REuters - Sika managers set out opposition to Saint-Gobain takeover plans

Oct 13 More than 140 country chiefs and department heads at Swiss construction chemicals group Sika have written to Saint-Gobain Chairman and Chief Executive Pierre-Andre de Chalendar to oppose the French group's takeover plans.

Although the intervention is not likely to be decisive in a takeover saga that has landed in the courts, it underlines the hostility to the deal in the Swiss company.

"We urge you once more to reconsider your plans, which in our opinion pose great risk for both sides," the letter obtained by Reuters on Tuesday said.

A Saint-Gobain spokesman dismissed the letter.

"The Sika board of directors sees that its legal arguments are falling away brick by brick," he said, adding the French group remained open for talks.

Saint-Gobain last year agreed to buy a 16.1 percent stake from the Burkard-Schenker family that carries 52.4 percent of Sika's voting rights -- enough for control and, at 2.75 billion Swiss francs ($2.87 billion), far cheaper than buying the whole company.

The letter asked Saint-Gobain to open talks on alternatives to the plan, which is also opposed by minority shareholders including Microsoft founder Bill Gates's foundation.

ADVERTISING

The dispute is likely to be decided in court only next year, legal experts say

>>> OHL investor Societe Generale increases stake to 5.415%

OHL investor Societe Generale increases stake to 5.415%

Obrascon Huarte Lain (OHL) investor Société Générale has increased its stake in the Spanish construction group to 5.415%, Expansion reported.

The French bank has become OHL’s second-largest shareholder after acquiring a further 4.3m shares, and currently controls 5.4m shares of OHL, the unsourced Spanish-language report said.

Inmobiliaria Espacio, a unit of Grupo Villar Mir, has historically been OHL’s largest shareholder with a 59.5% stake. The hedge-fund Tyrus Capital Event has acquired pre-emptive rights over 21.78m of the new shares OHL will issue on 30 October as part of its announced capital increase transaction. The fund will control 7.3% of OHL.

OHL's share price jumped on by 3.66% Tuesday (13 October) to EUR 8.5, while subscription rights rose by 16.66% to EUR 7.02, the report noted.

OHL expects to raise EUR 999m from the capital increase. It will issue 199m shares representing 85% of its capital.

Expansion

>>> French government considering selling shares in Orange or Safran, denies pot

French government considering selling shares in Orange or Safran, denies potential divestment of ADP shares 

The government of France is understood to be considering selling shares in some listed French groups in order to raise cash, French daily Le Monde reported. The funds could be used for the recapitalisation of Areva, estimated at EUR 3bn, report noted. The government could sell shares in listed groups Safran and Orange, the report cited banks as saying.

Meanwhile, French Finance Minister Michel Sapin denied news that the government would sell shares in listed French airports operator ADP. An earlier report from Bloomberg claimed that shares in ADP, in which the government controls a 50.6% stake, could be sold. Sapin replied that the love was not in the agenda, the report hinting that the door was not entirely slammed on the subject. The report also noted that the government would have to vote a law if it wants to decrease its stake in ADP to less than 50%.

With the downturn of the world’s exchange after the summer, the investments owned by the government in listed companies has fallen by 12.1% since the beginning of the year to EUR 68.3bn, the report went on to say.

The original article appeared in print I the Economy section of Le Monde, page 3.

