TheChek News Flow

Founder Chip Wilson looking at sale of entire Lululemon stake

Chip Wilson, who founded Lululemon Athletica Inc (LULU.O) and left its board earlier this year after disagreements with fellow directors, is now looking to potentially sell his family's estimated $1.3 billion stake in the yogawear maker.

A sale would give Wilson a huge war chest to throw into his family's latest venture - Kit and Ace - a Canadian apparel start-up. The retailer is set to open stores in Australia, Britain and Japan this year.

Sources familiar with the situation have previously said the Wilson family is expected to invest as much as $300 million to fund the expansion and rollout of Kit & Ace stores in the coming years.

Lululemon, which disclosed the news of the potential sale of the Wilson family's stake in a regulatory filing on Thursday, said Wilson, his wife and other entities that they control may look to sell all their shares.

"The prospectus supplement filed by Lululemon simply enables Chip Wilson to sell his shares in the future, if he chooses to do so, on the same basis as any other stockholder," a spokesman for Wilson said in an email.

Lululemon shares were down about 2 percent at $65.40 on Nasdaq.

According to sources familiar with the matter, Wilson left the board earlier this year after it failed to move forward on governance reforms that he had pushed for last year.

Lululemon, which is pursuing international expansion in the face of growing competition, averted a proxy war last year when Wilson agreed to sell half his stake in the company to Advent International, a private equity firm.

When Lululemon's board reached a settlement that essentially ended a face-off with Wilson last year, it said it would have an independent expert review its governance policies and the composition of its board. It has yet to outline any of the review's findings or make changes to its governance practices.

Wilson and his family, who have the right to nominate one member of the board, did not pick a nominee for election to the board at Lululemon's shareholder meeting earlier this month.

Wilson told Reuters in April that he had difficulty finding a qualified candidate willing to join the board given that the review he pushed for had not led to anticipated changes to the board's structure, make-up and plurality voting system.

Lululemon could not immediately be reached for comment on the potential sale of the Wilson family's stake or the status of the review.

* Equities: $5.9bn outflows (largest in 5 weeks) (outflows from both ETF’s and mutual funds)

* Bonds: $5.9bn outflows (largest weekly outflows since Dec’13)

* Commodities: eke out tiny inflows ($85mn)

* EM: big $9.3bn outflows (but note $5.1bn of outflows from just one ETF: Huatai-Pinebridge CSI 300);

* Japan: $1.2bn inflows (inflows in 15 out of past 16 weeks)

* US: small $0.3bn outflows

* Europe: tiny $93mn inflows

* Largest weekly outflows from HY bond funds in 25 weeks ($2.9bn)

* Largest weekly outflows from EM debt funds in 20 weeks ($0.8bn)

* 7 straight weeks of outflows from govt/tsy funds ($1.2bn)

* Weakest weekly inflows to IG bond funds in 77 weeks ($0.2bn)

* Outflows from TIPS ($0.5bn), Munis ($0.5bn) and even bank loans ($0.2bn)

Dish is considering borrowing $10 billion-$15 billion for the cash portion of a primarily stock bid

Dish Network Corp. is in talks with banks about funding a bid for T-Mobile U.S. Inc. that would include as much as $15 billion in cash, in the latest sign the takeover effort is progressing.

Dish is considering borrowing between $10 billion and $15 billion for the cash portion of a bid that would primarily be comprised of its stock, according to people familiar with the matter. The two sides are discussing a deal that would leave Deutsche Telekom AG, which controls T-Mobile, with a big minority stake in a combined company, the people said.

A deal agreement between Dish and T-Mobile isn't imminent, and it is possible there won’t be one, the people cautioned. It is unclear how much Dish is considering paying for T-Mobile, which has a market value of $31 billion and is the nation’s fourth-largest cellphone carrier. Dish, the country’s second-largest satellite-television provider, has a market value of $34 billion.

Still, Dish’s discussions with banks, and the fact that the structure of any bid is coming into focus, are a sign that the company and its unpredictable chief executive, Charlie Ergen, are moving closer to potentially buying T-Mobile after years of aborted attempts to strike a big wireless or satellite deal. Dish has consistently expressed interest in entering the wireless industry and has been amassing licenses to use wireless airwaves that a network like T-Mobile’s would enable it to put to use.

