>>> US Gapping up

Gapping up

Brazil ADRs extending yesterday's move higher - iShares Brazil ETF (EWZ +0.5%): GGB +2.7%, VALE +2.4%, CIG +1.8%, BBD +1.1%, BBL +3%

Select metals/mining names are trading higher: BBL +3%, RIO +2.5%, BHP +2.4%, GFI +1%, GOLD +0.9%, PAAS +0.4%

Semi/tech names seeing continued strength: NVDA +1.6%, AMD +1.5%, MU +0.6%

Other news:

  • CEMP +3.4% (light volume, closed down 5% on the day)
  • GLBL +2.5% (Knighthead Capital Management increases active stake to 6.43%)
  • MDXG +1.8% (EpiFix product has received coverage from insurer Aetna)
  • YELP +2.6%, CHK +1.1% and ALV +1.1% (still checking)
  • CETX +0.8% (will launch its previously announced $15.0 million subscription rights offering tomorrow)
  • PAA +0.3% (discloses equity distribution agreement; to sell $500 mln in Class A shares representing limited partner interests)
  • AAPL +0.2% (Apple Insider reported that Apple plans to introduce iPhone 7S with 5 inch screen in 2017)
  • BP +0.2% (Woolworths confirms sale of 527 Woolworths sites and 16 development sites for A$1.785 bln)

Analyst comments:

  • BK +1% (upgraded to Strong Buy from Outperform at Raymond James; tgt raised to $57 from $50)
  • AMZN +0.3% (named Top Pick for 2017 at Evercore, Buy rating reiterated at Cantor Fitzgerald)
  • BABA +0.2% (named top Internet picks for 2017 at Evercore)

>>> US Early premarket gappers

Early premarket gappers

Gapping up: YELP +11.5%, CEMP +3.5%, BBL +3%, GFI +2.8%, NVDA +1.9%, RIO +1.9%, BHP +1.9%, MDXG +1.8%, IRG +1.6%, ALV +1.4%, MU +1.3%, GOLD +1.2%

Gapping down: ANTH -58.2%, DB -2%, AA -1.1%, BCS -0.8%

FT : German states battle over tax avoidance clampdown

German states battle over tax avoidance clampdown
Billions of euros at stake in banking cum/cum trades dispute

A dispute has erupted among Germany’s regions over a planned clampdown on a tax avoidance strategy that could cost the country’s banks billions of euros.

A group of Social Democrat-led administrations headed by the industrial North Rhine-Westphalia state, Germany’s most populous, is pressing for tough action against the banks. Other states such as Hesse, home to the financial centre of Frankfurt, where chancellor Angela Merkel’s conservatives hold sway, want a less aggressive approach.

The dispute concerns how to deal with so-called cum/cum trades, a contentious practice that allows foreign investors to avoid a German withholding tax on dividends.

“This conflict is about billions of income for the banks and what happens to the banks if the tax authorities say ‘We want this money’ and German banks have to pay €10bn or more,” said Gerhard Schick, parliamentary finance spokesman for the Green party.

“This burden would fall more on some banks than others. A bank could fail. There is a conflict between protecting the banks and recovering unpaid tax. This is a big issue for German banks.”

A cum/cum trade involves a German bank borrowing a foreign investor’s shares in a company in the run-up to the company’s dividend payment. By doing so banks can take advantage of a loophole in German law that lets domestic investors claim a credit on taxes on dividends.

Such trades were prohibited this year but Germany’s 16 regions, which collect taxes and collectively decide key regulations, are split on how to deal with transactions made before 2016.

How much a retrospective penalisation of cum/cum trades would cost Germany’s banks depends on how far back the regions reach and how many trades they pursue.

The Association of German banks said it was “working constructively” with a parliamentary committee investigating the trades and would “not engage in any speculation” about the possible outcome.

With elections due next year in both North Rhine-Westphalia and nationally, the dispute is gathering political momentum as the SPD, Ms Merkel’s junior coalition partner in Berlin, seeks to differentiate itself from her CDU/CSU bloc.

North Rhine-Westphalia wants a 2015 ruling by Germany’s Federal Fiscal Court, the country’s highest arbiter of tax disputes, to be applied in such a way that regions can seek back taxes from banks involved in all cum/cum transactions before 2016. The state this month persuaded its peers to reject a narrower draft proposal from the federal finance ministry.

Officials in North Rhine-Westphalia say that billions of euros in back taxes are at stake.

“All in all, the chance is now growing to penalise tax tricks by the owners of securities and see them for what they are: massive tax avoidance to the cost of the whole community,” said Norbert Walter-Bojans, North Rhine-Westphalia finance minister.

Other regions say North Rhine-Westphalia’s maximalist approach would be self-defeating. “Retrospectively outlawing all cum/cum trades might be something you dream of doing, but unfortunately the legal situation was not clear until the end of 2015,” said Thomas Schäfer, Hesse’s finance minister. “Looking back, I want to concentrate on the extreme cases where we have a realistic chance of winning.”

