Premier Foods under fire as McCormick’s abandons pursuit
Premier Foods came under attack from shareholders after McCormick, the US spice maker, walked away from a proposed £537m takeover, precipitating a near 27 per cent drop in the British cake and custard makers’ shares.
Paulson & Co, the Wall Street hedge fund headed by John Paulson, said it was “extremely disappointing that the board could not recommend an offer”.
Premier, which makes Mr Kipling cakes and Ambrosia custard, has rejected three informal offers from the maker of Schwartz spices.
John Baillie, director at Mole Valley Asset Management, with less than 1 per cent of Premier’s shares, said: “The management has played its hand badly from start to finish. The pressure is on them to show they were right to play hardball — and to deliver.”
But David Beever, Premier chairman, said most shareholders were supportive: “We have been meeting our shareholders and the majority recognise that we have strong growth plans to go forward,” he said.
He added that the board’s decision to reject the 65p per share indicative offer as undervaluing the company had been unanimous.
Asked whether Premier had received any other approaches, Mr Beever said: “No”.
Alan Wilson, McCormick’s chairman, told Premier on Tuesday night that the group would not come up with a fourth proposal after the UK group had rejected its informal offer which was more than double the 31.5p price before disclosure of the takeover interest three weeks ago.
McCormick said on Wednesday: “It would not be able to propose a price that would be recommended by the board of Premier Foods while also delivering appropriate returns for McCormick shareholders.”
But it acknowledged that its due diligence had been conducted “in an open and collaborative spirit”.
Paulson, which holds 7 per cent of Premier’s shares, and Standard Life last month questioned the board’s objectivity in striking a tie-up with Nissin, the Japanese instant noodle-maker, after rejecting McCormick’s offers.
The highly-indebted Premier, which has been through a restructuring under Gavin Darby, chief executive, said it saw “a strong future for an independent Premier Foods and believes that the foundations have been laid for significant growth and shareholder value creation”.
Premier said its tie-up with Nissin, which now has 19.9 per cent stake, would “accelerate its growth”. It has doubled its medium-term sales growth outlook from 1-2 per cent to 2-4 per cent.
In January, the group reported quarterly sales growth of 0.1 per cent.
The collapse of McCormick’s interest leaves Nissin free to take a seat on Premier’s board, if it requests it. The noodle maker paid 63p a share to acquire its initial 17.3 per cent stake from Warburg Pincus, the private equity group, and has since raised its stake to 19.9 per cent.
Mark Brumby, analyst at Langton Capital said: “A month ago, Premier was a friendless, highly indebted and un-investable basket case. Now it has had bid approaches, has a supportive shareholder [Nissin] and could grow at double the rate previously asserted.”
Analysts at Davy Research said McCormick’s decision to walk away put “an onus on Premier’s board and senior management to deliver” on its growth targets.
Premier was once the UK’s largest food company but a debt-fuelled merger and acquisition spending spree brought it to the brink of collapse in 2008. Its shares closed down 26.75 per cent on Wednesday at 41.75p.
Guided by Mark Nordlicht, Platinum Partners has racked up returns that are the envy of the industry. But its winning strategy – lending to troubled companies – carries risks that many institutional investors would just as soon not take.
NEW YORK – Investing in Glacial Energy Holdings Inc should have been a disaster.
Starting around 2010, hedge fund manager Platinum Partners lent the reseller of electricity and natural gas tens of millions of dollars, and then took at least a 20 percent equity stake in the fast-growing company.
Then, trouble started. By 2013, Texas utility regulators had fined Glacial $100,000 for overbilling customers and not disclosing that founder and Chief Executive Officer Gary Mole’s previous energy venture had collapsed. Mole was forced to resign from the company’s Texas subsidiary.
Mole and his company were also targeted by former employees and a onetime partner in at least 10 lawsuits from 2009 to 2014, alleging, among other things, embezzlement, a hostile work environment, underpayment, and racketeering. Glacial beat back most of the legal challenges, but as debt mounted, the energy retailer filed for bankruptcy in 2014, listing more than $1 billion in unpaid obligations.
Platinum’s ownership stake in the company wasn’t worth much, according to a person familiar with Platinum’s history. But the firm had earned as much as $20 million in interest on its Glacial loans, which carried annual rates as high as 22 percent.
Then, Platinum delivered the master stroke, snapping up Glacial’s assets out of bankruptcy for about $53 million. Since then, Agera Energy LLC, the Platinum-backed company that inherited Glacial’s customers, has quintupled in value, according to the person familiar with the hedge fund firm.
Turning painful situations into profit is the peculiar genius of Platinum founder Mark Nordlicht. The linchpin of his success: the increasingly popular strategy known as asset-based lending. The idea is to provide high-interest loans to companies other lenders shun and, if the company runs out of cash, take ownership and ultimately flip it for a profit.
With that approach, combined with more traditional investment strategies, Nordlicht has generated spectacular results. Platinum’s approximately $720 million Value Arbitrage fund has generated average annual returns of about 17 percent since 2003, according to Platinum performance data reviewed by Reuters. The flagship fund’s investments are about evenly divided between private debt and shorter-term investments in stocks and other securities. The roughly $540 million Credit Opportunities fund, which focuses on debt, has averaged annual gains of 13.4 percent since 2005, making money every month but one. Neither has ever posted a decline for a calendar year.
