FT : Praxair moves to re-open talks over $60bn Linde deal

Praxair moves to re-open talks over $60bn Linde deal

US gas company Praxair has moved to re-open talks about a $60bn combination with German rival Linde, just over two months after a previous round of discussions between the companies collapsed in dramatic fashion and led to the dismissal of Linde’s chief financial officer.

Last week, Praxair contacted senior Linde representatives about their interest in reviving talks, according to people close to the matter. Linde has yet to respond to the US company’s message, one of these people added. A deal would create the world’s largest supplier of industrial gas, although it would likely face close regulatory scrutiny, especially given the recent wave of consolidation within the industrials and chemicals industries over the past two years.
The approach comes at a difficult time for Linde, which has been dealing with the fallout from the failed talks and has in recent weeks launched a large restructuring of its business.
Linde’s 12-member supervisory board dismissed Georg Denoke, its long-serving finance director, one day after talks with Praxair collapsed.
The Financial Times reported in September that Mr Denoke was dismissed for opposing a combination with Praxair against the efforts of Wolfgang Reitzle, chairman of Linde’s supervisory board, plus chief executive Wolfgang Büchele.
At the same time Dr Büchele, who first brought the idea of a deal with Praxair to Mr Reitzle, told the Linde board he would not seek a second term as chief executive when his contract ends next April.
Linde, which has a market value of about $29bn, declined to comment. Praxair did not immediately respond to a request for comment. Shares in Praxair rose 2.5 per cent in late US trading after the Wall Street Journal reported that it had approached Linde. The US company is worth about $34.6bn.
Update: Linde released a statement on Tuesday confirming it had received a revised offer from Praxair:
Linde AG (“Linde”) has received a revised proposal from the US based company Praxair, Inc. (“Praxair”) concerning a potential merger of equals. The Executive Board of Linde is reviewing the proposal.

FT : The buying spree behind Beijing’s crackdown

The buying spree behind Beijing’s crackdown
Days when a Chinese miner could buy a UK video game developer are drawing to an end

The days when a Chinese iron ore miner could buy a UK video game developer are drawing to a close as Beijing tightens up on cross-border investment by its companies.

Investment banks in Asia have worked overtime this year on bringing an expansive range of acquisition targets to aggressive Chinese groups, many of which have strayed far beyond the acquirers’ original scope of business.

According to commerce ministry data, overseas purchases by Chinese companies have surged past last year’s record of $121bn for non-financial outbound investments, reaching $146bn over the first 10 months of 2016.

The spree in the past few years has seen an airline buy a financial services business, an insurer move into the global hotel industry and a shopping centre developer purchase a blood bank. Most notably, Shandong Hongda, a lossmaking Chinese iron ore miner agreed to buy UK game developer Jagex earlier this year.

Beijing is seeking to cut back on such activity, which is thought to have helped some investors move billions of dollars offshore as the country’s currency depreciates and its economy slows.
The State Council plans to issue a circular that will tighten regulations on Chinese groups that acquire overseas companies that have little to do with their core business. Such acquisitions worth more than $1bn would not gain regulatory approval, according to two people that have seen a draft of the document.

It has also proposed stricter approval requirements for cross-border deals worth more than $10bn and on state-owned enterprises investing more than $1bn in foreign real estate, according to the two people.

“There have been a lot of deals that don’t make strategic sense. [A crackdown on capital controls] would be a reaction to that,” said a senior M&A banker based in Hong Kong. “If the deal is strategic and it’s good for ChinaChina, it can still get done.”

During 2016, Chinese companies agreed 33 acquisitions valued at more than $1bn each. At the start of November only seven of those deals had been completed, according to an analysis of data from Thomson Reuters. Six Chinese acquisitions announced since 2008 have surpassed $10bn. ChemChina’s buyout of Swiss agribusiness group Syngenta, which was announced in February but is still awaiting regulatory approval in Europe, topped the list at $44bn.

Some banks have already reacted to companies viewed as having “aimless” expansion plans, by removing them from target client lists and curtailing access to loans.

One Chinese bank recently removed HNA Group from its list of target clients following concerns over the company’s acquisition strategy and that some of its deals would not be sealed this year, according to a senior banker. “They have announced deals that likely will not be completed,” the banker said. HNA could not immediately be reached for comment.

