>>> Google A upgrade details -- to Buy at Stifel; tgt $850

Google A upgrade details -- to Buy at Stifel; tgt $850

Stifel upgrades GOOGL to Buy from Hold and sets target price at $850 noting Larry Page and Sergey Brin meet Warren Buffett and Charlie Munger as the Berkshire Hathaway (BRK.B) of the Internet emerges for a multi-year stock run, in firm's view. Today, co announced plans to create a new public holding company, Alphabet Inc., which will provide reporting for the core Google business as well as its smaller, more speculative segments separately. Co has recently been giving investors exactly what they've wanted, with the strong mgmt team exercising disciplined focus on value creation, and with multiple business units operating with reasonable levels of autonomy. Firm believes this combination leaves the possibility for shares to exceed the S&P 500 return for many years on the back of this new operating structure

>>> Greek Agreement - First Details

*GREEK DEAL SECURES ABOUT EU85B OF FUNDING FOR COUNTRY: GOVT
*GREEK DEAL AVERTS BAIL-IN OF BANK DEPOSITS, GOVT SAYS
*GREEK DEAL REDUCES 3-YR PRIMARY SURPLUS BY EU20B, GOVT SAYS
*GREEK AGREEMENT SEES BANKS RECAPITALIZED BY END-2015: GOVT
*GREEK AGREEMENT SEES BANKS GETTING EU10B IMMEDIATELY: GOVT

NY Post : Google to become Alphabet Inc in structure shakeup

Google has become a soup of diverse businesses — much more than its original search function — so its co-founders moved Monday to change its structure to reflect its broad evolution.
The Mountain View, Calif., company will form a new parent company, called Alphabet, that will be run by Larry Page, co-founder and current CEO of Google — and will house Google, the search company, as well as Nest, its thermostat company, and Calico, a unit devoted to age and longevity, Google X and YouTube.
The radical re-jiggering was announced by Page in a blog post.
The move follows growing criticism that Google’s hodgepodge of businesses has become unwieldy for investors and managers alike.
Insiders speculated that the new holding company could also pave the way for spinoffs.
Page will become CEO of Alphabet, with co-founder Sergey Brin becoming Alphabet’s president. Vice Chairman Eric Schmidt will likewise retain his title for Alphabet.
Sundar Pichai, Google’s head of product and engineering for online businesses, will become CEO of Google Inc., a subsidiary that will include the search engine, YouTube, Android operating system and Chrome browser.
Indeed, Page signaled that he and Brin are looking for more room to focus on the Google X’s moonshot end of the business, which is chasing everything from driverless cars to a reversal of the
human aging process.
“Sergey and I are seriously in the business of starting new things,” Page wrote, noting that Alphabet will include the X lab, the incubator of its drone-delivery project. “We are also stoked about growing our investment arms, Ventures and Capital, as part of this new structure.”
Ruth Porat, who recently joined as chief financial officer from Morgan Stanley, will retain her title at both Alphabet and the Google subsidiary.
Alphabet will replace Google as the publicly traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet. The shares will continue to trade on
Nasdaq as GOOGL and GOOG.

