>>> Mediaset may carry out EUR 500m-EUR 800m capital increase to ward off Vivend

Mediaset may carry out EUR 500m-EUR 800m capital increase to ward off Vivendi attack

Mediaset [BIT:MS] could carry out a EUR 500m-EUR 800m capital increase to fend off moves by Vivendi [EPA:VIV], Italian language daily Il Messaggero reported.
The unsourced article said the proposal was put forward by Intesa Sanpaolo and Unicredit, which are supporting Mediaset. The proceeds from the capital increase would be used to relaunch Mediaset Premium, the pay-TV arm of Mediaset and the centre of dispute between Vivendi and Mediaset.
The report noted Vivendi has built up a 20% stake in Mediaset in the last few days. Fininvest, the holding company of the Berlusconi family that is the controlling shareholder of Mediaset, has increased its stake from 34.7% to just under 40% in response to Vivendi's moves.

>>> Capsugel agrees to be acquired by Lonza from KKR for USD 5.5bn in cash

Capsugel agrees to be acquired by Lonza from KKR for USD 5.5bn in cash

Lonza Group AG (“Lonza,” VTX: LONN.VX), KKR and Capsugel S.A. (“Capsugel”) today announced that they have entered into a definitive agreement under which Lonza will acquire Capsugel from KKR for USD 5.5bn in cash, including refinancing of existing Capsugel debt of approximately USD 2bn, through a transaction that has been approved by the Boards of Directors of both Lonza and Capsugel. The transaction will be financed with a combination of debt and equity financing. The EV/adjusted EBITDA multiple for the transaction adds up to 15.1x based on the last 12 months adjusted EBITDA figures up to September 2016.
Strategic Advantages
  • Lonza to acquire Capsugel for USD 5.5bn, including refinancing of existing Capsugel debt of USD ~2bn
  • Acquisition is expected to accelerate Lonza’s growth and ability to deliver value along the healthcare continuum
  • Acquisition addresses needs of customers for integrated, value-added solutions that accelerate drug and ingredient delivery to patients and consumers
  • The combined portfolio offering will position Lonza as the development, formulation, delivery technology and manufacturing partner of choice for the pharma industry
  • Lonza will become a fully integrated solutions provider in oral delivery technologies and active ingredients to the consumer healthcare and nutrition markets
Financial Advantages
  • Lonza expects to achieve CHF ~30m p.a. operating synergies and CHF ~15m tax synergies p.a. by year three and CHF ~100m p.a. top-line synergies in the mid- to long-term
  • Transaction is expected to be CORE EPS accretive in the first full year post closing
  • Capsugel’s profitable business model and robust cash generation expected to further enhance Lonza’s strong financial profile
  • Lonza intends to retain current dividend policy and maintain ~3x net debt/EBITDA leverage
This acquisition is fully in line with Lonza’s stated strategy to accelerate growth and deliver value along the healthcare continuum by complementing its existing offerings and by opening up new market opportunities in the pharma and consumer healthcare and nutrition industries. With the acquisition of Capsugel, Lonza will add a trusted brand with a large breadth of technologies and will expand the market reach of its contract development and manufacturing organization (CDMO) and products businesses. It will also support Lonza’s strategic ambition of getting closer to the patient and end consumer.
The acquisition is designed to create a leading integrated, value-added solutions provider in drug development, formulation, delivery technologies and manufacturing for the global pharma and consumer healthcare industries. The combined business will be well positioned to benefit from the dynamics in these industries and to anticipate and address technology trends in order to support the evolving needs of its customers. It will provide additional value by offering an integrated portfolio of industry-leading technologies, from active pharmaceutical ingredients (APIs) through excipients to dosage forms and delivery technologies.
With the addition of Capsugel’s world-leading advanced oral dosage delivery technologies, including its leading position in hard capsule technologies, Lonza will become the partner of choice for its pharma customers along the entire value chain. The combined technologies and offerings will provide customers innovative solutions in both large and small molecules and solidify Lonza’s position as the partner best able to support the pharma industry by bringing new, differentiated medicines to market rapidly and efficiently.
In addition, the acquisition is expected to strengthen Lonza’s position in consumer healthcare and nutrition as Lonza becomes a fully integrated and innovative service provider of active ingredients, oral dosage forms, development services and delivery technologies. As a result Lonza will be well positioned to meet the increasing need for optimized consumer health and nutrition through a wide offering of next-generation dosage forms. The combined business will also be able to leverage its bioavailability technology to create a new dietary ingredient-ready offering, as well as capitalize on its formulation expertise to develop new ingredients and to market new combination products.
The enlarged business would have had combined 2015 revenues of approximately CHF 4.8bn and adjusted EBITDA of approximately CHF 1.1bn with an enhanced margin profile. Lonza and Capsugel’s highly synergistic customer base and complementary business models will facilitate seamless integration. The combined business will be able to leverage the strong regulatory track record and global footprint of each company.
