(Muddy- Waters) Ströer: the Pile Gets Bigger (SAX:GR)

We are unimpressed with Ströer’s response to our initial report. There seems to be a cottage industry that has grown up around responding to criticism from short activists. Accordingly, Ströer leaves major issues unaddressed, which we presume is because it has no good answers. Further, certain of its response were highly misleading.
This response to Ströer is 10 pages long, plus a 14-page appendix. It covers the following topics:
1. Historic Organic Growth Remains Overstated
2. Whether Ströer Reports Q1 Organic Growth that Exceeds Guidance is Irrelevant
3. Müller Misleads in Response to a Question on Self Dealing
4. Ströer’s Operational EBITDA Justification Does Not Hold Water
5. Ströer’s Response Strengthens Our Conviction that the Cash Flow Statement is Prepared Erroneously (and Misleadingly)
6. Ströer Appears to Contradict Itself on freeXmedia, and Strengthened Our Conviction this was an Improper Transaction
7. Müller Appears to have told an Untruth
8. “Project Zero” and Alleged Ballroom Material Misstatements
9. Ströer Confirmed that Public Video is Unusually Profitable; Yet it Offered No Explanation as to Why
10. Müller and Ströer’s Moaning is Disingenuous
11. Dirk Ströer’s Relationship to Sambara Stiftung / Müller’s Failure to Address His Irregular Series of Share Transactions
12. Dirk Ströer’s Bizarre “Temporary Retirement”
13. Former CIA Behavioral Analyst and Polygrapher Found Numerous Indicia of Deception in Ströer’s Call and Written Response

>>> Dreamworks Animation to be acquired by Comcast (CMCSA) for $41/share in cash

Dreamworks Animation to be acquired by Comcast (CMCSA) for $41/share in cash, or ~$3.8 bln (shares halted)
NBCUniversal, a division of Comcast (CMCSA) announced the acquisition of DreamWorks Animation. The studio will become part of the Universal Filmed Entertainment Group, which includes Universal Pictures, Fandango, and NBCUniversal Brand Development.
  • Under the terms of the agreement, DreamWorks Animation has an equity value of approximately $3.8 billion. DreamWorks Animation stockholders will receive $41 in cash for each share of DreamWorks Animation common stock. The agreement has been approved by the boards of directors of DreamWorks Animation and Comcast, and the controlling shareholder of DreamWorks Animation has approved the agreement by written consent.
  • Following the completion of the transaction, DreamWorks Animation CEO and co-founder Jeffrey Katzenberg will become Chairman of DreamWorks New Media, which will be comprised of the company's ownership interests in Awesomeness TV and NOVA. Katzenberg will also serve as a consultant to NBCUniversal.

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: CLF +11.1%, FB +10.9%, (also announces proposal of new class of stock), CVEO+10.4%, DLB +9.5%, EXTR +9.1%, ANIK +7.8%, PPC +6.9%, (also declares special dividend of $2.75/share), NTGR+6.8%, TTMI +6.8%, RNG +6.2%, VALE +5.9%, INUV +5.3%, YNDX +4.7%, BGC +4.1%, ASGN +3.7%, NGD +3.3%,SPRT +3.2%, CSH +3.2%, CSGP +3.1%, ELY +2.9%, INSY +2.6%, NEFF +2%, HTCH +1.9%, GG +1.9%, PYPL +1.8%,MAR +1.8%, F +1.8%, BMY +1.8%, DB +1.7%, F +1.7%, NOV +1.6%, SNDK +1.5%, TXN +1.4%, ALGT +1.3%, (also increases buyback authorization to $100 mln; increase quarterly dividend to $0.70 per share), VIV +1.3%, TOWR +1.2%, MO+1.1%, KIM +1%, CAB +1%, UPS +1%, BXLT +1%, CAKE +0.9%, LQ +0.9%

M&A news: TXTR +30% (acquired by Oracle (ORCL) for $26.00/share in cash or ~$663 mln), STJ +25.6% (Abbott (ABT) to acquire St. Jude Medical for $46.75 in cash and 0.8708 shares of Abbott common stock, representing total consideration of ~$85/share), MEMP +11.1% (Memorial Resource Development sells Memorial Production Partners GP to Memorial Production Partners (MEMP) for $750K in cash), MDVN +7.6% (receives hostile bid from Sanofi (SNY) for $52.50 per share), QLIK +4.8% (received preliminary takeover offers from various PE firms, according to Bloomberg), ALR +2.6% (ABT acquisition of STJ contemplates financing capacity to close both transactions)

