>>> Up
*AKZO NOBEL RAISED TO BUY VS NEUTRAL AT CITI {NSN NW59VI6S972N<Go>}
*ALLIANZ RAISED TO OVERWEIGHT VS UNDERWEIGHT AT JPMORGAN
*GLAXOSMITHKLINE RAISED TO NEUTRAL VS UNDERWEIGHT AT JPMORGAN
*H&M RAISED TO BUY VS NEUTRAL AT CITI
*JUPITER RAISED TO OUTPERFORM AT RBC CAPITAL
*LADBROKES RAISED TO NEUTRAL VS SELL AT CITI {NSN NW59XI6S972B<Go>}
*SMITHS GROUP RAISED TO NEUTRAL VS SELL AT UBS
*STANCHART RAISED TO MARKET PERFORM AT KEEFE BRUYETTE
*TELE COLUMBUS RAISED TO BUY VS HOLD AT BANKHAUS LAMPE
>>> Down
*ASSOCIATED BRITISH FOODS CUT TO NEUTRAL VS BUY AT CITI
*AXA CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*DRILLISCH CUT TO NEUTRAL VS BUY AT GOLDMAN
*EQUITY BANK CUT TO HOLD VS BUY AT RENAISSANCE
*FENNER CUT TO SELL VS NEUTRAL AT UBS
*IMI CUT TO NEUTRAL VS BUY AT UBS
*KPN CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE (note attached)
*LEONI CUT TO NEUTRAL AT JPMORGAN
*PIRELLI CUT TO NEUTRAL AT CREDIT SUISSE (note attached)
*PGNIG CUT TO SELL VS HOLD AT SOCGEN
*SUBSEA 7 CUT TO UNDERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*SINGULUS CUT TO REDUCE VS NEUTRAL AT ODDO SEYDLER BANK
>>> PT change
>>> Initiation
*SOPHOS RATED NEW BUY AT LIBERUM; PT 290P
>>> Call
>> Stock
*HOCHTIEF REMOVED FROM BANKHAUS LAMPE’S ALPHA LIST
*AAREAL BANK ADDED TO ALPHA LIST AT BANKHAUS LAMPE
*Credit Suisse - European Top Picks - note attached
>> Sector
*Goldman update on Cement - Note attached
*French Telco Preview - DB - Note attached
*Oiul&Gas - exane update - -note attached
Dow+0.28% S&P+0.08% Nasdaq+0.17% Russell-0.13% VIX 16.33 (-4.39%)
Us Market closed slightly higher, with bond mafrket closed for Colombus day. volume were below average with only 700mil shares traded. commodity-sensitive energy (-1.1%) and materials (-0.9%) underperformed throughout the session. energy sector finished at the bottom of the leaderboard, narrowing its October gain to 10.9% while crude oil surrendered 5.2% to settle at $47.19/bbl. Similar to the sector, WTI crude continues holding a solid month-to-date gain (+4.7%) despite today's dive. Apple (AAPL 111.58, -0.54), Microsoft (MSFT 47.00, -0.11), Alphabet (GOOGL 676.43, +5.19), and Facebook (FB 94.26, +1.02) traded in mixed fashion while EMC (EMC 28.35, +0.49) spiked 1.8% after agreeing to be acquired by Dell for $67 billion in cash and stock. LLY -7.8% after the company halted the development of a cholesterol drug. US After Hours FMC -9.4% (Cuts FY16 EPS $2.35-2.45 v $3.08e (guided $3.00-3.30 prior) due to rapid devaluation of BRL; Guides Q3 $0.38 v $0.66e; To cut 800-850 jobs), R -7.5% following earnings/guidance, FIG -5.3% on Macro Fund Closing..Asian equities are down across the board as risk off sentiment resurfaced in all asset classes, today's mixed China trade report has done little to support more substantial gains. In Japan, Nikkei225 returned with a near 1% slide after yesterday's holiday, tracking firmer JPY. China Customs Bureau released Sept trade data showing a 7-month high on terms of trade, but 3rd and 11th respective continued declines in exports and imports. Shipments to US rose, but those to Europe were down marginally and Japan fell by nearly 5% - in line with projections. Imports of iron ore and crude oil were up just over 1%. PBoC researcher said there's still concern over falling demand in real economy, with weak demand in credit market severely affecting lending.