With approximately 3,600 employees and 13 facilities on three continents, Capsugel has a customer-centric, entrepreneurial and collaborative culture that closely aligns with Lonza’s corporate culture. Both companies focus on quality, operational excellence and delivering on promises.
Richard Ridinger, Chief Executive Officer of Lonza, commented, “The acquisition of Capsugel meets Lonza’s strategic and financial goals. It accelerates our healthcare continuum strategy by giving us broader exposure to the fast-growing pharma and consumer healthcare markets. We expect the transaction to be accretive to our core earnings per share in the first full year post closing.”
He explained further, “This new integrated approach will benefit our customers, who will gain from the simplicity and efficiency of working with one company that can provide world-leading support from APIs to excipients and dosage forms. The combined business will allow us to partner with our customers to help them bring highly differentiated products to market more quickly and efficiently.”
Guido Driesen, President and Chief Executive Officer of Capsugel, said, “This transaction brings together two leading companies that share a common vision – to deliver real value to customers by accelerating their ability to develop and commercialize innovative pharmaceutical and healthcare products. The combination of our complementary technology platforms will put us in a strong position to benefit from evolving trends in the pharma and consumer healthcare markets.”
He added, “Both companies enjoy a strong quality and regulatory track record, and we believe that the combination enables us to provide the most complete set of tailored and integrated solutions for our customers. We look forward to bringing together our talented teams to deliver science- and engineering-based solutions to customers for the benefit of the patients and consumers who use their products. I am personally committed to making this integration a success.”
Pete Stavros, Member of KKR and Head of the Industrials Investing Team, said, “Since acquiring Capsugel five years ago, we have supported Guido and his management team in repositioning the company from a global leader in hard capsules into a specialty CDMO. Capsugel has grown significantly by investing in innovation, strategic acquisitions, product development and geographic expansion. Now Capsugel is well positioned for the next phase of its growth, and we look forward to its continued success as a part of Lonza.”
Synergies
The bulk of the benefits resulting from the transaction will be gained from positive top-line and innovation synergies. The highly synergistic customer base, the expanded addressable market and the improved value proposition for the customer will allow Lonza to further leverage its current product and service offerings. Also the acquisition of Capsugel will allow cross-selling of existing products, combine manufacturing solutions and services and create an integrated value offering that merges Lonza’s ingredients with Capsugel’s dosage forms.
The primary initial focus of this transaction is to ensure a seamless integration while continuing the strong growth trajectory of the Capsugel business. Lonza believes that the step-by-step integration will preserve the strong innovation culture and lead to a combined top-line synergy potential of around CHF 100m per annum in the mid- to long-term.
Lonza expects to achieve operating synergies of CHF ~30m per annum, which are expected to be fully realized by year three, in the areas of corporate, procurement and IT, as well as various efficiency gains. In addition, tax synergies of CHF ~15m per annum are expected.
Lonza anticipates that the transaction will be accretive to its CORE Earnings per Share (EPS) from the first full year post closing onwards and intends to retain its current dividend policy.
Financing and Approvals
The USD 5.5bn all-cash acquisition of Capsugel will be financed with a combination of debt and equity financing. Lonza has committed debt financing for the full acquisition amount from BofA Merrill Lynch and UBS and plans to raise equity, which is fully underwritten by UBS and BofA Merrill Lynch for an amount up to CHF 3.3bn.
Lonza’s Board of Directors is currently authorized to increase the share capital through the issuance of 5,000,000 fully paid-in registered shares. Lonza’s Board intends to seek approval for additional share capital at its upcoming annual general meeting (AGM) in April 2017.
Lonza expects to retain a leverage profile around ~3x net debt/EBITDA at closing and to maintain its unofficial investment-grade credit profile assigned by a number of Swiss banks. Lonza believes that the strong projected cash flow of the combined company will enable rapid de-leveraging after the acquisition and continue to support all planned growth initiatives.
The financial package foresees the refinancing of Lonza’s current CHF 700m revolving credit facility.
The transaction is expected to close in the second quarter of 2017 and is subject to certain regulatory approvals and other customary closing conditions.
Additional information about Lonza can be found on www.lonza.com, about Capsugel on www.capsugel.com, and about the acquisition on the dedicated transaction website www.TheFutureLonza.com, which may be updated from time to time.
Jefferies LLC is serving as lead financial adviser to Lonza. UBS AG and BofA Merrill Lynch also provided financial advice. Jenner & Block LLP is serving as Lonza’s legal counsel. Goldman Sachs is serving as sole financial adviser to Capsugel. Simpson Thacher & Bartlett LLP is serving as Capsugel’s legal counsel.

