WSJ : GE to Combine Oil and Gas Business With Baker Hughes

GE to Combine Oil and Gas Business With Baker Hughes
Combination creates a company with more than $32 billion in revenue

General Electric Co. reached a deal to combine its oil-and-gas business with Baker Hughes Inc., creating a publicly traded energy powerhouse that would give GE a cost-effective way to play any recovery in the industry.
GE will contribute its oil-and-gas business and $7.4 billion through a special one-time cash dividend of $17.50 for each Baker Hughes share. The new company will be publicly traded on the New York Stock Exchange and will be 62.5% owned by GE and 37.5% owned by Baker Hughes shareholders.
The Wall Street Journal reported last week that the companies were in talks about a potential transaction.
A combination creates a company with more than $32 billion in revenue that could cut costs to better compete with rivals such as Schlumberger Ltd. to provide equipment and services to oil rigs and wells. It would enable GE to benefit from an expected recovery in the industry without having to pay for a full acquisition of Baker Hughes. It would also enable the companies and their shareholders to benefit from savings and other synergies from putting the two businesses together.
After two brutal years for the oil-and-gas business, GE and some of its rivals in the industry have begun to see signs of hope. Crude prices, which plunged to $30 a barrel this year from more than $100 in 2014, have rebounded to around $50 recently.
GE expects the deal to add about 4 cents to its earnings per share in 2018 and 8 cents by 2020.
Lorenzo Simonelli, chief executive of GE Oil & Gas, will be chief executive of the new company and GE Chief Executive and ChairmanJeff Immelt will be its chairman. Baker Hughes Chairman and Chief Executive Martin Craighead will serve as vice chairman. The board of the new company will consist of five directors appointed by GE and four appointed by Baker Hughes.
GE shares rose 0.9% to $29.48 in premarket trading as Baker Hughes shares rose 5.7% to $62.50.
GE provided glimmers of improvement in the energy sector from the third quarter, noting that U.S. rig and well counts remained down 50% from the previous year but had ticked upward in the previous three months. Still, orders for services were down across all of GE’s oil business, the company said.
In recent public comments, GE has said it is still committed to the oil and gas unit for the long term, but GE said operating profit in the unit will be down by 30% for the year. GE is cutting more than $1 billion in costs out of the company over two years.
The announced deal comes in what has already been a strong year for mergers and acquisitions. Such strength defies conventional wisdom, coming less than two weeks before the presidential election. The fact that companies are inking mergers at a breakneck pace ,without knowing who the next president will be, shows how strong the imperative to consolidate across industries is, bankers say.
There is no guarantee a GE-Baker Hughes deal will be completed. The last merger agreement Baker Hughes entered into—a $35 billion proposed union with Halliburton Co.—was rejected by antitrust regulators this year amid a tough environment for deals in Washington.

Before Baker Hughes and Halliburton had to abandon their merger plans, the companies held talks with GE to sell a package of assets valued at more than $7 billion to help win regulatory approval.
A combination with Baker Hughes would be among GE Chief Executive Jeff Immelt’s biggest deals. The company has done more than $14 billion of acquisitions since 2007 to build its oil-and-gas business.
Mr. Immelt has pledged to be opportunistic about acquisitions in the segment and predicted that GE would exit from the oil downturn with a lean organization and a strong position against competitors such as National Oilwell Varco Inc. and Schlumberger.
Activist Trian Fund Management LP last year took a $2.5 billion stake in GE and has said the company must be more “disciplined” in its deal making. GE shares had done little since then and are still well below their high of more than a decade ago.
Baker Hughes has its own activist holder. ValueAct Capital Management LP purchased a stake after the Halliburton deal was announced that is now at 7%. ValueAct had suggested Baker Hughes could sell at least some of its businesses.

WSJ : CenturyLink to Buy Level 3 Communications for $25 Billion

CenturyLink to Buy Level 3 Communications for $25 Billion
Deal gives communications companies more heft in a competitive landscape

CenturyLink Inc. said Monday that it reached a cash-and-stock deal to buy Level 3 Communications Inc. for roughly $25 billion, a marriage that would give the communications companies more heft to weather a competitive landscape.
The deal, which values Level 3 at $69.92 a share as of Friday’s closing prices, represents a 49% premium to the company’s closing price of $46.92 on Wednesday, the day before The Wall Street Journal reported the companies were in advanced talks.
Shares of Level 3 rose 3.9% to $56.15 in premarket trading, while shares of CenturyLink were inactive.

