(CS) Rolls-Royce : Upgraded to Neutral

Boat rocking, questions rolling, but valuation troughing
■ Upgrade to Neutral with an 845p TP. We believe most negatives are in the
price now (with the shares underperforming the STOXX600 by -41% over 12
months), after the string of profit warnings since early 2014. The last
remaining risk we see is on Power Systems, where the guidance has been
maintained despite a lacklustre environment and a weak H1. Our 2015-16
PBIT expectations are 7-8% below consensus for this business.

(BN) Soros Hands Top Money Man Bessent $2 Billion to Start Firm (1)

Soros Hands Top Money Man Bessent $2 Billion to Start Firm (1)
2015-08-04 22:25:50.417 GMT


(Updates with new fund strategy in eight paragraph.)

By Katherine Burton
(Bloomberg) -- Scott Bessent, who’s been overseeing George
Soros’s $30 billion fortune for the last four years, will leave
at the end of 2015 to start his own hedge-fund firm.
Bessent, 52, is forming Key Square Group with a $2 billion
investment from Soros, according to a memo sent to employees of
Soros Fund Management. That will make his firm one of the
largest hedge-fund start-ups ever, even before he begins raising
money from other investors.
“Over the past four years, Scott has managed the firm’s
assets with skill and dedication,” said Robert Soros, George’s
son, in the memo. “He has decided to start his own venture
because of the constraints involved in working with a family
office structure, which prevent him from raising outside
capital.”
Bessent has spent much of his career managing money for
Soros, overseeing his European investments for about eight years
in the 1990s, and returning to the firm in late 2011. Since
then, the family office has made about $10 billion in profit
under Bessent as investment chief, or about 13 percent
annualized, according to a person familiar with the firm who
asked not to be named because it’s private.
Bessent will continue to advise the family office and
remains close to Soros and his family, the memo said. After he
leaves, the investment strategy and asset allocation will be
managed by the existing committees that Robert Soros and Bessent
put in place.

Chanos, Druckenmiller

After graduating from Yale University in 1984, Bessent did
stints at Brown Brothers Harriman & Co., Saudi Arabian holding
company Olayan Group and Jim Chanos’s Kynikos Associates before
taking a job as an analyst for Soros’s hedge fund. Soon after,
he became the fund’s London-based portfolio manager, as Soros
fired the European team that had been struggling to make money.
In 2000, Bessent decided to strike out on his own after
Soros announced he was cutting risk and two of his lieutenants,
Stan Druckenmiller and Nick Roditi, left the firm. He raised $1
billion for Bessent Capital Management, which ran a global and a
European stock fund. At the time, about $150 million came from
Soros.
Bessent was in the process of forming a macro fund when he
was recruited by Soros’s family office in September 2011. His
new fund will also try to profit from macroeconomic trends.
Bessent didn’t return a call seeking a comment.
Jack Meyer, the former head of Harvard University’s
endowment, holds the record for the largest hedge-fund startup
when he opened Convexity Capital Management with more than $6
billion in 2006. Druckenmiller’s former colleagues at Duquesne
Capital Management opened their PointState Capital with $5
billion in 2011.

For Related News and Information:
Ex-Soros Trader Bessent Returns to $25 Billion Firm as CIO
Soros Said to Make $1 Billion Since November Betting Against Yen
Janus Says Soros’s Quantum Invests $500 Million With Gross
Bloomberg Active Indexes for Funds: BAIF <GO>

To contact the reporter on this story:
Katherine Burton in New York at +1-212-617-2335 or
kburton@bloomberg.net
To contact the editors responsible for this story:
Christian Baumgaertel at +1-617-210-4624 or
cbaumgaertel@bloomberg.net
Pierre Paulden