Last year, hedge funds overall dropped an average of about 1 percent. Platinum’s Value Arbitrage fund, meanwhile, gained 9.4 percent, far ahead of its sector average of 2.46 percent. The Credit Opportunities fund gained 9.8 percent, trouncing a benchmark credit-fund gain of 0.07 percent.
And yet Platinum, with about $1.35 billion under management, remains relatively small next to other high-performance hedge fund firms.
Platinum has attracted enough pension funds, endowments and other institutional investors to bring their share of the firm’s assets to about 35 percent, according to the person with knowledge of the firm, who declined to identify any of those investors. But they remain too few and their investments too small to vault Platinum into the big league.
An important reason is what industry insiders call “headline risk.” Nordlicht’s investments and his approach to them, these hedge fund investors say, come with too many potential public-relations challenges. On top of that, some investors worry that many of Platinum’s investments are too complex to exit quickly to cover heavy redemptions.
A Reuters review of Platinum’s investments, interviews with hedge fund investors familiar with the firm, as well as former employees, clients and associates, and a review of marketing and other documents show that Platinum has a history of investing in controversial businesses.
In their pursuit of outsize returns, Platinum and Nordlicht have put money into a consumer finance company repeatedly fined for predatory lending before and after Platinum’s involvement, a pair of investments that turned out to be Ponzi schemes, and two energy companies that later went bankrupt and are facing criminal charges.
“Investors looking beyond the impressive headline returns will find a pattern of behavior that raises serious questions about ethics, morals, and a host of other risks an investor must take to achieve those returns,” said Ted Seides, the recently departed co-founder of hedge fund investment firm Protégé Partners.
The person familiar with Platinum’s thinking said the firm was aggressive with its investments, but always within the limits of the law.
One longtime Platinum investor, Bernard Fuchs, praised Nordlicht and said he was not concerned about liquidity issues or investments that might generate negative press.
“I know he’s an ethical, honest person,” said Fuchs, the former CEO of Lenoxx Electronics Corp who now invests personal and family money. “I would mortgage all our houses to invest with him, anything that he would go for.”
One of the companies Platinum invested in that’s now in bankruptcy, Black Elk Energy Offshore Operations LLC, began to unravel after three workers died in an explosion on one of its rigs and oil prices collapsed. Documents reviewed by Reuters, including internal company emails and legal agreements, show how Platinum rescued its investment even before bondholders and contractors were paid.
Nordlicht has also maintained ties to associates with troubled pasts. Kevin Cassidy, who has served time in prison three times for fraud and tax evasion, is now a sales executive at Agera, the Platinum-owned power supplier. Murray Huberfeld, a financier who was ordered to disgorge profits and fined for violating securities laws at his Broad Capital, provided Platinum with start-up money and ran Nordlicht’s credit-focused hedge funds until Platinum took them over in 2011. He no longer works at Platinum but remains a client, according to 2014 tax filings for his charitable foundation.
Cassidy and Huberfeld did not respond to requests for comment.
The person familiar with Platinum’s history said that the firm has made thousands of investments and that in the few cases that generated negative attention, Platinum was duped by deceptive business partners.
STRATEGIES AND SCHEMES
In an episode that attracted media attention in 2014, the U.S. Securities and Exchange Commission found that Platinum subsidiary BDL Group invested more than $56 million in a scheme operated by two brokers at other firms who exploited the terminally ill.
Patients in nursing homes and hospice care were gulled into providing personal information in order to receive a box of candy or a $250 gift; that information was used by the brokers to purchase long-term variable annuities that paid benefits to investors like BDL when the patient died soon after, according to the SEC.
BDL paid a combined $3.29 million profit disgorgement and penalty on the grounds that it made money on an illegal scheme. The two brokers at the heart of the operation were forced to repay their profits; one’s case is on appeal with the SEC.
Nordlicht’s friend and former colleague, Howard Feder, ran BDL and worked with the brokers to fund their strategy, according to the SEC. In a 2014 settlement with the agency, Feder was barred from the securities industry and paid a penalty of $130,000. At the time, the agency said Feder “understood the key components of the investment strategy.”
The person familiar with Platinum’s history said the firm was not aware that the brokers were engaged in illegal activity.
Feder did not respond to a request for comment.
With its 2010 investment in Glacial, Platinum got involved in a company that already had a record of questionable spending.
In 2007, internal financial statements of Glacial’s New York unit, reviewed by Reuters, show that Glacial CEO Mole and his team spent more than $671,000 on travel and entertainment – the same year for which the company ultimately recorded a loss of approximately $5 million.
More significantly, the 2007 statements show $17.9 million in “consulting” fees paid to a mining company in the Democratic Republic of the Congo.
These dealings were the basis for some of the lawsuits alleging various forms of wrongdoing filed against Glacial and Mole in ensuing years. All of those lawsuits were ultimately defeated, dismissed or pushed off into bankruptcy proceedings.
But one allegation gained additional weight in September last year, when Mole was arrested on charges of tax evasion. The New York attorney general alleged that he funneled Glacial profits into the Congo mining company, which operated in a region where illicit mining profits have been used to fund armed conflict. Reuters could not determine whether the Glacial-linked mining company was involved in conflict minerals.