Select metals/mining stocks trading higher: GFI +3.4%, SBGL +3%, HMY +2.1%, NEM +2%, AUY +1.6%, MT +1.1%,GDX +0.9%, RIO +0.9%, GLD +0.8%, AG +0.7%, ABX +0.7%

Other news: AEZS +15.5% (acquires exclusive US promotional rights for Apifiny prostate cancer blood test pursuant to a new co-marketing agreement with Armune BioScience), ADMS +8.6% (announces 'positive' top-line results from its phase 3 EASE lid 3 trial of ADS-5102; met its primary and key secondary endpoints), HBI +4.6% (approves a new share repurchase authorization for up to 40 mln shares ), ACTG +3.4% (CEO disclosed purchase of 55K shares worth total of $228.1K and Director purchased of 35K shares for $144.6K ), VRX +2.8% (expected to announce as early as Friday an overhaul of its Board of Directors, according to the WSJ), NVO +2.6% (announces top-line results from global phase 3a trial, notes that semaglutide 'significantly' reduces the risk of major adverse cardiovascular events), CATM +2% (Cardtronics to redomicile in the United Kingdom, expects adjustment from FY16 non-GAAP earnings), AMID +1.4% (announces acquisition of 66.7% interest in Okeanos pipeline, financial terms undisclosed), USCR +1.1% ( will restate its financial statements for the year ended December 31, 2015 in relation to its $24.8 million deferred tax asset )

Analyst comments: AAL +1.4% (upgraded to Overweight from Equal-Weight at Morgan Stanley)

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: GNC -24.2%, OCN -19.7%, SGI -15.7%, INFN -13.9%, OSIS -10.9%, (also authorizes additional 1 mln share buyback), DPZ -10.6%, AME -10.2%, HAR -10%, MSTR -9.5%, SYMC -9.4%, OTEX -8.6%, (also announced plans to acquire ANXeBusiness for ~$100 mln, expects earnings accretion immediately; increased dividend),PRXL -8.6%, ABT -8.3%, CAVM -8.2%, SJW -6.7%, (light volume), POT -6.6%, LOCK -6.1%, CRR -6%, BZH -5.5%, WLL-5.2%, FIX -5%, (also increases quarterly dividend to $0.07/share from $0.065/share ), LLNW -4.9%, TPX -4.6%, LYG -4.4%,RCII -4.2%, ALXN -3.8%, TS -3.7%, XLNX -3.4%, (also raises quarterly dividend 6.5% to $0.33/share ), ORLY -3.3%, MPC-3.3%, MPLX -3.2%, AR -3%, VRTX -2.7%, BKCC -2.7%, AEP -2.6%, FSLR -2.5%, (also Chief Financial Officer Mark R. Widmar has been appointed Chief Executive Officer), XL -2.4%, TER -2.3%, VAR -2.2%, TMO -2%, PF -1.7%, CELG -1.6%, BLL -1.5%,TYL -1.3%, BKFS -1.2%, CIT -1.2%, COP -1.1%

M&A news: ABT -7.7% (to acquire St. Jude Medical for $46.75 in cash and 0.8708 shares of Abbott common stock), ABBV-3.7% (to acquire Stemcentrx for ~$5.8 bln in cash & stock, updates FY16 guidance)

Other news: SGYP -1.4% (CFO Gary Sender resigns for personal reasons effective April 30, Bernard Denoyer to assume role as Principal Financial Officer as co conducts search for replacement), ARMH -1.3% (after INFN earnings), RXDX -1.1% ( commences ~$50 mln common stock offering), RXDX -1.1% (says that in the ongoing Phase 1 clinical trial of oral taladegib in patients with solid tumors, a complete response was observed in a patient with medulloblastoma), TROV -1.1% (Board member Antonius Schuh resigns, says his resignation is a result of the Board's failure to run a thorough external search process, the Board hastily appointing Bill Welch as CEO this past weekend)