Nikkei -1.1% Hang Seng -0.43% Shanghai -0.28%
Eur$ 1.1370 CNY 6.3352 JPY 119.87 GBP 1.5319 EURCHF 1.0947 BRL 3.7633 RUB$ 62.27 WTI $47.43 (+0.7%)
S&P -0.15% EuroStoxx-0.4% Dax-0.38% SMI+0.07%
Macro :
- China Sept. Retail Auto Sales Rise 2.5% on Year, PCA Says
- China’s Sept. Exports Fall 3.7% Y/y in Dollar; Est. 6% Fall
- ECB Won’t Hesitate to Act If Inflation Outlook Weakens: Mersch
- JAPAN SEPT PRELIMINARY MACHINE TOOL ORDERS Y/Y: -19.1% V -16.5% PRIOR
Keep an eye on :
- ABI BB : InBev Says in Talks With DOJ, California on Two Deals: Reuters http://cnb.cx/1NDpNZI
- ADP FP : Aeroports de Paris Boosts 2015 Traffic Forecast to at Least 3%
- APPS SM ; Carmignac Gestion Selling 6.36m Applus Services Shares, shared offered @ E9.05 to market price
- BARC LN : Barclays Said to Plan Naming of New CEO in Next Few Weeks: Sky
- POP IM : Italy Treasury Would Favor UBI-Banco Popolare Merger, MF Says
- EDF FP : EDF finalizes sale of wind farm assets in Portugal
- GLEN LN : Glencore Said to Hire BofA, UBS to Advise on Copper Mine Sales
- HEN3 GY : Henkel ‘Firmly Convinced’ Emerging Markets to Gain Importance
- HOT GY : Qatar Inv. Authority Selling Its 10% Hochtief Stake
- ISP Im ; Italy plans 2.2-billion euro rescue of three small banks-sources http://reut.rs/1LJScgx
- LHN VX : Lafarge Malaysia Rises Most in 20 Months as EPF Increases Stake
- LEO GY : Leoni Says It Will Miss 2015 Ebit Goal, Lowers 2016 Rev. Target
- MC FP : LVMH 3Q Wines & Spirits Organic Sales Growth Beats Ests.
- MC FP : Marc Jacobs Ceases to Lease Shop in H.K.’s Harbour City: HKEJ
- SAB LN : AB InBev’s Latest Bid Said Unlikely to Win SABMiller’s Approval
- SAP GY : SAP 3Q Non-IFRS Op. Profit Beats Est.; 2015 View Reaffirmed
- SAP GY : SAP Posted ‘Impressive’ 3Q Results, Jefferies Says
- STAN LN : MS is psuhing a statical short on the stock
- STLN SW : Schmolz + Bickenbach Cuts FY Ebitda Forecast on Lower Demand
- SYNN VX : FMC -9.4% in after hours after Cutting foreast
- VWS DC : Vestas Wind CEO Considers Extra Dividend Payments, Share Buyback
- VOW3 GY : Volkswagen Seeks EU3b in Cost Cuts at Suppliers: Handelsblatt
- VOW3 GY : Merkel Defends German Carmakers Against Blanket Attacks Over VW
- WOW AU : Woolworths could interest Tesco or Sainsbury's
Asian Mid-session Update: China trade figures improve as exports decline narrows
***Economic Data***
- (CN) CHINA SEPT TRADE BALANCE: $60.3B (7-month high) V $48.2BE; IN CNY TERMS: CNY376.2B V CNY292.4BE
- (AU) AUSTRALIA SEPT NAB BUSINESS CONFIDENCE: 5 V 1 PRIOR (3-month high); CONDITIONS: 9 V 9 PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 115.6 v 110.0 prior
- (NZ) NEW ZEALAND SEPT FOOD PRICES M/M: -0.5% V -0.5% PRIOR; 2nd straight decline
- (JP) JAPAN SEPT BANK LENDING (INCL TRUSTS) Y/Y: 2.6% V 2.7% PRIOR; BANK LENDING (EX- TRUSTS) Y/Y: 2.6% V 2.7%E
- (KR) SOUTH KOREA SEPT IMPORT PRICE INDEX M/M: -0.5% V -0.4% PRIOR; Y/Y: -13.0% V -13.6% PRIOR
- (UK) UK SEPT BRC LFL SALES Y/Y: +2.6% V +1.5%E
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.9%, S&P/ASX -0.8%, Kospi -0.4%, Shanghai Composite -0.4%, Hang Seng -0.5%, Dec S&P500 -0.2% at 2,007
***Commodities/Fixed Income***
- Dec gold -0.9% at $1,154/oz, Nov crude oil +0.8% at $47.47/brl, Dec copper -1.0% at $2.39/lb
