>>> But expected to welcome LBO France, Oaktree and CD&R in final phase – report

But expected to welcome LBO France, Oaktree and CD&R in final phase

The final phase of auction for French furniture and electronics retailer BUT SAS would see investment funds LBO France, Oaktree and CD&R submit final bids for the business, French daily Les Echos reported. The report cited a source as saying that other potential buyers, described as “emerging”, could also consider making a bid.

According to the report, franchisees representing about 100 BUT point of sales considered taking part in the auction but they are however not expected to take part in the bidding as they do not have the necessary financial firepower. The report added that it is not known whether Austrian group Lutz, which was interested in BUT in the past, or South African group Steinhoff, owner of competitor Conforama, will decide to enter the fray.

BUT is owned by a consortium of private equity houses including OpCapita, Colony Capital and Goldman Sachs PE. They have appointed Rothschild to conduct the sale process, which values the business at EUR 600m or seven times EBITDA, which amounted to about EUR 90m.

Les Echos

>>> SABMiller's Kompania Piwowarska may be sold

SABMiller's Kompania Piwowarska may be sold

Kompania Piwowarska, a Polish brewer that is part of SABMiller, an international brewing group, may be sold, Portalspozywczy.pl reported.

According to the Polish portal, brewery group Anheuser-Busch InBev has declared it will sell the European assets of SABMiller, which could mean the sale of the entire Kompania Piwowarska or its separate brands. The divestment is related with a process of the takeover of SABMiller by AB InBev, said the report.

The report quoted an announcement by AB InBev, on 29 April, about the submission of an updated package of commitments to the European Commission, related with the above transaction.

The spokespersons of Kompania Piwowarska in Poland did not comment on the subject, directing Portalspozywczy.pl to the company's owner.

Kompania Piwowarska operates three breweries: Tyskie Browary Ksiazece, Browar Dojlidy (Dojlidy Brewery) in Bialystok, and Lech Browary Wielkopolski in Poznan. Kompania Piwowarska’s beer portfolio includes Tyskie, Zubr, Lech, Debowe, Redd, and the Ksiazece specialty collection.

The item reported that in the financial year 2015, ended in March 2015, Kompania Piwowarska’s domestic sales volumes stood at 13.5hl of beer, giving the company a 36% market share.

Portalspozywczy.pl

>>> Pfizer in talks to sell USD 2bn pumps arm to Smiths; Smiths eyes asset sales

Pfizer in talks to sell USD 2bn pumps arm to Smiths; Smiths eyes asset sales 

Pfizer (NYSE:PFE), the New York-based pharma giant, is in negotiations to sell its pumps and devices operation to the British engineering conglomerate Smiths Group (LON:SMIN), The Sunday Times reported.

City sources cited in the report said preliminary talks have so far taken place regarding the USD 2bn pump subsidiary. Several private-equity firms and European trade groups are also interested in the Pfizer business, the report said.

Pfizer is believed to have engaged Goldman Sachs to manage the sale of the devices unit, which changed hands in the company’s USD 17bn acquisition of generic medicines manufacturer Hospira last year, the report noted.

The prospect of a deal could prompt Smiths to start selling assets, the report said. The group’s US-based Interconnect and Flex-Tek subsidiaries are believed to be the most likely to be divested and prospective buyers have already been identified by Smiths, the item reported. It added that Smiths might also seek to fund the Pfizer deal by tapping its shareholders for new capital.

Sunday Times

>>> Michel Klein seeks to buy back control of Viavarejo from Pao de Acucar - rep

Michel Klein seeks to buy back control of Viavarejo from Pao de Acucar

Michel Klein of the Casas Bahia founding family is moving to buy back Viavarejo from Cia. Brasileira de Distribuicao (Bovespa: PCAR4), one of Brazil’s largest retailers and known as Pao de Acucar, O Globo reported Sunday.

There is a large bank, which was not identified, interested in financing the transaction, Lauro Jardim wrote in his column in O Globo without giving a source.

Viavarejo is a retailer of home entertainment equipment, household appliances and furniture created from the merger of Casas Bahia and Ponto Frio in 2009.

Casino Guichard Perrachon [CO FP], the French listed supermarket chain, has controlled Pao de Acucar since June 2012.

