FT : Heard the one about the two brewers?


When it comes to squeezing money out of a bidder, few have played hard to get as effectively as SABMiller.
The London-listed brewer of Peroni and Grolsch beers forced its Brazilian-Belgian suitor Anheuser-Busch InBev to make four different takeover proposals, and put up the price of its offer each time.

It was only after four weeks of frantic statements and counterstatements that SAB finally rolled over — this week recommending a £44-per share cash offer from its larger rival. This £68bn deal will create the world’s first super brewer, responsible for one in every three beers sold globally.
In time-honoured fashion, the language SAB and its advisers used during the four-week battle was sometimes harsh, but what the brewer said was not always what it meant.
Below, the FT’s cryptographers have decoded what SAB was really saying.
“The board will review and respond as appropriate to any proposal which might be made.”
You’re kidding, right? At that price, we aren’t even going to bother with a board meeting.
“ABInBev’s proposal very substantially undervalues our company.”
We weren’t entirely sure how much our company was worth until ABInBev showed up. Now, we’re certain it’s worth seven times the original valuation. Funnily enough, our advisers think so, too.
“This company is the crown jewel of the global beer industry.”
Don’t let on that the beardy hipsters won’t touch our watery beer any more.
“We are uniquely positioned to generate decades of standalone future volume and value growth for all our shareholders from highly attractive markets.”
We have no strategy. So we’ll just keep saying “growth”.
“We are continuing to remove duplication across markets, bringing specialist expertise in areas like procurement under one roof and standardising common processes.”
McKinsey told us to say that.
“Another key plank of our strategy is to build a globally integrated organisation to optimise resource, win in market and reduce costs.”
Yeah, all that stuff. And don’t forget “growth”. Have they bid higher yet?
“We have increased our target cost savings. . . from US$500m by 31 March 2018 to at least US$1.05bn by 2020.”
There goes the expense account.
“The statements of estimated cost savings relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies.”
And the expense account is back!
“This bid is purely opportunistic.”
Our advisers haven’t quite finished working out our defence.
“We do business in a way that improves livelihoods and helps build communities.”
Poor people in poor countries love our beer. We should be up for the Nobel.
“The Boards of AB InBev and SABMiller have reached agreement in principle on the key terms of a possible recommended offer.”
Stuff beer, where’s the champagne?

FT : Casino: poker face --> Pao de Azucar -5% again today...


Casinos need cash. Casino Guichard-Perrachon is a prime example.
The beaten-up grocer and retailer reported a much-needed bit of good news on Thursday. Same-store sales in France were up 2.4 per cent in the third quarter. They had been flat the quarter before, and negative for the three quarters before that. Casino’s shares rose 7 per cent.

It was a decent card in an otherwise scary hand. In Latin America, where the company made most of its profits last year, collapsing currencies pushed sales down by a quarter. Even after Thursdays’s pop, the shares are down a third in six months, driven down by a price war in France and economic turmoil in Latin America. Weaker Latin American sales particularly hurt group results because growth and margins are both higher there. France generates half of sales but less than a fifth of operating profit.
These issues are pressing because of Casino’s high debt. It spent $4bn on acquisitions over the past decade, and in recent years has been splashing out on reformatting its hypermarkets. The company’s net debt at the half year (which is usually higher than the full year) was 2.9 times rolling 12-month earnings before earnings, tax, amortisation and depreciation. So maintaining the company’s investment-grade credit rating is the first priority of management. Very sensible. The company hopes to generate enough free cash flow to pay down debt, starting next year.
The head of Carrefour, its French competitor, said recently that the price war had gone too far. Casino surely feels the same way. Price competition does not subside just because it hurts, however — as the experience of UK grocers shows. The sales figures in France are a hopeful sign, but certainty on improved earnings and cash flow will only come with full-year results. What will happen in Latin America is even harder for Casino to control or predict. If neither variable improves, Casino may have to cut its dividend or sell assets to keep the game going.

WSJ : Hedge Fund Investor Liongate Capital Management to Shut Down

Hedge Fund Investor Liongate Capital Management to Shut Down

Liongate’s assets have fallen to less than $500 million after investor outflows in recent years

Liongate Capital Management LLP, one of London’s best-known hedge-fund investors, which ran billions of dollars at its peak, is to shut down, according to a person familiar with the matter.

Liongate at one time managed $3.4 billion and advised clients on billions of dollars more, the person said. But its assets have fallen to less than $500 million after investor outflows in recent years, the person said.

It comes as the $3 trillion hedge fund industry struggles to make money for investors, and big name funds including Fortress Investment Group LLC and Renaissance Technologies LLC shutter funds.

A spokesman for Principal Global Investors LLC, the U.S. asset manager that bought a 55% stake in Liongate in 2013, said in an emailed statement to The Wall Street Journal that the firm has started the process of returning cash to investors and of scaling back the firm’s operations.