- (CN) China may lower natural gas prices for non-residential use by 20-30%, effective on Nov 1st - Chinese press
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3231 v 6.3406 prior setting (strongest Yuan setting since Aug 12th; Biggest Yuan strengthening since Nov 2014)
- (CN) PBoC to inject CNY40B in 7-day reverse repos (29th consecutive injection)
- (JP) BOJ offers to buy ¥70B in JGBs with maturity less than 1-yr, ¥400B in 5-10yr JGBs
- (AU) Australia MoF (AOFM) sells A$150M in 4% 2020 indexed Bonds; avg yield: 0.156%; bid-to-cover: 3.07x
***Market Focal Points/FX***
- Asian equities are down across the board as risk off sentiment resurfaced in all asset classes. After yesterday's rally in Shanghai Composite on reports of a refinancing scheme for high quality credit assets, today's mixed China trade report has done little to support more substantial gains. In Japan, Nikkei225 returned with a near 1% slide after yesterday's holiday, tracking firmer JPY. USD majors also favored safe haven currencies such as the dollar and JPY at the expense of high-beta commodity FX. AUD/USD fell about 60pips below 0.73, with the lows coming after China trade figures. NZD/USD was also down 60pips at 0.6660, while USD/JPY was off by some 25pips at 119.80. In notable emerging market FX, USD/SGD was up for the 2nd straight day above 1.4030 ahead of tomorrow's MAS decision.
- China Customs Bureau released Sept trade data showing a 7-month high on terms of trade, but 3rd and 11th respective continued declines in exports and imports. The drop in the former was less than expected, while the latter was wider than expected. Shipments to US rose, but those to Europe were down marginally and Japan fell by nearly 5% - in line with projections. Imports of iron ore and crude oil were up just over 1%. In accompanying commentary, Customs Bureau said exports decline was both due to policy and external orders, adding that Q4 will likely see exports return to growth and imports decline to continue to narrow. Separately, PBoC researcher said there's still concern over falling demand in real economy, with weak demand in credit market severely affecting lending.
- In Japan, Fin Min Aso maintained an upbeat view on economy, noting it is obvious there is a trend of recovery. BOJ Meeting Minutes from last month, when policymakers cut assessment on Exports and Industrial Output were surprisingly neutral, with many members expressing confidence that 2% inflation target will be achieved. Members added there's still a need to maintain QE to help encourage companies to raise wages.
- Australia's NAB business confidence figures saw a 3 month high and a recovery from last month's 2-year lows, thanks in part to political transition in the coalition govt. NAB said employment is finally improving, turning positive and increasing to its highest level since mid-2011, and that services sector continues to outperform, concluding it was difficult to anticipate additional easing moves by the RBA. Earlier, RBA Dep Gov Lowe said the central bank still has flexibility on interest rates if needed, but that domestic fundamentals are strong.
