>>> Anbang Said to Consider Offer for IHG, Sunday Times Reports


Anbang Insurance Group is in early stages of considering InterContinental Hotels Group offer, Sunday Times reports, citing unidentified people.
  • Bankers have been to China for talks with Anbang about a potential takeover bid
  • IHG and Anbang declined to comment: report
  • NOTE: In April, Anbang Abruptly Pulls Starwood Offer, Clearing Marriott Path

InterContinental Hotels targeted for GBP 7bn takeover by Anbang Insurance

Anbang Insurance Group of China has been discussing with bankers in London a possible GBP 7bn (USD 9.2bn) takeover bid for UK-based InterContinental Hotels Group [LON:IHG], The Sunday Times reported.

According to City sources cited in the report, bankers have flown to China to attend meetings with Anbang during the past couple of months.

Anbang has yet to formally approach IHG and is still in the exploratory stages of weighing an offer, the item reported. People with close links to the hotel group confirmed it has not received any direct registration of Anbang’s interest, the report said.

Neither Anbang nor IHG wished to comment on the matter, the item reported.

City banking sources said Anbang has also looked at taking over UK-based general insurance groups but has not acted over fears of regulatory obstacles, the item reported.

IHG is on Anbang’s radar and New Jersey-based Wyndham Worldwide [NYSE:WYN], said to have made an offer for IHG which was rejected two years ago, may also revisit its interest as a result, according to a City banker quoted in the piece.

Sunday Times

>>> Anbang Said to Consider Offer for IHG, Sunday Times Reports



Anbang Insurance Group is in early stages of considering InterContinental Hotels Group offer, Sunday Times reports, citing unidentified people.
  • Bankers have been to China for talks with Anbang about a potential takeover bid
  • IHG and Anbang declined to comment: report
  • NOTE: In April, Anbang Abruptly Pulls Starwood Offer, Clearing Marriott Path

>>> SABMiller’s European lager brands in line for GBP 4bn bid from PSP Investmen

SABMiller’s European lager brands in line for GBP 4bn bid from PSP Investments

SABMiller's [LON:SAB] lager brands in central and eastern Europe are being eyed for a potential GBP 4bn (USD 5.2bn) bid from PSP Investments of Canada, The Sunday Times reported.

PSP, traditionally focused on low-risk assets in the infrastructure sector, intends to engage advisers in London to look for takeover targets, the report said, citing a City-based banker who said the Canadian fund hopes to make an impact in the British capital.

According to sources cited in the report, several prospective buyers are preparing to make offers for the SABMiller business, including private-equity houses Advent International and KKR. PSP may have to join forces with a private-equity firm to bid for the European beer assets, sources cited in the piece said. The report added that PSP and the PE-sector groups are hanging back to see if Asahi, the Japan-based brewing group, will make an offer for SABMiller’s European lagers.

The European beer assets are being divested as part of SABMiller’s GBP 79bn takeover by Anheuser-Busch InBev [EBR:ABI] of Belgium, the report noted. The merged group is seeking to dispose of some of its assets to assuage regulatory concerns over competition in Europe.

The European beers earmarked for sale include Poland’s Lech, Czech Pilsner Urquell and Hungary-based Dreher, the report said.

PSP did not wish to make any comment, the item reported.

Sunday Times

(Re/Code.net) Another AI startup wants to replace hedge funds

Another AI startup wants to replace hedge funds

Computer will start trading three stocks, including Tesla.

Dear, Wall Street: Silicon Valley is increasingly coming for you.

A machine intelligence system, dubbed Emma AI, is starting a fund that hopes to outsmart the humans and computers that make a living trading stocks. It’s part of a wave of tech startups aiming advanced machine learning at financial markets.

Automation is not new to Wall Street. But Shaunak Khire, Emma’s creator, claims his system differs from current finance computing — high-frequency trading and “quant” data science — because its system of neural nets takes into account a more complex set of factors affecting stocks, like management changes or monetary policy in Europe, that other programs miss.

