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Telecom convert savings shares: an obstacle on the road of French Investors
Surprisingly, the board of directors met for the quarterly put to the vote the conversion project. To shareholders without voting rights is offered with one ordinary share swap, adding almost 10 cents and waiving privilege on the coupon in order to vote. Conversion may hinder the climb of the French group TLC. Pending Actions nell'afterhours
MILAN - The board of Telecom Italy met to approve the accounts of the third quarter, surprisingly put to the vote the draft conversion of savings shares into ordinary fee. The transaction, which had already been investigated several times during the management of Franco Bernabe, expected to be offered to members without voting rights of concambiare their title with one ordinary adding just under 10 euro cents and thus giving up the privilege dividend. The Stock Exchange has suspended from trading securities evening.
Telecom Italy for the operation creates value in so many ways. First, the company will collect about 600 million euro from the market; second - eliminating 166 million extra coupons related to savings shares and discounting this value to the weighted average cost of capital - the group that is to save around 2.3 billion. And so, between collection and lower costs, Telecom creates about 2.9 billion greater value of 19 billion shares (assuming full conversion of rnc in ordinary) translates to about 15 cents more per share. The transaction must be approved by the shareholders ordinary Telecom, with a two-thirds majority.
But Telecom will not only be richer, will be even bigger and with much floating, a key requirement to fit into European indices of capitalization and liquidity, hence the Italian group had been excluded when coinciding with the peak of the crisis had slipped to a market value of ordinary shares and savings of only 13 billion euro
Currently the share capital of the group consists of 13.5 billion ordinary shares and 6 billion non-convertible savings shares, thus a full conversion would have the effect to be a part of creating about 15 cents of value but on the other to dilute 31 % voting rights of existing shareholders. It is not a minor detail in a time when the company is the subject of interest of several foreign groups including the media giant Vivendi (a former partner at 20.5% of the capital) and the French entrepreneur Xavier Niel (which purchased options on 15.2% of the capital). So if the operation conversion was successful, the participation of Vivendi would drop to about 14% of the ordinary share capital of the new Telecom while for Niel you should check if this extraordinary event could trigger the clauses of early conversion options.
Elliot Capital Advisors hires Jefferies to sell UK solar portfolio
Elliott Capital Advisors, the hedge fund, and Equinox Energy Capital, a private investment firm, has hired Jefferies to advise on the sale of their 83MW UK solar portfolio, two sources have said.
The deal is in advanced stages and is expected to close by the start of 2016, both sources said. The portfolio is valued at about GBP 150m, a sector banker added.
The portfolio comprises of six operational assets: Rowles Solar Park (12.8MW) in Oxfordshire; Aspatria (18.3MW) in Cumbria; Radstone (5.2MW) in Northamptonshire; Flit Solar Park (10.5MW) in Oxfordshire; Gaultney Solar Park (21.6MW) in Northamptonshire; and Egmanton Solar Park (14.1MW) in Nottinghamshire. They were developed by Equinox Energy Capital, and joint-owned by the two firms, the first source said.
There are several buyers still in the process, and interest has mainly come from sovereign wealth funds, pension funds, and infrastructure funds, the second source said. The portfolio will definitely be sold as a whole, the second source added.
Elliot Capital Advisors and Jefferies declined to comment. Equinox did not respond to a request for comment.
Volkswagen is going to radically overhaul its structure and organization by early next year, sources have told Handelsblatt.
The company’s subsidiaries will be separated out from its core business and streamlined. Its design department, headed by Walter de Silva, which currently uses up €100 million a year, will be slimmed down. Marketing budgets will also be cut: there will be no more lavish parties on the eve of important trade fairs in Frankfurt, Geneva and China. These cuts are expected to save some €24 million.
Chief executive Matthias Müller is also expected to announce a “Strategy 2025” plan by next year that will result in a reorganization of Volkswagen’s entire passenger car business. “We will question what we do with each brand in each region,” a manager told Handelsbatt.
At the moment, Seat, Skoda, Audi and Volkswagen brands often compete with each other in the same regions. This strategy was aimed at winning more customers, but the manager said this has come at the expense of profitability, “and therefore it has to end.”
Royal Dutch Shell expected to exit portions of Arrow Energy venture following BG merger
Royal Dutch Shell [LON: RDSA, RDSB] is anticipated to exit portions of the Arrow Energy joint venture with AGL Energy [ASX: AGL] after the Australian Competition and Consumer Commission (ACCC) approves its merger with BG Group, The Australian reported. According to the report in the paper’s Dataroom the ACCC has not yet given it approval for the international mega merger, which was announced eight months ago.
The report said, without citing its source, that it is widely anticipated that Shell will divest certain assets on Australia’s east coast, once the deal is completed.
The item said that Arrow Energy’s stake in the Moranbah Gas Project in Queensland is likely to be sold. Another is likely to be ATP1103, which is owned by Arrow. The paper noted that AGL has first rights to buy ATP1103. Moranbah and ATP1103 supply gas to the Moranbah Power Station in north Queensland, the paper noted.
The paper said that the projects are likely to sell for under AUD 100m (USD 71.76m), as they operate at a loss.
The item noted that Shell may struggle to locate a buyer for the assets, due to difficult conditions in the oil and gas space.