***Equities***
US equities / ADRs:
- JBLU: Reports Sept load factor 81.1% v 80.9% y/y; -1.3% afterhours
- FIG: Said to be planning to shut down its Macro Hedge Fund; Novogratz expected to leave the firm; -2.6% afterhours
- R: Guides Q3 lower $1.72-1.74 v $1.85e ($1.82-1.87 prior), Q4 $1.72-1.82 v $1.88e; cites lower than expected results in fleet management solutions; -7.3% afterhours
- FMC: Cuts FY16 EPS $2.35-2.45 v $3.08e (guided $3.00-3.30 prior) due to rapid devaluation of BRL; Guides Q3 $0.38 v $0.66e; To cut 800-850 jobs; -9.4% afterhours
Notable movers by sector:
- Consumer discretionary: China Yurun Food Group 1068.HK -7.0% (unit faces bond default)
Dick Smith Holdings DSH.AU +1.8% (potential takeover target); Mobile Embrace MBE.AU +18.9% (Q1 result); Skydive the Beach Group SKB.AU -1.6% (share offering); Galaxy Entertainment +9.9% (Macau golden week casino result)
- Financials: Agile Property Holdings 3383.HK -0.7% (Sept result); China Resources Land 1109.HK +0.5% (Sept result); Sunac China Holdings 1918.HK +0.8% (Sept result); Investa Office Fund IOF.AU -1.0% (offer speculation)
- Industrials: Hyundai Heavy 009540.KR +1.4% (speculation for Q3 earnings); Rusal 486.HK +0.3% (proposes interim dividend); Cardno CDD.AU +0.3% (comment on offer); Hyundai Heavy 009540.KR +1.4% (Q3 earning speculation)
- Technology: TCL Corp 1070.HK -5.2% (profit warning)
Sharp Corp 6753.JP +7.9% (Japan fund investment speculation); Hithink Flush Information Network Co 300033.CN +10.0% (profit alert); GBST Holdings GBT.AU -22.6% (H1 guidance)
- Materials: Glencore Xstrata Plc 805.HK -6.9% (asset sales); Shandong Chenming Paper Holdings 1812.HK +2.4% (profit alert); China Northern Rare Earth Group High-Tech Co 600111.CN -0.6% (to lower production); St Barbara SBM.AU +1.4% (guidance)
- Energy: JX Holdings 5020.JP -1.8% (said to write down inventory)
- Healthcare: Tonghua Dongbao Pharmaceutical Co 600867.CN +1.9% (guidance)
- Telecom: Telstra Corp. TLS.AU -1.2% (guidance and ACCC impact on earnings)
SABMiller
SABMiller warms to AB InBev's approaches as takeover offer rises
Budweiser maker raises its offer to £43.50 a share from £42.15, a 48% premium to the pre-approach share price
The board of SABMiller is warming to the approaches of Anheuser-Busch InBev following a fourth informal bid approach which values the UK-listed brewer at £67.4bn.
The maker of Budweiser and Stella Artois raised its offer to £43.50 a share from £42.15 in cash, with a partial share alternative aimed at SABMiller’s two largest shareholders Altria and the Santo Domingo family. It pointed out the new offer was a 48% premium to the UK-listed brewer’s share price on 14 September, before news broke of talks between the two.
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The combination of the world’s first and second brewers would create a giant company making a third of the world’s beer.
The SABMiller board, which has rejected three earlier approaches, did not issue a statement declining the latest offer as it has done on previous occasions nor did it say it was accepting the deal.
“This offer does provide the basis for some form of engagement,” said one person who knows some of the major players well.
Shares of SAB, maker of beers including Peroni and Grolsch, were down marginally at £36.67, as some investors worried the parties remained too far apart to agree to a deal. “The last reaction from SAB was that the previous offer was significantly undervaluing it,” said Morningstar analyst Phil Gorham. “The latest offer is not a significant improvement.”