>>> What to look at today - 5th of August 2015

Dow-0.27% S&P-0.22% Nasdaq-0.19% Russell-0.23% VIX 13
US Market close lower for a 3rd day in a row. Technology weighted on market, AAPL -3.2%, S&P 500 marked a session low during afternoon action after Atlanta Fed President and FOMC voting member Dennis Lockhart said that, barring significant deterioration in economic data, the economy will be ready for a rate hike in September, but market recovered quickly. energy sector (-0.5%) struggled even as crude oil rose 1.1% to $45.76/bbl. Similarly, telecom services (-0.5%) and utilities (-1.7%). Volume were in line with average at 790mil shares...US After Hours RATE +29.3%, Z +14.2%, ECOM +13.4%, FSLR +7%, ETSY -13.7%, DIS -5.9% following earnings/guidance...ARRY +7.4% on positive comments from Jim Cramer...SYT +2.2% after CNBC comments on negociations, Reuters denied any talks after...OHGI, DRAM, ROIC, AEL, MPW, PCG, RSPP..lower on announce of secondaries...Asian markets are trading mixed as heavy tone from late US session carries over into regional indices. Hawkish comments from a typically moderate FOMC voter Lockhart suggesting it may be appropriate to start tightening next month weighed on stocks and metals, while sending the greenback sharply higher. USD/JPY and EUR/USD consolidated USD gains around 124.40 and 1.0870 respectively...Shanghai Composite is the worst performer, falling well over 2% and at its lows going into its midday break...IMF has postponed its decision on SDR basket inclusion until Oct 2016 on concerns about Yuan as a potential reserve currency. IMF official said a "key focus of the review will be the determination on whether the RMB is a freely usable currency. July services PMI were also mixed, with multi-month highs in China Caixin print, ongoing contraction in Hong Kong, and a retreat in Japan. China PMI was underscored by "acceleration of new orders, stronger underlying client demand and new customer wins led to increased new work at service providers.". Japan's PMI remained in expansion but fell to a 4-month low amid "marginal" rate of job creation.

Nikkei +0.67% Hang Seng +0.17% Shanghai -2.10%

Eur$ 1.0871 JPY 124.33 GBP 1.5544 EURCHF 1.0633 RUB $63.1248 WTI $46.09 (+0.77%)

S&P +0.14% EuroStoxx+0.28% Dax+0.27% SMI+0.48%

Macro :
- Nikkei Japan July Composite PMI Unchanged at 51.5 From June
- IMF Says More Work Needed on Yuan Reserve-Currency Decision
- Soros Hands Top Money Man Bessent $2 Billion to Start Firm (1)

Keep an eye on :
- AIR FP : Airbus Backs Plan for ANA to Invest in Skymark, Nikkei Says
- BMW GY : BMW Supervisory Board to Vote on Adding 3 New Electric Cars: HB
- CRG IM : Banca Carige 1H EU16.7m vs Loss EU45.5m Y/y
- ELG GY : Elmos Semiconductor 2Q Rev. Rises 5%; Ebit Down 19%; Keeps Goals
- ZIL2 GY : ElringKlinger 2Q Organic Growth 4.5%, Order Backlog Reaches High
- FER SM : Ferrovial Says Portman Sells Stake in Company to Its Partners
- GBB FP : Bourbon 2Q Revenue EU345.1m Rises 7% vs Year Ago
- KU2 GY : Kuka 2Q Revenue Above Estimates, Raises 2015 Sales Forecast
- LUPE SS : Lundin Petroleum 2Q Sales Miss Est., Cuts Production Guidance
- MB IM : Mediobanca Fiscal 4Q Net Income EU124.2m, Est. EU131.5m
- MB IM : Mediobanca Agrees to Buy 51% of Cairn Capital From RBS: FT
- MSK IM : Moleskine Sees 2015 Rev., Ebitda at High End of Guidance
- NN NA : NN Group 2Q Operating Result Ongoing Business Up 90% to EU488m
- SFL IM : Safilo 2Q Sales In Line With Ests., Ebitda Misses
- SHP LN : Shire CEO Ornskov: Nothing Preemptive About Offer for Baxalta
- SHP LN : Baxalta Sees Shire Combo as Disruptive, Lacking Synergies
- GLE FP : SocGen 2Q Net Income Beats Estimates; CET1 Ratio 10.4%, Oudea Says ‘Very Positive’ on Investment Bank Outlook
- SYNN VX : Monsanto, Syngenta Not Holding Any Deal Negotiations: Reuters --> Link : http://reut.rs/1IoMGc6
- TIT IM : Telecom Italia Said to Weigh Revamp to Avoid $4.4 Billion Costs
- TIT IM : Telecom Italia to Announce Mediaset Content Deal Today: Sole
- VOE AV : Voestalpine 1Q Adj. Ebit Rises to EU237m on Europe, U.S.