O Globo

>>> Asian Update

Asian Market Update: China PMIs slow slightly but remain in expansion

***Economic Data***
- (CN) CHINA APR MANUFACTURING PMI (GOVT OFFICIAL): 50.1 V 50.3E (2ND STRAIGHT EXPANSION); NON-MANUFACTURING (SERVICES) PMI: 53.5 V 53.8 PRIOR
- (AU) AUSTRALIA APR NAB BUSINESS CONFIDENCE: 5 V 6 PRIOR; CONDITIONS: 9 V 12 PRIOR
- (AU) AUSTRALIA APR TD SECURITIES INFLATION M/M: 0.1% V 0.0% PRIOR; Y/Y: 1.5% (10-month low) V 1.7% PRIOR
- (AU) AUSTRALIA APR AIG MANUFACTURING INDEX: 53.4 V 58.1 PRIOR; 3-month low; 10th month of expansion
- (AU) Australia Apr Corelogic RPData House Prices M/M: 1.7% v 0.2% prior
- (JP) JAPAN APR FINAL PMI MANUFACTURING: 48.2 V 48.0 PRELIM
- (KR) SOUTH KOREA APR PMI MANUFACTURING: 50.0 V 49.5 PRIOR; first time out of contraction in 4 months
- (KR) SOUTH KOREA MAR CURRENT ACCOUNT BALANCE: $10.1B V $7.2B PRIOR
- (KR) SOUTH KOREA APR TRADE BALANCE: $8.8B V $9.8B PRIOR
- (HK) Macau Apr Casino Rev y/y: -9.5% v -13.5%e v -16.3% prior; 23rd consecutive decline

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -3.6%, S&P/ASX -0.7%, Kospi -0.7%, Shanghai Composite closed, Hang Seng closed, Jun S&P500 -0.1% at 2,057

***Commodities/Fixed Income***
- June gold +0.4% at $1,295/oz, June crude oil -0.7% at $45.58/brl, Jul copper -0.3% at $2.28/lb
- SLV: iShares Silver Trust ETF daily holdings rise to 10,482 tonnes from 10,437 tonnes prior; Highest since Dec 2014
- IEA Chief Economist Birol: Oil prices may have bottomed, but it depends on global growth - financial press
- (IQ) Iraq declares State of Emergency as supporters of supporters of Shiite Muslim cleric Moqtada al-Sadr breached the Green Zone which houses the country's Parliament, govt ministries, and foreign embassies - financial press
- (JP) BOJ offers to buy ¥70B in JGBs with maturity less than 1-yr, ¥160B in JGBs with maturity over 25-yr, and ¥2.0T in T-bills

***Market Focal Points/FX***
- Asian equity markets are generally in the red, though volumes are light with mainland China, Hong Kong, Taiwan, and Singapore closed for holiday. Nikkei225 is leading the declines with a catch-up slump, since Tokyo trade was closed on Friday. USD/JPY continued to crater to fresh 18-month lows, falling below ¥106.20 and further pressuring Japan exporters. Nikkei225 futures contract is now down 8.5% from the levels just before the BOJ shocked the markets with a rate hold late last week. In other majors, AUD/USD traded in a 25pip range above 0.76 and NZD/USD rose about 50pips to $0.7020 before retreating to 0.6990. Weaker USD also helped support cable, with GBP/USD sustaining its near 1-month long uptrend above 1.46.

- China official PMIs were a mixed bag - both were down slightly from March levels but remained in expansion. Among key manufacturing components, new export orders matched the headline with 50.1 v 50.2 m/m, employment continued to dive at 47.8 v 48.1 m/m, but input prices hit multi-month highs of 57.6 v 55.3 m/m. In another positive sign for commodities, inventories of raw materials fell to a 5-month low of 57.6 v 55.3 m/m, portending a potential peak in oversupply. Economist with Commerzbank said the latest PMIs reflects China govt's "managed stabilization". Also of note in China, the govt has completed the implementation of the new VAT scheme, replacing all business tax to now include construction, real estate, finance and consumer services sectors.

- Japan Final manufacturing PMI of 48.2 was only slightly better than 48.0 preliminary. Markit economist said the Output component with especially weak, registering the biggest rate of decrease in 2 years. New Orders also tracked that decline with the biggest drop since late 2012, even as employment increased for the seventh month running. Despite the slowing economy and rising uncertainty about the policies of Abenomics, cabinet approval ratings according to Nikkei have risen 7pts to 53% on favorable response to earthquake recovery measures. The same poll also found overwhelming opposition to Japan consumption tax hike, with 66% favoring a delay. Japan govt is expected to make a decision on the timing of that hike sometime this month. In terms of FX, Japan Fin Min Aso reiterated that one-sided speculative moves in FX are "extremely concerning" and the govt is prepared to take action.

- Monetary policy event risk is shifting the focus to Australia, where the recent soft CPI data has made for a much closer decision on tap tomorrow. Fixed income markets are tilting slightly in favor of a 25bp cut with a probability of just over 50%, though Australian National University's RBA "shadow board" expects rates to stay on hold as the central bank is skeptical that lenders will pass on the easing through lower rates. Economic data set out of Australia today would favor lower rates, as TD inflation gauge hit a 10-month low of 1.5% y/y, NAB business confidence slowed, and AIG Manufacturing retreated to a 3-month low. Westpac also kicked off Australia banks' earnings this week with a disappointing result, missing net profit forecasts amid 70bp drop in ROE. In its final hour of trade, WBC shares are down over 4%.