>>> Asian Update

Asia Mid-Session Market Update: Hawkish Fed rate hike reverberates in Asia as dollar adds to gains; Aussie employment shines with a 1-year high in new jobs; BOK on hold with an eye on other central banks

***US Session Highlights***
- (US) FOMC RAISES FED FUNDS TARGET RANGE 25BPS TO 0.50-0.75% (AS EXPECTED); Average Fed official looking for three hikes in 2017 vs two prior forecast; USD spikes higher across the board; Treasuries on the short end of the curve move lower; Gold falls nearly $20 below $1,150
- (US) Fed statement adds that measures of inflation compensation have moved up considerably; Economic activity expanding moderately; Fed's Yellen also denies suggesting she favors a "high pressure economy", puncturing her dovish credentials.
- (US) NOV ADVANCE RETAIL SALES M/M: 0.1% V 0.3%E; RETAIL SALES EX AUTO M/M: 0.2% V 0.4%E
- (US) NOV PPI FINAL DEMAND M/M: 0.4% V 0.1%E; Y/Y: 1.3% V 0.9%E
- (US) NOV INDUSTRIAL PRODUCTION M/M: -0.4% V -0.3%E; CAPACITY UTILIZATION: 75.0% V 75.1%E
- (US) OCT BUSINESS INVENTORIES: -0.2% V -0.1%E (biggest drop this year)
- (US) DOE CRUDE: -2.6M V -1.5ME; GASOLINE: +0.5M V +2ME; DISTILLATE: +0.8M V +1ME: US production rises 99K barrels on the week
- (US) Atlanta Fed cuts Q4 GDP forecast to 2.4% from 2.6% on Dec 9th
- (IT) Italy PM Gentiloni wins vote of confidence in Senate, approving his caretaker govt - press

***US markets on close: Dow -0.6%, S&P500 -0.8%, Nasdaq -0.5%***
- Best Sector in S&P500: Healthcare
- Worst Sector in S&P500: Basic Materials / Utilities
- Biggest gainers: NVDA +5.8%, FOXA +3.6%, ALXN +3.2%, AKAM +2.8%, NLSN +2.6%
- Biggest losers: UHS -6.8%, NEM -6.5%, RIG -5.0%, DO -4.8%, HCP -4.5%
- At the close: VIX 13.2 (+0.5pts); Treasuries: 2-yr 1.27% (+11bp), 10-yr 2.53% (+5bps), 30-yr 3.15% (flat)