Should the two sides manage to strike an agreement—and regulators and shareholders sign off—it would accelerate a wave of consolidation across the U.S. media and communications industries as companies scramble to adapt to new online offerings and keep up with rivals.

In an earlier sign that the talks are serious, negotiators for Dish and T-Mobile already agreed Mr. Ergen would be the combined company’s chairman, while T-Mobile CEO John Legere would be CEO, The Wall Street Journal reported last week.

But many parties have to come into alignment before a deal can come to fruition. One of them is Deutsche Telekom, which owns 66% of T-Mobile. The German operator has for years been seeking a deal to combine T-Mobile with another company.

Under Mr. Legere, T-Mobile has transformed itself from the weakling of the wireless industry into its fastest-growing national carrier. Deutsche Telekom is likely to insist on an adequate price given that progress, and may be happy to let T-Mobile remain independent and potentially become more valuable, one of the people said. Together with Mr. Ergen’s reputation for tough negotiating, that could make it difficult for the two sides ultimately to come to an agreement, the person cautioned.

A deal for T-Mobile that involved about $14 billion in cash and the rest stock could in theory leave Deutsche Telekom with a stake of around 27% in the combined company, according to an analysis done for the Journal by Moody’s Investors Service analyst Neil Begley. A buyout of T-Mobile by Dish could ultimately require a more expansive financing package given that $20 billion of the wireless carrier’s debt could come due in the event of a change in control that causes its credit rating to fall, Mr. Begley said.

* What's changed

Reuters reported on June 11 that the EU might pose objections to the

acquisition of Alstom’s Power assets by GE. The basis of objection

according to the report is concerns that the European gas turbine market

would be reduced to two players (Siemens and GE). The report also stated

that if the EU issues a ‘statement of objection’, GE would need to make

concessions. At the EPG conference in May, GE’s CEO noted he would

consider remedies involving ‘selling intellectual property for a product’,

but nothing that would impact service revenue streams.

* Implications

In our note GE vs. Siemens/MHI offers – Take II, published June 20, 2014,

we showed various scenarios for Alstom value including a ‘no-deal’ case

where Alstom continues to own all its discontinued Power assets. We

update this case and now see a value of €17/sh (down from €23/sh), which

decreases in three areas: (1) pension liabilities are up 40% on FX/interest

rates (€2/sh); (2) Alstom was fined $772 mn by the US DoJ (€2/sh); (3) 12-

month forward EBIT estimates (down 4.5% on a comparable basis; €2/sh).

From Alstom’s point, should a ‘statement of objection’ be issued the

outcome is binary (deal/no-deal). If GE agrees to remedy, the value of the

deal for Alstom is not impacted and GE alone would have to make

concessions to the EU (i.e., structure and deal price would remain intact).

* Valuation

We still assume the deal completes. Our 12m TP of €29.7 is based on 8.5x

2016/17E EV/EBIT for the Transport assets that would remain with Alstom

(including GE Signaling earnings to be acquired) and incorporates cash for

the Power sale, in line with the agreed offer. 8.5x is in line with LT growth

(c. 0%) and returns (Q4) prospects, within our sector-relative framework.

* Key risks

Key downside risks are ‘no-deal’, EM competition, weaker cash flows;

operational risk. Upside: better order intake, higher cash generation, M&A.

In this note we review the valuation, strategic rationale and cash positions of various assets which we have identified as ‘non-core’ or underperforming within our coverage, the combined value of which is >€10bn. While some of these assets have been hanging around a while, we believe the current environment is conducive to progress; we also review the balance sheet optionality of the parent companies herein. Our analysis reaffirms our positive view on Thales (OW PT €60), our BAE Systems UW (PT430p) and we revisit Finmeccanica (EW PT €12) in detail post the sale of Transport, taking a deep dive into the embedded value of the ‘Industrial Plan’.