Mole pleaded not guilty; he faces up to 15 years in prison if convicted. He did not respond to requests for comment.
The person familiar with Platinum said the firm was aware of Mole’s spending and put protections in place to curtail it.
EARLY SCANDAL
Nordlicht grew up outside of New York City in suburban Long Island, and graduated from nearby Yeshiva University with a degree in philosophy in 1990. With $11,000 saved from what he had received for his bar mitzvah, he started trading commodity options. In these early years, National Futures Association records show, various New York exchanges fined him small amounts on eight different occasions, mostly for improper record-keeping.
In the early 2000s, after helping start a small private equity firm, he co-founded commodities brokerage firm Optionable. The New York Mercantile Exchange took a 19 percent stake in the fast-growing operation in early 2007.
Later that year, Optionable collapsed in a trading scandal. Nordlicht, who resigned as non-executive chairman soon after, was not directly implicated. His co-founder, Kevin Cassidy, was. He was sentenced to prison for the third time in his career, this time for 30 months for deliberately misstating the value of natural gas derivatives in conjunction with an employee of BMO Financial Group.
As Optionable imploded, Nordlicht was already building his Platinum business, having launched the Value Arbitrage fund in 2003 with about $30 million.
Shortly after his release, Cassidy was hired as managing director of business development at Agera, the successor company to Glacial, along with other former Optionable and Glacial employees. Agera did not respond to requests for comment.
The 47-year-old Nordlicht lives an unflashy life in suburban Westchester County with his wife and children, usually driving himself to and from work at Platinum’s sleek midtown Manhattan offices.
He has strong ties in the New York-area Jewish community, the source of some of his funds’ investors. These include, according to public tax filings for 2014, a charitable trust set up by day-trading pioneer Aaron Elbogen, who was fined $1.4 million for illegal trading and bookkeeping while the chief executive of Datek Securities Corp; the Century 21 Associates Foundation, led by department store executive Raymond Gindi; and the SFF Foundation, a non-profit controlled by the Schron family, known for its real estate investments. All declined to comment or did not respond to requests for comment.
Nordlicht has enriched his investors with his focus on higher-risk debt that can yield far more than traditional fixed-income investments. And after years of near-zero interest rates, it’s a strategy increasingly sought out by big, otherwise conservative institutional investors hungry for higher yields.
Still, many big money investors who have looked at Platinum have walked away. Cambridge Associates, which counsels some of the world’s largest pension funds and endowments, recommended to a client around 2010 that it not invest with Platinum and has not changed its stance on Nordlicht’s firm since then, according to people familiar with the situation.
In an email, Cambridge said it does not “discuss specific investment managers.” It added: “We can say that we take our due diligence process very seriously.”
Among institutional investors that have considered putting money with Platinum but ultimately chose not to are the endowment of Yeshiva University, which is the alma mater of several Platinum employees, and large hedge fund allocator GAM, according to people familiar with the institutions.
One institutional investor that did get in is New York City’s Correction Officers’ Benevolent Association, according to two people familiar with the situation. The New York Times reported in June last year that Norman Seabrook, the union’s leader, was under investigation by the U.S. Department of Justice for potentially using his position to enrich himself. A broad subpoena from prosecutors requested that the union supply information related to Platinum, but the connection was not clear, according to the report.
A spokesman for the union declined to comment. The Justice Department and Seabrook did not respond to requests for comment.
Nordlicht has tried to polish Platinum’s image. In 2010, he hired ING Investment Management veteran Uri Landesman, who as president of the firm courts big investors and serves as its public face. Platinum declined to make Landesman available for an interview.
Platinum also has added to its legal and compliance staff, increased information provided to clients, and created a “headline test” for prospective investments to avoid bad publicity, according to the person familiar with the firm.
That hasn’t stopped Platinum from pursuing investments like CashCall, which lends to people at annualized interest rates that can be in the triple digits. The company has faced legal actions in recent years from multiple states and the federal government for its aggressive marketing practices and charging interest rates above state limits. It has been compelled to pay refunds to customers in some cases, according to regulators.
Platinum subsidiary Bayberry CF Management has set up six or more funds since 2009 that have lent at least $193 million to CashCall, according to marketing documents reviewed by Reuters. One CashCall fund expected to pay investors as much as 17.5 percent annually over three years, even after Bayberry took a 2 percent fee and 20 percent of the gains, according to a May 2013 marketing document.
A spokesman for CashCall declined to comment.
Nordlicht and his team often take positions in messy situations that can be difficult or costly to exit quickly. The perceived liquidity risk has been heightened by Platinum’s policy of allowing investors to take money out of its two main funds every three months. That’s far more frequently than most hedge funds that focus on private debt, which can lock up capital for several years.
“The mismatch in assets and liabilities could leave serious problems for those left holding the bag should the fund shrink in size,” said Seides, the veteran hedge fund allocator.
Platinum has told investors in recent years that it can manage mass redemptions thanks to large chunks of more liquid investments, at least in its main fund. It also believes that its loyal investor base of wealthy individuals and employees won’t flee at the first sign of trouble, according to another person with knowledge of the firm.