Analyst comments: WLL -3.6% (downgraded to Sector Perform at RBC Capital Mkts), X -2.7% (downgraded to Underperform from Neutral at Macquarie), MANH -2.5% (downgraded to Market Perform at William Blair), CG -1.1% (downgraded to Mkt Perform from Outperform at Keefe Bruyette)

FT : UBS to revamp wealth management business to cut costs

UBS to revamp wealth management business to cut costs

UBS is planning to merge large parts of the back and middle-office functions in its wealth management business, in a move that will save the Swiss group several hundred million francs a year and will result in hundreds of job cuts in its initial stage.
Three people familiar with the plans told the Financial Times that an announcement on the restructuring of the world’s biggest wealth manager was likely to be made next Tuesday, when UBS releases its first-quarter results.

The bank may also use the results announcement to tell investors about a new approach to cost cutting across the group which is designed to end the “dysfunctional” status quo of business divisions and the company’s corporate centre battling each other on savings.
Wealth management, the mainstay of UBS since its 2012 restructuring, has been a choppy business of late, with the bank reporting a sharp fall in profits in the three months to December as market volatility and fears for global growth tamed the risk appetites of the rich.
The people close to the plans insisted that the planned changes at wealth management were about seizing a strategic opportunity, and not about responding to weakness in the division’s performance. UBS declined to comment.
Under the initial restructuring, UBS’s wealth management unit will move to common IT systems and shared support functions across the more than 50 countries it operates in. That will eliminate several hundred jobs in the back and middle office, two of the people said. The cost savings will be several hundred million francs a year, on top of UBS’s existing cost-control programmes.
In the longer term, UBS is hoping to merge some back and middle-office functions between its main wealth management division and Wealth Management Americas, building on the success of a shared Chief Investment Office. The two divisions, which have historically been siloed, may also combine their buying power to negotiate with third parties. They will remain separate commercial entities.
“We are transitioning from federations to a global wealth management . . . with one wealth management platform,” one person familiar with the strategy said, describing the move as a natural next step for UBS. The American business is the bigger of the two, with invested assets of SFr1.035tn ($1.070tn) at the end of last year versus the international division’s SFr947bn.

Wealth management is the scene of the most notable restructuring, but other parts of UBS are tightening their belts as well. The investment bank is laying off more staff than usual in its annual cull, in response to tough market conditions, a person familiar with the situation said.
The bank’s management has agreed a new “front to back” approach to costs across the group that will place more onus for cost savings on business divisions and less on the group corporate centre, a person familiar with those plans said.
“We want to go from the dysfunctional situation of ‘us versus them’, to ‘we are all in this together’,” the person said. The approach involves forging teams of front-office bankers, operations and finance staff who are charged with looking at costs from the moment the bank begins a process, to the moment it ends. UBS hopes that the “cleaner process” will identify savings that were previously obtuse.
The Swiss bank has a good reputation for cost-cutting among its European peers, with former CFO and now Deutsche Bank boss John Cryan credited with getting the lender’s cost base into shape in the aftermath of the financial crisis. It appointed a new CFO, Kirt Gardner, last year after Tom Naratil moved on to head the US wealth management business.

>>> RTRS - FINMECCANICA CEO SAYS DISCUSSING POSSIBILITY OF TAKING CONTROL OF ATR

RTRS - FINMECCANICA CEO SAYS DISCUSSING POSSIBILITY OF TAKING CONTROL OF ATR CONSORTIUM

Finmeccanica: Moretti, rifiutata nostra offerta per Avio Space
Forbice tra domanda e offerta per ora non colmabile

(Il Sole 24 Ore Radiocor Plus) - Rom, 28 apr - Trattative per Avio Space "ci sono, ci sono state. Abbiamo anche fatto un'offerta che e' risultata non soddisfacente" e la "forbice" tra domanda e offerta "al momento non e' colmabile". Lo ha detto l'amministratore delegato di Finmeccanica, Mauro Moretti, rispondendo a una azionista. Moretti ha detto che anche altre societa' hanno offerte per Avio Space "che in alcuni casi mi risultano anche inferiori alla nostra". "So che in Avio stanno pensando ad altre operazioni vedremo se riusciranno ad andare avanti", ha concluso Moretti. Avio Space, la societa' che tra le altre cose produce il piccolo lanciatore Vega, e' controllata all'81% dal fondo Cinven e partecipata al 14% da Finmeccanica.