NY Post : New ad tracking software is like legal insider trading

It might be the closest thing to insider trading and still be legal.
Wall Street pros are warming up to one of the newest investment tools to come along — an advertising tracking service promising to correctly predict whether companies will beat or miss forecasts on quarterly results.
Todd Krizelman, CEO of MediaRadar, who started tracking all kinds of advertisements about eight years ago — from magazine spreads to pop-ups on mobile Google searches — feels the data can regularly predict how well a company is faring in a given quarter.
“We found that basically — not always, but often — we can predict business performance, like sales, based on marketing,” he said.
Some companies, he told The Post, especially those that sell clothes and food, tend to ramp-up their ad spending right before the end of their fiscal quarter if they were in danger of missing Wall Street forecasts, as a way to get more customers in the door.
“It’s a little bit like a tell in poker,” Krizelman said. “When you see the signal once, you don’t know what it means. But when you see it over time, you see what it means.”
MediaRadar started testing the data as its own product in December, and is now starting to roll it out more broadly.
For a year’s access to data on more than 3 million companies, Media Radar charges a six-figure fee.
Krizelman wasn’t always aware of this interesting — and potentially profitable — intersection of Wall Street and Madison Avenue.
When he started tracking ad spending on an almost real-time basis, he was hoping to help publications figure out what companies to pitch for buying ad space.
But then about a year ago, Krizelman said, “we started to look at all this advertising data. I showed it to a friend who works at a hedge fund, and he was like ‘Wow, I wonder what signals are in the advertising.’ ”
Over the eight years, Krizelman has amassed data on how nearly 3 million companies spend their money.
Krizelman is not alone in his belief. Private-equity giant Bain Capital believes in the tracking service and has invested in MediaRadar. (The Post is a client of MediaRadar).
One company MediaRadar has recently tracked is Panera Bread — and Krizelman said its ad buying successfully predicted investors would be in for disappointing results when it released its first-quarter results earlier this year.
After Panera reported first-quarter results on April 28, its shares fell 1.7 percent over the next two trading days.
MediaRadar was also able to predict how fashion retailer Michael Kors and Chipotle Mexican Grill would do during their third and fourth quarters last year.
There are limits to what MediaRadar can do, of course.
The advertising data might not be able to tell how much a company could beat or miss analysts estimates, for example, Krizelman said.
While Krizelman claims to have a high batting average in predicting how companies are faring within a quarter, the data is not for everyone.
Just a “a few dozen” hedge funds sophisticated enough to parse it could benefit from the information, said Josh Elwell, a partner at ValueStream Labs who’s currently in talks with MediaRadar on how to advise.

(BarCap) Financials of possible Zurich/RSA tie-up

Financials of possible Zurich/RSA tie-up

Intuitive logic in possible tie-up, but financials have to work: We believe, in theory, a
Zurich/RSA tie-up could create significant value. However, how the deal is funded and
at what price are the key issues. In this note we analyse the two prices indicated in the
press (i.e. FT 27/07/15 and Telegraph 05/08/15) flexing these against Zurich’s key
financial hurdle of a 10% ROI and ensuring Zurich’s solvency remains comfortably
above the bottom of its target range. Our analysis indicates cost saves for a 525p bid
price (per the Daily Telegraph) would need to be around £210m to meet the 10% ROI
hurdle but would be between 6% and 10% accretive to our current base case 18E EPS
(which includes a $3bn buy-back but does not include a transaction with RSA). This
would require $1-2.5bn of new equity (depending on target solvency level). Increasing
the price to 550p (per the FT) would require a further c$400m of new equity and cost
saves of >£300m representing c16% of RSA’s current controllable cost base.

RSA’s negotiating position is fairly limited, we think: We believe Zurich is better
positioned were negotiations to take place. Simply put, Zurich doesn’t have to do this
deal, yet we believe this could be one of the more value creating transactions that RSA
could do given the limited number of potential partners with synergy potential. We think
this could put pressure on RSA to close a deal but would weaken its negotiating position.
The presence of several ex-Zurich management at RSA (Head of UK, Head of Ireland and
the incoming CFO) could reduce execution risk and offer additional appeal for Zurich.

Pre-financing with a possible sale of the LatAm business: The Insurance Insider
(16/03/15) suggested RSA was selling its Latin American business for £500m. Zurich
could use this as ‘pre-financing’ to reduce the absolute level it could pay, reducing the
amount of equity capital it would need.

What about Canada?: While Zurich/RSA has significant potential synergies in the UK
and centrally (e.g. reinsurance costs), Canadian synergies are smaller. They both have
meaningful commercial businesses, but Zurich does not have a personal lines business.
Zurich may be able to exploit RSA’s sum-of-the-parts that RSA cannot do itself. Selling
the personal lines business to a market consolidator could realize between £0.9bn and
£1.6bn ($1.4bn-$2.5bn), which could quickly repay the equity raised.

RSA’s Pension update: We analyse RSA’s UK DB pension and see scope for payments
to fall, with the outcome of the Zurich proposal potentially having an important bearing.

Changes to earnings and price target: Unrelated to our M&A analysis, we reduce Zurich’s
15E/16E EPS as we delay cost benefits, which modestly impacts our PT, but this is offset by
the weakening CHF, causing our PT to rise to CHF342. For RSA we slow the improvement in
underlying loss ratio although our longer term earnings expectations rise modestly as the
full benefits of the current changes flow through causing our PT to rise to 440p.