“This is not algorithmic trading,” he said. “This is literally replication of an analyst.”

Emma will start trading stocks from pharma giant GSK and Tesla along with U.S. Treasury bonds. Previously, Emma went head-to-head with financial news writers, testing its ability to replace the profession of yours truly.

It picked a handful of stocks six months ago and Khire said they’ve yielded more than 30-percent growth since. He’s keeping the name of his company under wraps while he awaits certain patents involving bots and AI, he said.

Other startups are applying AI to financial trades. Those include Aidyia, run by eccentric roboticist Ben Goertzel, and Sentient AI, which has raised formidable money and hired top engineers from IBM and Apple. IBM’s Watson began partnering with Citibank four years ago.

Khire notes that other startups haven’t disclosed their performance. And he is also extending an open challenge on AI performance to Watson, which he and several others in the machine learning world dismiss as underwhelming.

Some proceeds from the Emma system trades will go to Watsi, a healthcare non-profit that came out of the well-known Y Combinator startup incubator. “There could be some common areas to work on down the line eg: use of bots/ai for personalized, affordable healthcare,” he said of Watsi in a follow-up email.

The primary purpose of the trading now, Khire said, is less commercial than to test the strengths of AI.

“How do you have an AI that — for lack of a better word —can ‘think’ on the input?” he asked.

The startup is in the process of closing a funding round, Khire said.

FT : Steinhoff targets US with $4bn deal for Mattress Firm

Steinhoff targets US with $4bn deal for Mattress Firm

Steinhoff International, the acquisition-hungry South African discount retailer, is set to break into the US market with a $4bn bid for Mattress Firm Holding, the country’s largest bedding retailer.
Steinhoff and Mattress Firm Holding, which operates 3,500 retail stores across America under the brands Sleepy’s and Mattress Firm, are expected to announce a deal as early as Monday, people briefed on the talks said, although they cautioned that the terms were still being finalised.

The exact terms could not be learnt but the transaction is expected to value the company’s equity at a huge premium and $4bn including debt, the people said.
Shares in Mattress Firm have slumped nearly 52 per cent during the past year, giving the company a market value of $1.12bn as of Friday’s close. It has net debt of nearly $1.5bn.
A deal will give Steinhoff, which already owns European home furnishings retailers Bensons for Beds and Conforama, a significant US operation of franchised and operated stores in 48 states. Neither company immediately responded to requests for comment.
Mattress Firm Holding, based in Houston, announced plans in June to help rejuvenate its weak performance and rebrand all its stores under the Mattress Firm banner after a series of acquisitions, poor results and increased competition from online retailers.
Ecommerce companies led by Amazon continue to disrupt the performance of traditional brick-and-mortar stores. Ecommerce sales are expected to increase by 13 per cent in 2016, while overall US retail sales are projected to rise by just 2 per cent, according to a report by eMarketer.
Steve Stegner, chief executive of Mattress Firm since 2010, led a number of acquisitions, including the $780m deal for the owner of Sleepy’s last year, before relinquished the position to company insider Ken Murphy in March. Mr Stegner took the roles of executive chairman and chairman.
JW Childs Associates, a mid-market US private equity firm, owns 36.5 per cent of Mattress Firm and is its largest shareholder.
The deal suggests Steinhoff has begun to turn its attention to the US market, after it attempted at least three takeovers in Europe this year.
Its one success came last month, agreeing a £450m deal to buy UK discount chain Poundland after it built a 22 per cent shareholding. Steinhoff was beaten in previous auctions for French retailer Darty and the UK’s Home Retail Group by rival suitors.
Bankers have said that Steinhoff is seeking to strike deals outside its home market to diversify and reduce its exposure to South Africa’s volatile currency. The company’s Frankfurt-listed shares are up 21 per cent since the start of the year, giving it a market valuation of €22.7bn.