Le Monde

(CS) Vivendi : Initiate at Outperform - full note attached

Backing music content and Bollore
■ Investment case: Backing music content and Bollore. Our investment
thesis for Vivendi is shaped by the following considerations: (1) Global music
revenues are at an inflection point where growth in streaming music sales is
outpacing the decline in physical music sales and digital download sales. We
expect strong industry revenues to ensue and for the change in mix to have
a positive impact on margins. (2) Universal Music Group looks well
positioned to capture the growth in global music revenues given its dominant
30% share of global recorded music and exposure to Europe and the US,
which are more advanced from a streaming perspective. We see the
potential for a five-year EBITA CAGR of 11%. (3) Canal+ International is
likely to deliver strong growth from Africa and Vietnam. (4) Vivendi has €8bn
net cash on its balance sheet and we see potential upside from the company
making a value-enhancing acquisition in the media or content space in
Europe or Africa in the €1-8bn range. We expect any potential acquisition to
take up to two years and see the potential for Vivendi to return some cash to
shareholders in the short term. (5) Vivendi is good value in our view trading
on 12x FY16E EBITDA excluding cash vs the European media sector (ex
internet) on 13x FY16E EBITDA.
■ Earnings potential: We forecast +3% and +6% EBITA and +20% and +17%
EPS growth in 2015 and 2016. We are in line with consensus for 2015E and
5% and 10% above consensus for EBITA and EPS in 2016E, respectively.
Our Universal Music Group revenue forecasts are above consensus due to
stronger growth in streaming. Our higher EPS forecast is due primarily to
higher associate profits driven by Vivendi's 19.9% stake in Telecom Italia.
■ Catalysts: We expect a strong 3Q result driven by growth at UMG.
■ Valuation: Our €25 TP is based on the average of our €27 DCF valuation
(WACC 8.7%, terminal growth 3%) and €22 SOTP valuation. This implies a
12x 2016 EBITDA excluding cash vs European media peers on 13x.


(CS) European Broadcasters : Vivendi initiate as Outperform

At a pivotal structural and cyclical juncture
We address the five key structural questions facing the European
broadcast industry: (1) Will cord-cutting destroy the European pay TV
industry? (2) What will US networks and major tech companies do? (3) What is
the triple and quad play opportunity? (4) Content is king, but is this enough in a
fragmented world? (5) Are audiences reaching an inflection point for
advertisers? As structural change evolves, companies with increasing content
ownership, product differentiation and progressive businesses should
outperform. With this report, Samantha Carleton assumes coverage of the
European Broadcast industry.
Our proprietary media buyers' survey suggests the UK has the greatest
short-term cyclical upside potential: UK media buyer expectations are for
5.8% growth in 2015, 30bp above consensus, implying 0.6% EPS upside for
ITV. On a five-year view, we see Spain and Italy as having the greatest upside
to mid-cycle ad revenues, representing a €1.5bn and €2.5bn opportunity
respectively.
Stock calls: We like content plays, restructuring stories and stocks exposed to
the UK, Spain and Italy. Our key calls vs the market are Sky (we upgrade to
Outperform from Underperform), Vivendi (we initiate coverage with an
Outperform rating) and RTL (we downgrade to Underperform from Neutral). We
like ITV (Global Focus List stock), Mediaset and Mediaset España (SMID Focus
List stock), all rated Outperform, and maintain our Underperform rating on TF1.
We are Neutral on ProSiebenSat.1 and Atresmedia (downgraded from
Outperform). We also revise our target prices and models for all stocks.

>>> Europe : Brokers Upgrades & Downgrades - 14th of October 201

>>> Up
*BRENNTAG RAISED TO HOLD AT BAADER-HELVEA
*ENEL RUSSIA RAISED TO NEUTRAL VS UNDERWEIGHT AT JPMORGAN
*KERRY GROUP RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
*SAP RAISED TO BUY AT HSBC
*SGL CARBON RAISED TO BUY AT BAADER-HELVEA
*SKY RAISED TO OUTPERFORM VS UNDERPERFORM AT CREDIT SUISSE

>>> Down
*ATRESMEDIA CUT TO REDUCE VS HOLD AT KEPLER CHEUVREUX
*ATRESMEDIA CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*BARLOWORLD LTD CUT TO UNDERWEIGHT AT JPMORGAN
*COLOPLAST CUT TO REDUCE AT KEPLER CHEUVREUX
*DKSH CUT TO REDUCE AT HSBC
*EMS-CHEMIE CUT TO SELL VS NEUTRAL AT UBS
*FEDERAL GRID CO CUT TO UNDERWEIGHT AT JPMORGAN
*FSK CUT TO UNDERWEIGHT VS NEUTRAL AT JPMORGAN
*K+S CUT TO SELL VS NEUTRAL AT UBS
*LEONI CUT TO HOLD VS BUY AT DZ BANK (yesterday)
*LINDE CUT TO SELL VS NEUTRAL AT UBS
*OGK-2 CUT TO UNDERWEIGHT VS NEUTRAL AT JPMORGAN
*RTL CUT TO UNDERPERFORM VS NEUTRAL AT CREDIT SUISSE
*SOLVAY CUT TO SELL VS NEUTRAL AT UBS
*URALKALI CUT TO NEUTRAL VS BUY AT UBS