Critics warn that if Germany’s regions take too long to agree how to proceed the amount of taxes that could be reclaimed could shrink as older trades start to fall outside the statute of limitations.

“We need a new finance ministry paper which makes clear that cum/cum deals from 2010-15 should be investigated,” says Mr Schick. “The sooner the better.”

FT : Bovis shares slide on warning of December slowdown

Bovis shares slide on warning of December slowdown
Housebuilder says 2016 completions will be lower than expected

Shares in Bovis Homes fell 5 per cent in early trading on Wednesday after the UK housebuilder warned that a slowdown in home completions in December would dent full-year profits.

The FTSE 250 company said in a trading statement ahead of its year end that the number of homes built by the end of the month would be “lower than previously anticipated”, resulting in the deferral of about 180 sales into next year.

It said profits before tax for the year to December 31 would be lower than forecast at between £160m and £170m. This compares with profits of £160.1m in 2015.

Analysts were expecting profits of £183m, according to Thomson Reuters.

Bovis said it expected revenues for 2016 to be between £1.04bn and £1.06bn. Land sales were also forecast to fall compared with 2016, both in revenues and profits.

Bovis shares were down 4.6 per cent at 816p in morning trade in London, having closed at 855p on Friday.

The update from Bovis weighed on the share prices of industry peers with Crest Nicholson, Berkeley Group and John Laing all falling.

Bovis said in the statement: “We expect the volume delivery for 2016 will be lower than previously anticipated at between 3,950 and 4,000 homes, the exact number depending on the extent of legal completions in the remaining days of the year.”

It added that “slower than expected build production” during December meant sales of about 180 homes expected to complete this year would be “deferred into early 2017”.

Bovis said, however, that the level of building starts was 7 per cent higher than 2015 at more than 4,200 units. It had secured detailed planning for all homes expected to be completed in 2017, which was “an improved position on the start of 2016”.

The news from Bovis surprised markets after the company said in November that it expected to deliver record revenues in 2016.

Until now, housebuilders have been reporting healthy profits and increasing sales against a backdrop of rising house prices, with little sign yet of any significant fallout from the Brexit vote.

However, a number of companies that supply building materials had struck a downbeat tone. Some have been closing branches and cutting jobs.