>>> Europe : Brokers Upgrades & Downgrades - 5th of August 2015

>>> Up
*BHP BILLITON RAISED TO HOLD VS SELL AT LIBERUM
*CINEWORLD RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*FUCHS PETROLUB RAISED TO HOLD VS REDUCE AT KEPLER CHEUVREUX
*GLENCORE RAISED TO HOLD VS SELL AT LIBERUM
*RIO TINTO RAISED TO HOLD VS SELL AT LIBERUM
*ROLLS-ROYCE RAISED TO NEUTRAL VS UNDERPERFORM AT CREDIT SUISSE
*TEVA RAISED TO HOLD VS SELL AT BERENBERG

>>> Down
*BHP UPGRADED TO HOLD AT LIBERUM
*CREDIT AGRICOLE CUT TO UNDERWEIGHT VS NEUTRAL AT JPMORGAN
*DEUTZ CUT TO HOLD AT HSBC
*MELROSE CUT TO HOLD VS ADD AT NUMIS
*PRYSMIAN CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS (Note Attached)
*RIO UPGRADED TO HOLD AT LIBERUM
*SCA RAISED TO HOLD VS SELL AT SOCGEN
*THOMAS COOK CUT TO SELL VS HOLD AT BERENBERG
*TRAVIS PERKINS CUT TO NEUTRAL VS BUY AT CITI

>>> PT Change


>>> Initiation
*EUROPCAR RATED NEW EQUALWEIGHT AT MORGAN STANLEY, PT EU14
*EUROPCAR RATED NEW BUY AT GOLDMAN

>>> Call
>> Stock
*DANONE REMOVED FROM CITI FOCUS LIST EUROPE
*HEINEKEN ADDED TO CITI FOCUS LIST EUROPE
*HUNTING REMOVED FROM GOLDMAN CONVICTION BUY LIST, STAYS BUY
*SHIRE REMOVED FROM CITI FOCUS LIST EUROPE

>>> Asian Update

Asian Mid-session Update: Offshore Yuan falls after reports the IMF will postpone decision on SDR basket; Services PMIs come in mixed


***Economic Data***
- (CN) CHINA JULY CAIXIN SERVICES PMI: 53.8 (11-month high) V 51.8 PRIOR; COMPOSITE PMI: 50.2 V 50.6 PRIOR
- (HK) HONG KONG JULY NIKKEI PMI: 48.2 V 49.2 PRIOR (5th consecutive month of contraction)
- (JP) JAPAN JULY NIKKEI SERVICES PMI: 51.2 (4-month low) V 51.8 PRIOR; COMPOSITE PMI 51.5 V 51.5 PRIOR
- (AU) AUSTRALIA JULY AIG PERF OF SERVICES INDEX: 54.1 V 51.2 PRIOR (2nd month of expansion; highest since Feb 2014)
- (NZ) NEW ZEALAND Q2 EMPLOYMENT CHANGE Q/Q: 0.3% (2-year low) V 0.5%E; Y/Y: 3.0% V 3.4%E
- (NZ) NEW ZEALAND Q2 UNEMPLOYMENT RATE: 5.9% (5-quarter high) V 5.9%E; PARTICIPATION RATE 69.3% (3-month low) V 69.6%E
- (PH) Philippines July CPI M/M: 0.1% v 0.2%E; Y/Y: 0.8% v 0.8%E; CPI Core Y/Y: 1.9% v 1.9%E
- (KR) South Korea July Foreign Reserves: $370.8B v $374.8B prior
- (UK) UK JULY BRC SHOP PRICE INDEX Y/Y: -1.4% V -1.3% PRIOR; 27th straight decline

***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.7%, S&P/ASX -0.5%, Kospi flat, Shanghai Composite -1.3%, Hang Seng +0.3%, Sept S&P500 +0.2% at 2,087