***US movers afterhours***
- PIR: Reports Q3 $0.22 v $0.12e, R$475.9M v $468Me; names Terry London as interim CEO, effective Jan 1st; +21.9% afterhours
- ATHN: Guides initial FY17 non-Gaap op income $170-190M, R$1.29-1.33B v $1.29Be; Affirms FY16 - ahead of investor day tomorrow; +20.8% afterhours
- MDLZ: Kraft Heinz said to consider acquiring Mondelez; Berkshire, Lemann may join acquisition - Swiss press; Speculation then denied by company +6.5% afterhours
- APOG: Reports Q3 $0.78 v $0.79e, R$274.1M v $278Me (1 est); +3.2% afterhours
- YHOO Identifies data security issues concerning certain Yahoo user accounts; believes 3rd party stole data from 1B user accounts in Aug 2013; -2.3% afterhours
- GPOR: Acquires ~85K net effective acres in the SCOOP play for $1.85B in cash and stock; -4.1% afterhours
- ORIG: Reports Q3 $0.47 v $0.53e, R$335M v $342Me; Review of alternatives may include a bankruptcy; -20.4% afterhours

***Politics***
- (US) President-elect Trump at meeting with major tech company leaders: I'm here to help you; I want you to succeed
- (JP) Japan PM Abe reportedly does not plan to call snap elections in Jan - Japan press

***Asia Key economic data:***
- (KR) BANK OF KOREA (BOK) LEAVES INTEREST RATE UNCHANGED AT 1.25%; AS EXPECTED (6th consecutive month of holding rates)
- (HK) Hong Kong Monetary Authority (HKMA) raises base rate by 25bps to 1.00%, following increase by FOMC
- (AU) AUSTRALIA NOV EMPLOYMENT CHANGE: +39.1K (1-year high) V +17.5KE; UNEMPLOYMENT RATE: 5.7% V 5.6%E
- (AU) AUSTRALIA DEC CONSUMER INFLATION EXPECTATION: 3.4% V 3.2% PRIOR
- (JP) JAPAN DEC PRELIMINARY PMI MANUFACTURING: 51.9 V 51.3 PRIOR; implies 4th consecutive expansion and 11-month high
- (JP) BOJ Q4 TANKAN Inflation Survey: Japan companies see inflation 0.7% y/y in 1-yr v 0.6% prior; 1.0% in 3-yrs v 1.0% prior, and 1.1% in 5-yrs v 1.0% prior
- (NZ) NEW ZEALAND Q3 VALUE OF ALL BUILDINGS Q/Q: 1.4% V 2.1%E
- (NZ) NEW ZEALAND NOV BUSINESS MANUFACTURING PMI: 54.4 V 55.1 PRIOR; 13-month low

***Asia Session Notable Observations, Speakers and Press***
- Fed's 25bp rate increase along with forecasts of 3 more rate hikes in 2017 (market consensus was 2), the accompanying rosier economic projections, as well as subsequent Q/A from Fed Chair Yellen were decidedly more hawkish than expected. US stock indices saw their biggest losses in 2 months, USD spiked by over 200pips against JPY and about 150pips against EUR to 1.05, while Gold fell over $20/oz below $1,450. US treasury yields rose most notably on the short end - 2-year added 11bps and the 5-year was saw a 10bp increase. USD added to gains in Asia, with EUR/USD coming within 10pips of its 14-year low below 1.0460 and USD/JPY approaching 118 handle. Aussie gold miners are bearing the brunt of the precious metal decline. Hong Kong was also hard hit - Insurers, financials, property developers, and gaming stocks were the biggest decliners.
- Aussie employment data were fairly strong, with net new jobs at a 1-year high of 39K - more than double the estimates. Unemployment rate rose a decimal due to a rise in participation rate, but aggregate hours worked put in their biggest decline in 7 months. AUD/USD hardly budged however amid prevailing greenback momentum. A pair of cautious research notes from DB and CS warned respectively about overestimated by the govt growth trends and high consumer leverage pushing RBA to cut rates deeper next year.
- Japan's Dec prelim manufacturing PMI printed an 11-month high with its 4th straight month of expansion - Employment and Input Price components saw notably faster increases, while New Export Orders growth slowed and inventories decreased. Markit economist noted new work inflows rising at the quickest pace since January, helping the rate of job creation picking up to a 32-month high. BOJ's Q4 Tankan survey of inflation raised its 1-year target and 5-year target by a decimal to 0.7% and 1.1% - still well below the 2% goal.
- Bank of Korea left rates on hold as widely expected, but noted Fed hikes, Brexit, political uncertainty, protectionism, and rising oil trends as risks worth monitoring. BOK was also leery of weak improvement in domestic demand and growing household credit.

