>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: TPX -22%, SYMX -8.4%, FGP -7.3%, SONC -5.2%, NKE -2.6%

M&A news:

  • RAD -2.1% (NY Post reports tepid PE interest in some 650 stores Walgreens is lokoing to divest to get a deal done)
  • GLBL -1.2% (reaches agreement with subsidiaries of SunEdison to buy certain assets from a third party buyer)

Other news:

  • GALT -47.8% (announces top-line data from exploratory Phase 2a pilot trial; trial also did not meet primary or secondary endpoints; entered into a Securities Purchase Agreement)
  • SCSS -7.7% (TPX sympathy)
  • VSAR -6.3% (commences common stock offering for undisclosed amount)
  • FOMX -4% (commences public offering of its ordinary shares w/ a portion of the shares being sold by certain selling shareholders )
  • RGSE -3% (after surging 150% higher)
  • GSBD -1.8% (light volume-plans to conduct an offering of up to $100 million aggregate principal amount of convertible notes due 2022 )
  • GXP -1.5% (prices offerings of common stock and depositary shares; prices 52.6 mln shares at $26.45)
  • FL -1.1% (following Nike earnings)

Analyst comments:

  • SEM -2.8% (downgraded to Mkt Underperform from Mkt Perform at JMP Securities)
  • BIDU -2.3% (downgraded to Hold from Buy at Deutsche Bank)
  • T -1% (downgraded to Neutral from Buy at UBS)
  • TWTR -0.9% (downgraded to Underperform from Neutral at Mizuho)
  • M -0.8% (downgraded to Neutral from Outperform at Credit Suisse)
  • GOOGL -0.6% (downgraded to Underperform from Neutral at Wedbush)

>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: CCCL +14.9%, STAF +13.2%, CTAS +4%, BBRY +1.5%

M&A news: DB +2.4% (to sell Abbey Life Assurance Company to Phoenix Life Holdings for GBP935 mln)

Select metals/mining stocks trading higher: RIO +1.9%, AUY +1.6%, FCX +1.3%, AG +1%, BHP +1%, BBL +0.9%, GOLD +0.9%, VALE +0.7%

Select oil/gas related names showing strength: WLL +2.1%, CHK +1.4%, BP +1.4%, RDS.A +0.5%

Other news:

  • SEED +47.6% ( announces sale of commercial seed production and distribution business for $60 mln)
  • HLIT +7.5% (enters into a warrant agreement with Comcast which provides Comcast with the opportunity to acquire shares of common stock of Harmonic based on specific CableOS and other Harmonic product sales)
  • TTS +6.1% (to Join S&P SmallCap 600)
  • INCY +5.5% (published an abstract containing updated data from the Phase 1 portion of the ECHO-202 trial)
  • CRBP +3.7% (presented prelim data on the effects of Resunab in a model of inflammation in healthy volunteers)
  • MYOK +3% (prices public offering of 3.8 mln shares of common stock at $15.00 per share)
  • TAP +3% (moving higher after BUD shareholders approved merger SABMiller)
  • FRGI +2% (appoints Danny Meisenheimer interim CEO and President of the Company; provides strategic updates)
  • COTY +1.7% (Coty will replace Diamond Offshore in the S&P 500)
  • ARRY +1.2% (prices offering of 18.4 mln shares of its common stock at $6.25 per share)
  • CZR +1% (after 18% decline on restructuring update)
  • CXW +0.9% (announces corporate restructuring and cost reduction plan)

Analyst comments: SRPT +4.1% (target raised to $108 at RBC Capital Mkts)

>>> Meeschaert to remain independent and family-owned

Meeschaert to remain independent and family-owned (translated)

Meeschaert, a family business that has been up and running for almost 100 years, has decided to change its governance and implement the terms of a shareholder relay passage between the family’s second and third generation. The practical modalities of this passage will be decided in the coming weeks.
This development was also reported in daily Les Echos, saying that the founding family mandated Edmond de Rothschild(EdR) earlier in the year to find a partner for the business. Offers came from China’s Fosun, Swiss Life, and France’s La Banque Postale, KBL, and Neuflize OBC. Market sources claimed that two issues prevented the deal to go through, the first being the EUR 150m expected by the family, a figure considered too high. The second issue was that Swiss Life is already the partner of Meeschaert in relation with the insurance sector, raising “technical” difficulties.
Meeschaert manages assets worth EUR 5.8bn.