Level 3 runs one of the largest internet backbones in the world but has turned its focus increasingly to small and midsize business in an attempt to reverse slowing sales growth in its core business. CenturyLink, traditionally a rural local-phone-service provider, has sought to upgrade its network with fiber-optic lines in a bid to compete with AT&T Inc., Verizon Communications Inc. and rivals in the cable industry.
CenturyLink gets about two-thirds of its revenue from business customers, while Level 3’s comes entirely from that segment.
Under the deal’s terms, CenturyLink agreed to swap $26.50 in cash and 1.4286 CenturyLink share for each share of Level 3. The company said the deal was worth $34 billion, including debt.
The companies see the deal closing by the third quarter of 2017

WSJ : Drugmakers Turn Cheap Generics Into Expensive Pills

Drugmakers Turn Cheap Generics Into Expensive Pills
Many drugs have active ingredients that can be purchased for a fraction of the cost

Kendall Jack was dismayed when her health plan stopped covering her migraine drug Treximet earlier this year. To buy a pack at the pharmacy would cost $750, compared with a $20 copay when the drug was covered.
“Nothing’s worth $750 for nine pills,” she said. “It’s cruel.”
Instead, the 50-year-old stay-at-home mother from Memphis, Tenn., takes Treximet’s two active ingredients—sumatriptan and naproxen—as separate pills. For these two generic drugs, her copay is zero.

A spokesman for Pernix Therapeutics Holdings Inc., which sells Treximet, said the drug addressed an unmet need among migraine sufferers by combining sumatriptan and naproxen into a single tablet. He also said Mrs. Jack could get a pack of Treximet for $20 by contacting the company directly.
Treximet is just one of many drugs whose active ingredients are generic drugs that can be purchased separately at a fraction of the cost. Others include acne cream Acanya, Duexis for rheumatoid pain and weight-loss pill Qsymia, according to data compiled for The Wall Street Journal by GoodRx, a group that compares pharmacy prices for prescription drugs.
A spokesman for Valeant Pharmaceuticals International Inc., which makes Acanya, said doctors could prescribe whichever medication they believe is most appropriate for their patients. Valeant is one drugmaker that has come under fire amid a broader eruption of public anger at drug companies for sharp price increases in recent years.
A spokesman for Horizon Pharma PLC, maker of Duexis, said combining its constituents made it easier for patients to stick with their drug regimen. Mark Oki, chief financial officer of Vivus Inc.,which makes Qsymia, declined to comment.
For Treximet, a box of nine tablets costs $728.67, according to Truven Health Analytics. Insurers and employers typically pay less than this so-called list price as a result of behind-the-scenes discounts: the average actual cost for a box of Treximet is about $353, according to an analysis of company-reported sales and prescription data from IMS, a health-care data company. To buy its two constituents, sumatriptan and naproxen, would cost around $19, according to GoodRx.
ENLARGE

There is no evidence that Treximet tackles migraines any better than a two-pill regimen of sumatriptan plus naproxen. The two clinical trials that led to its approval pitted it against sumatriptan alone, naproxen alone and placebo. Those trials were jointly conducted byGlaxoSmithKline PLC and Pozen Inc., now called Aralez Pharmaceuticals PLC. Glaxo transferred the rights for Treximet to Pernix in 2014.
Some patients avoid paying the full price for Treximet because the cost is partly covered by their health plans. But those whose plans don’t cover Treximet face the pharmacy price, which often exceeds the list price.