That logic didn’t hold up last year, as oil prices plummeted and volatility wracked markets. In response, Platinum extended the redemption notice from three to six months for the Value Arbitrage fund. Then, in December, it put about half the capital of the fund – much of it from the energy sector – in a so-called side pocket, meaning investors can’t take out their money on the normal schedule. When they can isn’t clear.
The move may ultimately protect investors from short-term losses, but changing liquidity terms is a last-resort measure that can turn investor sentiment against a fund.
BLACK ELK BLOW-UP
Platinum’s involvement with Black Elk shows just how complicated the firm’s investments can get – and how Nordlicht manages to wring profits from them.
Houston-based Black Elk was founded in 2007 to buy no-longer-productive offshore wells at discounted prices and then use new technology to squeeze more oil and natural gas from them.
Platinum began investing in Black Elk in 2009, first lending to it. Platinum later acquired preferred shares that eventually gave it majority control – and paid annual dividends of 20 percent or more, according to securities filings and an external valuation report reviewed by Reuters.
Then, in 2012, an explosion on a Black Elk rig off the Louisiana coast killed three workers, seriously injured three others and spilled oil into the Gulf of Mexico. A 2013 report from the U.S. Department of the Interior’s Bureau of Safety and Environmental Enforcement found that the “safety culture” aboard the rig was “poor at best.” Even before the explosion, the company received hundreds of bureau citations for safety violations.
The Department of Justice subsequently announced criminal charges against Black Elk and related contractors. Black Elk pleaded not guilty to involuntary manslaughter and other charges related to failing to follow proper safety practices. The case is pending.
That and other legal challenges after the explosion, combined with the collapse of energy prices, were among the issues that forced Black Elk into bankruptcy proceedings in August 2015.
By then, however, the company had sold its main assets to Houston-based Renaissance Offshore LLC for $149 million. Most of the proceeds from that August 2014 sale went to a Platinum subsidiary. Black Elk then sold much of its remaining assets to Northstar Offshore Group LLC, a Houston company in which Platinum is a substantial investor.
Together, the sales helped Platinum and its investors eke out a modest profit on their Black Elk bet, according to the person familiar with Platinum’s history. The position was the largest holding in the Value Arbitrage fund on March 31, 2014, worth as much as $186 million, according to the valuation report.
Black Elk’s creditors were left to wonder how Platinum was paid proceeds from the asset sale before them. Secured bondholders, for example, would normally have had first priority. Documents and interviews with people familiar with the transaction suggest an answer.
Just weeks before the sale to Renaissance closed, Black Elk asked holders of $150 million of its high-yield bonds to approve a measure that let Platinum receive proceeds of the transaction ahead of bondholders and other creditors.
Surprisingly, nearly 75 percent of bondholders consented, according to a Black Elk earnings announcement in August 2014. Reuters could not determine the identities of all bondholders or how they voted.
“No bondholder in their right mind would ever vote to have their covenants stripped like that,” said one note owner. Lawyers and representatives for other secured bondholders did not respond to requests for comment or declined to comment.
Internal Black Elk emails and legal documents related to its bonds show that various Nordlicht-controlled hedge funds owned about 70 percent of the bonds before the vote and at least 47 percent after. The person familiar with Platinum’s history confirmed that the firm voted its own bonds to approve the measure.
In addition, another large block of bonds was held by affiliates of reinsurer Beechwood Bermuda International Ltd, according to a Black Elk bond modification document from November 2014. Beechwood had hired former Platinum employee David Levy in November 2013 as chief investment officer of structured products. Levy returned to Platinum as co-CIO several months after the bondholder vote.
Beechwood spokesman David Goldin confirmed that Levy was responsible for Beechwood’s purchase of Black Elk bonds and for voting them in Platinum’s favor, along with the approval of other covenant changes. He said that those bonds were sold the month after Levy left.
Platinum believes that the measure would have been approved even if the firm’s votes had not been counted by the bond trustee, Bank of New York Mellon, according to the person familiar with Platinum’s position. The Renaissance sale proceeds, the person added, were used to pay back investors in a private equity fund Platinum created and from which it took no fees.
A lawyer for Black Elk declined to comment on Platinum, citing the bankruptcy proceedings.
Black Elk founder and CEO John Hoffman left the company shortly after the sale to Renaissance. Black Elk’s next CEO, Jeff Shulse, left after the Northstar deal. According to a filing by Black Elk creditors as part of the bankruptcy proceedings, both men left in protest over cash from the sales being used to pay Platinum. The filing alleged “a series of questionable transactions” that allowed $96 million from the Renaissance sale to go to Nordlicht’s firm “to the detriment of the company’s creditors and estate.”
Hoffman and Shulse declined to comment.
After the sale, some creditors cried foul. For example, in a lawsuit filed in Louisiana state district court in April 2015 against Black Elk, Nordlicht and Platinum entities, contractor Shamrock Management accused Platinum of engaging in an “unethical scheme” to suck assets out of Black Elk and pay itself while stiffing creditors. The lawsuit seeks nearly $1 million for unpaid work and damages.
