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ExxonMobil could use big cash hoard to make large acquisition

ExxonMobil, (NYSE:XOM), the Irving, Texas-based oil and natural gas producer and petrochemicals concern, has unparalleled financial flexibility to make an acquisition, Barron’s wrote in an online blog Tuesday (19 May), citing Oppenheimer’s Fadel Gheit and Luis Amadeo.

ExxonMobil will likely capitalize on its competitive advantage by making a large acquisition in the current oil downturn to make up for the XTO purchase, which proved to be disappointing, Barron’s reported, citing Gheit and Amadeo.

ExxonMobil is the only AAA-rated company among its peers, according to Gheit and Amadeo.

The recent dividend increase and expected USD 1bn share buy-back in the second quarter of this year underscores ExxonMobil's confidence and reassures its shareholders that it is different and a cut above the rest, Gheit and Amadeo said, according to Barron’s.

ExxonMobil has a current market value of more than USD 320bn, or about 59% above the market capitalization of its largest competitor, according to the report. It coul dtheoretically acquire any company in any of its business segments, conditional on regulatory approval, Barron’s wrote, citing the analysts.

The report didn’t identify potential targets.

The Californian tech giant Apple may be out of the race to buy the Finnish Nokia’s Here mapping technology unit, according to Taloussanomat.

The Finnish language piece wrote, without citing any sources, that since Apple had recently signed an agreement with the Dutch TomTom for its location services tech to be applied to Apple products, it may mean that Apple is not interested in acquiring Here.

It wrote that Apple has been mentioned as one of the possible buyers for Here in recent times. It said that Apple acquired a satellite services company recently too.

Link to article http://www.digitoday.fi/bisnes/2015/05/19/sopimus-vihjaa-apple-ei-mukana-nokian-tarjouskilvassa/20156303/66

Taloussanomat

Suddenlink acquired for $6.6 billion by management, investment firms

Cequel Communications Holdings LLC, which does business as Suddenlink Communications, reached an agreement Wednesday to be acquired for $6.6 billion by a group including BC Partners, CPP Investment Board and Suddenlink’s management team, led by Chairman and CEO Jerry Kent.

Suddenlink is the seventh-largest cable system operator in the United States and the 10th largest privately held company in St. Louis with revenue of $1.9 billion in 2011.

The purchase price includes $1.985 billion from BC Partners, CPPIB and certain members of Suddenlink management, plus debt of $500 million and the assumption of Suddenlink's current liabilities of $4.094 billion as of March 31. Sellers include holders of Suddenlink’s preferred and common equity, led by Goldman Sachs Capital Partners and including Quadrangle and Oaktree Capital Management. The transactions are expected to close in the fourth quarter of this year, subject to customary closing conditions, including receipt of required regulatory approvals.

Suddenlink, with 6,000 employees, offers television, high-speed Internet and telephony services to over 1.4 million residential and commercial customers, primarily in Texas, West Virginia, North Carolina, Oklahoma, Arkansas and Louisiana.

Cequel, the holding company, was formed by Kent and his long-time partner, St. Louis cable television pioneer Howard Wood. Wood is chairman of Cequel and Kent is CEO. Kent is also an investor in the group led by Tom Stillman, chairman and CEO of Summit Distributing, which bought the St. Louis Blues hockey team for $72 million in May.

The acquisition of Suddenlink positions the company to benefit from positive industry trends, including continued strength in television viewership, as well as growth in commercial services, high-speed Internet adoption and data consumption, the company said.

The company generated $1.96 billion in revenue and $743 million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in the 12 months ending March 31. Suddenlink is one of the fastest growing cable operators in the U.S., with pro forma compounded annual growth in revenue and adjusted EBITDA before non-recurring expenses of 7.4 percent and 11.2 percent, respectively, since 2007, according to the company.

“This agreement will allow us to continue to invest in our infrastructure, new technology, and most importantly, our people,” said Kent in a statement.

"Cable is an industry we know well in both Europe and the United States, and epitomizes the defensive growth characteristics we typically seek in an investment," said BC Partners Co-Chairman and Managing Partner Raymond Svider. "Jerry and his team have an enviable track record of delivering strong equity returns to shareholders, and we are looking forward to working with them to help continue growing Suddenlink and take it to the next level."