Pernix and others said they issued coupons to keep patient copays low in some cases. Even so, patients likely will end up paying for it indirectly. “Premiums go up, or it’s passed on to employers,” said Michael Rea, chief executive of Rx Savings Solutions, a software company that helps employers and health plans lower their prescription costs by pointing patients to cheaper alternatives. “It all comes out of the same bucket.”
In some cases, combining two or more drugs into a single pill has benefits, such as added convenience, said Bernstein analyst Ronny Gal. The problem: There is no agreed-upon process for assigning a fair value to those benefits.
“This is one more example of the inefficiency of the U.S. health-care system,” he said. Mrs. Jack is a case in point: She would be willing to pay a premium price for Treximet, which she finds more effective than two separate pills, but not $750 more.
What’s more, patients and their doctors often have no idea that a cheaper alternative exists. “Americans shop [around] for everything in their lives, except medications,” said Mr. Rea of Rx Savings Solutions. “They don’t know how.”
“Understanding the price of medication with the myriad of health plans offered in the U.S. is extremely complicated,” said Anand Rajani, a pediatrician based in Fresno, Calif., who owns a small stake in closely held Rx Savings Solutions. “Physicians are totally unaware” of the price.
To complicate matters further, some combination drugs use slightly different doses than are easily available to buy separately in the pharmacy. A single pill of Treximet contains 85 milligrams of sumatriptan and 500 milligrams of naproxen. When sold separately, sumatriptan comes in pills of 50 milligrams or 100 milligrams, making direct substitution difficult.
Sharon Orrange, an internal-medicine doctor at Keck Medical Center of the University of Southern California, said she had switched many patients to generics from branded drugs which, like Treximet, comprise two generic constituents. She also works as a consultant for GoodRx on which branded combination drugs can be substituted with cheaper generics.
For many of these patients, the savings are substantial, she said: “I have patients who can use the money [saved] to join a gym, or take a trip they couldn’t take before.”

>>> Nextra Energy Reaches agreement for an affiliate to merge with Texas Transmi

Reaches agreement for an affiliate to merge with Texas Transmission Holdings Corporation for consideration of around $2.4B 

NextEra Energy has reached an agreement for an affiliate to merge with Texas Transmission Holdings Corporation ("TTHC"), including TTHC's approximately 20 percent indirect interest in Oncor Electric Delivery Company LLC ("Oncor"), for merger consideration of approximately $2.4 billion, subject to adjustment. In addition, NextEra Energy has reached an agreement to acquire the remaining 0.22 percent interest in Oncor that is owned by Oncor Management Investment LLC ("OMI") for total cash consideration of approximately $27 million. If approved, these transactions, when combined with NextEra Energy's previously announced transaction to acquire Energy Future Holdings Corp.'s ("EFH") approximately 80 percent interest in Oncor, would result in NextEra Energy owning 100 percent of Oncor.

Under the terms of the TTHC merger agreement, NextEra Energy will pay 100 percent of the merger consideration in cash. As a result of the transaction, no debt will reside at TTHC or Texas Transmission Investment LLC ("TTI") upon close of the merger. NextEra Energy expects to fund the merger consideration through a combination of debt and equity, consistent with the company's commitment to maintaining its strong balance sheet and credit ratings. The transaction is not subject to any financing contingencies.

NextEra Energy expects that its transactions with EFH, TTHC and OMI, which would result in its 100 percent ownership of Oncor, if approved, would be meaningfully accretive to earnings, enabling the company to grow at or near the top end of its previously announced 6 percent to 8 percent per year adjusted earnings per share growth rate through 2018, off a 2014 base. The transactions are consistent with NextEra Energy's focus on investing in regulated and long-term contracted assets and leverage many of the company's core competencies, including investing smartly to improve operations, creating long-term value for both customers and shareholders.

The TTHC merger agreement contemplates approval by the Public Utility Commission of Texas. NextEra Energy, together with Oncor, expects to file by Nov. 1 a joint application for merger approval. The proposed TTHC transaction is also subject to approval by the Federal Energy Regulatory Commission, the expiration or termination of the waiting period under the Hart-Scott-Rodino Act, the receipt of any required third-party approvals and other customary closing conditions. NextEra Energy expects the TTHC transaction, which has been approved by the boards of directors of both NextEra Energy and TTHC, and the TTHC shareholders, to be completed in the first half of 2017.

>>> Cevian Says Rexel May Have 50% Upside on Improved Margin

Cevian Says Rexel May Have 50% Upside on Improved Margin
By Veronica Ek and Niclas Rolander
(Bloomberg) -- Rexel’s share price has about 50% upside if co. realizes its margin potential, Cevian co-founder Christer Gardell says in interview in Stockholm.
Says that “with a new CEO and a strengthened board we believe that Rexel, with the position it has, should be able to strengthen earnings”
Rexel reported an adjusted Ebita margin of 4.0% in 3Q; Gardell says “we believe that it has the capacity to reach 5.5% to 6%”
Gardell says he has full confidence in current board and management, and that work ahead is more about improving profitability than any structural actions
“It’s a question of hard work, turning every stone. There’s no Gordian knot to be cut, but we believe that the risk is low and the share potential is significant”
NOTE: Cevian is Rexel’s largest shareholder, with ~10.5% of shares
NOTE: Oct. 28: Rexel Creates New Executive Committee as Outlook Scaled Back