>>> Cypress Semi beats by $0.01, reports revs in-line; guides Q2 in-line;

Cypress Semi beats by $0.01, reports revs in-line; guides Q2 in-line; acquires Broadcom's (AVGO) wireless IoT business for $550 mln; Advanced Semi Engineering (ASX) invests $60 mln, licenses Deca's FOWLP technology
  • Reports Q1 (Mar) earnings of $0.07 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.06; revenues fell 6.8% year/year to $425.2 mln vs the $425.18 mln Capital IQ Consensus; gross margin was 36.9%, above guidance but below our long-term goal, primarily because "we continue to run our wafer fabs at a rate lower than actual demand to burn off excess inventory, and because of inefficiencies in ex-Fujitsu manufacturing, which is being integrated now."
  • Co issues in-line guidance for Q2, sees EPS of $0.10-0.14, excluding non-recurring items, vs. $0.11 Capital IQ Consensus Estimate; sees Q2 revs of $440-470 mln vs. $454.42 mln Capital IQ Consensus Estimate.
  • Cypress will acquire Broadcom's (AVGO) Wireless Internet of Things (IoT) business and related assets in an all-cash transaction valued at $550 million. Cypress will acquire Broadcom's Wi-Fi, Bluetooth and Zigbee IoT product lines and intellectual property, along with its WICED brand and developer ecosystem. Broadcom's IoT business unit, which employs approximately 430 people worldwide, generated $189 million in revenue during the last twelve months. The acquisition strengthens Cypress's position in key embedded systems markets, such as automotive and industrial, and establishes it as a leader in the high-growth consumer IoT market, a segment that includes wearable electronics and home automation solutions.
  • Advanced Semiconductor Engineering (ASX) and Deca Technologies, a subsidiary of Cypress announced the signing of an agreement whereby ASE will invest $60 million in Deca and will license Deca's M-Series Fan-out Wafer-Level Packaging (FOWLP) technologies and processes. As part of the agreement, ASE and Deca will jointly develop the M-Series fan-out manufacturing process and will expand production of chip-scale packages using this technology. The technology is required for the reduced size and power consumption needed for portable Internet of Things (IoT) applications and smartphones. Deca's version of it uses autoline technology developed by SunPower to decrease cost and manufacturing cycle time.
  • CY CEO, T.J. Rodgers, will step down this week and that a search—both internal and external—would be launched to replace him. In the interim, daily operational activities will be taken over by an Office of the CEO comprised of four current Cypress EVPs: Hassane El-Khoury (EVP, Programmable Systems Division), Dana Nazarian (EVP, Memory Products Division), Joe Rauschmayer (EVP, Manufacturing) and Thad Trent (CFO). Rodgers will remain on the Cypress Board and become a project leader working on key technical projects.

>>> Cliffs Natural Resources beats by $0.91, beats on revs

Cliffs Natural Resources beats by $0.91, beats on revs
  • Reports Q1 (Mar) earnings of $0.62 per share, $0.91 better than the Capital IQ Consensus of ($0.29); revenues fell 31.4% year/year to $306 mln vs the $271.8 mln Capital IQ Consensus.
  • Maintains guidance: For 2016, Cliffs is maintaining its full-year sales volume expectation of approximately 17.5 million tons from its U.S. Iron Ore business. The Company is also maintaining its 2016 production forecast of 16 million tons of iron ore pellets. Cliffs is maintaining its cash production cost per long ton2 expectation of $50 - $55 and the cash cost of goods sold per long ton expectation of $55 - $60. The cash cost of goods sold per long ton expectation includes expected idle costs of $65 million for the full year. Cliffs anticipates depreciation, depletion and amortization to be approximately $5 per long ton for full-year 2016.
  • "The steel market in the United States has started to show consistent signs of a real recovery, with a direct positive impact on our steel clients' order books and, consequently, a totally expected improvement in our clients' appetite for the pellets we supply them. Also, the announcement of a newly adopted supply discipline going forward by the two Australian majors, followed by a similar statement coming from their Brazilian peer, has generated a more reasonable pricing environment for sinter feed fines in the international market for iron ore, which continues to be short in lump ore and pellets.