That lawsuit and more than a dozen others like it remain unresolved in the bankruptcy process, part of 261 claims totaling $1.2 billion. The person familiar with Platinum’s position called the lawsuits a frivolous attempt to bilk Platinum of cash.
Lagardere to target travel retail and media buys, active divestments – bankers
* Balaire’s role seen as less strategic in short term
* Travel retail buys to target Asia and Middle East
* DFS Group flagged as potential but difficult target
Lagardere [EPA:MMB], the French media and sports group, will scale its travel retail business through M&A as it continues to divest assets in its Lagardere Active division, sector bankers and analysts said.
The departure of CFO and co-managing partner Dominique D’Hinnin, announced last month, has created some uncertainty for investors, one banker said. Shares in the group fell 13.3% the day after the announcement. As Lagardere’s finance director since 1998, D'Hinnin was perceived as a stabilizing factor in the company, the banker said. But it was the right time for him to leave and he was very willing to move on, a second banker said.
The incoming finance director, Bruno Balaire, a partner at audit and consultancy firm Mazars, will inject “new momentum” into the company, which is looking for a new vision and culture, the second banker added.
Balaire is a “smart guy”, shrewd and interested in strategic matters and M&A, a source familiar with situation said. But unlike D’Hinnin, who was second in command of the whole group, he will be less involved in strategic matters at first. “Maybe further down the line … but not immediately,” the source said.
Mazars acted as financial accountants earlier this year to French news publisher Groupe Les Echos in its purchase of Pelham Media, a UK-based communications consultancy firm.
As for the future vision, Lagardere will make acquisitions in travel retail and publishing as it has done in the past, the bankers and analysts said. They were divided, however, on whether it would be a buyer or seller in the TV production space.
The group’s travel retail division is pushing to consolidate the sector, a fourth banker and one of the analysts said. The sector is still fragmented, with many local shops in airports and railway stations to be taken over, the analyst added. Previous acquisitions include Lagardere’s purchase of Paradies, a US-based airport travel retailer, for USD 530m last year, and 17 fashion and confectionary retailers at JFK airport.
Lagardere would buy companies in Turkey, the Middle East, the Arabian Peninsula, and South Eastern Asia, including Taiwan and Singapore, because there are very few targets left in Europe, the fourth banker said. Transactions worth EUR 100m or more will be considered, the second banker said. Transactions in China are also of interest, although that market is trickier, the fourth banker added.
A move to acquire the Duty Free Shop (DFS), which is owned by the Selective Retailing division of listed luxury group LVMH [EPA:MC], would make sense partly because of DFS’ significant presence in airports, the first analyst said.
This would reflect a trend in the market, which saw Swiss group Dufry [SWX:DUFN] buy Italian rival World Duty Free [BIT:WDF] for last year for EUR 1.3bn, he said. But Lagardere’s cash position is limited and it would need help from a private equity firm to execute a transaction by buying a minority stake, he said. Lagardere had EUR 634m worth of cash and an undrawn credit line of EUR 1.2bn at the end of December 2015, according to its FY15 results. It has a leverage ratio of 2.4x net debt/recurring EBITDA.
LVMH’s Selective Retailing business group, which also includes cosmetic chain Sephora and Le Bon Marche in Paris, reported EUR 11.2bn in revenues for FY15, up from EUR 9.5bn a year earlier. The company does not report DFS’ revenues. DFS is a core part of LVMH and is not for sale, however, a fifth banker said.
Talks of travel retail acquisitions come after Lagardere Travel Retail divested its Belgian activities to the Belgian Post Group, also known as bpost group, and its Spanish Distribution subsidiary, SGEL, to Springwater Capital, earlier this year.
Other opportunities and divestments
Elsewhere, Lagardere could look to buy publishing companies in the US, the second banker and a second analyst said. These would be small to medium-sized transactions worth less than EUR 100m, the analyst added.
It could also buy look to production companies operating in the TV, animation and film sectors, which are attracting many buyers, including RTL [EBR:RTL], Vivendi [EPA:VIV], Altice [AMS:ATCT], Numericable and TF1 [[EPA:TFI], a sixth banker and a third analyst said. The arrival of Bolloré at the helm of Vivendi, the entry of Altice in the media sector, and the acquisition by TF1 late last year of Newen Studios have triggered consolidation in this space, they said.
But, others saw Lagardere as more likely a seller in this space. It is thought to be reviewing the sale of Tele7 Jours, part of Lagardere Active, having failed to sell it earlier this year, the fourth banker and several analysts said. In fact, all of the Lagardere Active division was rumoured to be up for sale last year after approaches were made by French private equity firms, the fourth banker said.
The division is struggling and there are no targets left in France that can help it grow, he said. He added there are not enough synergies around advertising and TV rights for Lagardere to acquire other media assets in Europe.
Lagardere Studios, part of Lagardere Active, also remains a divestment target, the third analyst said, adding that likely buyers would be TF1, Altice and Vivendi. Lagardere hired Societe Generale to sell a stake sale in the subsidiary, as reported.
Meanwhile, the whole group, controlled by Arnaud Lagardere, is seen as an attractive target to several media buyers, including Vivendi, as reported. The first and second bankers deemed a full sale unlikely. “Arnaud has never really wanted to sell. It’s a family business so there’s an emotional factor,” the first banker added.