>>> PT Change


>>> Initiation
*ARCELORMITTAL RATED NEW BUY AT BERENBERG; PT EU7.5
*CA IMMO REINSTATED NEUTRAL AT GOLDMAN
*COAL OF AFRICA RATED NEW BUY AT PEEL HUNT, PT 5.5P
*JOHN LAING RATED NEW BUY AT HSBC, PT 250P
*KBC RATED NEW NEUTRAL AT CREDIT SUISSE; PT EU60.9
*KLOECKNER REINITIATED AT SELL AT BERENBERG; PT EU7
*MORGAN ADVANCED MATERIALS RATED NEW BUY AT LIBERUM; PT 340P
*SALZGITTER RATED NEW BUY AT BERENBERG; PT EU40
*SHIRE RATED NEW OUTPERFORM AT NORTHLAND, PT $288
*SSAB RATED NEW HOLD AT BERENBERG; PT SEK40
*THYSSENKRUPP RATED NEW BUY AT BERENBERG; PT EU26
*TT ELECTRONICS RATED HOLD AT LIBERUM; PT 135P
*VIVENDI RATED NEW OUTPERFORM AT CREDIT SUISSE, PT $25 (Note attached)
*VOESTALPINE RATED NEW HOLD AT BERENBERG; PT EU38
*XAAR RATED NEW HOLD AT LIBERUM; PT 550P

>>> Call
>> Stock
*VIVENDI ADDED TO GOLDMAN DIRECTORS OF RESEARCH FOCUS LIST

>>> What to look at today - 14th of October 2015

Dow-0.29% S&P-0.68 Nasdaq-0.87% Russell-1.42% VIX 17.67 (+9.28%)
US Market closed lower after disap. chinese eco data, with lower import. Ryder Syst. -9.3% after lowering guidance & JBLU -7.9% on JPM dwg. Apple (AAPL 111.79, +0.19) and Alphabet (GOOGL 683.17, +6.74) climbing 0.2% and 1.0%, respectively, while SAP (SAP 72.30, +3.85) spiked 5.6% in reaction to better than expected results. IBB -3.2%, Healthcare -1.2%...JnJ -0.65 after numbers. Volume were on the light side with less than 800mil shares traded...US After Hours ADAT +4.8%, LLTC +3.8%, CPHD -12.3%, INTC -2.7%, JPM -1.2% following earnings/guidance...SNDK +11.8% (Bloomberg reporting co is exploring a sale and has attracted interest from Micron (MU) and Western Digital (WDC); Micron higher by 2.8%), ZEN +3.6% (announced acquisition of We Are cloud SAS of Montpellier, France for $45 mln in cash...Asian equity markets are mixed as investors digest slowing inflation in China, monetary policy adjustment in Singapore, and more bad news on the US earnings front going into tomorrow's key retail sales data... China CPI missed expectations and the rate of inflation slowed after 3 straight months of increases.no speculation the figures give PBoC some scope for easing because of components of CPI. Intel and JPMorgan were down nearly 3% and 2% respectively after posting Q3 results. The former met consensus numbers but gross margins slowed, as INTC also cut its outlook for FY15 capex. JPM missed on both top and bottom line, though CET1 ratio rose 80bps. WFC, DAL, and BLK highlight the US pre-market earnings session. Nikon -5% on H1 speculation, Materials trading higehr in China, Glencore flattish...Luxury flattish too...

!!! Today pre open : BLK, DAL BAC, WFC..After Close NFLX...

