Shares volatile as M&A blog says industry experts still see BHI as a potential takeover target after failed HAL merger - Suggests GE or Carlyle Group are potential acquirers
Abengoa may have received offers some of its transmission lines
Abengoa may have received offers for some of its operating electricity transmission lines from WPR Participacoes, a Brazilian infrastructure company, and FIP Coliseu, an investment fund managed by Brazilian bank Banco Modal, Exame reported without citing a source. The brief Portuguese-language article claimed the offers were presented in May.
The report in the fortnightly business magazine said, however, that when contacted WPR denied it had presented an offer and that Banco Modal, and Abengoa declined to comment.
As previously reported, China's State Grid has shown interest in acquiring all Abengoa’s assets in Brazil, which include unfinished and already operational power transmission lines. However, the two companies have still been unable to reach an agreement.
Exame
Fed's Lockhart (moderate, non-voter): "On the fence" regarding the June meeting; too early to say how Q2 GDP will look - CNBC
- Two US jobs reports ahead of the June meeting will be key
- Would like to see more economic growth reports that are more in sync with jobs growth, would like to see inflation numbers move in the right direction
- 200K is a good round number for NFPs, would not panic if it were lower
- Brexit is a big unknown, involves a great deal of uncertainty
Fed's Kaplan (moderate, non-voter): wants firmer GDP before advocating for next rate hike - radio interview
- consumer spending is strengthening; wants to see more job market improvement
- June is a live FOMC meeting
Some Interesting FX charts: USD Index, EUR/USD, USD/CAD & USD/JPY
Short USDJPY is now the largest position in the G4, roughly $7.5bn. When markets are hit with a volatility shock, risk management is going to force you to close your largest longs and shortest shorts. If we take the Commitment of Traders report as a good measure of exposure – JPY is now the largest long, and the USD is the largest short.
From: Barry Lyss
Sent: Thursday, May 5, 2016 5:30 PM
Subject: Some Interesting FX charts: USD Index, EUR/USD, USD/CAD & USD/JPY
USD Index (93.50 last) – bull case alive above 92 support area
· The highlighted Elliot wave count on the charts suggests that we are now at the start of a wave 5 within a bigger wave 3.
· Based on the height of wave 1 of 3 the ideal target for this move is 103.23
· Based on a Fibonacci extension of 161.8% of wave 1 the target for wave 3 is 103.31
· I like the fact that we get a similar target zone of 103.23 / 103.31 based on 2 different Fibonacci extension waves.
· This view is consistent with the views on EUR/USD, GBP/USD, USD/CAD & USD/JPY.
· Given this view I will exit the long NOK/SEK trade idea at market level for 0.55% gain (long from 0.9880 exit at 0.9935)
Weekly chart
EUR/USD (1.1422 last) – bearish case persists as long as below 1.1714
· The current consolidation seems to be one that will eventually end with a downside break.
· It is hard to pick an exact level but if this is indeed a consolidation this should eventually end with a downside breakdown and the CCY pair should not take out 1.1714.
Strategy: short 1 unit from 1.1590, target 1.08 with a stop at 1.1725.
Weekly chart
USD/CAD (1.2837 last) – Bullish wedge breakout argues for a move higher
· The break out from a wedge pattern is bullish, the breakout level is 1.2730 and the target is 1.3509
· The cycle low at 1.2461 should not be taken out
Strategy: Long 0.5 unit from 1.2770, target 1.3500 with a stop at 1.2448.
Daily chart
USD/JPY (107.30 last) – Bullish case alive above 105.23-106.57
· I have been long and wrong about this move but I still believe the odds to see a move higher exist.
· The 38.2% Fibonacci retracement level of the entire 2011-2015 bull cycle stands at 106.57 AND the 200 week moving average stands at 105.23 – while above those 2 levels a move higher could still be on the cards.
Strategy: Long 1 unit from 108.1450, target 120 with a stop loss on a close below 104.80.
Weekly chart
Enel close to making offer for fiber network firm Metroweb: sources http://reut.rs/1UCtnWH
Italian utility Enel is close to presenting an offer for a controlling stake in fiber network company Metroweb as part of plans to roll out a high-speed Internet network, two sources familiar with the matter said on Thursday.
Developing a national ultra-fast broadband network is an important part of the reformist agenda of Prime Minister Matteo Renzi, who has enlisted state-controlled Enel's help to achieve the goal.
Owning Metroweb, controlled by state lender Cassa Depositi e Prestiti (CDP) and infrastructure fund F2i, would boost Enel's plans in this area because of Metroweb's assets and expertise.