(Exane) French Telco : Here’s my number, so call me maybe

* A long-term necessity with limited short-term probability – No changes to ratings or TPs
As we argued in If two's company, and three's a crowd, is four a party?, only two operators can
nationally invest in fibre infrastructure: Orange and SFR. For Bouygues, and to a lesser degree
Iliad, the inevitable consumer shift to high-speed-high-value converged services will likely leave
both operators at risk of ‘value’ share erosion. This forms the basis of our view that French
telecoms must eventually consolidate from four players to three.
* Anticipating the next deal – same players but a different structure
Recent press reports suggested that operators had revived ‘discussions’, although the claims were
then robustly denied. Since the last consolidation attempt, we note that: 1) Orange is unlikely to
lead the operations; 2) Telecoms remains core to Bouygues; 3) US is increasingly a focus for
Altice; and 4) Iliad would still welcome consolidation. In this context, we see a 50/50 ‘BouyguesTel-
SFR’ merger as the most credible scenario. In this report, we show that such a deal could be both
approved and funded, provided that the operators can agree on a price and remedies.
Financials: synergies and pro-forma numbers
Despite the heavy cost cuts at Bouygues Tel & SFR, a merger would still secure big savings (ULL
& wholesale fees, network, fibre capex, etc.). We think a merger could achieve ~EUR5bn NPV of
net synergies and fetch a further EUR2-4bn in asset sales. Finally, we believe Bouygues would be
keen to increase its stake to 50%, either immediately (Altice bringing more debt to the NewCo) or
progressively (via call options) – an opportunity for Altice to de-lever and fund other US deals.
On the road with Iliad – All about 2 to 20
Earlier this month, we roadshowed with Iliad’s CEO and Deputy CEO. Iliad does not believe four
operators can attain sufficient scale to invest in fibre and thinks that the market would ultimately
consolidate – a view that we share. Meanwhile, Iliad remains focused on executing its strategy
(expanding mobile margin through network investments) while planning its Italian entry with
confidence (see our Iliad roadshow feedback).

(UBS) Gemalto - Key Investors questions & Morpho analysis - full note attached

* Response to key questions and Morpho analysis
We use this note to outline two things: 1) Provide feedback to key investor questions
we have received recently and 2) Outline our thoughts on the potential that Gemalto
could acquire Safran's Morpho division (Gemalto one of five parties bidding according
to Bloomberg 22 Sept 2016). At this point, we maintain our Neutral rating on Gemalto
as while the company has a number of good growth opportunities (M2M, enterprise,
government and payment), until we have clarity mobile is stabilising and the 2017E PFO
target is revised, we struggle to see the shares performing well. We do however believe
that valuation at current levels of 13x '17E P/E vs. peers on 14x provides some support.

* Responding to key questions
In response to key questions from investors: 1) We continue to believe Gemalto will
need to lower its FY17E PFO target of €660m (UBSe €576m) but we believe is only
likely to do this once it has completed its budgeting exercise (i.e. possibly FY16 results).
2) We see further opportunities for growth in payments and would see contactless in
the US as a key opportunity, although timing is unclear. 3) While there is much concern
around what embedded SIM standards might mean for Gemalto, we would continue to
see this as much as an opportunity for Gemalto as it is a risk and will likely take some
time before being implemented in smart-phone devices.

* Morpho acquisition analysis - could be an interesting opportunity for Gemalto
While the bidding process is still ongoing for Safran's Identity & Security division, we
have conducted a financial merger analysis. We estimate that if Gemalto were to
succeed and pay the €2.4bn that has been speculated in the press it could deliver 11-
31% EPS accretion depending on synergies/deal structure. However, to deliver a RoIC >
WACC we believe the business would need to generate >€150m synergies. We expect
it would be key for Gemalto to portray long-term benefits of the deal and we believe
there could be cross-selling opportunities for Gemalto into enterprise for biometrics.

* Valuation: €60.0 DCF-based price target (WACC 9%, g 2%)
We have left our forecasts largely unchanged and hence our price target remains €60.
The valuation for Gemalto does provide support at 13x '17E P/E but pending clear
visibility on Mobile stabilising we remain Neutral on the shares.