FT : European energy groups press on with multibillion-dollar disposals

European energy groups press on with multibillion-dollar disposals
Three of Europe’s biggest energy groups are looking to make progress with multibillion-dollar asset disposal programmes before the end of this year, despite pressure on valuations from low oil prices.
Total of France is aiming to sell its Atotech chemicals subsidiary this autumn in a deal expected by analysts to raise about $3bn, and Eni of Italy says talks to offload part of a big Mozambique gasfield are at an “advanced stage”.

Royal Dutch Shell, meanwhile, says it is working on 17 potential disposals as it seeks to reassure investors that its target for $30bn of asset sales by 2018 is achievable.
In common with other oil companies, the European trio are looking to divest non-core assets to help shore up their balance sheets and defend dividends at a time of mounting pressure from the prolonged weakness in oil prices.
However, they face a challenge to achieve acceptable valuations as the deflationary impact of the oil price crash ripples through the industry.
This balancing act is especially tricky for Shell as disposals are crucial to reduce debts after its £35bn takeover of BG Group, completed in February.
“Shell is going to have to be flexible on price if it is to move forward with some of these deals,” said one energy banker. “They cannot just sit back and wait for oil prices to come back.”
About $3bn of disposals have been completed or announced by Shell so far this year, including the sale of its stake in the Japanese refiner Showa Shell.
Simon Henry, Shell’s chief financial officer, said last month that the group wanted to make “significant progress” on deals worth $6bn-$8bn by the end of the year.
Assets in Thailand, New Zealand and the North Sea are among those up for grabs, as well as Shell’s planned exit from its Motiva refining joint venture with Saudi Aramco in the US.
Patrick de la Chevardière, chief financial officer of Total, said he was confident of hitting his target for $10bn of disposals by the end of next year despite weak valuations for upstream exploration and production assets.
“It is true that the oil price environment is not favourable to sell upstream assets, and we are not desperate to sell at any price,” he told investors last month. “We have a few projects under negotiation to sell midstream assets, mostly pipeline infrastructure . . . and the market is there for those assets.”
Much of this year’s deal activity has involved downstream refining and chemicals businesses, such as Total’s Berlin-based Atotech unit, which makes chemicals for circuit boards and semiconductors used in electronics. Mr de la Chevardière said Total was in the process of selecting a short list of bidders, with an aim to sign a deal in the fourth quarter.
Reuters reported last week that Sinochem of China and private equity groups Cinven and BC Partners had made it into a second round of bidding. Total and the three reported bidders declined to comment.
ExxonMobil has been strongly linked with Eni’s Mozambique asset. Both companies declined to comment. Eni is also planning to offload part of a big Egyptian field next year in pursuit of its target for €7bn of disposals by 2019.

‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory, IMF Economist Ar


‘No Empirical Evidence’ for Thomas Piketty’s Inequality Theory, IMF Economist Argues
Historical data shows he has it all wrong, Carlos Góes says in a new study

Thomas Piketty’s case for rising inequality took another hit this week.

Mr. Piketty hypothesized that income inequality has risen because returns on capital—such as profits, interest and rent that are more gleanings of the rich than the poor—outpaced economic growth.

The evidence modern capitalism foments inequality, the former adviser to French Socialist Party candidate Ségolène Royal argued, was in capital’s rising share of income at the expense of labor’s contribution over the last four decades.

But Mr. Piketty’s thesis, posed by the French economist in his controversial 2013 tome “Capital in the Twenty-First Century,” isn’t proved by historical data, says International Monetary Fund economist Carlos Góes.

“There is little more than some apparent correlations the reader can eyeball in charts,” Mr. Góes says in a new paper published by the IMF. “While rich in data, the book provides no formal empirical testing for its theoretical causal chain.”

Mr. Góes tested the thesis against three decades of data from 19 advanced economies. “I find no empirical evidence that dynamics move in the way Piketty suggests.”

In fact, for three-quarters of the countries he studied, inequality actually fell when capital returns accelerated faster than output.

Those findings support previous work by Daron Acemoglu of the Massachusetts Institute of Technology and political scientist James Robinson, now of the University of Chicago, suggesting Mr. Piketty’s thesis was far too simplistic for the complexities of real-world economies that are affected by politics and technology.

