October 24, 2016
MAKOR EVENT DRIVEN COMMENT : SYNN VX - OUR COMMENT FOLLOWING CONFIRMATION THAT NO EC REMEDIES WERE OFFERED
We are retracting our earlier check that Syngenta and ChemChina can offer remedies post the 21 October (“Day 20” deadline). We have received confirmation from our lawyers and have reviewed the EC merger regulations and concluded that this is a HARD deadline which cannot be extended or breached should the companies wish to obtain antitrust clearance in Phase I. Any remedies offered by the parties would have resulted in an automatic 10 business day extension to the timetable (i.e. a Phase I decision would have been expected on 14 November). The EC Press Office has confirmed that any remedies (if submitted) would have been reflected in the public case file. As there are no references to any remedies there, no remedies have thus been submitted. We have confirmed that SYNGENTA AND CHEMCHINA ARE NO LONGER ABLE TO SUBMIT REMEDIES IN PHASE I.
A state-of-play meeting (alleged to have taken place on 14 October) does not necessarily indicate that there are significant issues with the transaction and can be requested by the merging parties to demonstrate to the EC in detail that there are no significant competition overlaps, and still receive Phase I approval. Nevertheless, we find it surprising that after such lengthy pre-notification discussions (deal was announced on 13 November 2015 and the EC filing was only formally submitted on 23 September 2016), a state-of-play meeting was still requested by the parties to make their case to the EU and yet no remedy package was formally filed.
The EC may extend the review period with the agreement of the notifying parties at any time post-filing and any extension on this basis cannot exceed 20 working days (i.e. a further 20 business day extension from the 28 October decision date would be 30 November accounting for EC holidays). Nevertheless, no remedies can be submitted to the EC despite this extension, during Phase I.
The ACCC have also announced today that “the former proposed decision date of 27 October 2016 delayed at the request of the merger parties so that they can provide more information to the ACCC. A new proposed decision date will be published in due course.” This is a VOLUNTARY suspension of the timeline.
Another possible explanation would be that the parties are working with the EC and the other regulators to offer a global remedy packaged for the deal which explains the lack of remedies offered to date. We await the update from Syngenta when they announce their Q3 earnings tomorrow morning.
Clearly, the initial share price reaction was overdone for a Phase I to a potential Phase II extension, and now the spread is back to pre-CFIUS levels, but supporters of any “conspiracy theory” will find comfort in this news. Clearly, it is becoming increasingly difficult to find much comfort at this time given the information vacuum and traditional worries about a Chinese buyer.
Makor Capital
11 Menachem Begin St., 26th FL
Ramat Gan 52681
ISRAEL
Tel +972 3 5453 762Fax +972 3 7162 680
Research Disclaimer
This publication has been prepared by Makor Capital Limited (“Makor Capital”) and is intended for professional or qualified investors only. Makor Securities London Ltd (“Makor Securities”)is distributing this material to its clients who are Eligible Counterparties or Professional Clients under FCA Rules. It may also be disseminated to persons who are Investment Professionals within the meaning of the Financial Services and Markets Act 2000 (Financial Promotion Order 2005). In the United States, Makor Capital only distributes this material to major US institutional investors (as that term is defined in Rule 15a-6 of the Securities and Exchange Act of 1934) and to SEC-registered broker-dealers or banks acting in a broker–dealer capacity. This material is not intended for distribution to any other persons and should not be redistributed. If you do not fall into any of these categories you should disregard it.
This material is a marketing communication. It is not investment research and has not been prepared in accordance with legal requirements designed to promote the independence of investment research. It is not subject to any prohibition on dealing ahead of the dissemination of investment research under U.K. law. This material is not a research report and is not intended to be a research report as defined under U.S. securities laws and regulations. This material is not intended to provide information reasonably sufficient upon which to base any investment decision.
This material does not take into account the particular investment objectives, financial situation or needs of individual clients or other recipients. Before acting on this material, clients and other recipients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice.
This material should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action.
In the United States, Makor Capital does not offer securities services to U.S. persons except pursuant to SEC Rule 15a-6 only to major US institutional investors and SEC registered broker-dealers or banks acting in a broker–dealer capacity. Transactions in the United States must be effected through the U.S. broker-dealer, Oscar Gruss & Son Incorporated. Oscar Gruss & Son has not prepared, reviewed or distributed this material.
Some of this material is produced by providers which Makor Securities believes to be reliable, but Makor Securities does not warrant or represent (expressly or impliedly) that it is accurate, complete, not misleading or as to its fitness for the purpose intended and it should not be relied upon as such.