>>> Street Pre-Market Indications

RBC
*ADIDAS: +1% NIKE (-2.62%) on weak Q1 numbers after hours, taking market share.
*DBK: +1% BILD: CEO ruling out capital increase, state aid not an issue, sell Postbank.
*D. POST: 0% buy UK MAIL for 440p in cash/shares.
*KONE: -1% FY market & biz outlook unchanged, long-term drivers in China solid.
*NYRSTAR: +1% restart Middle Tennessee mines, full prod expected Nov 2017.
*SAINSBURYS: -1% Q2 retail sales ex fuel -1.1% v -1% estimates.
*SKY: +2% FT: reignites FOX interest in company.
*SMINS: +1% FY 16 results solid beat, rev +2%, underlying growth -2%.
*STAGE COACH: -3% trading update, LFL revs regional bus -1.9%, outlook uncertain.
*STEINHOFF: -1% issues 222M new shares, private placed @ last night's close.
*TUI: +3% summer & winter 2016 in line, rev +11% overall & bookings +5%.
*UKM: +30% DEUTSCHE POST to buy UK MAIL for 440p in cash/shares.
*VW: -1% suspended production for Q5 model on emission level test failure.
Macquarie
-AA- Revenue’s up 2.2%, Dividend 3.6p vs 3.5p. In line with expectations. +1%
-Mortgage Advice Bureau MAB1- Strong set of no’s, not seen any slowdown post Brexit. Current trading in line with expectations +5%
-Mysale MYSL-Strong FY16, Encouraging start in Financial year, performance ahead of expectations.+3%
-PZ Cussons PZC- Performance in line with views, group well placed to manage challenging conditions. Unch
-Royal Mail RMG- Read across from UKM Approach. +2%
-Smiths Grp SMIN- Significant headwinds impacted John Crane’s performance Group performance in 2017 will be weighted towards second half. -3-5%
-Stobart STOB- Mark Adams appointed CFO from November. Unch
-UK Mail UKM- Recommended offer from Deutsche Post 440p Cash. (vs 307.5p close) +40%

MainFirst
*DBK-Keeps target of selling Postbank. Rules out Capital Increase....+0.5%
*ADIDAS-Read across from Nike Orders miss, GM weak,F/Orders weak.....-0.5%
*VOLVO-CEO says co has solid plan for bus unit, Brexit s/impact......+0.5%
*KONE-Fin tgts, outlook unch, China l/t drivers ok, Performance gd.....+0.5%
*PROSEGUR-Considers IPO for Cash Management Unit, value €3bln........+0.5%
*STEINHOFF-To offer 100m new shares via ABB, Gross Proceeds 1.89b....-0.5%
*ORPEA-H1 Rev 1.38b(1.369),Net 75.5m(73.8),Reits FY guidance........+1%
*ZURICH INS-To cut agencies in Switzerland, Bilanz reports .........+0.5%
*LANXESS-CEO sees more acquisitions after Chemtura integration.......+0.75%
*HELLA-Sales 1.533b(1.565),Ebit 117m(115),Confirms FY guidance......+0.5%
*TUI-Raises 15/16 Underlying Ebita f/casts to 12-13% vs 10%.........+2%
*DEUT POST-To buy UK Mail for 440p a share close 307.5p(RMG -1%)....+0.25%

CS
AA -1% H1 Trading revenue 2.5% light, EPS 10.3 cons 11)
Abb +0.5% Cevian reportedly met potential buyers for ABB Power Grids
Adidas -1-2% US peer Nike -4.2% after hours, weaker future orders
Hella +2-3% 4% revenue beat and 7% EBIT beat, confirms guidance
Kone M/P CMD, Guidance for 2016 is reiterated
Miners M/P Copper +0.30%, Brent +1.05%, Iron Ore +0.60%, China -0.22%
Oils +0.5% API stats showed -0.75 crude draw, OPEC and DOE today
Opera +1% 1H net 2% ahead, confirms FY goals
RBS -1% To pay $1.1bn to settle National Credit Union Admin claims
Sainsbury -1% Q2 Total ret sales ex fuel down 0.4% est flat
Smiths Group +1-2% Solid FY earnings with a 3.5% op profit beat
SSE M/P Trading statement inline with market expectations
Stagecoach -3-5% Bus passenger volumes weak,
Tui +2-3% Raising EBITA forecasts to 12%-13% from 10%
Ublox -2% CS DOWNGRADE to UNDERPERFORM (Margin headwinds)

>>> Cevian Capital looking to sell ABB Power Grids in parts - report (translated

Cevian Capital looking to sell ABB Power Grids in parts

Cevian Capital, the Swedish activist fund, wishes to sell ABB's Power Grids division in parts, according to Dagens Industri.
The Swedish business daily reported, without citing any named sources, that if ABB decides to spin off Power Grids, Cevian plans to try and sell the division in pieces in order to gain as much value as possible.
One source said that Cevian knows that ABB will be forced to talk to buyers for parts of Power Grids if approached. Another source said that Cevian has already worked on finding possible buyers.
Meanwhile, the paper asked Cevian partner, Christer Gardell, if the company has talked to possible bidders for parts of Power Grids, to which he responded that Cevian always meets stakeholders and competitors when carrying out its usual analysis duties.