>>> Loxam raises offer for Lavendon Group to 260p per share

Loxam raises offer for Lavendon Group to 260p per share
28 DEC 2016
On 14 December 2016, the boards of directors of Lavendon and Loxam announced that they had reached agreement on the terms of a recommended all cash offer for the entire issued and to be issued share capital of Lavendon by Loxam, to be implemented by way of a takeover offer under the City Code and within the meaning of Part 28 of the Companies Act 2006 (the "Original Offer").
On 15 December 2016, Loxam published an offer document setting out the full terms and conditions of the Original Offer (the "Original Offer Document").
On 15 December 2016, TVH Group N.V. ("TVH") announced an increased cash offer (the "TVH Increased Offer") of 230 pence per share for the entire issued and to be issued share capital of Lavendon.
On 16 December 2016, the boards of directors of Lavendon and Loxam announced an increased recommended all cash offer of 250 pence per share for the entire issued and to be issued share capital of Lavendon by Loxam (the "Increased Recommended Offer").
On 23 December 2016, TVH announced a second increased cash offer (the "TVH Second Increased Offer") of 251 pence per share for the entire issued and to be issued share capital of Lavendon.
Today, the boards of directors of Lavendon and Loxam are pleased to announce an increased recommended all cash offer of 260 pence per share for the entire issued and to be issued share capital of Lavendon by Loxam (the "Second Increased Recommended Offer").
2.Second Increased Recommended Offer
The Second Increased Recommended Offer values the entire share capital of Lavendon in issue as at 23 December 2016 at GBP 442m and represents a premium of approximately:
  • 87 per cent. to the Closing Price of 139.0 pence for each Lavendon Share on 21 November 2016 (being the last Business Day prior to the start of the Offer Period); and
  • 98 per cent. to the volume-weighted price of 131.3 pence for each Lavendon Share for the twelve month period ended on 21 November 2016 (being the last Business Day prior to the start of the Offer Period).
3. Amendment to debt facility agreement
Loxam further announces that the Interim Facility Agreement, a summary of which was included in paragraph 8.3 of Section V (Additional Information) of the Original Offer Document, has been amended for a second time, so as to increase the facilities available to Loxam to EUR 795m and to increase the portion of the facilities available for cash consideration to EUR 570m. Copies of the amendment documentation will be available on Loxam's website at www.loxamgroup.com.
Rothschild and Deutsche Bank, financial advisers to Loxam, are each satisfied that sufficient resources are available to Loxam to enable it to satisfy, in full, the cash consideration payable to Lavendon Shareholders by Loxam under the terms of the Second Increased Recommended Offer.
4. Offer related arrangements
On 16 December 2016, at the same time as the announcement of Loxam's Increased Recommended Offer of 250 pence per share, the boards of directors of Lavendon and Loxam announced that Lavendon had agreed to increase the break fee of GBP 3,700,000 payable under the break fee letter between Lavendon and Loxam dated 14 December 2016 (the "Break Fee Letter") to GBP 4,200,000, being 1 per cent. of the value of the current issued share capital of Lavendon pursuant to the Increased Recommended Offer. Loxam and Lavendon therefore entered into a revised break fee agreement on 16 December 2016 to reflect this increase. Following discussions with the Takeover Panel, Loxam and Lavendon have agreed to revert to a break fee of GBP 3,700,000, being the amount of the original break fee as set out in the Break Fee Letter.
5. How to accept the Second Increased Recommended Offer
A revised offer document (the "Revised Offer Document") containing the full terms of, and conditions to, the Second Increased Recommended Offer together with the associated revised form of acceptance (the "Revised Form of Acceptance") will be posted to Lavendon Shareholders within 28 days of the date of this announcement and be made available, subject to certain restrictions relating to persons resident in certain jurisdictions, on Loxam's website at www.loxamgroup.com in due course.
Lavendon Shareholders wishing to accept the Second Increased Recommended Offer in respect of certificated Lavendon Shares, should complete either: (i) the Form of Acceptance accompanying the Original Offer Document dated 15 December 2016; or (ii) the Revised Form of Acceptance which will accompany the Revised Offer Document to be posted in due course.
Lavendon Shareholders wishing to accept the Second Increased Recommended Offer in respect of uncertificated shares should do so electronically through CREST.
Lavendon Shareholders who have already accepted the Original Offer will receive the price per Lavendon Share payable under the Second Increased Recommended Offer if the offer becomes unconditional in all respects and so do not need to take any further action.
If you have any questions relating to this announcement, the Original Offer Document or the Revised Offer Document (when published), please contact the Receiving Agent, Equiniti Limited on 0333 207 6523 or +44 121 415 0906 if calling from outside the UK. The helpline is open between 8.30 a.m. and 5.30 p.m., Monday to Friday excluding public holidays in England and Wales.
6. Loxam seeking to acquire Lavendon Shares
Institutional Lavendon Shareholders wishing to sell their shares for 260 pence per Lavendon Share in cash today should contact Deutsche Bank (Jimmy Bastock: +44 (0)20 7545 8000) who have authority to make a limited number of market purchases.
7. Recommendation by the Lavendon Directors
The Lavendon Directors, who have been so advised by Canaccord Genuity as to the financial terms of the Second Increased Recommended Offer, consider the terms of the Second Increased Recommended Offer to be fair and reasonable. In providing its advice, Canaccord Genuity has taken into account the commercial assessments of the Lavendon Directors.
The Lavendon Directors intend to recommend that Lavendon Shareholders accept (or procure acceptance of) the Second Increased Recommended Offer as each of the Lavendon Directors who are interested in Lavendon Shares have irrevocably undertaken to do in respect of their own Lavendon Shares representing, in aggregate, approximately 0.55 per cent. of the issued share capital of Lavendon as at 23 December 2016 (being the last practicable date prior to the date of this Announcement). The Lavendon Directors therefore recommend that Lavendon Shareholders take no action with regard to the TVH Second Increased Offer.
8. General
Save as set out in this announcement, the Second Increased Recommended Offer is subject to the same terms and conditions as the Original Offer and Loxam confirms that there have been no other material changes to any of the matters listed in Rule 27.2(b) of the City Code since the publication of the Original Offer Document.
The Original Offer Document will remain available, subject to certain restrictions relating to persons resident in certain jurisdictions, on Loxam's website at www.loxamgroup.com. The contents of Loxam's website are not incorporated into and do not form part of this announcement.
Capitalised terms used but not defined in this announcement shall have the meaning given to them in the Original Offer Document dated 15 December 2016.

>>> Global Solution (GSOL US) : To launch fully integrated online system for tra

To launch fully integrated online system for trading, customs declaration and payment settlement with Globex Global Sources and Shenzhen Globex e-Services Inc., an integrated e-commerce service provider, are planning to co-develop a fully integrated electronic solution to facilitate more efficient cross-border trade between mainland China-based exporters and overseas buyers. As an integrated system, the new service aims to include:

- Electronic customs declaration and clearance
- Full integration of customs, banking and shipment information
- The completion of tax refund applications directly to the exporter's account

Participating buyers and sellers would gain visibility over all stages of the trade process, including payment, product inspection and shipment status.

Expected to launch in early 2017, the service is to be made available through the Global Sources website to Global Sources' community of buyers and suppliers and is designed to support B2B buyers who require rapid delivery times for ready-to-order products.