***Equities***
US equities / ADRs:
- BHI: Halliburton and Baker Hughes formally announce termination of Merger Agreement; Halliburton will pay Baker Hughes the termination fee of $3.5B
- APOL: Apollo Education Group Receives Revised $1.14 Billion Offer from Consortium of Investors

Notable movers by sector:
- Consumer discretionary: Tabcorp TAH.AU -3.3% (Q3 result)
- Financials: GPT Group GPT.AU +0.6% (Q1 result); Westpac Banking Corp WBC.AU -4.2% (H1 result)
- Industrials: Virgin Australia VAH.AU -3.7% (Q3 result); Cardno CDD.AU -10.8% (cuts guidance); Mitsubishi Motors 7211.JP +2.5% (considers compensation payments)
- Technology: Sharp Corp 6753.JP -4.1% (speculation on job cuts and earnings)

WSJ : China’s Manufacturing Gauge Expands at Slower Pace as Stimulus Fades

China’s Manufacturing Gauge Expands at Slower Pace as Stimulus Fades
China’s manufacturing PMI falls to 50.1 in April, the second month of expansion after a seven-month contraction

BEIJING—An official gauge of factory activity in China edged down in April, signaling a modest weakening of momentum for the world’s second-largest economy despite easy-credit policies and a stronger real-estate market.

China’s official manufacturing purchasing managers index, a key gauge of factory activity, fell to 50.1 in April from 50.2 in March, the National Bureau of Statistics said Sunday. This was below a median forecast of 50.4 by 12 economists polled by The Wall Street Journal. But the indicator remained above the 50 mark that signals expansion for the second straight month, after a stretch of seven months in contraction below that level. China’s official nonmanufacturing PMI, also released Sunday, fell to 53.5 from 53.8 in March.

The unexpected, if modest, drop in activity suggested that government efforts to bolster growth by expanding credit are having a short-lived effect. “This really highlights the fact that the stimulus we saw in the first quarter has a limited time frame,” said IG Markets analyst Angus Nicholson. “The fact that the PMI is already weakening shows the easy-credit policies are having far less efficacy in driving growth.”

Credit growth accelerated sharply in the first quarter and Beijing frontloaded 2016 infrastructure spending in a bid to bolster momentum. The economy grew 6.7% in the first quarter, its slowest pace since 2009.

The central bank is unlikely to ease monetary policy in response to Sunday’s weaker data, economists said, given that factory output continues to expand while debt levels are still rising. Corporate debt, now an estimated 160% of gross domestic product, has grown rapidly over the past half-decade partly due to increased borrowing to ward off the financial crisis.

“Beijing is unlikely to ratchet up its stimulus measures, but neither will it tighten its easing policies given the lower-than-expected PMI figures,” said HSBC economist Ma Xiaoping. “The PMI data shows the Chinese economy continues its slowing trend, though it’s showed signs of stabilizing.”

Zhao Qinghe, an economist at the statistics bureau, said in an online comment that manufacturing activity continued to expand in April amid increased investment, an improved property market and stepped-up infrastructure spending, although he added that risks remain.

“Factory investment still declined while overall investment was recovering, which will rein in further expansion of production,” Mr. Zhao said.

A subindex measuring new factory orders dropped to 51.0 from 51.4 in March, while the production subindex decreased slightly to 52.2 from 52.3 in March, the statistics agency said.

Sunday’s weaker figures could hurt commodity markets, including iron ore and copper, that have pinned their hopes on a strong Chinese recovery. “China enthusiasm has been a bit overpriced,” said Commerzbank economist Zhou Hao in a note.
IG Markets’ Mr. Nicholson said recent stimulus measures may produce a temporary upturn, but undercut the government’s pledge to deleverage and shut production in the steel, coal and related industries producing more than the market needs.
“This shows that the focus should be less about propping up growth with easy credit and more that debt-led investment is running out of steam,” he said. “What they really need is to deal with debt and overcapacity.”

WSJ : Fidelity, in Reversal, Raises Value of Many Tech Startups

Fidelity, in Reversal, Raises Value of Many Tech Startups

Mutual-fund company’s change of course in March comes after it had cut the value of these investments in the first two months of the year

Fidelity Investments reversed course in March, marking up many of the stakes in closely held technology companies it had previously cut, including a biotech startup that was subsequently acquired at a large premium.

The mutual-fund company late Friday released valuation estimates as of March 31 for its holdings in various funds. Fidelity wrote up the value of software firm Domo Inc. by 68% after marking it down 29% in February. Stemcentrx Inc., the cancer-drug maker that AbbVie Inc. said this past week that it would acquire for up to $9.8 billion, was marked up 61%, back to the value Fidelity paid for the shares in August.