(CS) Novo Nordisk Expectations downgraded with limited margin expansion


Credit Suisse not Citi
From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: 10/31/16 08:05:08
Subject: (Citi) Novo Nordisk Expectations downgraded with limited margin expansion
NOVO NORDISK (N, TP DKR270.0): Novo Nordisk reported solid 3Q16 sales broadly in line with consensus and CS, and operating profit and EPS 2.5% ahead of expectations. However, the speed of US diabetes deterioration has taken Novo by surprise and the company has: (1) trimmed 2016 guidance, (2) indicated new 2017 guidance for flat to low single digit EBIT growth, and (3) cut long-term guidance from 10% EBIT CAGR to 5%. Novo is entering a period of significant growth uncertainty. With price uncertainty and the DEVOTE trial yet to read out we see better opportunities elsewhere.

(Citi) Novo Nordisk Expectations downgraded with limited margin expansion

NOVO NORDISK (N, TP DKR270.0): Novo Nordisk reported solid 3Q16 sales broadly in line with consensus and CS, and operating profit and EPS 2.5% ahead of expectations. However, the speed of US diabetes deterioration has taken Novo by surprise and the company has: (1) trimmed 2016 guidance, (2) indicated new 2017 guidance for flat to low single digit EBIT growth, and (3) cut long-term guidance from 10% EBIT CAGR to 5%. Novo is entering a period of significant growth uncertainty. With price uncertainty and the DEVOTE trial yet to read out we see better opportunities elsewhere.

>>> What to look at today - 31st of October 2016

Oil falls after OPEC talks in Vienna yield no agreements. OPEC talks in Vienna yielded NO DEAL to limit oil output; Iraq and Iran remain in dispute about production cuts, not ready to freeze output. BOE Gov Carney committed to serving his 8-year term; Expected to make an announce this week to end speculation he would step down. Political Bureau of the Communist Party of China (CPC) Central Committee: Reiterates stance that China to continue to implement proactive fiscal policies and maintain prudent monetary policy. Japan's top 3 shipping companies merging their container operations into a JV; Total investment for 3 companies at ¥300B; Expect to realize benefit of about ¥110B annually. FBI said to review about 650K emails on the laptop of former Congressman Anthony Weier, the former husband of Hillary Clinton's close aide Huma Abedin.

Nikkei -0.12% Hang Seng +0.20% CSI -0.15% Shanghai -0.24%

Eur$ 1.0962 CNH 6.7802 CNY 6.7698 JPY 104.83 GBP 1.2182 CHF 0.9883 RUB 63.1503

S&P +0.25% EuroStoxx -0.26% FTSE -0.16% Dax -0.05% SMI -0.29%

Macro :
- BOE Governor Carney May Step Down ‘Within Days,’ Mail Reports
- Druckenmiller-Backed Fund Said Set to Start Nov. 1: Bus. Insider
- Gabriel Says EU Rejects China ‘Foul Play’ in Takeovers: Welt
- China’s Factory to the World Mulls the Unthinkable: Price Hikes
- OPEC Splits Prevent Deal With Other Producers to Curb Supply
- Saudi Stocks Extend Winning Streak as Cash Crunch Concern Eases
- SNB Reports 9M Profit of CHF28.7b on Foreign Currencies, Gold
- France Said to Raise Efforts to Attract Business From London: FT
- U.K. Business Confidence Hits Highest Since Brexit Vote: Lloyds