He said that Liongate, set up by Randall Dillard and Jeff Holland in 2003 had been subject to “a number of headwinds” from the loss of clients over the past two years. “This has placed the business under significant pressure,” he said. He added that Liongate was running $1.4 billion when Principal made its investment.

Liongate gathered a net $800 million from investors in 2008, which helped its flagship Multi-Strategy fund of funds grow to around $1.75 billion. Funds of funds such as Liongate select a range of hedge funds on behalf of investors.

Like many of its peers, Liongate suffered in recent years. The fund of hedge funds sector saw $118 billion of outflows in 2009, according to Hedge Fund Research, and further withdrawals after that, due to poor returns and questions over the extra layer of fees that such funds charge.

Investors pulled assets from Liongate following a loss of around 8% in 2011, and withdrew further assets following the departures of Mr. Dillard and Mr. Holland earlier this year. The firm has more recently been led by Tim Stumpff, the firm’s president, who previously worked at Principal.

The acquisition by Principal, which runs $346 billion in assets for retirement plans and other institutions, of a stake in Liongate in 2013 had valued the firm at around $150 million, said the person. The spokesman for Principal said the firm had never disclosed the terms of the deal but said Principal wrote-off the value of its Liongate investment late last year at $45 million.

(Les Echos) EDF veut céder au moins 10 milliards d’euros d’actifs d’ici 2020

EDF veut céder au moins 10 milliards d’euros d’actifs d’ici 2020


EXCLUSIF- Le projet de construction de deux EPR en Grande-Bretagne impose à EDF des cessions d’actifs. Parmi les activités placées sous revue stratégique, l’exploration-production de sa filiale Edison n’est pas jugée « cœur de métier ».
EDF a besoin d’argent pour financer ses investissements. Selon nos informations, l’électricien public prévoit de céder au moins 10 milliards d’euros d’actifs à l’horizon 2020. Si le programme de cession « n’est pas arrêté » indique-t-on en interne, le contexte financier d’EDF impose ce mouvement : pour ne pas maltraiter davantage son titre en bourse, EDF maintient, contre vents et marées, son objectif de générer un cash flow libre positif après dividende à l’horizon 2018. Or les contraintes s’accumulent : en reprenant la majorité de l’activité Réacteurs d’Areva, le groupe va devoir, d’ici fin 2016, débourser au moins 51 % de 2,7 milliards d’euros (un chiffre encore provisoire). Et en Grande-Bretagne, où EDF espère signer la semaine prochaine un accord commercial pour construire deux EPR, le tour de table réduit lui imposera de consolider son investissement, ce qu’il ne souhaitait pas faire. L’opération aura en outre un impact sur sa note à long terme, et donc ses conditions de financement. « Le coût total du projet équivaut à environ 12 % du total des actifs d’EDF », a rappelé l’agence de notation Moody’s dans une note récente.
Des actifs sous revue stratégique
EDF a déjà levé une partie du voile sur la nature des actifs qui pourraient être cédés : cet été, il a annoncé avoir placé sous revue stratégique ses actifs de production d’énergie à partir de combustibles fossiles en Europe continentale, ainsi que ses activités de production et de commercialisation de combustibles fossiles qui ne sont pas dans son cœur de métier. Cela peut donc recouvrir des centrales électriques comme certaines de ses activités de trading. Mais cela vise aussi, selon nos informations, l’activité exploration-production (E&P) d’Edison, sa filiale en Italie. A fin 2014, Edison disposait de 46 milliards de mètres cubes équivalents de réserves. Son principal actif étranger est le gisement de gaz d’Aboukir en Égypte. EDF a par ailleurs déjà indiqué qu’il était en quête de partenaires minoritaires pour sa filiale. Du fait de la faiblesse des prix du pétrole, la période n’est toutefois pas propice pour valoriser au mieux des actifs pétroliers.

Des partenaires pour le « grand carénage »
EDF dispose par ailleurs d’une option pour vendre sa participation dans l’américain CENG, qu’il évaluait il y a un an autour de 2 milliards d’euros. EDF détient aussi des participations minoritaires dont il voudrait se défaire, notamment au sein du suisse Alpiq, mais elles sont parfois peu liquides, ou peu valorisables. Plusieurs sources évoquent aussi désormais des réflexions sur l’entrée de partenaires dans les investissements du « grand carénage » (le programme de maintenance lourde du parc nucléaire français). L’article 336-8 du code de l’énergie prévoit que le gouvernement peut proposer « des modalités permettant d’associer les acteurs intéressés, en particulier les fournisseurs d’électricité et les consommateurs électro-intensifs, aux investissements de prolongation de la durée d’exploitation des centrales nucléaires »

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: HSC +2.1% (expects that its Q3 above the guidance ranges previously provided), YUM +1.8%, (sales in China continue to be difficult to forecast-- now estimates that China Division same-store sales for Q4 could range from 0% to 4%, with positive same-store sales growth at KFC and negative same-store sales at Pizza Hut Casual Dining; near conclusion of strategic review), WAL +1.3%, CMA +0.9%, STI +0.8%, HON +0.4% .