***Commodities/Fixed Income***
- Dec gold -0.5% at $1,085/oz, Sept crude oil +0.4% at $45.92/brl, Sept copper -0.7% at $2.35/lb
- (US) API Petroleum Inventories: Crude -2.4M v -1.5Me (2nd straight draw)
- (CN) China MOF sells 10-yr bonds, avg yield 3.446%
- USD/CNY: PBoC sets yuan mid point at 6.1186 v 6.1177 prior setting (weakest Yuan setting since July 21st)
- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥425B in 3-5yr JGBs, and ¥400B in 5-10yr JGBs
- (AU) Australia MoF (AOFM) sells Bonds; avg yield: 2.7166%; bid-to-cover: 2.42x

***Market Focal Points/FX***
- Asian markets are trading mixed as heavy tone from late US session carries over into regional indices. Hawkish comments from a typically moderate FOMC voter Lockhart suggesting it may be appropriate to start tightening next month weighed on stocks and metals, while sending the greenback sharply higher. USD/JPY and EUR/USD consolidated USD gains around 124.40 and 1.0870 respectively.

- Shanghai Composite is the worst performer, falling well over 1% and at its lows going into its midday break. Recall overnight the index rallied over 3%, ending the day on its highs. Offshore Yuan weakened by nearly 1% at one point, rising above 6.2250 after press reports suggested the IMF has postponed its decision on SDR basket inclusion until Oct 2016 on concerns about Yuan as a potential reserve currency. IMF official said a "key focus of the review will be the determination on whether the RMB is a freely usable currency... Significant work remains outstanding to inform the Board's determination with regard to the RMB's inclusion in the SDR basket." In other notable Chinese press, CREIC speculated it would be challenging for the property market to recover, adding Tier 3 and 4 cities will be especially vulnerable during the adjustment period. Separate report suggested policymakers could further loosen policy for property market to stimulate sales, leading to some stabilization in prices.

- July services PMI were also mixed, with multi-month highs in China Caixin print, ongoing contraction in Hong Kong, and a retreat in Japan. China PMI was underscored by "acceleration of new orders, stronger underlying client demand and new customer wins led to increased new work at service providers." Employment component in China was also notably improved, with rate of hiring picking up since June. Hong Kong PMI was in contraction for 5th month, and Markit estimated that "latest PMI reading is consistent with an annual rate of economic growth of only 1.3%, down from an average pace of 1.5% signaled for the second quarter." Japan's PMI remained in expansion but fell to a 4-month low amid "marginal" rate of job creation.

- NZD/USD fell over 20pips below 0.6530 after the release of softer than expected labor data. Employment change slowed to a 2-year low, while jobless rate rose to a 1-year high. NZD was already under pressure after another poor Global Dairy Trade auction result in US hours, showing prices fell for the 10th straight time to their lowest levels since 2002.

***Equities***
US equities / ADRs:
- USNA: Reports Q2 $1.92 v $1.71e, R$233.2M v $219Me; +15.1% afterhours
- Z: Reports Q2 -$0.01 (adj) v -$0.21e, R$171.3M v $169Me; +14.7% afterhours
- FSLR: Reports Q2 $0.93 (GAAP) v $0.42e, R$896M v $769Me; +7.8% afterhours
- ATVI: Reports Q2 $0.14 v $0.09e, R$759M v $680Me; +6.7% afterhours
- LC: Reports Q2 $0.03 v $0.01e, R$96.1M v $89.7Me; +5.6% afterhours
- CERN: Reports Q2 $0.52 v $0.52e, R$1.13B v $1.20Be; -3.6% afterhours
- DIS: Reports Q3 $1.45 v $1.39e, R$13.1B v $13.2Be; -6.2% afterhours
- TRMB: Reports Q2 $0.28 v $0.27e, R$586M v $590Me; -13.4% afterhours