Nikkei -1.9% Hnag Seng -0.78% Shanghai -0.68%

Eur$ 1.1394 CNY 6.3472 JPY 119.62 GBP 1.5277 EURCHF 1.0914 BRL 3.8934 RUB$ 62.9884 WTI $46.78

S&P -0.08% EuroStoxx-0.65% Dax-0.57% SMI-0.75%


Macro :
- VIX Charts Show How Unsettled the U.S. Stock Market Still Is
- Here’s Why the Fed Needs to Go Slow on Interest-Rate Increases
- China Sept. Consumer Prices +1.6% Y/y; Est. +1.8%


Keep an eye on :
- ABI BB : AB InBev-SABMiller Buy Lifts Takeover Risk for Asahi: SMBC Nikko --> Asahi (3333 JP) -1.8%
- AB1 GY : Air Berlin Faces Rev. Drop on Stalled Agreement: Handelsblatt
- ASML NA : ASML 4Q Sales, Gross Margin Forecast Lower Than Estimated
- BLT LN : BHP Said to Plan to Sell $3b USD Hybrid Bonds This Week: WSJ
- BMW GY : Brillinace -4.5% in HK...
- BNP FP : BNP Centralizes French Overseas Back-Offices at Merignac: Echos
- DRTY LN : Darty to Open Paris Shops on Sunday, Creating 50 Jobs: Echos
- DGE LN : Treasury Wine Agrees to Buy Diageo Wine Assets for $600 Million
- DRW3 GY : Drägerwerk Cuts Year View; Will ’Intensify’ Efficiency Program
- DWNI GY : Vonovia Offers to Buy Deutsche Wohnen in Cash, Share Deal, Vonovia Will Cancel Offer If Deutsche Wohnen Buys LEG
- EDEN FP : Edenred Interim CEO: Situation in Brazil Seen Stabilizing in 4Q
- GLEN LN : Rio Tinto CEO Says Co. Isn’t Interested in Buying Glencore: WSJ
- GS US : Goldman Role in 1MDB Deals Probed by FBI, Justice Dept.: WSJ
- IPH FP :
- ML FP : Michelin Unions Say Co. Reducing Promised Investments: Echos
- REP SM : Repsol to Maintain Dividend, Keep Gas Natural Stake: Expansion
- SAB LN : Altria May See Dividends From Beer Stake Rise to $715m: Stifel
- SOW GY : Software AG Lowers 2015 Rev. Goals, Raises Ebita Margin Target
- SYNN VX : Syngenta Withdraws EU Applications for Two GMO Products: Reuters http://reut.rs/1X0FHz0
- UHR VX : Swatch to Sell Watch With Payment Function in China

>>> Asian Update

Asian Mid-session Update: China CPI slows on lower food prices; Singapor avoids technical recession as MAS policy via SGD slope reduction


***Economic Data***
- (CN) CHINA SEPT CPI Y/Y: 1.6% V 1.8%E; Rate of CPI growth slows for the first time in 4 months
- (CN) CHINA SEPT PPI Y/Y: -5.9% V -5.9%E; (43RD MONTH OF DECLINE)
- (SG) SINGAPORE CENTRAL BANK (MAS) BI-ANNUAL POLICY STATEMENT: KEEPS SGD CURRENCY ON APPRECIATION PATH WITH BAND WIDTH AND CENTER UNCHANGED; REDUCES SLOPE - (2nd adjustment in 2015)
- (SG) SINGAPORE Q3 ADVANCED GDP Q/Q: +0.1% V -0.1%E; Y/Y: 1.4% V 1.3%E; Avoids technical recession
- (JP) JAPAN SEPT M2 MONEY STOCK Y/Y: 3.8% V 4.3%E; M3 MONEY STOCK Y/Y: 3.1% V 3.5%E
- (JP) JAPAN SEPT CGPI (PPI) M/M: -0.5% V -0.4%E; Y/Y: -3.9% V -3.9%E
- (AU) AUSTRALIA OCT WESTPAC CONSUMER CONFIDENCE INDEX: 97.8 V 93.9 PRIOR, M/M: +4.2% V -5.6% PRIOR
- (KR) SOUTH KOREA SEPT UNEMPLOYMENT RATE: 3.5% V 3.6%E; 8-month low and 3rd straight decline

