>>> Rosetta Ressources (ROSE) To be acquired by Noble Energy for $26.62/shr in s

To be acquired by Noble Energy for $26.62/shr in stock (approx 38% premium); total deal valued around $2.1B; deal to be immediately accretive 

Noble Energy will acquire all of the common stock of Rosetta in an all-stock transaction valued at $2.1 billion, plus the assumption of Rosetta's net debt of $1.8 billion as of March 31, 2015. Under the definitive agreement, Rosetta shareholders will receive 0.542 of a share of Noble Energy common stock for each share of Rosetta common stock held. Based on the Noble Energy closing price on May 8, 2015, the transaction has an implied value to Rosetta shareholders of $26.62 per share, representing a 28 percent premium to the average price of Rosetta stock over the last 30 trading days. Following the transaction, shareholders of Rosetta are expected to own 9.6 percent of the outstanding shares of Noble Energy. Deal expected to close Q3 2015 

Rosetta's liquids-rich asset base includes approximately 50,000 net acres in the Eagle Ford Shale and 56,000 net acres in the Permian (46,000 acres in the Delaware Basin and 10,000 acres in the Midland Basin). Noble Energy has identified in excess of 1,800 gross horizontal drilling locations for development, providing net unrisked resource potential of approximately one billion barrels of oil equivalent. Rosetta's assets produced 66 thousand barrels of oil equivalent per day in the first quarter of 2015, and year-end 2014 proved reserves were 282 million barrels of oil equivalent. More than 60 percent of Rosetta's current production and proved reserves are liquids. Noble Energy anticipates a compounded annual production growth rate from these assets over the next several years of approximately 15 percent, generating positive free cash flow on an annual basis. 

Noble Energy CEO: The Eagle Ford and the Permian are premier unconventional resource plays, two of the most economic in the U.S., which will expand our resource base and development inventory and further diversify our portfolio. The transaction will be immediately accretive to our per share production, reserves, earnings, and cash flow.

(Makor) Ahold for Delhaize - first comments

Ahold for Delhaize
Belgian newspapers De Tijd and L’Echo reported May 9 that the companies are in early talks to merge.
Firstly, this is unlikely to be a merger but more a potential takeover of Delhaize Mcap 8.4bn Euro by its Dutch rival Ahold Mcap 16.4bn Euro.
However, we are cautious on this deal (optimistic yes but cautious)
The negatives are that Delhaize multiples are already high. For example, Delhaize EV/Sales multiple over the prior 3 years is 0.29x Ev/Sales average. Delhaize is at current share price of Eur84.1 trading at 0.44x Ev/Sales or c50pct higher than average. Bear in mind this merger has been on the making for years and there does not seem to be counter bidders, so at current share price and sales multiple, Delhaize would need to have evident synergies with Ahold. Antitrust in benelux may also be a concern (who are the ready buyers if a divestment is required?).
The positive is that CEOs are reactiing to the European MnA environment and pursuing long rumoured mergers, Delhaize Ev/Sales multiples have been improving vs Ahold. For example in 2012 the Ev/Sales multiple for Delhaize was 48pct discount to Ahold’s (0.25x vs 0.37x) the consensus forward 2015 Ev/Sales multiple puts the discount at 21pct. The market is re-rating Delhaize’s sales and both companies have a foothold in the US which could drive synergies. This may mean the timing is right for Ahold to take Delhaize over. Also Delhaize and Ahold share a common large holder (Silchester), similar FcF generation and leverage.
Short covering in Delhaize and the unwinding of long/short positions may push the Delhaize share price in the short term but we await for further details

(Jeffries) Alcatel-Lucent - Mixed Quarter but the Nokia Deal is On

Mixed Quarter but the Nokia Deal is On Track… Where’s the Cost Savings?

Key Takeaway
- The Q1 results included a modestly higher-than-expected top line with
operating profitability that met expectations. We came away from the earnings
call feeling less confident about their ability to hit the full €950M Fixed Costs
savings target. Barring any surprises, we expect the Nokia transaction to move
forward. Our rating remains Hold.
- Nokia Deal Still on Track... CEO Michel Combes got asked numerous questions on the
pending deal. Management teams of both companies have stated that the deal will not be
affected by one poor quarter of results from Nokia. The Nokia transaction remains on track
to close in 1H’16.
- Negative Q1 Fixed Cost Savings? We’re Having Flashbacks to Prior
Restructurings... In Q1, the organization did not capture any Fixed Cost savings that
accrued to the bottom line. The company stated that all savings were reinvested back into
the business (R&D + Sales & Marketing). While they reaffirmed the €950 million expected
for Shift Plan savings by year-end 2015, it seems the Fixed Cost savings are getting harder
and harder to generate. Net savings have declined each of the past 3 quarters. The situation
reminds us of the company’s six prior restructurings (pre-Shift Plan) where they missed their
targets as savings were plowed back into the business. In total, we believe the industry may
simply be too competitive for Alcatel-Lucent to deliver on their cost savings targets and run
the business at high-single digit operating margins over sustained time periods.
- The Cash Performance Was Much Worse than Advertised… Per the headline figure
from the company --Net Cash at Q1-end was €262M, down versus €326M at Q4-end. On
the Balance Sheet however, Current Liabilities increased roughly €500M Q/Q after running
at very consistent levels (€1.2 to €1.4 billion) over the past 3 years. That certainly helped
cash look much better. The additional Q/Q increase in Receivables factoring also helped cash
balances.
- Tweaking Estimates… For 2016, our revenue and EPS projections move from €14.299
billion and €0.20 to €14.384 billion and €0.16. We continue to rate the shares a Hold and
expect the business to trade in-line with Nokia given the all-stock terms of the deal.
- Valuation/Risks
Risks: 1) Balance Sheet / Cash Burn; 2) management execution against the Shift Plan; and 3)
lumpiness in spending trends among the major North American service providers. Our new
Price Target is €3.50, which equates to the current consideration Alcatel-Lucent shareholders
will receive on the deal.