Notable movers by sector:
- Consumer discretionary: MGM China 2282.HK +5.3% (H1 result); Fast Retailing Co Ltd 9983.JP -4.0% (July Japan Uniqlo SSS); Skilled Group SKE.AU +4.8% (FY15 result)
- Financials: Huayuan Property Co 600743.CN -2.4% (H1 result); Greattown Holdings 600094.CN -10.0% (H1 result); China Everbright Bank Co 601818.CN -0.2% (lower margin lending leverage); Huatai Securities Co 6886.HK -0.9%, CITIC Securities 600030.CN -1.0%, Huatai Securities Co 601688.CN -1.7% (suspend short selling business)
- Industrials: China Railway Construction Corp 1186.HK +1.8% (awarded contract); Toyota Motor Corp 7203.JP -2.1% (Q1 result)
- Technology: Guangdong East Power Co 300376.CN +9.4% (H1 result)
- Materials: Fortescue Metals FMG.AU +8.6% (China investment speculation); Asia Cement China Holdings 743.HK -0.9% (H1 result); Sojitz 2768.JP -1.4% (Q1 result); Mitsubishi Corp 8058.JP -0.6% (Q1 result); Itochu Corp 8001.JP +5.1% (Q1 result); Anhui Conch Cement 600585.CN +4.8% (China to support infrastructure)
- Energy: Shunfeng Photovoltaic International 1165.HK -6.3% (H1 guidance); Idemitsu Kosan Co 5019.JP -7.1% (Q1 result)
- Telecom: Hutchison Telecom Hong Kong 215.HK +3.3% (H1 result)
- Healthcare: Huadong Medicine Co Ltd 000963.CN +5.3% (private placement)

Reuters : Syngenta and Monsanto not in deal talks: sources

Earlier : CNBC reported co and Monsanto (MON) were close to reaching an agreement on a deal price; Paulson & Co reported to have taken a stake in the company


http://reut.rs/1IoMGc6


Monsanto Co (MON.N) and Syngenta AG (SYNN.VX) are not holding any deal negotiations at this time, let alone discussions about a price for Monsanto’s proposed takeover of its Swiss rival, sources familiar with both companies told Reuters on Tuesday.

A CNBC report earlier in the day, citing an unnamed source, said that at least one major investor, hedge fund manager John Paulson, believes the two agricultural firms "continue to be in deal talks and aren't far apart on price."

U.S.-traded Syngenta shares rose 3.7 percent in after-hours trading after the CNBC report.
Monsanto told Reuters that no deal talks are taking place, but said it has continued to hold out an invitation to Syngenta.

"We welcome and encourage Syngenta to engage in a direct, private dialogue with Monsanto, which has not happened to date," said Sara Miller, a spokeswoman for Monsanto.
Executives and other representatives from the two companies did meet earlier in the year to discuss Monsanto's unsolicited $45 billion offer.

Representatives from Syngenta declined to comment Tuesday.
Paulson did not respond to a request for comment.

>>> US After Hours Summary: RATE +29.3%, Z +14.2%, ECOM +13.4%,

After Hours Summary: RATE +29.3%, Z +14.2%, ECOM +13.4%, FSLR +7%, ETSY -13.7%, DIS -5.9% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: RATE +29.3%, RLOC +15.6%, USNA +15.5%, Z +14.2%, ECOM +13.4%, ZEN +12.5%, CHUY +12.3%, ACLS +9.8%, PLPM +8.1%, ZAGG +8%, OCLR +7.5%, AWAY +7.5%, FSLR +7%, PAYC +6.9%, MB +6.8%, SMCI +6.6%, ATVI +6.5%, AMSG +5.8%, LC +5.2%, REXX +5.1%, ENPH +4.6%, CDE +4.5%, AHS +4.2%, RMTI +4%, XXIA +3.9%, EYES +3.2%, TSE +3.1%, COKE +3%, SYNC +2.5%, OAS +2%