China:
- (CN) China National Energy Administration (NEA): China Nov power consumption 507B Kwh, +7.0% y/y v +1.9% prior
- (CN) China govt said to announce 7 new Free Trade Zones (FTZ) soon - Chinese press

Japan:
- (JP) Japan PM Adviser Nishimura: Will not comment on currency levels, but a weak yen generally helps lift corporate profits
- (JP) Japan Chief Cabinet Sec Suga: expects frank talks between Japan and Russia leaders; Important to monitor concrete impact after Fed decision
- (JP) BOJ said to consider upgrading its economic outlook in its policy decision next week; Would mark first upgrade in 19 months - Nikkei

Australia:
- (AU) Credit Suisse economist: RBA may have to cut rates as many as 3 more times to ward off dramatic deleveraging given over-geared conditions of Australian households - AFR
- (AU) Deutsche Bank economist Boyton: Australia Treasury has overestimated its forecasts for nominal GDP - AFR

***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +0.4%, Hang Seng -1.7%, Shanghai Composite -0.4%, ASX200 -0.8%, Kospi flat
- Equity Futures: S&P500 +0.2%; Nasdaq +0.1%, FTSE100 +0.3%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0470-1.0540; JPY 117.00-117.90; AUD 0.7380-0.7430; NZD 0.7075-0.7125
- Feb Gold -1.8% at 1,143/oz; Jan Crude Oil -0.1% at $50.97/brl; Mar Copper +0.7% at $2.62/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 6.9 tonnes (0.8%) to 849.4 tonnes; 19th straight decline; lowest since May 12th
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.9289 V 6.9028 PRIOR; weakest Yuan setting since 2008; biggest margin of weakness since Aug 29
- JGB: (JP) Japan's MoF sells ¥1.0T in 0.6% (0.5% prior) 20-year JGBs; Avg yield: 0.645% v 0.456% prior; bid-to-cover: 3.35x v 3.17x prior
- (JP) Japan investors bought net ¥267B in foreign bonds v ¥892B sold in prior week; Foreign investors bought net ¥278B in Japan stocks v ¥403B bought in Japan stocks in prior week
- (HK) Hong Kong 1-month HK$ HIBOR 0.66464% (7th consecutive rise) v 0.65929% prior; 3-month 0.93426% (>7-yr high) v 0.91921% prior; Overnight 0.14607% v 0.15429% prior

***Asia equities / Notables / movers by sector***
- Consumer discretionary: DuluxGroup DLX.AU +2.2% (Raised at JPMorgan ); Tatts Group TTS.AU -2.2% (Morgans Financial cuts to hold)
- Consumer staples: Mengniu Dairy 2319.HK -4.0% (profit warning); Yashili International Holdings 1230.HK -1.9% (profit warning)
- Industrials: IHI Corp 7013.JP -3.8% (Credit Suisse cuts to underperform)
- Materials: Resolute Mining RSG.AU -6.7%, Regis Resources RRL.AU -8.2%, Newcrest Mining NCM.AU -5.4%, Saracen Mineral SAR.AU -5.9%; (gold declines after Fed hikes rate)
- Energy: Santos STO.AU -10.2% (capital raising); Caltex Australia CTX.AU +0.8% (guidance); Beach Energy BPT.AU -4.6% (Citi cuts to sell); Mitsubishi Materials 5711.JP -1.3% (Morgan Stanley cuts to underweight)
- Healthcare: Askul Corp 2678.JP +5.2% (H1 result)