Lagardere reported EUR 7.1bn in revenues and operating profit of EUR 399m for FY15. Travel Retail is Lagardere’s largest division, responsible for EUR 3.5bn of the revenues, followed by Publishing with EUR 2.2bn and Active with EUR 962m. The remainder is held by Sports and Entertainment.
Lagardere did not return calls for comment.
Vivendi va prendre 15% de la Fnac dans le cadre d'une augmentation de capital de 159 millions d'euros. Le but? Faire front commun contre Amazon, et cela, que la Fnac rachète ou non Darty.
Tous les chemins mènent à Amazon. Alexandre Bompard l'a compris depuis son arrivée à la tête de la Fnac, en 2011. Il sait que le géant d'Internet, qui a déjà déclenché un raz-de-marée aux Etats-Unis, suit la même progression tentaculaire en France, et qu’il doit trouver un moyen de lui résister avant de se faire balayer. Après avoir redressé les comptes de la Fnac et l'avoir introduit en Bourse, Bompard a donc attaqué en 2015 la troisième étape de son plan: se rapprocher d'un autre acteur pour résister à la tempête Amazon par la consolidation. Fin septembre, il a déposé une offre d'achat sur Darty avec l'idée de créer un leader de l’électronique grand public, des produits éditoriaux et de l’électroménager. Mais début mars, Conforama est venu jouer les trouble-fête, appuyé par sa maison mère Steinhoff, avec une contre-offre en cash, plus séduisante pour les actionnaires que celle essentiellement en actions de la Fnac.
Une augmentation de capital de 159 millions
La voie choisie pour lutter contre Amazon semble barrée? Qu'à cela ne tienne, réputé tenace, Alexandre Bompard a revu son itinéraire en un temps record. Ce lundi 11 avril, le jour même où Conforama a déposé formellement son offre sur Darty, la Fnac a annoncé un partenariat stratégique avec Vivendi. Fondé sur un projet de coopération dans les domaines culturels, il est assorti d'une prise de participation minoritaire de Vivendi au capital de la Fnac, qui en détiendra 15%, à la faveur d'une augmentation de capital de 159 millions d'euros. L'idée de cette alliance avait surgi il y a un an déjà chez les équipes de la Fnac. La contre-offre de Steinhoff a accéléré sa mise en oeuvre.
En quelques semaines, Alexandre Bompard a convaincu Vincent Bolloré d'entrer à son capital, avec une double idée: construire un projet industriel séduisant afin de résister à Amazon et de séduire les actionnaires, et obtenir davantage de flexibilité financière. "Cette opération est la preuve d’une inventivité stratégique exceptionnelle à la Fnac", salue Olivier de Panafieu, associé chez Roland Berger. "Mais une question se pose: avec cette opération, la Fnac se donne-t-elle les moyens de surenchérir sur Darty, ou à l’inverse, renonce-t-elle à surenchérir, en considérant l’offre de Conforama plus pertinente?" La Fnac a jusqu'au 11 juin pour apporter la réponse, en formulant une nouvelle offre. Si elle abandonne, les 159 millions levés pourraient financer d'autres opportunités stratégiques. A voir la hausse du cours de Bourse hier, le marché semble parier sur une surenchère. Mais rien n'est joué: Bompard étudie avec autant d'intérêt une contre-offre qu'un retrait, et il ne paiera pas un prix qu'il juge démesuré, malgré son intérêt prononcé pour Darty.
5 chemins pour résister à Amazon
Le partenariat avec Vivendi, lui, en revanche, est quasiment acté, même s'il est soumis au vote des actionnaires le 17 juin. "Le deal avec Darty est autoporteur, celui avec Vivendi aussi", pointe Olivier de Panafieu. "L’un n’a pas besoin de l’autre pour fonctionner, et la somme des deux est également possible." Que la concentration horizontale avec Darty se fasse ou pas, la Fnac peut préparer sa riposte anti-Amazon par une intégration verticale avec Vivendi.
Comment? Premièrement, en proposant un modèle similaire à celui par abonnements développé par Amazon et son service Prime. La Fnac possède 6 millions adhérents, et Vivendi, via Canal+ et Canalplay, environ 10 millions d'abonnés. Ensemble, les deux groupes pourraient développer leur base de clients fidèles, à l’aide d’une offre de services omnicanaux étendue. Ensuite, en réponse à la guerre des contenus menée par Amazon, Vivendi pourrait mettre ses productions (musique, jeux vidéo, Canal+) en avant dans les points de vente de la Fnac. Par ailleurs, le label Universal Music, détenu par Vivendi et France Billet, le leader de la billetterie qui appartient à la Fnac, pourraient facilement oeuvrer de concert.
Une mutualisation est aussi possible entre le service de streaming musical Fnac Jukebox, et ceux de Deezer et Spotify dans lesquels Vivendi détient des participations, ou entre le service de vidéo à la demande FnacPLAY, et CanalPlay, IROKO+ en Afrique, Watchever en Allemagne, appartenant à Vivendi. Enfin, face à la croissance planétaire d'Amazon, la Fnac peut bénéficier de la présence de Vivendi en Afrique pour s’y déployer, tandis qu'elle lui ferait profiter de son leadership dans la péninsule ibérique. Tous les chemins mènent à Amazon, et déjà, la Fnac et Vivendi en ont identifié au moins cinq à suivre ensemble.