“This represents a unique opportunity to acquire a leading cable operator that has consistently generated industry-leading results,” said André Bourbonnais, senior vice president, private investments for CPPIB. “We are delighted to partner with Suddenlink’s management team and BC Partners to position the company for continued growth and long-term success.”

In connection with the acquisition, a newly formed subsidiary of Suddenlink entered into a commitment letter with Credit Suisse for $500 million of senior unsecured bridge loans. The company expects to use the proceeds to fund a portion of the purchase price. In addition, the company will continue to be managed by Cequel III LLC, pursuant to the management agreement.

Advisors to Suddenlink in the transaction include LionTree Advisors, a division of EM Securities, and Goldman Sachs acted as financial advisors; Paul Hastings LLP and Seyfarth Shaw LLP acted as legal advisors. For BC Partners and CPPIB, Credit Suisse acted as financial advisor; Latham & Watkins LLP and Wachtell, Lipton, Rosen & Katz LLP acted as legal advisors. CPPIB was also separately advised by Torys LLP. For existing equity holders, Fried, Frank, Harris, Shriver & Jacobson LLP acted as legal advisor.

BC Partners is a private equity firm with $15.5 billion under management. BC Partners Funds own Com Hem, a leading supplier of television, broadband and telephony in Sweden. Previously, BC Partners led the creation of Unitymedia, Europe’s third largest cable operator, following a number of transformational and value enhancing acquisitions. Unitymedia was sold to Liberty Global in 2009.

CPP Investment Board is a investment management organization that invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 18 million Canadian contributors and beneficiaries. CPPIB is governed and managed independently of the Canada Pension Plan. At March 31, the CPP Fund totaled C$161.6 billion of which C$26.3 billion was invested in private equities.

Uber will challenge plans by Boris Johnson to cap the number of minicabs operating across London, arguing that the move would mean “higher prices” for millions of travellers in the British capital.

The Mayor of London, who was elected as an MP this month, is pressing for new legislation that would limit the number of minicabs in the city.

The proposals, which are expected to feature in this month’s Queen’s Speech, are being seen as a direct attempt to curb the rise of the US taxi app group.

In a letter seen by the Financial Times, Jo Bertram, the head of Uber’s business in the UK, has requested the chance to debate the issue with the mayor directly.

She also complains that Uber is not yet represented on the board of Transport for London and has been shut out of other industry bodies from which it can better challenge the move.

“London is one of the great cities of the world and Londoners have embraced Uber’s technology; tens of thousands rely on us for their job and millions more use us to get where they need to go,” Ms Bertram said.

“Capping the industry’s ability to grow would mean higher prices and less availability for the millions of people who rely on Uber and services like ours to get around.”

Boris Johnson seeks to curb number of London minicabs

A London taxi is seen on a a taxi rank on the Aldwych in London, U.K., on Friday, May 4, 2012. Olympic tourists seeking to hire one of London's 9,000 black taxis during the events may struggle as drivers quit the streets in protest against travel restrictions. Photographer: Chris Ratcliffe/Bloomberg

Boris Johnson wants to cap the number of minicabs operating across London, in an attempt to curb the rapid growth of Uber, the ride hailing app

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She added that new regulations should “protect people — their personal safety and their pockets — not hamper new innovations they value and that make their lives easier”.

Representatives for the Mayor of London’s office did not respond for requests for comment.

The letter is Uber’s first step in lobbying against the cap proposals revealed by Mr Johnson last week. “We must be able to take action against the threat posed by the massive increase we are seeing in the number of private hire vehicles,” he said.

Mr Johnson argues that the increase was to blame for greater congestion on London’s roads, more air pollution and the problem of illegally parked vehicles.

The number of minicabs in the capital has increased by nearly a fifth in the past year to more than 78,000. Uber has about 14,000 drivers in London, making it the largest provider of private hires in the city.

The rise has put pressure on TfL, caught between the popularity of Uber and incumbent taxi groups. The transport regulator is currently undertaking a review of the London taxi market.

London’s long-established black cab drivers have complained that a lack of regulation was skewing the market in Uber’s favour. The London Taxi Drivers Association has taken Uber to court alleging that the use of smartphones to log journey’s flags regulations.