CB News : La bataille Vivendi/Berlusconi pour le contrôle de Mediaset se durcit


La bataille Vivendi/Berlusconi pour le contrôle de Mediaset se durcit
Vivendi et la famille de Silvio Berlusconi, ont amplifié mercredi leur lutte pour le contrôle du groupe de télévision Mediaset, sous le regard critique du gouvernement italien. Moins de trois jours après son entrée au capital, le groupe français a annoncé détenir désormais 20 % du capital de Mediaset, après avoir pris une première participation de 3,01 % lundi puis avoir franchi le seuil des 10 % (12,32 %) dès mardi. Dans le même temps, la famille Berlusconi, qui détenait jusqu’ici un peu moins de 35 % du capital du groupe italien et a vivement critiqué l’opération lancée par Vivendi, s’est lancée également dans l’achat de titres pour monter désormais à 38,266 % du capital et 39,775 % en termes de droits de vote. Fininvest, la holding des Berlusconi, avait annoncé la veille avoir déposé devant la justice italienne une plainte pour "manipulation du marché" contre le groupe de Vincent Bolloré, qualifiant son entrée au capital d'"hostile". Au moment même de l’annonce de la montée à 20 % de Vivendi, Silvio Berlusconi a assuré que sa famille continuerait d’augmenter sa participation au capital de Mediaset. "Nous n’avons aucune intention de laisser quelqu’un redimensionner notre rôle d’entrepreneur. Pour cela nous avons augmenté notre participation et nous continuerons à le faire dans les limites consenties par la loi", a-t-il affirmé dans un communiqué, en soulignant "la cohésion la plus forte de sa famille sur ce point".
La bataille pour le contrôle de groupe de médias italien a fait grincer des dents du côté du gouvernement de péninsule, le ministre du Développement économique, Carlo Calenda critiquant mercredi la conduite non appropriée de Vivendi vis-à-vis de Mediaset et pourfendant une "escalade hostile". "Les investissements étrangers sont toujours bienvenus, quand ils apportent du capital de croissance et des compétences, et contribuent au développement du tissu industriel italien", a souligné le ministre. "Mais quand il s’agit d’une entreprise qui intervient dans un secteur stratégique comme celui des médias, la manière dont on procède est importante. Il me semble que ce principe soit amplement reconnu en France et prétendument défendu", a-t-il dit, assurant par ailleurs que "le gouvernement surveillerait avec attention l’évolution de la situation". Après l’échec du projet de mariage annoncé en avril entre Mediaset et Vivendi, qui a débouché sur un conflit acrimonieux, Vivendi tente un coup de force pour s’emparer de Mediaset, seule cible européenne accessible dans le domaine des contenus télévisuels.

>>> After Hours Summary: ATHN +21%, PIR +19%, APOG +2% following e


After Hours Summary: ATHN +21%, PIR +19%, APOG +2% following earnings/guidance, MDLZ +6% on potential KHC deal... ORIG -20% following earnings/guidance, several names lower following offering news

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: ATHN +21% (reaffirms FY16 guidance, issues upside FY17 rev guidance), PIR +19.4%, APOG +2.2%

Companies trading higher in after hours in reaction to news: CBIO +42.2% (Catalyst Biosciences entered into an agreement with Pfizer subsidiary Wyeth for the exclusive license to Wyeth's rights applying to CB813a & CB813d; co to make a $17.5 mln cash payment to Wyeth upon the achievement of milestones), ACUR +11.7% (announces the FDA has provided it with advice on the continued development of LTX-04; co intends to advance new formulations of LTX-04 tablets to a second pharmacokinetic study which is expected to start in late first quarter of 2017), MDLZ +6.1% / KHC +2.1% (higher on reports of potential Mondelez acquisition by Kraft Heinz)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: ORIG -19.9%