Opinions expressed will be the current opinions of those producing this material as of the date appearing on this material only. We expect those producing the material in this publication to update it on a timely basis but can give no undertaking that they will do so and regulatory compliance or other reasons may prevent them from doing so (or us from disseminating updated material).
Members and employees of Makor Securities London Ltd, employees of Makor Capital, Makor Capital Markets may from time to time have long or short positions in securities, warrants, futures, options, derivatives or other financial instruments referred to in this material. For Makor Securities, this information is set out in our Conflicts of Interest Policy which is available on request. Policies for the production of research from other research providers are available on request. Unless otherwise stated, share prices provided within this material are as at the close of business on the day prior to the date of the material.
Neither the whole nor any part of this material may be duplicated in any form or by any means. Neither should any of this material be redistributed or disclosed to anyone without prior consent. This material is issued for general information and discussion purposes only. None of Makor Securities, Makor Capital, Makor Capital Markets accepts liability whatsoever for any direct, indirect or consequential loss or damage of any kind arising out of the use of all or any of this material.
The services, securities and investments discussed in this material may not be available to, nor are suitable for all investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves risk, including the risk of capital loss. Past performance is no guide to future performance. In relation to securities denominated in foreign currency, movements in exchange rates will have an effect on the value, either favourable or unfavourable.
All investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves risk, including the risk of capital loss. Past performance is no guide to future performance. In relation to securities denominated in foreign currency, movements in exchange rates will have an effect on the value, either favourable or unfavourable.
Entities
Makor Securities London Ltd is authorised and regulated by the Financial Conduct
Authority (FCA registration number 625054)
Makor Capital, company number 514456466, is incorporated in Israel and is a 100% held
subsidiary of Makor Holdings Pte Ltd incorporated in Singapore.
Makor Capital Markets SA, company number CH-660.2.999.011-0 is incorporated in Switzerland
and is also a 100% held subsidiary of Makor Holdings Pte Ltd.
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S
YNGENTA (SYNN VX)Our comment following confirmation that no EC remedies were offered
We are retracting our earlier check that Syngenta and ChemChina can offer remedies post the 21 October (“Day 20” deadline). We have received confirmation from our lawyers and have reviewed the EC merger regulations and concluded that this is a HARD deadline which cannot be extended or breached should the companies wish to obtain antitrust clearance in Phase I. Any remedies offered by the parties would have resulted in an automatic 10 business day extension to the timetable (i.e. a Phase I decision would have been expected on 14 November). The EC Press Office has confirmed that any remedies (if submitted) would have been reflected in the public case file. As there are no references to any remedies there, no remedies have thus been submitted. We have confirmed that SYNGENTA AND CHEMCHINA ARE NO LONGER ABLE TO SUBMIT REMEDIES IN PHASE I.
A state-of-play meeting (alleged to have taken place on 14 October) does not necessarily indicate that there are significant issues with the transaction and can be requested by the merging parties to demonstrate to the EC in detail that there are no significant competition overlaps, and still receive Phase I approval. Nevertheless, we find it surprising that after such lengthy pre-notification discussions (deal was announced on 13 November 2015 and the EC filing was only formally submitted on 23 September 2016), a state-of-play meeting was still requested by the parties to make their case to the EU and yet no remedy package was formally filed.
The EC may extend the review period with the agreement of the notifying parties at any time post-filing and any extension on this basis cannot exceed 20 working days (i.e. a further 20 business day extension from the 28 October decision date would be 30 November accounting for EC holidays). Nevertheless, no remedies can be submitted to the EC despite this extension, during Phase I.
The ACCC have also announced today that “the former proposed decision date of 27 October 2016 delayed at the request of the merger parties so that they can provide more information to the ACCC. A new proposed decision date will be published in due course.” This is a VOLUNTARY suspension of the timeline.
Another possible explanation would be that the parties are working with the EC and the other regulators to offer a global remedy packaged for the deal which explains the lack of remedies offered to date. We await the update from Syngenta when they announce their Q3 earnings tomorrow morning.
Clearly, the initial share price reaction was overdone for a Phase I to a potential Phase II extension, and now the spread is back to pre-CFIUS levels, but supporters of any “conspiracy theory” will find comfort in this news. Clearly, it is becoming increasingly difficult to find much comfort at this time given the information vacuum and traditional worries about a Chinese buyer.