Our Oil team now expects a long-term (2020) $55 oil price (Brent). Nearer

term, they expect an average Brent price of $62-65 in 2016-18. We have

noted heightened concerns in our recent discussions with investors that a

‘lower for longer’ oil price environment could adversely affect the A&D

sector. In this note, we outline the likely impact from a lower oil price by

sub-sector.

Overall, we believe the defence outlook is likely to be unaffected by a lower

oil price. Tougher fiscal conditions in Saudi Arabia are offset by heightened

regional tensions and ongoing force modernisation plans. In Western

markets, we do not expect any significant change; we note that European

and US budgets are broadly improving and that cheaper fuel could

alleviate some fiscal pressure, but it is unlikely that fuel savings would flow

straight through into higher equipment spending

The lower oil price will benefit airlines, and healthier airlines are less likely

to try to delay/reduce maintenance spend. The overall impact should

therefore be positive. However, this improvement will be less pronounced

on RPH contracts, which are less cyclical in nature than T&M contracts.

We think a lower oil price could slow aircraft ordering activity: we forecast

a book-to-bill of 1x at Airbus in 2015 vs. 2.3x last year (although oil is not

the sole factor here). We estimate that if the active life of aircraft were

stretched from 25 to 27 years, this could reduce wide-body replacements

between now and 2020 by c.100 aircraft, equal to 4% of our forecast

deliveries by 2020; for narrow-bodies, the impact is negligible. Overall, we

think broad cancellations or deferrals are unlikely given buoyant traffic

growth and improving airline financials.

Safran and Thales remain our two top picks in European A&D (both CL

Buys). Safran should benefit from an improving aftermarket, and our

forecasts are ahead of the company’s aftermarket guidance for this year.

For Thales, we expect margin improvement as organic growth returns,

partly driven by a better French defence outlook.

with investors. Overall, the tone was confident, yet realistic, with the

company's key message around capital returns reassuring and further

elaborating how the ALU deal will bring more scale and scope.

■ Capital structure will be monitored, scope for returns. Management

articulated that if the HERE business is sold, they would still retain the

flexibility for capital distribution, even if the ALU transaction has not or does

not close. We believe this distribution could be high as €3bn, equating to as

much as 13% of the market cap, but the timing remains uncertain. Longer

term, while there are several hurdles for the ALU deal to close (regulatory,

etc.), as well as financial aspects to consider (converts/ squeeze out),

management concede that the combined entity would have potentially

excessive levels of cash (as of Q115 gross cash of €13bn/net cash of €5bn)

and would seek to return this to shareholders. The company also highlights

that the new entity's potential profitability and lower level of volatility should

help them attain an investment grade rating over time.

■ Why, and why now? Management argued that the strategic rationale is

based upon fixed mobile convergence, the industry being in transition

between 4G and 5G, and both entities having gone through a large part of

the restructuring process.

■ Synergies €900mn a net and gross number…the hassle factor. Nokia

target a gross synergy and net synergy estimate of €900mn long term. This

is a function of several factors. First, there is scope for revenue synergies as

the routing business from ALU is sold through a broader channel. Second,

there are dis-synergies in wireless within China and possibly at Sprint.

Finally, management have allowed for the hassle factor, which seems to

include industry competitive reactions. This final factor we believe is possibly

the hardest to estimate. We assume gross savings of €1.35bn, but estimate

Nokia only retain 50% of that, driving LT OMs to 15% in 2019, up from 8.7%,

which we believe is fair.

Commodities vs. Earnings stabilization?, QE?, Weaker €. Question remains if the discount rate or are the earnings wrong? Using spot WACC in our long-term valuations points at c.40% upside

on average for the sector Key stocks: Outperform: Iberdrola (TP € 6.8); Centrica (TP 290p); Shanks (TP 115p) Underperform: Gas Natural Fenosa (TP €18); National Grid (TP 780p), Verbund

(TP €10.5) Stocks to watch: Enel (Neutral, TP €4.3), Engie (Neutral, TP €19.25) , Terna (U/P, TP €3.5, as an alternative to National Grid)