The Australian
CWC takeover by Liberty Global could be carried out at LiLAC level
Liberty Global [LBTYA:NASDAQ] could choose to issue shares at the LiLAC [NASDAQ:LILA/LILAK] rather than parent level for its acquisition of Cable & Wireless Communications [LON:CWC], two bankers following the deal and a top minority investor said.
Liberty and CWC are in talks regarding a cash and share offer for CWC, with a PUSU deadline of 19 November. Liberty’s Latin America and Caribbean Group (LiLAC) began trading in July this year to give shareholders the opportunity to invest directly in the region.
Issuing shares in LiLAC rather than Liberty Global would give the entity welcome scale, the investor, who holds shares in both Liberty and CWC, said. However, as LiLAC trades at a lower multiple to Liberty Global, the acquisition would be more dilutive to its shareholders than if the shares were issued at parent level, the investor said.
Liberty Global plc is trading at 10.4x LTM EBITDA and Liberty LiLAC Group is trading at 8.1x LTM EBITDA, according to Dealreporter analytics.
A share issue at the LiLAC level would also limit the impact of the CWC acquisition on the prospects of a Vodafone [LON:VOD]/Liberty Global tie-up in the future, the first sector banker said. Keeping the emerging market assets operating independently from Vodafone and Liberty Global’s European portfolio would simplify any potential future discussions between the two companies, this banker said.
The exact division of cash and shares for the deal is not yet known. The investor said he did not have concerns about the ratio as yet, but noted the price is yet to be confirmed.
Talks are understood to be focused on an offer price of between 80-85p per share, as previously reported. This seems to be a full price for CWC, the first banker and investor said. The company is still in transition, having completed its acquisition of Columbus International in March this year, a third sector advisor noted.
CWC’s interim results for the first half, published today, state group revenue is up 4% on the previous year, at USD 1.2bn. The company saw a pre-tax loss due to ‘exceptional items’ including the integration of Columbus.
The acquisition holds strong rationale for Liberty Global, the two bankers said. Despite concerns about constraints on improving performance in certain countries and large minority government stake, the acquisition makes sense when the lack of alternative options is considered, the two bankers said.
CWC has presence across the Caribbean and Latin America. Peers with a similarly wide geographic scope, America Movil [NYSE:AMX] and Telefonica [NYSE:TEF], could not be acquired by Liberty Global, the bankers said. Digicel is smaller and financially viable but does not have the geographic scope Liberty wants, they said.
Liberty Global and CWC declined to comment.
Hologic rebuilds M&A team to focus on tuck-ins
Hologic (NASDAQ:HOLX), the Marlborough, Massachusetts-based healthcare and diagnostics company, has reorganized its management structure to seek bolt-on acquisitions in the surgical space, according to CEO Stephen MacMillan.
In the Q&A session on Wednesday’s 4Q15 earnings call, Goldman Sachs analyst Joel Kaufman asked how Hologic felt about the M&A landscape in the surgical space.
“I think we feel pretty good,” MacMillan said.
The CEO noted that Hologic “blew up” its acquisitions activities when he arrived at the company around two years ago. MacMillan said it now had teams in place looking on a divisional basis for opportunities.
“Surgical is clearly an area that would be a great tuck-in acquisition opportunity for us. So we've rebuilt the team there to be focused on that as well,” he added.
Later on the call, William Blair analyst Brian Weinstein asked MacMillan to confirm that the company’s first use of cash would be debt paydown, then high-yield buybacks and finally tuck-in buys.
“Very well said,” the CEO replied.
Hologic develops, manufactures and supplies diagnostic products, medical imaging systems and surgical products. Its core business units focus on diagnostics, breast health, GYN surgical and skeletal health.
A report by this news service in late August listed Hologic as one of several potential suitors for Norcross, Georgia-based Guided Therapeutics (OTCBB:GTHP). Separate earlier reports by this news service suggested Hologic, among others, as potentially interested in medical device companies Novian Health, based in Chicago, Illinois and Malvern, Pennsylvania-based Neuronetics.
Hologic’s last notable acquisition was the purchase of Gen-Probe, a California-based provider of rapid nucleic acid tests. The deal was completed in August 2012 for a total net purchase price of approximately USD 3.8bn.
Since that deal, Hologic has focused its strategic efforts on disposals. Most recently, the company sold its Sentinelle Breast and Prostate Coils product lines in September 2014 for an undisclosed sum.
MacMillan was appointed CEO in December 2013.
Goldman Sachs and Perella Weinberg Partners were used for the Gen-Probe deal, with the former having advised on multiple earlier buys. Hologic has also used JPMorgan, EY, Jefferies and Deutsche Bank in the past decade.
Brown Rudnick was used for legal matters on Gen-Probe, as well as for several previous acquisitions, according to the Mergermarket M&A database. Hologic has also used Richards Layton & Finger and Jones Day on multiple occasions each.
According to Brown Rudnick’s website, partner Philip Flink has advised Hologic in numerous matters including venture capital financings, IPO, technology spin-offs, multiple follow-on offerings and the acquisition of several companies, both public and private.
Lawrence Levy has been one of Hologic’s directors since December 2005. He retired from the position of Senior Counsel at Brown Rudnick in January 2011.
On the call, Hologic reported USD 493m in cash and net debt of USD 3.1bn at year-end, with a current leverage ratio of 3.3x net debt to EBITDA. The company has a market capitalization of USD 11.bn.