(JPM) Equity Strat. - How worrying is the latest move up in bond yields?

How worrying is the latest move up in bond yields?
Reflation was never a reason to be bearish on equities

* There were good arguments for volatility to increase in the short term –
elevated P/Es, strong prior run, position squaring in crowded trades, bad
seasonals etc – but the spike in bond yields should not be added to this list,
in our view. In fact, we think that the move up in bond yields is one of a range
of factors signaling that the next stage for the market will be the reflation
trade, and that the risk-off phase will not last beyond a few weeks:
* 1) Yields moving higher will end up an eventual positive. We note that in ‘13
the bond selloff drove a correction initially, only to be followed by a strong 2H
equity rally, where SPX moved up by 15%, despite 10 year yields selling off
150bp.
* Banks are helped when yields increase. There is a strong positive relationship
between the relative performance of BKX index and the 10 year yields, as per
top chart. The relative performances of Cyclical vs Defensive sectors and of
Value vs Growth styles are also linked to the bond yield direction. We note that
since the peak of SXXP on 27th April, the Defensive group has in fact
underperformed Cyclicals by 20bp, in the down market. We stay UW Utilities in
particular and stay OW Banks, even during the correction phase.
* 2) DXY rolling over is reflationary, as it underpins commodity prices. The
correlation between oil price and the equity markets, or indeed the oil and
earnings, remains resolutely positive. Stay OW Energy.
* 3) Inflation expectations are rising, reaching their highest level since last
November. This is in stark contrast to Q4 of last year when the collapse in
inflation expectations was pressuring equities, and Banks in particular.
* 4) M1 keeps moving up in Eurozone. This suggests there are further gains in
Eurozone PMIs in store for 2H. The peripheral PMIs in particular are breaking
out.
* 5) Credit is turning higher. Loan growth is bottoming out in Eurozone. Cost of
credit is coming down.
* May remains seasonally a poor time for risk trades, but we believe that, beyond
some potential further short-term position unwinding, the backdrop for the 2nd
half is looking increasingly encouraging. The signs of reflationary dynamics
taking hold should lead to the next leg higher in equities, driven by Banks,
commodities and Cyclicals. Among our key sector calls we are OW Banks and
OW Energy vs underweight Utilities and Staples, and are OW Cyclicals vs
Defensives.

(JPM) Syngenta - Further thoughts on Syngenta as an acquisition target

Syngenta (SYNN VX, UW – SF395.80, PT SF240.00) (Ben Scarlett)
Further thoughts on Syngenta as an acquisition target
In this note, we follow up on our earlier comments (link) regarding Syngenta as a potential
take-over target, and address some of the common questions posed to us by investors
following Monsanto’s bid. As a general comment, we expect discussions to persist and
the question is whether or not Monsanto elects to put the offer to Syngenta’s
shareholders, or indeed raises the offer. In our view, a deal appears achievable, with antitrust
restrictions likely to represent the greatest challenge, based on the presumption
Syngenta’s Board at some point accepts a bid. Finding a suitor for Syngenta’s Seeds
business – for which at least a partial disposal is likely to be required to fulfill anti-trust
requirements – is unlikely to pose a problem. However, there may prove to be greater
difficulties in meeting requirements with regards to disposals/sales of herbicide assets,
where a Monsanto-Syngenta combination would otherwise have a substantial market
share in North America and Latam, and in the non-selective markets globally. Overall, we
estimate 15-20% of Syngenta’s sales could be subject to anti-trust considerations. We
estimate potential synergies will likely be in the $600-700m region, but note this figure

The key issues we address in this note include:
1) Potential anti-trust considerations
2) Possible alternative bidders for Syngenta
3) Potential suitors for part disposals
4) Possible defense mechanisms for Syngenta
5) Synergies and other considerations