(BarCap) AutoParts : Future Powertrain: From sail to steam

Global Autos & Auto Parts
Future Powertrain: From sail to steam

We hosted our second annual Future Powertrain Symposium in London last month (July 3) with experts from Ricardo, VW, Valeo, LMC, Neste, RNO, BMW, Bosch and Intelligent Energy. It was notable that many of the discussion points remained similar to the prior year (see Future Powertrain: Premium pain?) and many of the unknown questions, such as the shape of regulations beyond 2021 and the likely speed of consumer’s shift towards a “sharing economy” and Disruptive Mobility remain unanswered. Powertrain questions unsurprisingly crossed over into much wider topics such as connectivity in driving, car sharing and the timeline towards autonomous driving. We hope to discuss many of these themes in more detail at our inaugural Driverless World conference in London 4 Sept. What is clear is that both regulations and changing consumer demands are making the industry more costly
for all and that, just as we saw steam engines in the 19th century taking over from the age of sail, so the internal combustion engine will be displaced over time by electrification, be it battery or fuel cell. The speed of the shift is unclear, but clearly opens up risks of new entrants and innovators entering the auto space and leapfrogging over the existing players by avoiding the costly hybridization phase.

(Citi) Change to Focus List Europe : Adding Capgemini, Removing ARM Holdings

Adding Capgemini, Removing ARM Holdings

What's Changed — Today we launched European Technology – Tech Tones, a
report in which we rank-order the stocks in Citi’s European Technology coverage
within the Citi rating categories of Buy, Neutral and Sell. While we have no specific
formula for allocating the ranks, factors we take into consideration include business
conditions, upcoming catalysts and recent share price volatility. We have three
premises for positioning our overall framework 1) top-down preference for EU (QE)
exposure, over exposure to emerging markets (EM), and particularly China (~25%
of EU Tech sales), 2) focus on capital allocation & market leadership, and 3)
bottom-up view emphasizing earnings momentum and expectations setup. This
analysis triggers our removal of ARM Holding (ARM.L; Buy, £9.51) and addition of
Capgemini to Citi Focus List Europe.


Adding Capgemini — Our Buy recommendation is based on two premises - a)
improving revenue growth underpinned by structural shift toward greater
outsourcing and offshoring in Europe, and b) steady pace of margin expansion
driven by merger synergies and declining average remuneration per employee
(Please see our recent Beyond the Horizon for more detail). Our DCF-based target
price of €100 factors in medium-term top-line growth of 4-6%, reported EBIT margin
of 10-11%, terminal FCF growth of 1% and WACC of 7.4%. Enterprise Value (EV)
adjustment of ~EUR 1.3bn primarily includes pension provisions.

Removing ARM Holding — We retain our Buy recommendation but no longer
consider it as a top pick as slowing demand from China continues to weigh in
across semis. More importantly, emphasis on momentum has meant that impact on
stock has been stronger than the likely cut to earnings. And with our economists
seeing China risks tilted to the downside, near-term setup remains challenged,
despite our positive view on the firm’s long-term licensing and adoption
fundamentals. We value ARM on 32x 2016E EPS to arrive at our TP of 1160p. This
PE multiple reflects EPS CAGR of 20% and PEG multiple of 1.6x.

(BofA-ML) Iran For European equities (Saipem, Eni, Total, OMV, Genel, DNO, Peuge

EU sanctions relief appears more comprehensive than US
Following on from our GEM primer, The Iran Nexus, we focus on what the Iranian nuclear deal could mean for European equities. We present a new timeline of selected key events related to the implementation of the sanctions framework and note that sanctions relief appears more comprehensive on the EU-side than on the US-side. This could lead to more EU business involvement in Iran, in our view.

Europe’s prior trading links a factor
Before the 2012 US/EU sanctions, Europe was a major developed economy end-market for Iran oil and petrochemicals exports and leading source of manufacturing goods, oil services, chemicals and transport equipment. Trade was concentrated in a handful of relationships with major integrated oil companies and multinationals. Those companies
have since withdrawn making straightforward investment opportunities within European equities more of a challenge to identify.

European equities: potential impact if sanctions lifted
We see short-term potential for oil service companies and opportunities for oil majors and E&P companies in the longer-term as oil field developments require significant capital investment and new licenses. Demand for European industrial and consumer goods may also increase if sanctions are lifted and FX reserves are released. Others may be negatively affected. Lower for longer oil and gas prices could add to deflationary pressures and European chemicals companies may face competition from an increase in Iranian petrochemicals production.