Dow+0.07% S&P-0.07% Nasdaq-0.17% Russell-0.14% VIX 12.85

Nikkei +0.97% Hang Seng -0.20% Shanghai +1.96%

Eur$1.1134 GBP 1.5505 EURCHF 1.0427 JPY 120.93 CHF 0.9364 WTI $58.44 (+0.78%)

S&P +0.01% EuroStoxx -0.16% Dax -0.31% SMI -0.09%

- ECB Mulls Accepting More Greek Assets as Collateral: Kathimerini

- Oil M&A Activity to Pick Up in 2016

- Rokos Hires Former Brevan Howard Colleague Ahead of Fund Startup

- AIR FP : Boeing, Airbus, Lockheed Considering Bids for Sikorsky: WSJ

- AREVA FP : Engie Said to Mull Bid for Areva Nuclear Services Outside France

- ATC NA : Time Warner Cable Said to Receive Takeover Approach From Altice (see WSJ, Reuters & FT Article on ur bbg)

- AZM IM : Timone Fiduciaria Selling 7.54m (5,26%) Azimut Holding Shrs, sold at E27,90

- BDT GY : Bertrandt 2Q Net Income EU15.2m vs EU15.8m; Confirms Outlook

- DSY FP : Autodesk 2Q Rev. View Below Est; Falls 3.3% Post-Mkt --> ADSK -1% in afte hours, could weight on DSY

- DEXB BB : Dexia 1Q Net Loss EU125m; 1Q Recurring Loss EU212m

- DPW GY : Deutsche Post DHL Group Divests 4.16% Stake in Sinotrans

- ENG SM : Oman Oil Selling 5% of Enagas(Citi & DBK) worth €314.4m, shares placed @ €26.34

- FCC SM : Slim Asks Banks to Renegotiate FCC’s EU4.5b Debt: Confidencial

- FCA IM : Fiat Chrysler Automobiles Says ‘Fully Aligned’ With NHTSA

- HLE GY : Hella Shareholders Selling Up to 13.9m Shrs in Bookbuilding

- HOLN VX : Holcim to Reorganize Group Functions, Sees 120 Swiss Job Cuts

- ING FP : Bpifrance Buys 5.5% Stake in Ingenico From Safran

- KPN NA : America Movil Offers EU2.25b of Bonds Exchangeable Into KPN Shrs

- LG FP : Lafarge to Cut 380 Jobs, Including 166 in France: Les Echos

- EGL PL : Mota-Engil 1Q EU3.4m vs EU7.34m Y/y

- PLUS LN : Plus500 Aims to Unlock Core Accounts Within Days: City A.M.

- SALM NO : Salmar 1Q Operational Ebit Declines; Harvest Volumes Increase

- GLE FP : France May Reconsider SocGen Tax Breaks for Kerviel Loss: Echos

- UBSN VX : UBS Pays $342m to Fed Over Practices Linked to FX Business

- VOD LN : Malone Says Liberty, Vodafone Make ‘Great Fit’ in W. Europe

- ZO1 GY : Zooplus 1Q Pretax Rises 25%, Confirms 2015 Forecast

*AVEVA RAISED TO NEUTRAL VS UNDERWEIGHT AT JPMORGAN

*ENGIE RAISED TO BUY VS NEUTRAL AT CITI

*E.ON RAISED TO NEUTRAL AT CITI

*GAM HOLDING RAISED TO BUY VS NEUTRAL AT GOLDMAN

*IGD RAISED TO BUY VS HOLD AT SOCGEN

*TALKTALK RAISED TO BUY VS NEUTRAL AT CITI

>>> Down

*ABERDEEN ASSET MANAGEMENT CUT TO NEUTRAL VS BUY AT GOLDMAN

*ITALCEMENTI CUT TO MARKET PERFORM VS OUTPERFORM AT BERNSTEIN

*MAGNIT CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE

*OLD MUTUAL CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN

*TATE & LYLE CUT TO UNDERPERFORM VS NEUTRAL AT EXANE, PT 550P

*UNICREDIT CUT TO UNDERPERFORM VS SECTOR PERFORM AT RBC

>>> PT Change

>>> Intitiation

*ELEMENTIS RATED NEW UNDERPERFORM AT CREDIT SUISSE; PT 264P

*SOUTH32 RATED NEW HOLD AT HSBC, PT 125P

>>> Call