Mr. Góes says his study also provides evidence that Mr. Piketty’s assumption that saving rates remain stable is flawed. Rather, the data shows changes in the savings rate are likely to offset most of the effects of an increase in capital share of national income.

Why does all this matter?

Because if policy makers seeking to address inequalities misunderstand the problem, their solutions could be wrong, ineffective and costly. Based on his inequality theory, Mr. Piketty has proposed progressive wealth taxes, a measure some economists argue could harm economic growth.

Mr. Góes says his study suggests, however, “one needs to look for the causes of inequality (and potential solutions) elsewhere.”

>>> US Close Dow +1.04% S&P +0.86% Nasdaq +1.06% Russell +1.45%


Closing Market Summary: Nasdaq & S&P Notch New Highs After Jobs Report

The stock market ended the week on a higher note as a positive reading of the Employment Situation Report for July helped the Nasdaq Composite (+1.1%) and the S&P 500 (+0.9%) notch new all-time closing highs. The upbeat employment report elicited buying interest while diminishing on-going concerns regarding the strength of the U.S. labor market. Other factors impacting today's trade included weakness from the oil pit, continued strength in the dollar, and sector leadership from the heavily-weighted financial (+1.9%), technology (+1.2%), and consumer discretionary (+1.1%) sectors. The tech-heavy Nasdaq (+1.1%) finished ahead of the Dow Jones Industrial Average (+1.0%) and the S&P 500 (+0.9%).

Today's session began on a higher note as a better-than-expected reading of the Employment Situation Report for July helped reduce concerns regarding the hiring landscape. The report showed that nonfarm payrolls (255K; consensus 185K) and nonfarm private payrolls (217k; consensus 171k) each came in stronger-than-expected despite the impressive rebound in the June report. Furthermore, average hourly earnings (+0.3% consensus +0.2%) also came in better-than-expected, which could pave the way to an increase in inflation expectations.

The positive employment report brought forward rate hike expectations, but the fed funds futures market still does not believe that a rate hike will happen before the end of 2016. The fed funds futures market currently estimates the odds of a rate hike at the December meeting at 46.5%, rising from yesterday's implied probability of 32.1%. The dollar strengthened in response while gold fell and the economically-sensitive financial sector (+1.9%) led today's rally. 

Equity indices extended their advance through the session, shrugging off potential headwinds from a strengthening dollar and weakness in oil futures. The benchmark index hovered in the area of its record high for most of the session, notching a new all-time intraday high (2182.86) in the final hour. The S&P 500 (+0.9%) finished near its best level of the day as eight sectors ended in the green. The heavyweight financial (+1.9%), technology (+1.2%), and consumer discretionary (+1.1%) sectors outperformed while defensively-oriented telecom services (-0.2%) and utilities (-1.4%) ended in the red.

The financial sector (+1.9%) demonstrated broad-based strength as money center banks, investment brokerages, and life insurance names each outperformed. JPMorgan Chase (JPM 66.30, +1.74) and Citigroup (C 45.72, +1.88) finished higher by 2.7% and 4.3%, respectively. Separately, MetLife (MET 41.14, +1.60) finished the day higher by 4.1%, rebounding from yesterday's 8.7% decline. The economically-sensitive group finished the week higher by 1.4%, erasing its year-to-date loss.

The influential technology sector (+1.2%) finished ahead of the broader market as top-weighted Apple (AAPL 107.48, +1.61) gained 1.5%. The stock extended its recent rally, jumping 11.2% since reporting above-consensus bottom-line results on July 26. The high-beta chipmakers also outperformed, evidenced by the 1.3% gain in the PHLX Semiconductor Index. The price-weighted index erased a modest weekly loss to finish the week higher by 0.9%.

The Dow Jones Transportation Average (+1.9%) outperformed amid strength in rail names and airlines. The U.S. Global Jets ETF (JETS 22.32, +0.52) finished the day higher by 2.4%, trimming its weekly loss to 0.9%. Separately, railroads settled higher as Canadian Pacific (CP 144.04, +0.86) rebounded 0.6%. The name was under pressure yesterday after announcing a 9.8 million share public offering on behalf of Pershing Square.