There have been a lot of deals that don’t make strategic sense … If the deal is strategic and it’s good for China, it can still get done
Senior M&A banker based in Hong Kong
Over the past two years HNA, which has its roots in the airline industry and bought a Chinese financial services company Yisheng Financial Services Holdings this year, has announced $33bn in cross-border acquisitions. Earlier this year, it agreed to pay about $6bn for Ingram Micro, a US-based software distribution company. Last month, it said it would pay a similar sum for a 25 per cent stake in Hilton Worldwide Holdings, the US hospitality group. The completion of both of those deals, along with several others, is still pending.

Anbang Insurance has been flagged by some banks as a potential risk when offshoring cash for acquisitions. Anbang’s attempt at a $14bn buyout of US group Starwood Hotels and Resorts came crashing down after running into regulatory troubles in March. The same month it agreed to buy Strategic Hotels & Resorts, another US group, for $6bn.

Shopping centre developer Sanpower Group has bought up a number of foreign assets over the past three years, including House of Fraser, the UK retail group, US novelty gadget maker Brookstone and Israeli healthcare provider Natali. Late last year, it agreed to buy New York-listed life sciences company China Cord Blood for $1.4bn.

Regulators have already tightened the channels for offshoring capital for deals, according to lawyers familiar with cross-border transactions. One Hong Kong-based lawyer said that Chinese regulators such as the State Administration of Foreign Exchange had recently increased the time it took to process applications, effectively killing some time-sensitive deals. In some cases “they don’t reject the application, they just don’t respond”, the person said.

>> US Close Dow +0.12% S&P +0.13% Nasdaq +0.21% Russell -0.12%

Closing Market Summary: Stocks Eke Out Gains Despite Power Outage in Final Hour

The stock market appeared to be on track for a swift recovery from a Monday dip, but a pullback during the final hour made the rebound appear not nearly as swift. The Nasdaq Composite displayed relative strength, adding 0.2% after an intraday probe of its record high from Friday. The S&P 500 underperformed, ticking up 0.1%.

Equity indices started the day on a flat note, but heavily-weighted sectors like health care (+0.7%), financials (+0.2%), and technology (+0.2%) saw buying interest from the start, which was enough to improve sentiment around other sectors. The energy space (-1.2%) was the only laggard of note, responding to headlines that cast doubt on the likelihood of an OPEC supply cut agreement.

Better than expected economic data was peppered into the pre-market mix that was pretty bland otherwise. Third-quarter GDP was revised up to 3.2% from 2.9% (consensus 3.0%), driven by an upward revision to personal expenditures growth. Separately, the November Consumer Confidence report (107.1; consensus 100.0) soared past estimates, even though the bulk of the survey was conducted amid pre-election uncertainty.

With no red flags on the economic front, stocks climbed in methodical fashion, overcoming weakness in the energy sector (-1.2%). The growth-sensitive group was down more than 2.0% at the start, briefly testing its 50-day moving average, as crude oil stumbled ahead of tomorrow's OPEC meeting in Vienna.

WTI crude settled lower by 3.9% at $45.27/bbl, retreating amid headlines with bearish implications. Iranian oil minister Bijan Zanganeh said that his country will not take part in any production cuts. Given similar reluctance among other oil producers, the market is adjusting to reduced hopes for a supply cut being announced after tomorrow's meeting.

On the upside, the health care sector (+0.7%) maintained its early strength, bolstered by biotech names and Dow component UnitedHealth (UNH 157.59, +5.48). The iShares Nasdaq Biotechnology ETF (IBB 280.40, +0.41) slipped into the close, adding just 0.2%, while UnitedHealth jumped 3.6% after guiding earnings and revenue for fiscal year 2017 ahead of market expectations.

Health care was edged out slightly by another countercyclical group—real estate (+0.7%)—which displayed strength even as Treasuries retreated during morning action. Moving down the leaderboard, utilities (+0.3%) held a modest gain throughout the day while financials (+0.2%) and technology (+0.2%) trimmed their gains during the final hour of action, causing a pullback in the broader market.

Elsewhere, the consumer discretionary sector (+0.2%) settled in line with the benchmark index, which masked a 3.2% spike in the shares of Tiffany (TIF 80.60, +2.46), brought on by better than expected results and reaffirmed guidance.

Treasuries dipped in morning action, but climbed throughout the session to end with gains. The benchmark 10-yr yield slipped one basis point to 2.30% while the 30-yr yield slid three basis points to 2.95%.

Intraday trading volume was below average, but final-hour selling brought the NYSE floor total up to 901 million.