Companies trading lower in after hours in reaction to news: VBTX -25.5% (commences an underwritten public offering of shares of its common stock; Veritex Holdings to merge with Dallas-based Sovereign Bancshares, Inc. and its wholly-owned subsidiary Sovereign Bank), SGY -18.6% (filed voluntary petitions under chapter 11 to pursue a pre-packaged plan of reorganization), FOLD -10.8% (announces an offering of $225 mln convertible senior notes due 2023 in a private placement), KCAP -7.9% (reduces quarterly distribution to $0.12/share from $0.15/share), GPOR -4.1% (to acquire approx. 46,400 net surface acres in the core of the SCOOP for a total purchase price of $1.85 bln from Quantum Energy Partners; commences underwritten public offering of 29,000,000 shares of its common stock and launches proposed $600 million offering of senior notes due 2025), YHOO -2.3% (confirms it has identified data security issues concerning certain Yahoo user accounts; has taken steps to secure user accounts and is working closely with law enforcement), FANG -1.8% (Diamondback Energy to acquire Brigham Resources and Brigham Resources Midstream for $2.43 bln; announces 10.5 mln share offering and notes offering; raises FY17 production 25%)

(Bilanz.ch) Jorge Lemann: With Buffett on the hunt for fat booty

Jorge Lemann: With Buffett on the hunt for fat booty

Jorge Lemann has a reputation as a cost reducer with fusionitis. He has already successfully implemented this strategy in the beer market. Now he seems to repeat the same in the food business.

The takeover carousel is turning in the food industry. The Kraft Heinz Company is to take over Mondelez as a very well-informed source from the food industry knows. Rumors about this transaction have existed since the beginning of November.

Drivers behind the acquisition is Jorge Paulo Lemann be the second richest Swiss. His Brazilian 3G investment has already begun to mobilize capital for the transaction. Probably Berkshire Hathaway would of legendary investor Warren Buffett again be a co-investor here, as with the transaction, the Kraft Foods and Heinz last year for The force Heinz Company brought together.

"Merge two icons and create a platform for leadership in the food industry", the merger was communicated by the new owners, which already indicated further takeovers. On the Board of The Kraft Heinz Company, Lemann and Buffett have two icons that oversee brands like Capri Sun, Philadelphia and Ketchup from Heinz.

Hard cost reduction with fusionitis
Lemann has a reputation as a tough cost reducer with fusionitis. He has successfully implemented this strategy in the beer market with his AmBev. Now he seems to repeat the same in the food business. For this, Mondelez would fit, because there the costs in the industry comparison seem too high. The Mondelez profit margin amounts to only 8.6 per cent, according to the financial information service Bloomberg, whereas it is almost 13.5 per cent at Kraft Heinz Company.

A little confusing is that Mondelez was split by brands such as Milka, Toblerone, Trident, Tuc and Stimorol only in 2011 by Kraft. In addition, Mondelez was still active as a company hunter in June and has submitted a $ 23 billion offer to the US competitor Hershey - Hershey's Board of Directors declined.

Rumors said at the time that Mondelez had mainly gone out of the line of fire - the merged company would have been too big for a takeover. Even so, the company with a market value of 66 billion dollars is not a small dessert.

>>> US Close Dow -0.60% S&P -0.81% NAsdaq -0.50% Russell -1.28%

Closing Market Summary: Stocks Slip After Rate Hike

The stock market ended the midweek session on a lower note, extending its retreat after the Federal Open Market Committee announced a 25-basis point rate hike. The S&P 500 settled lower by 0.8% while the Russell 2000 (-1.2%) underperformed.

Going into today's session, market participants were all but sure that the Fed would raise rates for the first time since last December. The central bank lived up to that expectation, but the accompanying "dot plot" indicated that policymakers expect to raise rates three times in 2017. This is at odds with the fed funds futures market, which expects just two hikes in 2017.