Keep an eye on :
- AAL LN : Anglo American Spinoff Wouldn’t Include Manganese: Telegraph
- ABG SM : Abengoa Seeks Court Approval For Restructuring Contract
- AC FP : Hyatt Hotels Gains as Much as 2.9%; Reports 3Q November 3
- AF FP : Air France-KLM Mulls Terner, Guerin for Air France Unit: Figaro
- AF FP : KLM Cabin Crew to Strike 20 Minutes Per Flight on Oct. 30
- AGFB BB : CompuGroup's acquisition of Agfa-Gevaert could stumble over retirement payments - Tidj.be
- ALPH SW : Alpiq Says Vote to Quit Nuclear Energy Would Cost Co. ~CHF2.5b
- BABA US : Alibaba in Talks with German Retailers Over Online Shops: Welt
- CBK GY : Commerzbank’s Zielke Wants to Join BDB Board, Handelsblatt Says
- ALIV SS : Takata sees Daicel, Autoliv as most desirable sponsors - report
- BHI US : GE, Baker Hughes Could Reach a Deal as Early as Next Week: WSJ
- BAS GY : BASF Says Employee Dies of Injuries After Oct. 17 Explosion
- BMPS IM : Monte Paschi Road Show to Include Doha: Sole
- CSGN VX : Credit Suisse Plans ‘Cost-Sharing Project’ w/ Another Bank: FT
- DAI GY : Daimler CEO Opposes Govt Restraints on China M&A in Europe: HB
- DAI GY : Daimler’s Zetsche Seeks Leaner Corp. Hierarchy: Handelsblatt
- DAI GY : Daimler’s Vans Business to Have Record 2016: Euro am Sonntag
- DL NA : Delta Lloyd/NN takeover talks not in exclusive phase yet
- DBK GY : Deutsche Settlement Over Russia Trades Possible in 2017: Reuters
- ESNT LN : Essentra Close to Appointing Coats’s Forman as CEO: Sunday Times
- ERICB SS : Ericsson Owners Said to Question New CEO’s U.S. Base: DI
- GHE LN : Damon Buffini Buys 5% Stake in Gresham House: Sky
- HEN3 GY : Henkel’s Van Bylen Seeks to Broaden Global Presence: FT
- HSBA LN : HSBC Seeks to Unlock GBP5b Capital From China Bank: Sunday Times
- IGAS LN : Trans European Oil & Gas Said to Seek IGas Energy Assets: Sky
- INVN US : InvenSense Said Exploring Alternatives Including Sale: Reuters
- KORS US : Michael Kors Trades to Session High; December $50 Options Active
- LPE FP : Champagne Maker Laurent-Perrier’s Owners Said to Mull Stake Sale
- LHA GY : Cabin-Crew Union Rejects Arbitration at Lufthansa’s Eurowings
- MC FP : Tag Heuer CEO Sees Sale of 150,000 High-End Smartwatches: NZZ
- MG US : Magna to Grow Faster Than Overall Mkt, CEO Tells Automobilwoche
- MRK GY : Germany’s Merck Said to Explore Biosimilar Drug Unit Sale: Rtrs
- NESN VX : Nestle Wanted Health Expert for CEO Role, Chairman Tells Blick
- NOVOB DC : Novo Nordisk’s Share Implosion Sends Shock Waves Through Denmark
- RBI AV : Raiffeisen Bank Plans to Open Branch in Iran: Tehran Times
- RAND NA : Randstad Completes Tender Offer to Acquire Monster Worldwide
- REC BB : Recticel 3Q Combined Sales Drop 1.6%; Affirms FY Outlook
- RHM GY : Rheinmetall-Led JV May Win U.K. Tank Upgrade Bid: Telegraph
- SAN FP : Regeneron, Sanofi Fail to Win FDA Approval for Sarilumab
- SAN LN : StanChart Said in Financing Talks on Chinese Aviation JV: FT
- SIK VX : Sika Still Wants to Buy Back Burkard Family’s Stake: NZZ
- SWISS POST IPO : Swiss Post Has No Plans for Postfinance IPO: FuW
- TTK GY : Takkt 3Q Rev. Rises 2%; EPS Up 13%; Confirms 2016 Outlook
- TWX US : Goldman Pushing Apple to Make Bid for Time Warner: N.Y. Post
- VOW3 GY : Volkswagen to Drop BlackBerry for IPhones: Automobilwoche

>>> Europe : Brokers Upgrades & Downgrades - 31st of October 201

>>> Up
*IAG Raised to Hold at HSBC
*SSAB Raised to Buy at Jefferies, PT SEK34
*Technip Raised to Add at AlphaValue, PT EU66.10
*William Hill Raised to Hold at HSBC

>>> Down
*Dialog Cut to Hold at Bankhaus Lampe, PT EU38
*Novo Nordisk Cut to Hold at DNB Markets, PT DKK255
*Novo Nordisk Cut to Add at AlphaValue, PT DKK301
*Novo Nordisk Cut to Neutral at Citi, PT DKK260
*UPM Cut to Neutral at Citi, PT EU22.70

>>> PT Change


>>> Initiation


>>> Call
>> Stock
*LAGARDERE ADDED TO CONVICTION LIST AT GOLDMAN
*ZAYO GROUP ADDED TO CONVICTION BUY LIST AT GOLDMAN