Mgmt’s comments in several interviews point to a solid quarter
S Korea’s Hanjin looks to sell European business
Beleaguered shipping group accelerates asset sales as part of break-up
Hanjin Shipping is looking to close its European business and step up its asset sales as part of the beleaguered container line’s break-up amid a prolonged slump of the global shipping industry.
Saddled by debt and onerous contracts, and with industry overcapacity depressing freight rates, Hanjin filed for bankruptcy protection in late August after creditors withdrew financial support.
That prompted the Seoul Central District Court to kick off a process to break up the company, which the court said included selling the company entirely. Hanjin said on Monday that it wanted to close all its 10 branches in Europe, including its regional headquarters in Germany.
“The profitability of our European business has fallen a lot so we are seeking court approval to shut it down,” said Hanjin, adding that the court could approve the company’s request as early as this week.
Shares of the South Korean company fell 12 per cent on Monday, underperforming a 0.5 per cent rise in the benchmark Kospi index. The company’s market capitalisation has fallen 72 per cent this year.
Hanjin, under court protection, is accelerating its sale process for most of its assets to pay back debts totalling Won6tn ($5.4bn). It is in talks to sell a 54 per cent stake in a terminal at Long Beach Port to Mediterranean Shipping, while it has also put its Asian-US business up for sale with a November 7 deadline for bids. Hanjin is also planning to lay off half of its 700 land-based employees in South Korea.
“This was very much expected. It is a concentrated effort by the court to sell down the company’s remaining valuable assets and garner as much sales proceeds towards debt retrial,” said Rahul Kapoor, director at Drewry Financial Research Services.
However, Mr Kapoor expressed doubt over how popular the asset sales could be for potential bidders as the industry is affected by overcapacity. “Container shipping is a service business and anybody acquiring it would be worried about potential legal suits as well, despite the sale being ringfenced,” said Mr Kapoor.
“Why would one pay for a ghost network when the credibility of that network has been under threat and we are also uncertain what value there is in these assets. Most of the customers have already moved on.”
However, Hyundai Merchant Marine, Hanjin’s crosstown rival, said it was considering buying some of Hanjin’s assets including its US-Asia route. “We’re reviewing the possibility to see if there would be any synergies with our existing businesses,” said Hyundai Merchant.
Hanjin’s bankruptcy created a global logistics logjam last month with many of its ships seized by overseas creditors and stranded at sea, unable to dock at ports. The company said on Monday that some 80 ships of its 97 container vessels have completed cargo unloading.
We reached to the Merger Registry and the Syngenta Case Secretary at the EC who were both unable to conclusively confirm that remedies were NOT offered by the 21 October (Day 20) deadline. The Case Secretary believes that remedies can be offered up to the 28th October decision date and the timetable extended accordingly. This is being verified with the dedicated Syngenta case team and we are confirming the latest date that remedies can be offered. We will come back as soon as we have further information.
Berenberg – Food Manufacturing – A Q3 packaged food fight (afd)
Citi – Daimler - Stronger For Longer – Our Top Pick
Credit Suisse – European Wholesale Banks - US read-through positive for CIB forecasts
DBK – Utility & Power Q3 Preview – Fair Weather quarter (0900)
Kepler – ABB – Turning to 2017
Kepler – Daimler – More Margin power to come from MB
Kepler – Volvo - Synchronous downswing = not good
MS – Commodity Manual - Signs of Stress As Loadings Finally Recover; Shale is Coming; Producers Are Adapting; Gas Backwardation (TCM)
SG – Daimler - Delivering on Cars & Vans but Trucks remain challenged – downgrade to Hold
From: LCHEKROUN@makor-cm.com At: 10/24/16 09:41:17
October 24, 2016
MAKOR - Share Class Report
Good morning,
Please find attached our latest share class report.
This week we focus on:
- Long REN / short REL vs Short UNA / Long ULVR
- + CCL LN / - CCL US
- + TITR / - TIT
Last week moves:
- Last week was flat in terms of performance despite some activity.
o We cut our short UHRN / long UHR trade with a 162 bps gain and wait for a good level or newsflow to put back.
o We “played” a slight risky game with TITR IM / TIT IM (details below) and made 102 bps on the week.
o Our call Long REN / short REL vs Short UNA / Long ULVR didn’t really move, nor did + CCL LN / - CCL US. =>we still like levels to set up trades.