A rebounding stock market likely led to many of the March markups. The tech-oriented Nasdaq Composite Index rose 7% in March, wiping out much of the losses suffered in the first two months of the year. The Domo markup, however, was back to the share price at which the company raised new capital in March, the same price as the prior year. In April, the Nasdaq Composite fell 1.9%.

Other shares marked up by Fidelity in March include software companies Cloudera Inc. and Nutanix Inc., each up about 20%, as well as storage firm Dropbox Inc., up 14%. Fidelity marked up ad-technology company AppNexus Inc. and software firm MongoDB Inc. over 20%. All five of those companies’ values are still down overall since December, due to prior markdowns in January and February.

T. Rowe Price Group Inc. marked down most of its investments in closely held technology companies for the month of March, including Uber Technologies Inc. and Dropbox.

At least 13 startups have one or more mutual funds marking their stakes at below the price the funds paid, according to The Wall Street Journal’s Startup Stock Tracker. Still, many have delivered big gains to the funds, including Uber Technologies and Airbnb Inc.

The markdowns have caused much consternation in Silicon Valley. Many venture capitalists and company founders were caught off guard, assuming that after mutual-fund firms invested in their companies the firms would hold the investments at cost.

Speaking to tech news site the Information on Friday, the chief executive of Stemcentrx, Brian Slingerland, criticized Fidelity for marking down the shares of his company, saying they complicated deal talks. A day after the deal was announced, Fidelity said it had marked Stemcentrx shares back up as of the end of March.

“I think the unicorn and markdown situations need to be judged on a company by company basis,” said Mr. Slingerland in an email, referring to startups valued at more than $1 billion. “In our case, while the marks created some confusion, the benefits of having Fidelity as a private investor far outweighed.”

It isn’t clear exactly when Fidelity’s valuation committee sets prices for the prior month. A spokesman for Fidelity didn’t immediately respond to a request for comment.

Valuations for closely held companies are determined by a special committee that sits apart from the portfolio managers who buy and sell stocks. To value illiquid shares, such committees typically look to a company’s financial information, the value of publicly traded rivals, and share prices paid by investors in previous funding rounds.

Mutual-fund firms are required by regulators to estimate the value of illiquid securities, in part because their own investors are trading in and out of the funds frequently.

Those investors receive the current net asset value for the mutual-fund shares when they buy or sell. If, for instance, the fund firm holds the valuation of an illiquid startup steady despite a rapid decline in the overall market, the net asset value of the fund might be artificially high. That would benefit those trading out of the fund at the expense of those buying in.

WSJ : Mobile-Payments War: Profits May Suffer Collateral Damage

Mobile-Payments War: Profits May Suffer Collateral Damage

Battle resembles a multifront conflict complete with overlapping agendas and shifting alliances

The mobile-payments war is getting messy.

Far from the quick victory for Apple many expected when it entered the fray, the battle increasingly resembles a multifront conflict complete with overlapping agendas and shifting alliances.

When asked on his company’s earnings call last week about Wal-Mart Stores’s move to introduce its own mobile-payment services to customers, MasterCard CEO Ajay Banga summed up the situation: Retailers like Wal-Mart, he said, are “trying to find a way to offer a product and a wallet that their consumer can be connected to loyally.”

“The banks, by the way, are doing the same thing,” Mr. Banga added. “They’re trying to make sure they offer products that get the consumer loyal to them and not just let the digital player own that space or the merchant own that space, and, of course, the digital players doing the same thing.”

The result is a crowded, confused space. Wal-Mart’s service will compete with the likes of Apple Pay, Samsung Pay, PayPal and J.P. Morgan Chase’s Chase Pay. Wal-Mart itself never enabled the NFC technology needed to use Apply Pay.

So protracted conflict in the payments sector is likely.

This analysis could be taken one step further: Intense competition could drive down profitability for whoever remains standing. That is because it will, over time, push down pricing across the entire payments infrastructure.

Payment providers are competing with one another to offer a convenient experience to consumers. But they also need to lure in merchants, and to do that they will probably need to compete on price.

Some pricing pressure is visible already. At PayPal Holdings, which also reported results last week, the take rate, or the amount of revenue it collects on every purchase, has declined 0.16 percentage point a year since 2012, according to Sanford Bernstein. It is currently about 2.8%.

So far, that is mostly because PayPal is expanding to bigger merchants that demand lower fees. But the pressure on the sector could soon intensify.

If Apple, for instance, moves to establish Apple Pay as a payments-acceptance service used by merchants, it could undercut the fees charged to merchants. This is because it relies mainly on device sales for revenue. Chase Pay already is offering merchants lower fees than they pay on traditional card payments.

When the smoke clears, the ultimate victors of the payments war may find the spoils disappointing.