The countercyclical health care sector (+0.3%) ended the day on a flat note as Bristol-Myers (BMY 63.28, -12.04) underperformed. The company announced that its lung-cancer treatment, Opdivo, failed to meet its primary endpoints. On the flipside, Dow component Merck (MRK 63.86, +6.02) topped the price-weighted index as investors looked to diminishing competition for its Keytruda drug.

The U.S. Dollar Index (96.24, +0.48) ended off its best level of the day, but the greenback still finished with gains against the pound, yen, and euro. Cable ended lower by 0.3% (1.3070) while the single currency declined 0.4% against the buck (1.1085). Separately, the dollar gained 0.5% against the safe-haven yen (101.76).

Treasuries ended the day on a lower note as yield rose across the curve. The yield on the 10-yr note settled higher by eight basis points, rising to 1.59%.

Participation was in-line with the recent average as more than 842 million shares changed hands at the NYSE floor.

Today's economic data included the Employment Situation Report for July, the June Trade Balance, and June Consumer Credit:

  • Nonfarm payrolls increased by 255,000 (consensus 185,000). Over the past three months, job gains have averaged 190,000 per month.
    • June nonfarm payrolls revised to 292,000 from 287,000
    • May nonfarm payrolls revised to 24,000 from 11,000
  • Private sector payrolls increased by 217,000 (consensus 171,000)
    • June private sector payrolls revised to 259,000 from 265,000
    • May private sector payrolls revised to -1,000 from-6,000
  • Unemployment rate was 4.9% (consensus 4.8%) versus 4.9% in June
    • Persons unemployed for 27 weeks or more accounted for 26.6% of the unemployed versus 25.8% in June
  • July average hourly earnings were up 0.3% (consensus 0.2%) after being up 0.1% in June
    • Over the last 12 months, average hourly earnings have risen 2.6%
  • The average work week was 34.5 hours (consensus 34.4) versus 34.4 hours in June
    • July manufacturing work week was unchanged at 40.7 hours
    • Factory overtime was up 0.1 to 3.3 hours
  • The labor force participation rate was 62.8% versus 62.7% in June
  • The trade deficit in June widened to $44.5 billion (consensus -$42.7 billion) from -$41.0 billion in May.
    • The widening was a by product of imports increasing by $4.2 billion month-over-month to $227.7 billion and exports increasing by only $0.6 billion month-over-month to $183.2 billion.
    • There was a $2.30 billion jump in imports of industrial supplies and materials, more than half of which was owed to imports of crude oil (+$1.43 billion), petroleum products (+$0.44 billion), and fuel oil (+$0.29 billion).
    • Capital goods imports, excluding automotive, were up $1.0 billion, with civilian aircraft (+$0.7 billion) accounting for much of that increase.
    • Imports of consumer goods increased $1.9 billion, paced by a robust $1.4 billion increase in pharmaceutical preparations and a $1.1 billion increase in cell phones and other household goods.
    • The export side of the equation featured a $0.6 billion increase in foods, feed, and beverages, a $0.4 billion increase in consumer goods, and a $0.3 billion increase in capital goods, excluding automotive, which was offset in part by a $0.4 billion decline in exports of autos, parts, and engines.
    • On a year-over-year basis, imports are down 2.4% while exports are down 3.8%.
  • Total outstanding consumer credit increased by $12.3 billion in June after increasing a downwardly revised $18.0 billion (from $18.6 billion) in May. The consensus estimate for June was $16.2 billion.
    • In the preceding 12-month period leading up to June, consumer credit had risen by an average of $17.7 billion.
    • The growth in June was driven by a $7.7 billion increase in revolving credit, which rose to $960.8 billion, and a $4.6 billion increase in nonrevolving credit to $2673.1 billion.
    • In June, consumer credit increased at an annual rate of 4.0%. For the second quarter, consumer credit increased at a seasonally adjusted annual rate of 5.25%.