- The TITR / TIT story:
o TIT IM supposedly under pressure as a mandatory convertible matures on 15/11. However, possibility that convertible guys are over-hedged on TIT, as TIT share price rises.
o Also, index rebalancing impact on TIT 150m after 15 November and probably towards the end of Nov
o As Vivendi will get diluted by the mandatory conversion, it could be a possible buyer of between 249m and 373m shares if it wants to maintain same level of ownership!
o So I guess there is a possibility at some point to see a great entry point on +TITR / -TIT (seen it a little the other day).TIT could spike, leaving TITR behind.
o + TITR / - TIT to monitor. Wouldn't be surprised if we return to 80% or below
Makor Capital
11 Menachem Begin St., 26th FL
Ramat Gan 52681
ISRAEL
Tel +972 3 5453 762Fax +972 3 7162 680
Research Disclaimer
This publication has been prepared by Makor Capital Limited (“Makor Capital”) and is intended for professional or qualified investors only. Makor Securities London Ltd (“Makor Securities”)is distributing this material to its clients who are Eligible Counterparties or Professional Clients under FCA Rules. It may also be disseminated to persons who are Investment Professionals within the meaning of the Financial Services and Markets Act 2000 (Financial Promotion Order 2005). In the United States, Makor Capital only distributes this material to major US institutional investors (as that term is defined in Rule 15a-6 of the Securities and Exchange Act of 1934) and to SEC-registered broker-dealers or banks acting in a broker–dealer capacity. This material is not intended for distribution to any other persons and should not be redistributed. If you do not fall into any of these categories you should disregard it.
This material is a marketing communication. It is not investment research and has not been prepared in accordance with legal requirements designed to promote the independence of investment research. It is not subject to any prohibition on dealing ahead of the dissemination of investment research under U.K. law. This material is not a research report and is not intended to be a research report as defined under U.S. securities laws and regulations. This material is not intended to provide information reasonably sufficient upon which to base any investment decision.
This material does not take into account the particular investment objectives, financial situation or needs of individual clients or other recipients. Before acting on this material, clients and other recipients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice.
This material should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action.
In the United States, Makor Capital does not offer securities services to U.S. persons except pursuant to SEC Rule 15a-6 only to major US institutional investors and SEC registered broker-dealers or banks acting in a broker–dealer capacity. Transactions in the United States must be effected through the U.S. broker-dealer, Oscar Gruss & Son Incorporated. Oscar Gruss & Son has not prepared, reviewed or distributed this material.
Some of this material is produced by providers which Makor Securities believes to be reliable, but Makor Securities does not warrant or represent (expressly or impliedly) that it is accurate, complete, not misleading or as to its fitness for the purpose intended and it should not be relied upon as such.
Opinions expressed will be the current opinions of those producing this material as of the date appearing on this material only. We expect those producing the material in this publication to update it on a timely basis but can give no undertaking that they will do so and regulatory compliance or other reasons may prevent them from doing so (or us from disseminating updated material).
Members and employees of Makor Securities London Ltd, employees of Makor Capital, Makor Capital Markets may from time to time have long or short positions in securities, warrants, futures, options, derivatives or other financial instruments referred to in this material. For Makor Securities, this information is set out in our Conflicts of Interest Policy which is available on request. Policies for the production of research from other research providers are available on request. Unless otherwise stated, share prices provided within this material are as at the close of business on the day prior to the date of the material.
Neither the whole nor any part of this material may be duplicated in any form or by any means. Neither should any of this material be redistributed or disclosed to anyone without prior consent. This material is issued for general information and discussion purposes only. None of Makor Securities, Makor Capital, Makor Capital Markets accepts liability whatsoever for any direct, indirect or consequential loss or damage of any kind arising out of the use of all or any of this material.
The services, securities and investments discussed in this material may not be available to, nor are suitable for all investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves risk, including the risk of capital loss. Past performance is no guide to future performance. In relation to securities denominated in foreign currency, movements in exchange rates will have an effect on the value, either favourable or unfavourable.
All investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves risk, including the risk of capital loss. Past performance is no guide to future performance. In relation to securities denominated in foreign currency, movements in exchange rates will have an effect on the value, either favourable or unfavourable.
Entities
Makor Securities London Ltd is authorised and regulated by the Financial Conduct
Authority (FCA registration number 625054)
Makor Capital, company number 514456466, is incorporated in Israel and is a 100% held
subsidiary of Makor Holdings Pte Ltd incorporated in Singapore.
Makor Capital Markets SA, company number CH-660.2.999.011-0 is incorporated in Switzerland
and is also a 100% held subsidiary of Makor Holdings Pte Ltd.
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