At the close: VIX 11.7 (-0.5pts); Treasuries: 2-yr 1.22% (flat), 10-yr 2.54% (-6bps), 30-yr 3.12% (-6bps)

***US movers afterhours***
- CNAT: Announces exclusive worldwide option, collaboration and license agreement covering development and commercialization of Emricasan with Novartis; +124.5% afterhours
- AUPH: Announces up to 20 year Manufacturing Collaboration Agreement with Lonza for Clinical and Commercial Supply of Voclosporin; +5.0% afterhours
- SCMP: Announces $225M convertible Senior Note offering; -5.4% afterhours
- WOR: Reports Q2 $0.75 ex-items v $0.80e, R$727.8M v $725Me; -7.4% afterhours
- NPTN: To sell low speed transceiver business to APAT Optoelectronics for $26.4M; Cuts Q4 $0.03-0.11 v $0.17e (prior $0.13-0.21); Rev $109M v $113Me (prior $109-115M); -19.1% afterhours

***Politics***
- (US) President-elect Trump secures over 270 Electoral College votes needed to be inaugurated as President - press
- (US) President-elect Trump said to prepare a "infrastructure task-force" to carry out federal spending program - US press

***Asia Key economic data:***
- (JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED; Maintains 10-yr JGB yield target around ~0%
- (NZ) New Zealand Nov Food Prices M/M: -0.1% v -0.8% prior (3rd straight decline)
- (KR) South Korea Nov PPI Y/Y: +0.7% v -0.1% prior (first increase in 28 months)

***Asia Session Notable Observations, Speakers and Press***
- Volatility across regional indices and FX majors is seasonably compressed despite the geopolitical jitters in Europe. Treasuries saw a pronounced bid in US hours after reports that a Russian ambassador was shot and killed by an off-duty policeman in Turkey in defiance of Russia's involvement in the Syria conflict. Later in the day, an armed man was also detained attempting to break into a US embassy. Separately, in an attack reminiscent of the Nice, France terror strike, a truck ploughed into a crowd of people at a holiday market in Berlin, killing 12 and injuring about 50.

- Bank of Japan policy decision was out exceptionally early today as the BOJ kept its yield control policy settings unchanged - short-term IOER was left at -0.1% while the target rate on the 10-year was kept at around 0% despite a minority view that it could be raised to reflect the recent jump in yields and lower rates. Also as speculated in Japan press, the BOJ raised its assessment for overall economy as well as the Exports component, noting continued moderate recovery trend (prior acknowledged sluggishness) and a pick-up in shipments. Inflation expectations are still deemed to be in "weakening phase", and the outlook for inflation remains to be slightly negative or about 0%due to effects of decline in energy prices. USD/JPY was up about 30pips on the BOJ release, rising above 117.50.

- RBA policy decision this month saw very few changes in the statement, and the meeting minutes reflected minimal shift in sentiment. Australia central bank is still widely viewed to have a neutral stance but with some optionality - members recognized domestic data (such as large Q3 GDP contraction) has not been encouraging, but also debated if the risks of even easier policy outweighed any benefit. RBA still expects inflation to remain low for some time, but also noted housing market conditions had strengthened while global inflation risks were diminished.

China
- (CN) Fitch: China housing sales to decline by 15% in 2017
- (CN) China may see tight interbank liquidity conditions persist until early Feb 2017 - Chinese press

Japan
- (JP) Japan govt confirms raising FY17/18 GDP to 1.5% from 1.2% July forecast - press
- (JP) Japan Fin Min Aso confirms that FY17 budget will total ¥97.5T; FY16 extra budget has ¥600B for disaster aid
- (JP) Japan govt (cabinet office) expected to raise its economic assessment in Dec (would be the first increase in more than a year) - Nikkei

Australia:
- (AU) Australia Finance Ministry (AOFM) FY16/17 bond issuance plan expected to be little changed around A$100B
- (AU) HSBC's Bloxham: More fiscal reform needed for Australia to preserve its AAA rating - NZ Herald

***Asian Equity Indices/Futures (23:30ET)***
- Nikkei +0.1%, Hang Seng -0.3%, Shanghai Composite -0.5%, ASX200 +0.5%, Kospi +0.2%
- Equity Futures: S&P500 +0.1%; Nasdaq +0.1%, Dax flat, FTSE100 flat

***FX ranges/Commodities/Fixed Income (23:30ET)***
- EUR 1.0395-1.0415; JPY 117.00-117.55; AUD 0.7240-0.7260; NZD 0.6915-0.6930
- Feb Gold flat at 1,140/oz; Jan Crude Oil -0.2% at $52.95/brl; Mar Copper flat at $2.50/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 8.9 tonnes to 828.1 tonnes; 22nd straight decline; lowest since May 4th
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.9468 V 6.9312 PRIOR
- USD/CNY: SWIFT: CNY use in international transactions: 2.00% of total in Nov v 1.67% prior