US Market closed slightly higher, Mkt open high butwas knocked back into the middle of its range after it was reported that International Monetary Fund representatives left Brussels for Washington due to insufficient progress between Greece and the creditors. Furthermore, IMF spokesman Gerry Rice stressed the continued presence of major differences, saying, "We are well away from an agreement.". Seven of ten sectors registered gains while consumer staples (-0.1%) and energy (-0.4%) spent the day in the red. In addition, technology (-0.1%) turned negative during the afternoon. energy sector struggled as crude oil fell 1.0% to $60.74/bb...Pressure on Tech prevent mkt to finsih on highs of the day...10Y helped financials to OP...Volume were in line with 770mil shares...US After Hours OCLS +5.8%, CHKE +3.9%, KFY +2.6%, LF -15.9%, XONE -9.8%, BOJA -1.3% following earnings/guidance...Asia markets are mixed in a quiet trading session heading into the weekend. Shanghai Comp and Hang Seng are leading the regional indices higher, as investors continued to process the latest set of economic data released overnight. Among USD majors, USD/JPY pared some of its initial gains, retreating below ¥123.60 on comments from BOJ's Harada who said the central bank could hold off on expanding stimulus even if inflation does not hit 2% target as long as price trends are improving.

Nikkei -0.02% Hang Seng +0.55% Shanghai +0.97%

Eur$ 1.1236 JPY 123.44 GBP 1.5511 EURCHF 1.0494 RUB $54.5252 WTI $60.36 ( -0.67%)

S&P -0.08% EuroStoxx -0.11% Dax -0.19% SMI -0.11%

*B&M EUROPEAN VALUE RETAIL RAISED TO BUY VS NEUTRAL AT NOMURA

Although minimized by Airbus, the problems encountered on the new PW1100G Pratt & Whitney, which is to equip the first A320 Neo, may have an impact on the delivery schedule of the new best seller. Following doubts about the build quality of a minor part of the engine, Airbus had to stop there already two months ago, flight testing on the A320 Neo equipped with Pratt & Whitney engine, which had made its first flight in September. Despite these two lost months, Airbus has maintained its target for first delivery of an A320 Neo equipped with the PW1100G to Qatar Airways' fourth quarter 2015 ". But according to the head of Qatar Airways, Akbar Al Baker, the manufacturer has already announced his delay. "Airbus has warned us that there would be late ... not a long delay, but even when a delay," said Akbar Al Baker, Qatar Airways boss, on the sidelines of the IATA conference in Miami.

The A320neo will not go to Paris Air Show

The Pratt & Whitney engine problems have already forced Airbus to forego present the A320 Neo the next Paris Air Show, where he was to make his first public appearance. No date has yet been set for the resumption of flights. At a press conference on 28 but the director of Airbus programs, Didier Evrard, considered that the resumption of flights was "a matter of days." Today, Airbus communication services prefer to evoke a recovery "in coming weeks", while stressing that the A320 Neo is not totally grounded as flight testing continues with the first copy with CFM engine, jointly developed by Safran-Snecma and GE.

The previous Bombardier

In 2013, the Québec aircraft manufacturer Bombardier was the pause for nearly four months test flights of its new model, the CSeries, following the explosion on the ground of a Pratt & Whitney engine, based on the same concept Technical fan drive gear (RWG) than the A320 Neo. Airbus problems apparently have no connection with those of Bombardier, but they are one more stone in the garden of Pratt & Whitney, which did not need that. The US engine manufacturer, which has staked everything on the GTF technology to come back strong in the market for single-aisle, remains far behind by CFM International, the joint venture of GE and Safran, whose new Leap engine caught 70% of the market single-aisle and 56% of the A320 Neo market according to CFM leaders. More than 8,900 orders at the end of May, the equivalent of 5 years of production. Two weeks after its first flight on an A320, the Leap-1A has already made 19 test flights with no known problem and Safran's leaders seem quite confident about their ability to meet their commitments for certification this summer to an entry into service early 2016, at SAS.

CFM is racing ahead

A start on the run, helped by the difficulties of Pratt. "The trials with Pratt & Whitney is interrupted, the team of Airbus flight test focuses 100% on the A320 Leap. This allows us to fly much "explains Philippe Petitcolin, the CEO of Safran. Party with a few months behind Pratt & Whitney in the race for the A320 Neo, CFM Leap could enter service at the same time, if not before. However, the Safran boss does not intend to be able to replace, if needed, to US rival for the first deliveries of A320 Neo. "We have very ambitious targets certification and production ramp-up of production, he said. We focus on our commitments. But we can not commit at this stage, on additional production volumes. If Airbus was having to supply an engine problem, it would necessarily with CFM-56. "