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -2.0%, S&P/ASX -0.2%, Kospi -0.3%, Shanghai Composite +0.1%, Hang Seng -0.6%, Dec S&P500 flat at 1,994

***Commodities/Fixed Income***
- Dec gold +0.5% at $1,171/oz, Nov crude oil +0.4% at $46.84/brl, Dec copper +0.4% at $2.39/lb
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3408 v 6.3231 prior setting; first weaker Yuan setting since Sept 24th
- (CN) China MoF sells 10-yr bonds at 2.99% v 3.10%e
- JGB: (JP) Japan MoF sells ¥2.32T in 0.1% coupon 5-year JGB bonds; Avg yield: 0.053% v 0.067% prior; Bid-to-cover: 2.79x (lowest since 2011) v 3.49x prior

***Market Focal Points/FX***
- Asian equity markets are mixed as investors digest slowing inflation in China, monetary policy adjustment in Singapore, and more bad news on the US earnings front going into tomorrow's key retail sales data. USD majors were also volatile - USD/JPY fell about 30pips below ¥119.50 before recovering much of lost ground, AUD/USD fell for 2nd straight day about 50pips below $0.72, and NZD/USD outperformed with a 60pip rally off the lows to $0.6680. SGD strengthened after Singapore avoided a technical recession with a positive Q3 GDP, and MAS maintained strengthening pace of the currency in its semiannual policy, with USD/SGD falling some 100pips below S$1.3920.

- China CPI missed expectations and the rate of inflation slowed after 3 straight months of increases. Most of the deceleration however was behind the food component which slowed to 2.7% v 3.7% prior - Non-food inflation was little changed around 1%. China Stats bureau said the lower CPI was mainly due to high base effect in the prior year, though economist did speculate that the figures give PBoC some scope for easing.

- Singapore central bank's biannual policy statement maintained SGD currency on appreciation path with unchanged band width, but reduced the slope of appreciation for the 2nd time this year. MAS added core inflation would remain subdued in 2015 around -0.5% vs prior forecast of -0.5% to +0.5, but forecast it would rise to about 0.5-1.5% in 2016. MAS also remarked the global outlook has been softer and warned the headwinds may persist.

- Westpac decided to pass on some of the higher capital requirements to consumers, raising the variable mortgage rate by 20bps, along with announcing a capital raise. Analysts with Macquarie see the Westpac move as helping build the case for lower RBA rates next month to help offset the effect on borrowers. Accompanying the surprise decision, WBC reported prelim FY15 Net A$8.01B v A$7.56B y/y on Rev A$21.6B v A$19.9B y/y. The bank did post some encouraging metrics - CET1 capital ratio was up to 9.4% v 9.0% y/y while 90day+ delinquencies in mortgage and credit card units were down marginally. Also down under, commentary from RBNZ Gov Wheeler briefly sent NZD/USD lower as he noted additional easing seems likely and China outlook posed a key concern.

- Intel and JPMorgan were down nearly 3% and 2% respectively after posting Q3 results. The former met consensus numbers but gross margins slowed, as INTC also cut its outlook for FY15 capex. JPM missed on both top and bottom line, though CET1 ratio rose 80bps. WFC, DAL, and BLK highlight the US pre-market earnings session.

***Equities***
US equities / ADRs:
- SNDK: Said to have hired advisors to explore sale of company; +11.7% afterhours
- LLTC: Reports Q1 $0.46 v $0.46e, R$342M v $343Me; +4.0% afterhours
- JPM: Reports Q3 $1.32 (adj) v $1.38e, R$23.5B v $23.8Be; -1.7% afterhours
- UA: UA: Piper Jaffray Cuts UA to Neutral from Overweight, price target: $113; -1.3% afterhours
- INTC: Reports Q3 $0.64 v $0.59e, R$14.5B v $14.2Be; -2.8% afterhours
- CPHD: Reports Q3 prelim -$0.13 adj v -$0.26e, R$126.5M v $128Me; -14.2% afterhours