Companies trading higher in after hours in reaction to news: ARRY +7.4% (mentioned positively by Jim Cramer), ATEN +6.9% (disclosed that on June 5, 2015, Founder and CEO Lee Chen entered into a written stock trading plan in accordance with Rule 10b5-1 to purchase up to an aggregate of $2 mln of common stock), ADAT +4.6% (disclosed it will explore strategic and financial alternatives in an effort to enhance shareholder value), AAC +3.1% (Chairman and CEO Michael Cartwright disclosed the purchase of 16.66k shares for ~$343k; Director Darrell Freeman purchases 15k shares for $331k), SYT +2.2% (CNBC reporting co and Monsanto (MON) are close to reaching an agreement on a deal price; Paulson & Co reported to have taken a stake in the company), CHK +1.6% (mentioned positively in WSJ article), PLUG +1.1% (Axane S.A. (L'Aire Liquide) disclosed 5.64% active stake in 13D filing)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: ETSY -13.7%, BOOT -13.3%, TRMB -12.9%, GLUU -10.4%, GEVO -9.2%, FWM -8.3%, LNTH -7.7%, ABCO -7.3%, GNW -6%, DIS -5.9%, PZZA -5.8%, LF -5%, PBPB -4.5%, EOX -4.5%, NYMT -4%, DWA -3.5%, CERN -3.3%, CZR -2.6%, GDOT -2.5%, TWO -2.3%, TRIV -2%, MHLD -1.9%, EPAM -1.4%, RXN -1%, CSU -0.4%, UNXL -0.4%

Companies trading lower in after hours in reaction to news: OHGI -20.0% (priced $3 mln public offering of common stock and warrants), DRAM -3.8% (disclosed the sale of 500K shares of common stock at $1.00/share in a private placement; appoints Anthony Lougee as CFO), ROIC -3.6% (to offer 4.5 mln shares of common stock in an underwritten public offering), AEL -2.0% (announced an offering of 8.6 mln shares of common stock), MPW -2.0% (announced a 43.75 mln share public offering of common stock), PCG -1.7% (announced a 6.8 mln share public offering of common stock), RSPP -1.4% (commenced an underwritten public offering of 6 mln shares of its common stock), EXP -1.3% (disclosed it and an employee received grand jury subpoenas seeking information regarding an investigation of the gypsum drywall industry by the DOJ), 

>>> US Close Dow-0.27% S&P-0.22% Nasdaq-0.19% Russell-0.23%

Closing Market Summary: S&P 500 Logs Third Consecutive Decline as Technology Weighs

The stock market registered its third consecutive decline on Tuesday with the S&P 500 shedding 0.2% while the Dow Jones Industrial Average (-0.3%) underperformed.

Equity indices spent the first half of the trading day near their flat lines with the S&P 500 bouncing inside a six-point range. The benchmark index made a brief appearance in the green, but could not build on that momentary gain as the top-weighted technology sector (-0.7%) weighed. Specifically, Apple (AAPL 114.64, -3.80) was down as much as 4.4% in the early going, which kept a lid on the market. The tech heavyweight narrowed its loss to 3.2% by the close, ending near levels last seen in late January.

Similar to Apple, most large cap tech components registered losses while chipmakers also underperformed with the PHLX Semiconductor Index falling 1.1%. Including today's decline, the SOX index is down 7.2% in 2015.

Unlike technology, most other cyclical sectors traded in the green early on, but their gains faded during the afternoon. The S&P 500 marked a session low during afternoon action after Atlanta Fed President and FOMC voting member Dennis Lockhart said that, barring significant deterioration in economic data, the economy will be ready for a rate hike in September. The stock market recovered rather quickly from the move that occurred after Mr. Lockhart's comments while Treasuries settled near their lows with the 10-yr yield rising six basis points to 2.21%. On a related note, the Dollar Index (97.91, +0.41) charged to a fresh high, climbing 0.4%. The USD/CAD pair was in focus as continued weakness in the Canadian dollar drove the pair to a fresh 11-year high.

Although the S&P 500 returned to its intraday range, it could not push into the green as only two sectors—consumer discretionary (+0.3%) and materials (+0.4%)—registered gains. The discretionary sector was underpinned by retailers, evidenced by a 0.7% gain in SPDR S&P Retail ETF (XRT 97.89, +0.67). On the earnings front, Coach (COH 31.40, +0.97) spiked 3.2% after beating earnings and revenue estimates.

On the downside, the energy sector (-0.5%) struggled even as crude oil rose 1.1% to $45.76/bbl. Similarly, telecom services (-0.5%) and utilities (-1.7%) ended the day behind the broader market. The utilities sector ended at the bottom of the leaderboard, snapping its seven-day streak as higher market rates took some shine of the high-yielding sector.

Today's participation was in-line with average as roughly 790 million shares changed hands at the NYSE floor.