Bien que minimisés par Airbus, les problèmes rencontrés sur le nouveau moteur PW1100G de Pratt & Whitney, qui doit équiper les premiers A320 Neo, risquent d’avoir un impact sur le calendrier de livraison de son nouveau best-seller. Suite à des doutes sur la qualité de fabrication d’une pièce mineure du moteur, Airbus a dû interrompre, il y a déjà deux mois de cela, les essais en vol des A320 Neo équipés de moteur Pratt & Whitney, qui avait effectué son premier vol en septembre. Malgré ces deux mois de perdus, Airbus a maintenu son objectif d’une première livraison d’un A320 Neo équipé du PW1100G à Qatar Airways « au quatrième trimestre 2015 ». Mais selon le patron de Qatar Airways, Akbar Al Baker, l’avionneur lui aurait déjà annoncé un retard. « Airbus nous a prévenu qu’il y aurait du retard... Pas un retard important, mais un retard quand même », a indiqué Akbar Al Baker, le patron de Qatar Airways, en marge de la conférence IATA de Miami.

L’A320 Neo n’ira pas au salon du Bourget

Les problèmes du moteur Pratt & Whitney ont déjà contraint Airbus à renoncer à présenter l’A320 Neo au prochain salon du Bourget, où il devait faire sa première apparition publique. Aucune date n’est encore fixée pour la reprise des vols. Lors d’une conférence de presse, le 28 mais, le directeur des programmes d’Airbus, Didier Evrard, avait estimé que la reprise des vols était « une question de jours ». Aujourd’hui, les services de communication d’Airbus préfèrent évoquer une reprise « dans les prochaines semaines », tout en soulignant que l’A320 Neo n’est pas totalement cloué au sol puisque les essais en vol se poursuivent avec le premier exemplaire doté de moteur CFM, développé conjointement par Safran-Snecma et GE.

Le précédent de Bombardier

En 2013, l’avionneur québécois Bombardier avait du interrompre pendant près de quatre mois les essais en vols de son nouveau modèle, le Cseries, à la suite de l’explosion au sol d’un moteur Pratt & Whitney, basé sur le même concept technique de soufflante à réducteur d’entraînement (GTF) que celui de l’A320 Neo. Les problèmes d’Airbus n’ont apparemment aucun lien avec ceux de Bombardier, mais ils sont une pierre de plus dans le jardin de Pratt & Whitney, qui n’avait pas besoin de ça. Le motoriste américain, qui a tout misé sur le technologie GTF pour revenir en force sur le marché des monocouloirs, reste largement distancé par CFM International, la co-entreprise de GE et Safran, dont le nouveau moteur Leap a pris 70 % du marché des mono-couloirs et 56 % du marché des A320 Neo selon les dirigeants de CFM. Soit plus de 8.900 commandes à fin mai, l’équivalent de 5 années de production. Deux semaines après son premier vol sur un A320, le Leap-1A a déjà effectué 19 vols d’essais sans problème connu et les dirigeants de Safran semblent tout à fait confiants sur leur capacité à tenir leurs engagements d’une certification cet été, pour une entrée en service début 2016, chez SAS.

CFM fait la course en tête

Un démarrage au pas de course, facilité par les difficultés de Pratt. « Les essais avec Pratt & Whitney étant interrompus, l’équipe des essais en vol d’Airbus se consacre à 100 % sur l’A320 Leap. Ce qui nous permet de voler beaucoup plus», explique Philippe PetitColin, le directeur général de Safran. Parti avec quelques mois de retard sur Pratt & Whitney dans la course à l’A320 Neo, le Leap de CFM pourrait entrer en service au même moment, si ce n’est avant. Cependant, le patron de Safran n’envisage pas de pouvoir se substituer, en cas de besoin, à son concurrent américain sur les premiers livraisons d’A320 Neo. « Nous avons déjà des objectifs très ambitieux de certification et de montée en cadence de la production, souligne-t-il. Nous nous concentrons sur nos engagements. Mais nous ne pourrions pas nous engager, à ce stade, sur des volumes de production supplémentaires. Si Airbus devait avoir à suppléer à un problème de moteur, ce serait nécessairement avec des CFM-56 ».

En savoir plus sur http://www.lesechos.fr/industrie-services/air-defense/021129039325-interrogations-sur-le-calendrier-de-lairbus-320-neo-1127382.php?esWORMJVVjYVJakb.99