Notable movers by sector:
- Consumer discretionary: Domino's Pizza Enterprises DMP.AU +5.6% (acquisition)
- Consumer staples: Daio Paper Corp 3880.JP +3.4% (H1 result speculation)
- Financials: Greentown China 3900.HK +0.8% (YTD result); Huatai Securities Co 6886.HK -1.1% (Sept result); Westpac Banking Corp WBC.AU -0.6% (FY15 prelim result); iSelect ISU.AU +2.4% (confirms receiving acquisition proposal)
- Industrials: Zoomlion Heavy Industry Science and Technology Co 000157.CN -0.6% (profit warning); BAIC Motor Corp 1958.HK -1.7% (Q3 result); Weichai Power 2338.HK -4.8% (profit warning); AVIC Aero-Engine Controls Co 000738.CN +10.0%, AVIC Aviation Engine Corp 600893.CN +10.0% (AVIC may ends control)
- Technology: Nikon Corp 7731.JP -5.5% (H1 result speculation)
- Materials: Yunnan Salt & Chemical Industry Co 002053.CN +5.8% (profit alert); Xiamen Tungsten 600549.CN +10.0% (cuts production); Regis Resources RRL.AU +2.6% (exploration drilling result); Lynas Corp. LYC.AU +15.8% (Q1 result)

>>> Deutsche Wohnen - Receives offer to be acquired by Vonovia in cash and share

Receives offer to be acquired by Vonovia in cash and share deal valued at €9.92B 

The Management Board and Supervisory Board of Vonovia SE have decided that the Vonovia SE will offer to the shareholders of German Wohnen AG, whose par value bearer shares of the German Wohnen AG with a proportionate amount of the share capital of the German Wohnen AG of EUR 1.00 per share (ISIN: DE000A0HN5C6) by way of a voluntary takeover bid to acquire (combined cash and exchange offer).

In return for the German residential shares for conversion the Vonovia SE intends, subject to the final determination of the legal minimum price and the final provisions in the Offer Document, the 11 German Wohnen shares (i) EUR 83.14 in cash and (ii) 7 new, no-par value registered shares of the Vonovia SE with a proportionate amount of the share capital of the SE Vonovia offer of EUR 1.00 each. Subject to the registration of the capital increase for the creation of new Vonovia shares before the next Annual General Meeting of Vonovia SE will be the new shares of Vonovia SE from 1 January 2015 dividend.

Highlights:
- Offer values company at ~€9.92B based on Oct. 8 closing price, ~11% above VWAP in last three months until Oct. 8
- Says new shares in Vonovia to have div. rights as of Jan. 1, 2015
- Deutsche Wohnen holders would hold 34.4% of combined company
- Consummation of transaction is expected in early 2016
- Estimates an FFO on a stand alone basis of around €690-710M

>>> US After Hours Summary: ADAT +4.8%, LLTC +3.8%, CPHD -12

After Hours Summary: ADAT +4.8%, LLTC +3.8%, CPHD -12.3%, INTC -2.7%, JPM -1.2% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: ADAT +4.8%, LLTC +3.8%

Companies trading higher in after hours in reaction to news: SNDK +11.8% (Bloomberg reporting co is exploring a sale and has attracted interest from Micron (MU) and Western Digital (WDC); Micron higher by 2.8%), ZEN +3.6% (announced acquisition of We Are cloud SAS of Montpellier, France for $45 mln in cash; not expected to have a material impact on co's FY15 revs or non-GAAP operating loss), CQP +1.3% (Blackstone Holdings disclosed 5.5% active stake in 13D filing; may communicate with the Board / management), PJT +0.8% (Stephen A. Schwarzman (Blackstone Group) disclosed 6.6% active stake in 13D filing)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: CPHD -12.3%, HAWK -3.9%, INTC -2.7%, OZRK -1.6%, JPM -1.2%

Companies trading lower in after hours in reaction to news: HASI -5.2% (commenced a public offering of 5 mln shares of common stock), DOC -4.8% (commenced a public offering of 12.5 mln common shares of beneficial interest), BRG -2.1% (announced a public offering of its Series A Cumulative Redeemable Preferred Stock; size and terms not disclosed), DG -0.8% (announced it is restructuring its corporate support functions to eliminate approximately 255 positions; will incur a pre-tax cash expense of ~$7 mln in Q3)