Economic data was limited to the Factory Orders report for June, which increased an in-line 1.8%. Durable goods orders increased 3.4% in June, which was unrevised from the advance durable goods report. These orders declined 2.3% in May.

As the advance report already showed, a majority of the increase in orders was the result of a 56.0% increase in defense and nondefense aircraft orders. Excluding transportation, durable goods orders were revised down from a 0.8% gain in the advance report to an increase of 0.6%.

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while ADP Employment Change for July (consensus 220K) will be announced at 8:15 ET. The Trade Balance for June (consensus -$42.70 billion) will cross the wires at 8:30 ET while the ISM Services Index for July (expected 56.3) will be reported at 10:00 ET.
  • Nasdaq Composite +7.8% YTD 
  • S&P 500 +1.7% YTD 
  • Russell 2000 +1.9% YTD 
  • Dow Jones Industrial Average -1.5% YTD

(BN) New Pharma Giant Already in Play as Shire Takes Aim: Real M&A

New Pharma Giant Already in Play as Shire Takes Aim: Real M&A
2015-08-04 16:02:31.833 GMT


(For a Real M&A column news alert: {SALT REALMNA <GO>}.)

By Tara Lachapelle
(Bloomberg) -- Shire Plc makes $30 billion bid for -- wait,
what’s Baxalta?
That was probably the reaction most had to Shire’s
announcement Tuesday because Baxalta Inc. is technically only
one month old. It’s the drug division that was spun off from
medical-products maker Baxter International Inc. in July. It
could now end up being the shortest-lived pharmaceutical giant.
Shire, emerging as a major dealmaker in the industry,
wasted no time, and its pursuit of Baxalta probably won’t end
here. The $50 billion company said it made its all-stock bid
public after Baxalta’s leadership wasn’t willing to engage in
merger talks.
“It was quite a quick bid,” said Jonathan Morgan, an
analyst for The Edge, a research firm that analyzes spinoffs and
special situations. “We think there’s going to be a little bit
of back and forth, and we’ll have to see how this plays out.”
It’s understandable that Baxalta would want to see how its
brand-new stock performs. Health-care spinoffs tend to do better
than those in any other industry, delivering an average return
of 45 percent in the first year after the separation, according
to a study by The Edge and Deloitte.
Even so, analysts were forecasting that Baxalta shares
would trade for only about $36 apiece in a year. That’s only 16
percent higher than its closing price on its first day of
trading.
Shire’s offer was worth $45.23 a share upon announcement,
and about $42 even after the Dublin-based suitor’s American
depositary receipts slid Tuesday.

Shire Suitors

Shire itself has been considered a target for Allergan Plc
or Pfizer Inc., and the company’s bid for Baxalta could be a way
to fend off suitors. That said, a purchase of Baxalta could just
make Shire an even juicier prize.
Baxalta’s shares are surging, a sign its shareholders like
what they see even if management doesn’t. Shire, which is
increasingly focused on rare-disease treatments, is tempting
them with a fair premium, cost savings and a low tax base.
The hurdle will be Baxalta’s staggered board structure,
which makes an overhaul more difficult.
Shire is also constrained in how it can improve its offer,
should it need to. The bid is currently structured as all stock
to avoid incurring taxes related to Baxalta’s spinoff, which
wasn’t taxed at the time. Therefore, Shire -- or any other
bidder -- probably couldn’t sweeten its offer by adding cash,
which investors usually prefer.
Valeant Pharmaceuticals International Inc.’s long, drawn-
out chase of Allergan last year kept investors busy. In the end,
Valeant didn’t win, but Allergan still got bought. Could this be
the sequel?

For Related News and Information:
Shire Seeks to Cajole Baxalta Into Talks With $30 Billion Offer
The $100 Billion Deal Is Still Out There for Pharma: Real M&A
Shire Hunt for Next Target Spotlights PTC to Synageva: Real M&A
Real M&A columns: NI REALMNA <GO>
Top deal stories: DTOP <GO>

To contact the reporter on this story:
Tara Lachapelle in New York at +1-212-617-8911 or
tlachapelle@bloomberg.net
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Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Crayton Harrison