At least one institutional shareholder contacted by the Guardian felt the 3% increase on the previous offer was not sufficient for it to agree to a deal.
Some said SABMiller should hold out for a bid nearer to £45 a share, but accepted the current offer might further split shareholders, raising fears among some that the bidder could walk away.
Altria, the owner of Phillip Morris cigarettes, which controls 27% of SABMiller, has already agreed to accept the lower offer. But Bevco, the vehicle controlled by the wealthy Santo Domingo family of Colombia, which has 14%, has so far rejected AB InBev’s approaches on valuation grounds.
The cash-and-share alternative, which is designed to appeal to Altria and the Santo Domingo families in particular, to assist them in avoiding large tax bills, has been sweetened in the latest proposal. However, it values SABMiller shares at only £38.88, short of the main cash offer and there may be room for it to be improved further. Significantly the cash element of that alternative offer has been raised by 119p to 356p.
The further increase in the offer from the Brazilian-Belgian brewer, albeit a relatively small one, will intensify pressure on SABMiller’s chairman, Jan du Plessis, to open talks on a deal to buy the group, which was founded 120 years ago as South African Breweries. The view of the Santo Domingo family will be crucial because the bidder has made it clear it favours a friendly merger. Du Plessis last year fought off a merger approach from Glencore as chairman of miner Rio Tinto.
Analysis AB InBev's offer isn't enough to break up SABMiller and the Santo Domingos
Nils Pratley
Read more
The new offer came before Wednesday’s bid deadline and after SABMiller’s fourth-biggest shareholder earlier in the day rejected AB InBev’s previous price as too low.
“We have confidence in the board and we will rely on their judgment. They have said the price is too low and we agree with them,” said Dan Matjila, chief executive of Public Investment Corporation..
The South African investment manager, which owns about 3% of SABMiller, said last week it would seek guidance from brewery group’s board about the financial aspects of the proposed deal.
It is the latest major SABMiller investor to say AB InBev’s approach is too low to buy the company, whose brands also include Castle beer in Africa. SABMiller’s board has said the proposal “very substantially undervalues” the business.
Aberdeen Asset Management said last week it could see the potential benefits of a merger but that AB InBev’s proposed offer was opportunistic and too low. SABMiller’s fifth-largest shareholder, Kulczyk Investments, rejected AB InBev’s valuation. Investec, another significant investor, was also reported to be against the deal.
AB InBev’s chief executive, Carlos Brito, has urged SABMiller shareholders to tell their board to enter serious talks before Wednesday’s 5pm deadline for AB InBev to lodge a formal offer.
After Hours Summary: FMC -9.4%, R -7.5% following earnings/guidance
After Hours Gainers:
Companies trading higher in after hours in reaction to news: AMGN +0.3% (presented additional findings from its exploratory Phase 2 trial of romosozumab: results showed increased estimated bone strength at the spine and hip; announced positive long-term results from Phase 3 FREEDOM study of Prolia (denosumab) in patients with osteoporosis)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings: FMC -9.4%, R -7.5%
Companies trading lower in after hours in reaction to news: COLL -9.2% (announced the FDA will not be able to complete its review of the New Drug Application for Xtampza by the PDUFA date of October 12, 2015), FIG -5.3% (Bloomberg reporting co is planning on closing macro Michael Novogratz hedge fund), JBLU -2.4% (reported September traffic: increase in RPMs of 13.3% Y/Y to ~3.09 bln, on a capacity increase of 13.1%), SKYW -0.6% (reported September 2015 block hours decreased 11.5% from prior year to 162,742)
US probes allegations AB InBev seeking to curb craft beer distribution-sources
WASHINGTON (Reuters) - The U.S. Justice Department is probing allegations that Anheuser-Busch InBev is seeking to curb competition in the beer market by buying distributors, making it harder for fast-growing craft brewers to get their products on store shelves, according to three people familiar with the matter.