M&A news: SFXE +44.2% (CEO Robert F.X. Sillerman discloses a 39% active stake in 13D filing; sends letter to the Board offering to acquire all shares he doesn't already own for $3.25/share), YOKU +22.4% (Youku Tudou confirms receipt of the non-binding 'going private' proposal from Alibaba, will form special committee to evaluate the offer)

Select oil/gas related names showing strength: BP +0.6%, RDS.A +0.5%, TOT +0.5%, .

Other news: YGE +15.4% (still checking), PTCT +13.1% (reports results from its Phase 3 ACT DMD clinical trial of Translarna, with results showing clinically meaningful benefits for treated patients), DY +6.3% (still checking), NBG +4.3% (still checking), ARQL +3.8% (reports the publication of a paper detailing the pre-clinical profile of ARQ 092 and ARQ 751), TTM +1.6% (continued strength), OXY +1.4% (Reuters discusses that OXY plans to exit North Dakota with sale of oil fields for $500 mln), AFMD +1.3% (following 25% move higher yesterday), BABA +1.3% (Youku Tudou confirms receipt of the non-binding 'going private' proposal from Alibaba (BABA), will form special committee to evaluate the offer), NVO +1.3% (still checking), MBLY +1.3% (continued strength on Tesla collaboration rumors), SHPG +0.9% (still checking), WBAI +0.7% (after making notable move higher yesterday on speculation that China provinces will soon approve lottery sales), VRX +0.7% (modestly rebounding), ESPR +0.5% (following 10%+ move higher yesterday), GOLD+0.4% (Bloomberg reports that Rangold (GOLD) Congo mining deal might close by the end of this year), BIIB +0.3% (favorable commentary on Thursday's Mad Money), STX +0.2% (following 13% pullback yesterday on disappointing guidance; downgraded to Sector Weight from Overweight at Pacific Crest), UPS +0.2% (reports 2016 rate increases; ground rates and accessorial charges to increase by an average net 4.9%).

Analyst comments: LULU +0.7% (upgraded to Outperform from Neutral at Credit Suisse), DECK +0.4% (initiated with Buy at Brean), FEYE +0.3% (initiated with a Buy at DA Davidson)

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: WYNN -9.2%, EXAC -6.8%, MAT -2.4%, SYRG -1.9%, GE -1.5%, SLB -0.7%, AMD -0.5% (also signs JV with Nantong Fujitsu Microelectronics, who is paying AMD $371 mln).

WYNN casino / gaming peers are under pressure: LVS -2.9%, MGM -2.9%, MPEL -2.5%.

Select metals/mining stocks trading lower: VALE -1.2% (announces on its website that its Board approved the payment of the second installment of the 2015 dividends of $500 mln, or ~$0.097 per share),RIO -1% (reports Q3 production, global iron ore shipments were +17% y/y), ABX -1%, SLV -0.8%, GDX -0.7%, GLD -0.3%.
Other news: ZFGN -28.6% (receives verbal notice from the FDA that beloranib has been placed on partial clinical hold; patient who died was receiving beloranib), CRZO -5.4% (announces estimated q3 production and raises 2015 crude oil production growth target; Estimated Q3 crude oil production of 23,573 Bbls/d, 4% above the high-end of the guidance range; announces public offering of 5.3 mln shares of common stock; prices the upsized offer of 5.5 mln shares of its common stock for gross proceeds of ~$211.8 mln), MYCC -4% (prices secondary offering of 8,968,922 shares at $20.80 per share), SAVE -3.8% (reaffirms prior Q3 revenue guidance, increases operating margin guidance; however, prices are low, capacity growth in 2016 now expected at lower end of prior guidance range; downgraded to Equal-Weight from Overweight at Morgan Stanley), SLRC -3.7% (Solar Capital reports that Voya Financial has agreed to invest in its Senior Secured Unitranche Loan Program), RDUS -2.4% (up ~20% yesterday on Shire M&A speculation), AZN -1.9% (receives a Complete Response Letter from the FDA regarding the NDA for the investigational fixed-dose combination of saxagliptin and dapagliflozin for the treatment of adult patients with type 2 diabetes), JAH -0.7% (prices the underwritten public offering of 10 mln shares of its common stock at $49.00/share).

Analyst comments: NAV -4.2% (downgraded to Neutral from Buy at Longbow)