Enel, Italy's biggest utility, earlier this year set up Enel Open Fiber (EOF) to manage its fiber ambitions and plans to invest 2.5 billion euros ($2.85 billion) to bring ultra fast broadband into peoples' homes using its existing power network.
"Enel is looking to buy F2i's 54 percent stake and then merge EOF with Metroweb and do a capital increase to fund broadband investments," a second source said.
The source said Enel has valued Metroweb at around 760 million euros, but the valuation could still change as the utility did not want to overpay.
"(Enel's) bid should be ready in coming days," one of the sources said.
F2i declined to comment.
The purchase would also strengthen Enel's position relative to former state telecoms monopoly Telecom Italia, which has its own plans to expand fast Internet coverage in Italy.
Telecom Italia is in parallel talks with F2i and CDP to buy Metroweb for cash and in exchange for a stake in its international wholesale unit Sparkle, sources have said.
One source said that a rival bid from Telecom Italia valued Metroweb at around 650 million euros but had the edge over Enel because of the Sparkle stake it was offering to CDP in exchange.
"It's like a game of chess," the source said.
Telecom Italia declined to comment.
CDP, which controls Italy's gas and power grid companies Snam and Terna, is keen to tighten its grip on strategic networks in the country.
If CDP were to own a slice of Sparkle this would help the government prevent it from falling into foreign hands, especially given the growing influence of French media group Vivendi as a major investor in Telecom Italia.
Sparkle is deemed strategic because its submarine network transmits information between countries in Europe, the Mediterranean and the Americas.
Two other sources familiar with the matter said a final offer from Enel for Metroweb had not yet been presented and talks were ongoing. Telecom Italia is also pushing ahead with talks over Metroweb and this could be discussed at a board meeting on May 13.
MergerMarket
London Stock Exchange’s (LSE) [LON:LSE] shareholder meeting to vote on the proposed merger with Deutsche Boerse [FRA:DB1] is most likely to be held after the UK’s 23 June referendum on EU membership, though the date has not yet been set, it is understood.
The LSE shareholder meeting may be held in around two months, it was said.
Practical measures ahead of the vote on the scheme of arrangement, such as preparing the circular, are yet to be completed, but could be finalized around the end of May, a person briefed on the matter said.
For investors, a UK exit from the EU should not make much difference to the merger case, but it would be preferable to give them visibility on the outcome of the Brexit vote, the same person briefed said.
There could be a case for holding the LSE vote before the Brexit referendum, two sources close to the situation agreed. A pre-referendum vote would “get it out of the way” given the parties have argued the merger rationale does not hang on whether the UK remains in the EU, the first source explained. On the other hand, there will be more clarity after the referendum result is known, he conceded.
As reported, sector bankers believe a “Brexit” would not hurt the LSE/Deutsche Boerse tie-up as the combined company would retain a strong presence in both London and Frankfurt.
However, the deal could face more difficulty in securing approval from Frankfurt’s regional financial regulator if the UK left the EU, this news service has reported. Exchange regulation is currently harmonized across the EU, but Brexit may alter this landscape, as reported.
LSE and Deutsche Boerse have argued that the merged entity will be well placed to benefit from either result in the referendum. The combined entity will be able to pitch itself as having access to the EU’s single market via the German operations if Brexit occurs, and sell itself as being a European champion in the event the UK remains, it was said.
ICE claims frosty reception
US exchange operator Intercontinental Exchange (ICE) [NYSE:ICE] on 4 May withdrew its indication of interest to take over LSE, saying “insufficient engagement” with LSE made it impossible to evaluate the merits of a bid.
ICE secured access to all information it was entitled to under the UK Takeover Code, the two sources close and the person briefed argued.
LSE declined to comment, while Deutsche Boerse did not reply to requests for comment.
There is no sign of any LSE shareholder backlash against the company due to ICE’s abandoned approach, the second source and the person briefed said.
LSE’s CEO Xavier Rolet has talked to the UK’s top-50 shareholders and they have not given any such negative feedback, the person said. LSE’s investors are fully aware that ICE’s approach was hostile and they were never given any indications about what ICE may have offered to trump the synergies with Deutsche Boerse, he pointed out.
ICE “didn’t come to the table” with an offer to discuss, the first source said. ICE was not immediately available for comment.
The US group would be allowed to make a new approach for LSE after six months under the Code. But ICE is viewed as unlikely to make any renewed bid attempt, the second source and the person agreed.
LSE and Deutsche Boerse will set up a “TopCo” following the LSE shareholder vote, after which ICE would have to bid for the TopCo and offer to break it up, the person said. This would be possible but technically difficult, he argued.
LSE shareholders may also take less positively to an approach at that late stage, he added.