There is no economic data of note scheduled to be released on Monday.

(GeekWire) Exclusive: Apple acquires Turi in major exit for Seattle-based machin

Exclusive: Apple acquires Turi in major exit for Seattle-based machine learning and AI startup

Machine learning and artificial intelligence startup Turi has been acquired by Apple in a deal characterized as a blockbuster exit for the Seattle-based company, formerly known as Dato and GraphLab, GeekWire has learned.

The acquisition reflects a larger push by Apple into artificial intelligence and machine learning. It also promises to further increase the Cupertino, Calif.-based company’s presence in the Seattle region, where Apple has been building an engineering outpost for the past two years.

“Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans,” said Apple in a statement when contacted by GeekWire about the deal, its standard comment after making such acquisitions.

Multiple sources with knowledge of the deal confirmed that Turi has been acquired. Sources close to the deal pegged the purchase price at around $200 million, marking a huge outcome for the original investors and early shareholders. Carlos Guestrin, the University of Washington professor who founded the company, declined to comment when GeekWire stopped by the company’s office Friday morning.

According to people familiar with the acquisition, Turi’s team is expected to remain in the Seattle region and continue to grow as Apple builds out further expertise in data science, artificial intelligence and machine learning. Turi recently hosted a closely-watched Data Science Summit in San Francisco, in an indication of its leadership position in the field.

Apple’s plans for Turi’s technology are not clear, but the company has been making a broad push into artificial intelligence through an expansion of its Siri personal assistant and related technologies.

This is Apple’s second Seattle-related acquisition in the past two years. In 2014, the tech giant bought Union Bay Networks, a stealthy cloud networking startup, which ultimately led to Apple opening an engineering office in Seattle.

Turi lets developers build apps with machine learning and artificial intelligence capabilities that automatically scale and tune. Its products —which include the Turi Machine Learning Platform, GraphLab Create, Turi Distributed, and Turi Predictive Services — are largely designed to help large and small organizations make better sense of data. Use cases include recommendation engines, fraud detection, predicting customer churn, sentiment analysis, and customer segmentation.

The company began as an open-source project at Carnegie Mellon in 2009 under Guestrin’s guidance. In 2012, he joined the University of Washington’s faculty. Amazon founder Jeff Bezos provided $2 million to endow two professorships in machine learning at the UW for Guestrin and his wife, Emily Fox. Guestrin later spun off the open-source project from the UW into its own company, at the time called GraphLab. He remains the University of Washington’s “Amazon Professor of Machine Learning,” according to his LinkedIn profile.

A year after the spin-off, the company raised $6.75 million in its Series A funding round from Madrona Venture Group — one of Seattle’s leading venture firms — and NEA, the Silicon Valley behemoth best known around the Northwest as the primary backer of Tableau Software. The company then reeled in an additional $18.5 million in January 2015.

That’s when the company first changed its name from GraphLab to Dato. A few weeks later, Datto, which has been offering data backup and recovery services from its Connecticut headquarters since 2007, first complained about Dato’s new name. The two companies went back-and-forth for the next several months, deadlocked in a trademark infringement argument. Ultimately Dato was forced to rebrand again, changing its name to Turi earlier this month.

Turi is one of several Seattle-area companies developing machine learning and artificial intelligence technology. Some say the region is poised to be an epicenter for the emerging industry.

Apple has made around 15 acquisitions since early 2015, including Perceptio and VocalIQ, two artificial intelligence/machine learning startups similar to Turi. Other Apple acquisitions in 2016 include Emotient, a facial recognition startup; LearnSprout, an education startup; Flyby Media, a spatial perception startup; and LegbaCore, a firmware security startup.

Earlier this year, Apple CEO Tim Cook hinted that the company was open to making a larger acquisition as iPhone sales decline. Apple reported $231 billion in cash in its most recent earnings report. “We continue to look and we stay very active in the M&A market,” Cook said at the time.