(BFW) Daimler, BMW, Audi Interested in TomTom: Sueddeutsche (Earlier)

Daimler, BMW, Audi Interested in TomTom: Sueddeutsche (Earlier)
2015-06-15 08:54:31.138 GMT


By Claudia Rach
(Bloomberg) -- Executives of Daimler, BMW, Audi met a few
weeks ago with TomTom representatives and cos. more recently
discussed due diligence talks, Sueddeutsche Zeitung reported
Saturday, without citing anyone.

* German carmakers may find prices for HERE start getting too
high: newspaper
* TomTom didn’t confirm talks: newspaper
* SNS Securities: Says it makes sense for 3 German carmakers
to explore other options, sees opportunities for TomTom
(buy), from which its shareholders can benefit, according to
note today
* NOTE May 22: Audi is open to other carmakers joining bid for
Nokia’s HERE
*
* May 19: BMW, Daimler, Audi working on approach for HERE,
people familiar with the matter have said
* NOTE: TomTom shrs rise as much as 3.3% today, most since
June 8, only gainer in the Amsterdam Midkap Index


For Related News and Information:
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To contact the reporter on this story:
Claudia Rach in Berlin at +49-30-70010-6219 or
crach1@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-3525-2645 or
jludden@bloomberg.net

FT : US companies regaining their appetite for tax inversion deals

Push for deals increases in spite of White House crackdown on controversial foreign takeovers

US companies have regained their appetite for controversial foreign takeovers that allow them to move overseas and escape US taxes, in spite of a White House crackdown to restrict so-called tax inversions last year.

According to several senior corporate advisers in the US and Europe, demand for such deals has picked up significantly in recent months and set the expectation that more transactions will be announced this year.

The largest attempted tax inversion in more than a year was revealed last week when it emerged that Monsanto, the US agribusiness company, had structured its unsolicited $45bn takeover of Switzerland’s Syngenta as an inversion that would allow it to move its domicile to the UK, where corporate tax rates are lower. Syngenta has refused to engage with Monsanto and rebuffed its takeover approaches so far.

The desire for inversion deals comes amid feverish deal activity led by the US, as companies look to use cheap debt and high share prices to squeeze every possible synergy, including tax benefits, out of potential takeovers.

But the attempted inversions fly in the face of the US government, which moved last year to reduce the attractiveness of these deals after a flurry of transactions in 2014. US President Barack Obama has labelled the practice “unpatriotic”.

The US Treasury took specific actions in September designed to limit the benefits of inversions after at least 15 US companies struck such transactions last year. A number of others, including drugmakers Pfizer and AbbVie, launched ultimately failed bids at tax inversion deals.

“For some companies considering mergers, today’s action will mean that inversions no longer make economic sense,” the Treasury said at the time.

The measures were designed to prevent an inverted US company from using various structures to access its deferred overseas earnings without paying US taxes. The Treasury also homed in on transactions where the target company’s shareholders would only own between 20 and 40 per cent of the newly formed company, by strengthening the requirements on the US company seeking the inversion.

“Initially executives were shocked by the decision taken by the government and decided that they didn’t want to hear about inversions any more,” said one banker who helps with tax structuring on mergers and acquisitions.

However, he said that corporate boards were looking at tax inversion proposals at a pace that was nearly the same as before the US government clamped down on the move. “They are willing to take more risk and structure deals in a way that goes around the new rules not against them,” the banker said.

In addition to lower future corporate tax rates, other benefits to would-be inverters include their ability to access future non-US earnings — as opposed to their existing cash piles — free of US tax, and their ability to take generous tax deductions on loans between different parts of their business.

At least three tax inversion deals have been reached since the US Treasury action: medical equipment maker Steris said it would buy the UK’s Synergy Healthcare for $1.9bn, Cyberonics took over Italy’s Sorin for close to $3bn, and US networking equipment maker Arris agreed to acquire the UK’s Pace for $2.1bn.

“The simple answer is that transatlantic M&A involving healthcare and pharma companies is coming back. Those kinds of businesses in particular lend themselves to inversion, because they already have tax planning constructs within them,” one international M&A lawyer said.

When asked in April about the possibility of Pfizer seeking another tax inversion deal after its unsuccessful attempts to buy the UK’s AstraZeneca last year, the company said it was focused on reducing its expenses, including tax.

Ian Read, Pfizer’s chief executive, said: “The new rules — or not the new rules, the new proposed rule change — does make it more difficult to immediately realise any benefits from being redomiciled. But it really depends upon the target.”

FT : Greece has nothing to lose by saying no to creditors

If it were to default on its official-sector debt, France and Germany stand to forfeit €160bn

So here we are. Alexis Tsipras has been told to take it or leave it. What should he do?

The Greek prime minister does not face elections until January 2019. Any course of action he decides on now would have to bear fruit in three years or less.

First, contrast the two extreme scenarios: accept the creditors’ final offer or leave the eurozone. By accepting the offer, he would have to agree to a fiscal adjustment of 1.7 per cent of gross domestic product within six months.