Apple designer said to leave and join GoPro - The Information
is that the reason why the stock is +12.4%....I will sell the rally....means 2 things to me :
1 - GPRO is desperate and should have pay a lot to have this guy on board
2 - if he was so important to Apple, I am sure they have all tools to keep him in the team...
MergerMArket
--> DEPO +2.68%
* Long list of bidders may be optimistic
* Company likely to resist sale at lower price
Starboard Value believes a sale of DepoMed (NASDAQ:DEPO) is the most direct way of yielding value for shareholders, a person familiar with the matter said.
There may be up to 10 potential buyers for the Newark, California-based specialty pharma company, this person said, including Japan’s Daiichi Sankyo (NASDAQ:DSKY), Allergan (NYSE:AGN), Teva Pharmaceutical (NYSE:TEVA) and Horizon Pharma Plc (NASDAQ:HZNP). Last year Horizon made an unsuccessful hostile bid for DepoMed.
Last week, Starboard revealed it had acquired a more than 9% stake in DepoMed and said it planned to request a special meeting of shareholders to nominate six new members of the board, including five from Starboard. The activist said it was making the move now to block the company from reincorporating to Delaware from California, which it said is a more shareholder-friendly state, among other reasons.
In the letter, Starboard said that a sale of the company is an option, but that it was not necessarily calling for a sale. But it said “board change is necessary” to ensure “the company is acting in the best interests of all shareholders.”
Prior to the 13-D filing, DepoMed announced it would hold its 2016 AGM on 18 May. Six directors are up for reelection, including CEO James Schoeneck.
DepoMed, which sells pain and other central nervous system drugs, last summer rebuffed hostile efforts by Horizon Pharma (NASDAQ:HZNP) to acquire the company for USD 33 per share in stock or alternatively, USD 32.50 per share in stock and cash. Horizon withdrew its bid after a California court blocked it, saying it was based on the Ireland-based company’s improper use of confidential information.
DepoMed stock subsequently fell by more than 50%, but Horizon’s also fell by more than 60% in connection to an overall decline in specialty pharmaceutical companies in the wake of criticism of the industry’s practice of raising drug prices and slower sales.
“It’s a travesty that DepoMed rebuffed the Horizon offer, but in retrospect, I’m glad they did,” said one top-20 DepoMed shareholder. “They did the right thing by rejecting funny money.”
DepoMed shares closed at USD 15.68 on Tuesday, giving it a market value of less than USD 1bn. The top-20 shareholder said the Starboard move “increases the probability of a sale” but said he wondered if there is a buyer.
From Starboard’s perspective, there are many potential global buyers for DepoMed, which bought the rights to Johnson & Johnson (NYSE:JNJ) painkiller Nucynta for USD 1.05bn more than a year ago and has grown the product to generate USD 190m in revenue, the person familiar said.
Japan’s Daiichi Sankyo, for instance, has said it could spend up to USD 2.5bn on US acquisitions, particularly in pain drugs, to offset patent expirations, the person familiar said. Earlier this year, Takeda Pharmaceutical (TYO:4502) told this news service that it could spend up to USD 1bn on acquisitions, including on CNS drugs.
Two industry bankers agreed that DepoMed would attract interest if it ran a sale process, but one said it “strikes me as fanciful that there could be ten buyers out there.” That banker said that the involvement of a prominent activist like Starboard means that there is a “50-50 chance” it will get sold in a year.
A second industry banker and a second investor said Starboard’s strategy is likely to garner shareholder support for a special meeting to replace the board and then push for a sale.
Given that DepoMed fended off a hostile bidder last year, it is unlikely that potential buyers would want go hostile again, particularly Horizon, the second banker said. He said that all the buyers are likely to be in wait-and-see mode to see how the Starboard campaign pans out, which could likely force the company to launch a sale process.
With DepoMed shares now around USD 15.70, its existing board and management is likely to be resistant to a sale, this banker said. He noted that they rejected USD 33 per share and Starboard may face a long battle.
Starboard “knows that DepoMed missed out on a high priced offer last year and that management is vulnerable, so they think that by getting board seats they can make changes,” the same banker said.
The second investor said he expects Starboard to begin reaching out to other shareholders for its campaign to get a special meeting and replace the board and begin a sale process.
The investor said Allergan, Horizon, Endo International (NASDAQ:ENDP) and Mallinckrodt (NYSE:MNK) could all be viable buyers, provided they made offers substantially in cash, rather than volatile shares. For buyers like Endo and Mallinckrodt, there will be large synergies due to DepoMed’s pain franchise, he said. Further, it would lower DepoMed’s tax rate if a buyer domiciled outside the US acquires it.
A spokesperson for DepoMed declined to comment. The company has said that Starboard did not communicate with it prior to filing the 13-D. A Starboard representative didn’t return a request for comment.
Ce que révèlent les frappes de drones américains contre Al-Qaida en Syrie
Etats-Unis contre Al-Qaida. Un nouveau chapitre, d’une guerre commencée il y a plus de quinze ans, s’est ouvert au début du mois, dans un triangle de quelques milliers de kilomètres carrés du nord-ouest syrien sur lequel Washington multiplie les frappes de drone sur fond d’offensives djihadistes et d’allées et venues de hauts cadres d’Al-Qaida.