Economic data included Q3 GDP, Case-Shiller 20-city Index, and Consumer Confidence:

  • The second estimate for third quarter GDP showed growth was revised up to an annual rate of 3.2% (consensus 3.0%) from 2.9% in the advance estimate while the GDP Deflator was revised down to 1.4% (consensus 1.5%) from 1.5%
  • The Case-Shiller 20-city Index for September showed an increase of 5.1% while the consensus expected a reading of 5.2%
  • The Conference Board's Consumer Confidence Index surged to 107.1 in November (consensus 100.0) from an upwardly revised 100.8 (from 98.6) in October

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while November ADP Employment Change (consensus 160K) will be reported at 8:15 ET. October Personal Income (consensus 0.4%), Personal Spending (consensus 0.5%), and Core PCE Price Index (consensus 0.1%) will be released at 8:30 ET while Chicago PMI for November (consensus 52.0) will cross the wires at 9:45 ET. October Pending Home Sales (consensus 0.7%) are expected at 10:00 ET, and the day's data will be topped off with the 14:00 ET release of the Federal Reserve's Beige Book for November.

  • Russell 2000 +16.9% YTD
  • Dow Jones Industrial Average +9.7% YTD
  • S&P 500 +7.9% YTD
  • Nasdaq Composite +7.4% YTD

(Challenges) Henri de Castries, l'atout de l'équipe Fillon

Henri de Castries, l'atout de l'équipe Fillon

Le nom de l'ex-PDG d'Axa, très proche du vainqueur de la primaire et très impliqué dans son programme, est évoqué pour Matignon. Est-ce réellement la meilleur option?

Qui serait le Premier ministre d’un François Fillon élu à l’Elysée ? Ce sera évidemment le signe le plus évident de la volonté de changement du candidat de la droite à l’élection présidentielle. Comme celui-ci a promis de construire son gouvernment – resserré – pendant la campagne, et qu’il a promis de faire largement appel à la société civile, laissons-nous aller à une hypothèse révolutionnaire : installer Henri de Castries, l’ancien PDG d’Axa, à Matignon.

Il y a peu d’exemple d’une telle proximité entre un ténor de la politique et un poids lourd du big business. Martin Bouygues était certes intime de Nicolas Sarkozy. Mais il n’a jamais pris place dans ses équipes de campagne, et le patron de Bouygues dit souvent ne pas avoir bénéficié de cette relation amicale, bien au contraire. La décision de l’ouverture du marché des télécoms à un quatrième opérateur, en l’occurrence Free, est là pour en témoigner.

A l’inverse, Henri de Castries a travaillé depuis le début sur le programme du vainqueur de la primaire de la droite. Quand ce dernier était encalminé, il ne l’a jamais lâché. Ensemble, ils sont allés à New York, pour lever de l’argent pour la campagne, ce qui est un des plus efficaces témoignages de fidélité. D’ailleurs, François Fillon n’a cessé de mettre en avant ce compagnonnage, et l’ex-PDG était ostensiblement auprès de lui, à la tribune de son dernier meeting, le 25 novembre, deux jours avant la victoire.

Un rôle très actif dans la préparation de la transition

Surtout, alors que bien souvent les patrons rechignent à s’engager sur le terrain politique, Henri de Castries, qui a quitté Axa plus tôt que prévu, est totalement libre. De ses activités professionnelles, de son temps et de ses engagements. Et il brûle d’une formidable envie de servir son pays, comme en témoigne la présidence de l’Institut Montaigne, qu’il a prise avec un bel appétit pour faire avancer la pédagogie des réformes.

On voit bien tout ce qui milite contre un tel choix de la part de François Fillon : le primat du politique, qui veut que le Premier ministre vienne de la majorité qui l’a choisi ; l’affichage avec un « grand patron » – encore administrateur de Nestlé et de la banque HSBC - dans un pays méfiant vis-à-vis des entreprises ; l’attelage de deux « châtelains » qui se trouvent avoir une belle demeure aux confins du même département ; l’ancrage à Matignon d’un ex-assureur, alors qu’une forme de privatisation de la santé perce dans le programme du candidat ; le ratage de certaines expériences précédentes, comme celle de Francis Mer, ex-patron d’Usinor, à Bercy – tout le monde n’est pas Georges Pompidou…