My colleague Martin Sandbu calculated how an adjustment of such scale would affect the Greek growth rate. I have now extended that calculation to incorporate the entire four-year fiscal adjustment programme, as demanded by the creditors. Based on the same assumptions he makes about how fiscal policy and GDP interact, a two-way process, I come to a figure of a cumulative hit on the level of GDP of 12.6 per cent over four years. The Greek debt-to-GDP ratio would start approaching 200 per cent. My conclusion is that the acceptance of the troika’s programme would constitute a dual suicide — for the Greek economy, and for the political career of the Greek prime minister.

Would the opposite extreme, Grexit, achieve a better outcome? You bet it would, for three reasons. The most important effect is for Greece to be able to get rid of lunatic fiscal adjustments. Greece would still need to run a small primary surplus, which may require a one-off adjustment, but this is it.

Greece would default on all official creditors — the International Monetary Fund, the European Central Bank and the European Stability Mechanism, and on the bilateral loans from its European creditors. But it would service all private loans with the strategic objective to regain market access a few years later.

The second reason is a reduction of risk. After Grexit, nobody would need to fear a currency redenomination risk. And the chance of an outright default would be much reduced, as Greece would already have defaulted on its official creditors and would be very keen to regain trust among private investors.

The third reason is the impact on the economy’s external position. Unlike the small economies of northern Europe, Greece is a relatively closed economy. About three quarters of its GDP is domestic. Of the quarter that is not, most comes from tourism, which would benefit from devaluation. The total effect of devaluation would not be nearly as strong as it would be for an open economy such as Ireland, but it would be beneficial nonetheless. Of the three effects, the first is the most important in the short term, while the second and third will dominate in the long run .

Grexit, of course, has pitfalls, mostly in the very short term. A sudden introduction of a new currency would be chaotic. The government might have to impose capital controls and close the borders. Those year-one losses would be substantial, but after the chaos subsides the economy would quickly recover.

Comparing those two scenarios reminds me of Sir Winston Churchill’s remark that drunkenness, unlike ugliness, is a quality that wears off. The first scenario is simply ugly, and will always remain so. The second gives you a hangover followed by certain sobriety.

So if this were the choice, the Greeks would have a rational reason to prefer Grexit. This will, however, not be the choice to be taken this week. The choice is between accepting or rejecting the creditors’ offer. Grexit is a potential, but not certain, consequence of the latter.

If Mr Tsipras were to reject the offer and miss the latest deadline — the June 18 meeting of eurozone finance ministers — he would end up defaulting on debt repayments due in July and August. At that point Greece would still be in the eurozone and would only be forced to leave if the ECB were to reduce the flow of liquidity to Greek banks below a tolerable limit. That may happen, but it is not a foregone conclusion.

The eurozone creditors may well decide that it is in their own interest to talk about debt relief for Greece at that point. Just consider their position. If Greece were to default on all of its official-sector debt, France and Germany alone would stand to lose some €160bn. Angela Merkel and François Hollande would go down as the biggest financial losers in history. The creditors are rejecting any talks about debt relief now, but that may be different once Greece starts to default. If they negotiate, everybody would benefit. Greece would stay in the eurozone, since the fiscal adjustment to service a lower burden of debt would be more tolerable. The creditors would be able to recoup some of their otherwise certain losses.

The bottom line is that Greece cannot really lose by rejecting this week’s offer.

(Reuters) Greece and creditors are not really far apart

Greece and creditors are not really far apart - RTRS

LONDON, June 15 (Reuters Breakingviews) - The brink keeps getting closer, but there's agreement on broad principles. The fight is over 2 bln euros, 1 pct of Greek GDP and 0.02 pct of euro zone GDP. The damage from failure is many times larger. A deal can be done - if only politics and pride can be overcome.

(CS) Agencies : Publicis Downgraded to Neutral & PT Cut €70 from €79

We remain positive on WPP and raise our Target Price to 1650p from 1600p; we downgrade Publicis to Neutral and cut our TP to €70 from €79.
Overall the survey supports our view that the Agencies are still structurally well positioned relative to other Media sub-sectors. However, given the increasing scepticism of their value-added, and without an obvious global GDP upgrade to kick-start growth, we are more lukewarm on the space. We are also concerned about the unprecedented number of account reviews underway, with Publicis more exposed than WPP (1.4%-1.7% of revs vs WPP 0.8%-1.0%). Accordingly, Publicis shares have been weaker in Q2 but we expect adverse news flow to continue. Also, given our lingering concerns over client/staff risks from the failed Omnicom merger, its recent relatively low organic growth and the likelihood management will sacrifice margin for organic growth, we downgrade Publicis to Neutral and recommend buying WPP over Publicis.

(BN) German Stock Market Pain Seen Just Beginning Should Greece Exit

German Stock Market Pain Seen Just Beginning Should Greece Exit
2015-06-15 07:10:28.30 GMT


(For an Options column news alert: SALT OMA.)