During her press conference, Fed Chair Janet Yellen was asked if fiscal policies that fail to boost productivity could prompt the Fed to be more aggressive when it comes to hiking rates, but Ms. Yellen's response only acknowledged the presence of considerable uncertainty on the fiscal front.

Treasuries retreated in reaction to the rate increase while the U.S. Dollar Index (102.10, +1.04) jumped 1.0% to mark a fresh high for the year. As for Treasuries, short-dated issues bore the brunt of today's selling while the long end remained anchored. The 2-yr yield jumped eight basis points to 1.25% while the 10-yr yield rose five basis points to 2.52%. The long bond ended slightly lower with its yield increasing one basis point to 3.14%.

All eleven sectors ended the day in negative territory with rate-sensitive groups leading the retreat. Real estate (-1.9%) and utilities (-2.0%) settled near the bottom of the leaderboard while consumer staples (-1.0%) and telecom services (-1.0%) posted slimmer losses. The health care sector (-0.4%) ended a bit ahead of the market thanks to the outperformance among biotech names. The iShares Nasdaq Biotechnology ETF (IBB 269.42, +0.37) added 0.1%.

Most cyclical sectors struggled at the start while technology (-0.3%) and financials (-0.6%) displayed early strength. The financial sector surged in immediate reaction to the rate hike, but reversed just below its high from December 8. The economically-sensitive sector remains higher by 4.2% for the month, trading only behind telecom services (month-to-date +4.8%).

The energy sector (-2.1%) settled at the bottom of the leaderboard, pressured by daylong weakness in crude oil. The energy component sank 3.7% to $51.03/bbl, beginning its retreat after yesterday's bearish API inventory report. Crude saw no respite from a bullish inventory report that was released by the Energy Information Administration this morning.

With all eyes on the Fed, stock-specific news was relegated to the backburner, masking press reports from China that suggested an unnamed U.S. automaker will be fined for monopolistic behavior. General Motors (GM 35.95, -1.41) lost 3.8% while Ford (F 12.53, -0.24) surrendered 1.9%.

Investor participation was ahead of average with more than 1.2 billion shares changing hands at the NYSE floor.

Economic data included Retail Sales, PPI, Industrial Production, and Business Inventories:

  • Retail sales increased just 0.1% (consensus +0.3%) after a downwardly revised 0.6% increase (from +0.8%) for October. A 0.5% decline in auto sales was the main drag on total retail sales
    • Excluding autos, retail sales were up 0.2% (consensus +0.4%), aided by modest sales increases in most retail categories
  • Both the final demand indexes for PPI and core-PPI, which excludes food and energy, were up 0.4% in November against the consensus estimates of +0.1% and +0.2%, respectively
    • With prices rising at the producer level, some angst may arise about higher consumer inflation going forward
  • Industrial production declined 0.4% in November following an upwardly revised 0.1% increase (from 0.0%) in October. Taking the revision into account, the decline in November was largely in-line with the consensus estimate that called for a 0.3% decline
  • Business inventories declined 0.2% in October (consensus -0.1%) versus a downwardly revised unchanged reading (from +0.1%) for September
    • Sales increased 0.8% on top of an upwardly revised 0.8% increase (from +0.7%) for September
  • The weekly MBA Mortgage Index fell 4.0% to follow last week's 0.7% decline

Tomorrow will also be pretty busy on the economic front with weekly initial claims (consensus 256K), November CPI (consensus 0.2%), December Philadelphia Fed (consensus 9.0), December Empire Manufacturing (consensus 3.0), and Q3 Current Account Balance (consensus -$111.60 billion) all set to be released at 8:30 ET. The December NAHB Housing Market Index (consensus 63) will be reported at 10:00 ET.

  • Russell 2000 +19.5% YTD
  • Dow Jones Industrial Average +13.6% YTD
  • S&P 500 +10.2% YTD
  • Nasdaq Composite +8.6% YTD