Tout cela Henri de Castries le sait, et, à cette étape de sa vie, il n’est pas là pour demander un poste. Nul doute qu’il ait un rôle très actif dans la préparation de la transition, pour faire qu’un président élu n’arrive pas, comme Sarkozy et Hollande, dans un grand état d’impréparation à l’Elysée. Mais après ? S’il fallait renoncer à Matignon, Bercy serait-il une consolation ? Pas sûr. En fait il y un job, auquel personne ne pense, mais idéalement fait pour ce parfait connaisseur de la planète, qui croise comme président de Bilderberg les plus hautes autorités politiques, qui connait la Chine mieux que quiconque, qui parle anglais et allemand couramment, qui négocierait le Brexit en vrai stratège : c’est le poste de ministre des Affaires étrangères. Un vrai signal pour l’étranger, un vrai service à rendre à la France

Challenges : Comment le français Starburst veut dénicher le prochain SpaceX

Comment le français Starburst veut dénicher le prochain SpaceX


L’accélérateur dirigé par François Chopard est en train de lever 200 millions de dollars, dont une partie à Singapour. Objectif: financer une trentaine de jeunes pousses de l’aéronautique pour dénicher les champions de demain.


Où s’arrêtera donc François Chopard? En à peine deux ans, le fondateur de l’accélérateur de start-up aéronautiques français Starburst Accelerator avait déjà imposé sa structure comme le leader mondial du segment, avec quatre antennes à Paris, Munich, Los Angeles et Singapour et des implantations prochaines à Sao Jose dos Campos, Montréal voire Tel-Aviv. Cet ancien d’Airbus, PWC et Oliver Wyman lance désormais le second étage de la fusée Starburst, avec la création d’un fonds d’investissement de 200 millions de dollars pour accompagner les start-up les plus prometteuses. "Le but est d’amener ces sociétés vers une valorisation de 300 à 400 millions de dollars, explique François Chopard. Nous travaillons déjà sur une short-list d’une dizaine de start-up pour y investir dès 2017".

Une bonne partie des 200 millions de dollars est apportée par le fonds singapourien Leonie Hill Capital, un "family office" malaisien qui avait déjà investi dans la compagnie AirAsia, la banque japonaise Softbank et dans des opérateurs télécoms. Starburst compte boucler le reste de la levée de fonds en 2017. Le nouveau fonds, baptisé Starburst Venture, sera installé à San Francisco, et devrait employer une quinzaine de personnes, qui s’ajouteront aux 25 salariés de l’accélérateur de start-up. François Chopard le dirigera, laissant les manettes de l’accélérateur à ses équipes.


La BPI va-t-elle investir?

Les priorités de ce fonds d’un nouveau genre sont déjà définies. La structure envisage de consacrer la moitié de sa force de frappe à des investissements de 3 à 5 millions de dollars. La seconde moitié des 200 millions devrait être consacrée à des prises de participations plus importantes, de 10 millions de dollars environ, dans une dizaine de jeunes pousses à très fort potentiel. "On ne veut pas manquer un futur SpaceX", résume François Chopard, qui donnera la priorité aux start-up sorties de son accélérateur. Ironie de l’histoire, le dirigeant avait fait le tour des financiers (BPI) et industriels français, dont Thales, pour monter son fonds. Sans succès: c’est donc en Asie qu’il est allé chercher les moyens de ses ambitions. Une entrée de la BPI reste cependant envisagée, à hauteur de 20 à 30 millions de dollars, soit 10 à 15% du fonds, ce qui correspond à peu près au ratio de start-up françaises dans le cheptel de Starburst.

L’accélérateur français, qui a déjà accueilli une centaine de start-up, s’est imposé rapidement sur le marché grâce à un concept original: la structure sert de lieu de rencontre entre grands groupes et jeunes pousses. Les premiers (Safran, Thales, Airbus Group, Boeing, Lockheed Martin, Air France Industries…) paient une cotisation annuelle (100.000 à 250.000 dollars) qui leur permet de participer aux comités de sélection des start-up candidates. En échange, ils ont la garantie de pouvoir travailler en exclusivité avec les pépites retenues si une technologie les intéresse.

Déjà des références

Le principe a déjà fait ses preuves. Safety Line, qui propose des solutions pour aider les compagnies aériennes à limiter leur consommation de carburant durant la phase de montée des avions, a signé le 15 juin un partenariat commercial avec Safran pour distribuer son système. Idem pour Win MS, qui a signé avec Safran un accord technique et commercial sur ses solutions de diagnostic des câbles aéronautiques. Le spécialiste français de l’impression 3D Poly-Shape, autre jeune pousse "accélérée" par Starburst, travaille avec Thales Alenia Space, Airbus Helicopters, Safran, Dassault. Quant à l’opérateur de drones RedBird, il a fusionné avec l’américain Airware en septembre dernier.