***Asia equities / Notables / movers by sector***
- Financials: BT Investment Management BTT.AU -4.9% (Credit Suisse cuts to underperform); Wanda Commercial Properties Group Co 169.HK +3.0% (partnership)
- Industrials: Yamaha Motor 7272.JP -4.8% (Jefferies cuts to hold); Kawasaki Heavy Industries 7012.JP -3.3% (Macquarie initiates with underperform); Korea Aerospace Industries 047810.KR +2.4% (Nomura rates new buy)
- Technology: Toshiba Corporation 6502.JP -1.9% (TSE keeps it on watchlist); MediaTek Inc 2454.TW -2.5% (halves TSMC order); Sharp Corp 6753.JP +3.5% (to cut TV panel supplies); Asahi Glass Co 5201.JP -3.3% (acquisition); Sumco Corp 3436.JP -5.8% (Daiwa cuts to underperform)
- Materials: Newcrest Mining NCM.AU +4.6% (Raised at Macquarie)
- Energy: AGL Energy AGL.AU +2.4%, APA Group APA.AU +2.1% (APA contract with AGL)
- Healthcare: Capitol Health CAJ.AU +13.0% (raises guidance); Terumo Corp.4543.JP +1.7% (JPMorgan maintains neutral)
- Telecom: China Mobile 941.HK +1.4% (Nov result); TPG Telecom TPM.AU -1.2% (Shaw & Partners cuts to sell)

>>> US After Hours Conatus (CNAT) more than doubles on Nov

US After Hours : Conatus (CNAT) more than doubles on Novartis pact, NeoPhotonics (NPTN) slips on guidance revision

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: N/A

Companies trading higher in after hours in reaction to news: CNAT +110.2% (Enters into exclusive option, collaboration and license agreement for the global development and commercialization of its first-in-class, orally active pan-caspase inhibitor emricasan with Novartis (NVS)), AUPH +5% (Enters into a long-term agreement with Lonza for the manufacturing of Voclosporin), OMED +2.7% (Initiated with a Buy at SunTrust), ECR +2.1% (Completes the sale of approximately 9,900 net acres in eastern Noble County and western Monroe County, Ohio for ~$63.8 mln), SRPT +1.4% (Announces that the EMA validated the previously submitted MAA for eteplirsen to treat Duchenne muscular dystrophy amenable to exon 51 skipping), FMI +1.2% (Confirms FDA approval for FoundationFocus CDxBRCA for use as a companion diagnostic to aid in identifying women with ovarian cancer for whom treatment with Rubraca is being considered).

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: NPTN -17.5%, WOR -6.7%,

Companies trading lower in after hours in reaction to news: REN -6% (To offer and sell 3.8 mln shares of its common stock in an underwritten public offering), IMMY -1.2% (To raise $9.8 mln in a private placements of units)

(ZH) Italy Seeks Authorization To Raise National Debt To Fund Bank Bailouts, As

Italy Seeks Authorization To Raise National Debt To Fund Bank Bailouts, As BMPS Rescue Plan In Jeopardy

While Italy scrambles to conclude a private sector rescue of ailing Monte Paschi, which hopes to raise €5 billion in the form a share sale to anchor and retail investors, while at the same time the bank is underoing a debt for equity swap, moments ago Reuters reported that Italy's cabinet will meet later on Monday to authorise an increase to the national debt to cover the cost of saving Monte dei Paschi di Siena, should a public bailout be unavoidable, as well as other ailing banks, government sources said cited by Reuters.
As reported yesterday, Monte dei Paschi has launched a 5-billion-euro (4.2 billion pounds) capital increase and must raise the money by the end of the year or face being wound down. If it cannot find takers in the private sector, the government will be forced to step in.

Sources told Reuters last week that the government was ready to pump €15 billion euros - just under one percentage point of gross domestic product - into Monte dei Paschi and other ailing banks. Before it can do that, it needs authorisation to lift national debt levels, which it will do tonight at 7:30pm CET when the cabinet will meet with the Italian parliament to discuss increasing Italy's public debt to fund bank bailouts.
Meanwhile, after having soared in the early part of December following the failed Renzi referendum, Italian banks slid today on concerns over the successful conclusion of the Monte Paschi bailout.

The reason for today's selloff may be that, as Reuters also reports in a separate note, Monte Paschi is trying to resolve differences with a key investor over the 5 billion euro rescue plan. Monte dei Paschi has failed to find buyers for its shares so far Reuters notes, adding that on Monday, it shook the market again with a warning that Italian bank industry bailout fund Atlante was rethinking its 1.5 billion euro purchase of bad loans from the lender.
Atlante had expressed "deep reservations" in a Dec. 17 letter over the terms of a bridge loan that Monte dei Paschi had secured as part of the sale of bad loans, the bank said. Monte dei Paschi shares extended losses on the news, erasing a week's gains to trade down 7.7 percent at 19.3 euros each.
"If issues raised by (Atlante's manager) Quaestio cannot be solved, the operation could not be concluded by Dec. 31, 2016 as requested by the European Central Bank," the bank said in a statement.

However, Carlo Messina, chief executive of Intesa Sanpaolo one of Atlante's top contributors, said he believed the investment fund should go ahead with the deal and that it would reach a decision by Tuesday at the latest.
What makes the rescue problematic is that there are many moving parts, including not only the share sale and the debt-for-equity swap, but also a successfully executed bridge loan as well as the securitization, and sale of its nonperforming loans to third party investors.
As part of its own faltering rescue plan, Monte dei Paschi has taken out a 4.7 billion euro bridge loan with JPMorgan, Mediobanca (MDBI.MI), Credit Suisse and HSBC.
JPMorgan and Mediobanca have been working on the bank's rescue plan and have already come under fire from opposition politicians who object to them earning fees in the event of a state bailout, especially fees accruing on the bridge loan. Monte dei Paschi needs the loan to help complete the sale of bad debts, which are to be repackaged as debt securities worth 9 billion euros. The loan is worth around half of that, but it is secured against all the securities -- which is the source of concern for Atlante, said a source familiar with the matter.