Le 3 avril, Abou Firas Al-Souri, porte-parole du Front Al-Nosra – la branche syrienne du réseau terroriste – est tué par une frappe aérienne avec une vingtaine de djihadistes alors qu’il anime une réunion dans la région d’Idlib. Ancien d’Afghanistan, il était revenu en Syrie à la fin de l’année 2012.
Lire aussi : Abou Firas Al-Souri, tué en Syrie après quarante ans de djihad
Le séjour syrien de Rifai Ahmad Taha a été plus bref. Moins d’une semaine après l’entrée de ce vétéran d’Afghanistan et d’Al-Qaida dans le pays, autour du 1er avril, en provenance vraisemblablement de Turquie, l’Egyptien a été tué par la frappe d’un drone américain dans la soirée du 7 avril. Il circulait, alors, en voiture dans la région d’Idlib (nord-ouest). Cet ancien commandant militaire de la Gamaa Islamiya – qui fut notamment à l’origine d’une vague d’attentats dans les années 1990 en Egypte – venait d’assister à une réunion dans la ville de Sarmada.
Cible prioritaire
Selon Khaled Al-Qaisi, un « chercheur salafiste » particulièrement informé des soubresauts internes qui agitent les organisations djihadistes, des cadres d’Al-Nosra étaient réunis en conclave, dans la ville, le 7 avril. Ils tentaient d’aplanir les dissensions entre deux tendances de l’organisation au sujet de la stratégie à suivre dans les mois à venir. Ayant maintenu de bonnes relations avec tous les protagonistes, Rifai Ahmed Taha revendiquait d’être une autorité religieuse « indépendante » dans la galaxie djihadiste. Il a probablement fait le voyage pour jouer un rôle de modérateur entre les deux camps.
« La vieille garde d’Al-Qaida veut accélérer le processus de création d’un premier émirat entre Idlib et Lattaquié alors que la direction actuelle d’Al-Nosra continue de privilégier une stratégie sur le long terme », abondait il y a quelques jours Charles Lister, analyste au Middle East Institute. « Une vieille garde » que Washington a sans nul doute érigée au rang de cible prioritaire, comme le montre la traque de l’Egyptien Saïf Al-Adel. Ce dernier assura la transition à la tête d’Al-Qaida entre l’élimination de Ben Laden par un commando américain, en avril 2011, et la désignation d’Aymenn Al-Zawahiri, son chef actuel.
Considéré comme un stratège militaire du réseau terroriste, Saïf Al-Adel, dont la tête est mise à prix par les Etats-Unis pour son rôle présumé dans les attentats contre les ambassades américaines au Kenya et en Tanzanie (224 morts en août 1998), est entré en Syrie il y a quelques mois, selon l’indiscrétion, sans doute volontaire, d’un activiste médiatique d’Al-Qaida, dont les comptes et interventions sur les réseaux sociaux relaient les consignes de la direction d’Al-Qaida « central » et de son chef, Ayman Al-Zawahiri. Une arrivée confirmée par des sources américaines, qui présentent Al-Adel comme le missi dominici d’Al-Zawahiri en Syrie.
Mauvaise passe
Ce retour sur un terrain d’affrontement très exposé marque une nouvelle étape dans un parcours très singulier : Saïf Al-Adel aurait fait l’objet, avec quatre autres cadres du réseau terroriste, d’un échange entre l’Iran – où il était incarcéré ou du moins retenu depuis le début des années 2000 – et Al-Qaida dans la péninsule arabique (AQPA), la branche yéménite de l’organisation djihadiste, qui détenait en otage un diplomate iranien, finalement libéré en mars 2015.
Outre Al-Adel, Abou Al-Khayr Al-Masri – ancien responsable des relations extérieures d’Al-Qaida – et Abou Qassam Al-Ordoni, un responsable militaire du réseau à la fin des années 1990, auraient fait partie du deal, selon des responsables américains interrogés par le New York Times et d’après des sources djihadistes. Ces dernières s’étaient à l’époque réjouies de leur libération, tout en les signalant aujourd’hui en Syrie, au moment où leurs détracteurs au sein de l’organisation djihadiste leur prêtent des velléités putschistes à l’égard de leurs « benjamins » qui dirigent l’organisation.
Ces dissensions, et les frappes américaines, ne semblent en tout cas pas affecter sur le terrain le dynamisme du Front Al-Nosra, à l’initiative d’une reprise à grande échelle des combats il y a une dizaine de jours. Un nouvel embrasement qui peut permettre à l’organisation de s’extraire d’une mauvaise passe : la reprise des manifestations et le regain de mobilisation populaire, permis par la relative accalmie qui a suivi le cessez-le-feu, fin février, contrariaient les plans d’un groupe, dont les représentants ont même été expulsés de rassemblements prorévolution qu’ils tentaient de briser.
Les Etats-Unis, qui ne disposent d’aucun allié sur le terrain susceptible de contrecarrer l’organisation djihadiste, s’en remettent pendant ce temps-là à leurs drones.