In the past few months, the world's largest brewer has rattled the craft beer world by striking deals for five distributors in three states. Many states require brewers to use distributors to sell their product, and once AB InBev buys a distributor, craft companies say they find that they can't distribute their beer as easily and sales growth stalls.
Antitrust regulators are also reviewing craft brewers' claims that AB InBev pushes some independent distributors to only carry the company's products and end their ties with the craft industry, two of the sources said, noting that the investigation was in its early stages. AB InBev's purchase of several craft beer makers in recent years means that it is in a position to offer a greater variety of products itself.
Craft brewers, who produce everything from well-crafted classics to odd flavors such as pumpkin or raspberry beer, have been a bright spot in an otherwise dull U.S. beer market. While beer sales rose 0.5 percent in 2014, craft beer sales rose by 17.6 percent to capture 11 percent of the U.S. market.
The Justice Department review comes at an awkward time for AB InBev as it is seeking to buy No.2 SABMiller Plc for more than $100 billion in what would be the biggest-ever merger of brewers. AB InBev is widely expected to sell SABMiller's stake in U.S.-based MillerCoors if the merger goes through, leaving its U.S. market share unchanged at 46.4 percent.
Small craft brewers have already been rattled by AB InBev's purchases of craft beer makers, including Golden Road in September, Blue Point Brewing in 2014 and Goose Island Beer Co in 2011.
As AB InBev also snaps up distributors, craft brewers have expressed concern that the company would push distributors to only carry its products.
To retain the craft title, a brewery must make less than 6 million barrels annually. That means those that get taken over by a big brewer like AB InBev lose that identity even if they still make small batches with distinctive flavors.
State regulators in California, where AB InBev announced wholesaler purchases in Oakland and San Jose in September, are also looking into the matter, the people familiar with the matter said. It was not clear if state regulators were looking at the recent purchases of two distributors in Colorado and one in New York as well.
The Justice Department declined comment. AB InBev, and the attorney generals' offices for California, New York and Colorado did not respond to requests for comment.
Nikos Ridge, CEO of Ninkasi Brewing Co in Oregon, said that when two of his distributors were bought by AB InBev in 2011 and 2012, he saw what had been healthy sales growth quickly stall until it found alternative distributors.
"Our feeling was that we weren't getting the same level of representation," said Ridge. "We saw our trends drop and we have seen improvements since we've switched."
An executive at a second craft brewer, who asked not to be named, said that AB InBev had recently bought one of its distributors. "It (the distributor) is slowly but surely divesting itself of everything that is not ABI. And we're one of the last ones," said the executive, who noted that its other options for distribution were limited. "We're at the mercy of a lot of big players."
Their experience is not unique. Conversations with at least four other craft brewers told the same story.
There were some 4,000 craft beer companies as of September, brewing everything from artfully made classics like Dale's Pale Ale, Brooklyn Lager and Gordon Biersch Hefeweizen, as well as quirky brews like Breckenridge Vanilla Porter, and the super hoppy Palate Wrecker from Green Flash Brewing Co.
A handful of antitrust experts say that craft brewers have a case, albeit not an easy one.
The authorities could step in if AB InBev bought so many distributors that craft brewers lost significant access to a local market, said Jonathan Lewis, an antitrust expert at the law firm Baker Hostetler LLP. He estimated that the breaking point could be when AB InBev owned some 50 percent of distributors in a given area.
Andy Gavil, a former head of the Federal Trade Commission's Office of Policy Planning who now teaches antitrust law at Howard University Law School, said he believes the problem could be resolved by scrapping a requirement for alcoholic beverages to go through liquor distributors in most U.S. states. That would allow the craft brewers to go directly to the supermarkets, liquor stores and bars.
"There are some older justifications that it's about preventing underage sales but since the ultimate sale is done by a retailer, that's a bogus argument," Gavil said.