By Inyoung Hwang
(Bloomberg) -- The tumble in German stocks has already
breached a level that constitutes a correction and could go
another 10 percent should Greece exit the euro.
So say Ralf Zimmermann of Bankhaus Lampe KG and UniCredit
Bank AG’s Christian Stocker, who forecast the DAX Index could
slip as low as 10,000. Even in a more likely scenario where
Greece and its creditors compromise, the decline probably isn’t
over and the benchmark gauge may hit 10,500, Zimmermann said.
A rebound in the euro coupled with losses in German bunds
has made the DAX the second worst-performing index among
developed markets this quarter. Now Greek debt negotiations are
stalling, and European officials are preparing for a potential
default and exit from the euro.
“The deadline is approaching, and it’s crunch time,” said
Zimmermann, an equity strategist at Bankhaus Lampe in
Dusseldorf. “The move from mid-April was driven by the crash in
the German bond market. If there is a Grexit, that would be an
add-on.”
German equities have more at stake after the nation’s index
more than tripled from a low in 2009 through a record in April,
while the Euro Stoxx 50 Index just doubled. A level of 10,000
would mark a 19 percent drop from the DAX peak. The gauge lost
1.5 percent at 9:09 a.m. in Frankfurt.

Growing Despair

Greece needs to come up with a set of financial reforms
that its creditors will deem satisfactory to unlock further
bailout aid, with its current rescue package expiring at the end
of the month. The nation already missed an International
Monetary Fund payment this month, and the lender’s delegation
voiced despair of Prime Minister Alexis Tsipras’s negotiation
tactics.
While UniCredit Bank’s Stocker sees the DAX at risk, he
also says potential declines would be temporary. With the
European economy gaining strength, 10,000 would be a buying
opportunity. Such a level would send the DAX valuation to 12.6
times projected earnings for this year -- the lowest since
January, data compiled by Bloomberg show.
“A Grexit would only pause the overall positive equity-
market development during the summer months,” Stocker said.
“The spillover effects of a possible Grexit are much less
compared to two to three years ago.”
Even as a gauge tracking volatility expectations on the DAX
has climbed 50 percent from a low in February, it’s near a two-
month low relative to a measure of Euro Stoxx 50 swings.
Still, even a compromise that entails ongoing formal euro
membership for Greece may create enough jitters to hurt German
shares, according to Zimmermann.
“Investors have thought there would finally be a
solution,” he said. “But you could argue with capital controls
and a parallel currency, that this would be the early sign for a
Grexit in the longer run. And of course, many have believed
promises by politicians and the European Central Bank that such
a thing would never happen. There is still downside risk for
markets.”

For Related News and Information:
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To contact the reporter on this story:
Inyoung Hwang in London at +44-20-3525-2394 or
ihwang7@bloomberg.net
To contact the editors responsible for this story:
Cecile Vannucci at +44-20-3525-7032 or
cvannucci1@bloomberg.net
Trista Kelley

(GS) Japan: Let history be our guide(ance)


Forward guidance is a key investor focus, yet there is room for management subjectivity

Investors generally believe that with an insider’s view of the business, management should produce better estimates than anyone else looking in. However, there is room for application of management’s subjectivity and  judgment when producing these estimates, in our view, sometimes even leading to perennially conservative or aggressive forward guidance.

 

We find some companies consistently beat or miss guidance

Comparing 10 years of initial sales guidance with actual results, we find 29 consistent “guidance beaters” (average sales beat of 3.6% per year) and 19 consistent “guidance missers” (average sales miss of -5.2% per year).

 

Guidance beaters outperform in the long run, but may underperform shortly after announcements

Since 2005, the 29 consistent guidance beaters have returned 12.0% more per annum vs. the missers. Conversely, in the one month after guidance release, we find that the consistent guidance missers have outperformed, likely due to their more aggressive guidance which leads to heightened near-term expectations by the market.

 

4 names that are attractively valued and likely to beat FY3/16 guidance

We screen for stocks that have historically consistently beaten guidance, and we think will likely beat in FY3/16 as well. These stocks are also supported by attractive valuations: Fanuc, Hitachi Kokusai, Nippon TV and NSK.

(Jeffries) Integrated Oil : Fundamental Rebalancing (Note attached)

--> We raise our Brent estimate for 2015 to an average of $60/bbl from $52.50/ bbl, and our estimate for WTI to $55.10/bbl from $48.60/bbl. As a result, our aggregated earnings estimates for the universe increase 29% in 2015 (28% in the US, 30% in EU).

* Oil market near-term oversupplied. Fundamental data indicates that the oil market is oversupplied by over 2 mbd, and yet the Brent price has rallied by over 40% since its January low. While prices remain low, they have been more resilient than our prior 2015 price forecasts. We raise our Brent estimate for 2015 to an average of $60/bbl from $52.50/ bbl, and our estimate for WTI to $55.10/bbl from $48.60/bbl.