Pressure on oil prices and potential gas supply
Iran sits on the world’s most abundant gas reserves and fourth largest oil reserves. The potential return of up to 0.7mdb in production over the next 12 months could add downward pressure on forward oil prices of US$5-10/bbl, in our commodity research team’s view. Meanwhile a lack of investment has seen Iran’s gas supply remain dormant, but we expect the country’s contribution to the global gas supply to be significant with time.

>>> Baxalta/Shire dig in on positions, sources say

Deal Reporter

Baxalta/Shire dig in on positions, sources say 

• No dialogue since public offer
• Dispute over market valuation

Baxalta (NYSE:BXLT) and Shire (LON:SHP) are at odds over the Irish pharma company's unsolicited USD 30bn bid, two sources familiar with the situation said.

Deerfield, Illinois-based Baxalta is not resistant to a sale, but Shire's announced offer will not break the impasse, one of the sources familiar said.

This source familiar said shareholders that Baxalta has met with have indicated they believe its board made the right decision to reject Shire’s offer.

Last week, Shire revealed a stock offer to acquire Baxalta for USD 30bn, a 36% premium to the target's share price the day prior. Baxalta subsequently rejected the offer.

Shire is frustrated with Baxalta’s unwillingness to engage and disclose a valuation it would entertain, the second source familiar said.

The existing Shire offer is not “close enough” on valuation to warrant an engagement with Baxalta, the first source familiar said. He said that Baxalta's board, like any company's board of directors, is focused on fetching the best value for its shareholders.

The UK Sunday Times has reported that Shire is likely to enter takeover negotiations with Baxalta within the next few days. Talks between Baxalta’s major shareholders and Shire CEO Flemming Ornskov have so far made good progress and the two companies could now make initial contact, the report claimed.

Both sources, however, said that neither company has been engaged in any dialogue since Shire took its offer public. Shire did not offer “anything new” that would make the Baxalta board change its mind about the offer, the first source said.

Baxalta, as a new spun-out company, was hoping that after its debut it would find new long-term investors, different from Baxter International’s (NYSE:BAX) shareholder base, the first source familiar said. Also, there may be an uplift in its valuation over time. Shire made an opportunistic move at an artificially low price, “far away from even normal trading price and even further away from the change of control premium price,” he added.

On a call on Monday organized by Cowen & Company, Baxalta CEO Ludwig Hantson said Shire’s proposal “as of today is not the USD 45 per share they are asserting, but given the overall downward pressure on its share price, this morning’s value is more like USD 42 per share, a modest 27% premium off an unseasoned equity price.”

The implied value of Shire’s proposal is “no different from what we think we can achieve on our own in the next six to 12 months, and our investors and analysts agree. Many investors see value well north of Shire’s proposal without any of the risk inherent in taking Shire stock or giving away the control premium that our shareholders can enjoy in the future,” Hantson said.

Baxalta’s assertion that the company has traded only for a short period of time is not the best argument to make, the second source familiar said. He said the market already knew the valuation of the pharma portfolio when it was part of Baxter. Baxalta officially separated from Baxter on 1 July in a tax-free spinoff. Just one day later, Shire requested a meeting with Baxalta to discuss a merger opportunity.

“Everyone knows the company and its appropriate valuation. It’s just a huge song and dance,’’ the second source said.

Baxalta’s board and management is not at all shut off to the idea of objectively considering any offer that is compelling, either from Shire or any other suitor, the first source familiar said. He declined to specify a fair valuation for the company.

To suggest that Baxalta board is not willing to listen to a good offer is a wrong assertion to make, the same source said, but, at the same time, Baxalta is not interested in giving “people access to information without a good offer” on the table.

Baxalta, the first source familiar said, was surprised by Shire CEO’s aggressive move to go public with its one-and-only offer so far.

As a result, Ornskov has created a risk for himself by drawing the attention of other possible interested parties, he added. Last year the Shire's CEO did not cave in to AbbVie’s (NYSE:ABBV) overtures until the valuation was right, the first source familiar pointed out. AbbVie subsequently terminated the USD 54bn Shire deal after the US Treasury Department made inversion deals harder to pull off.

Shire, however, is unlikely to bid against itself unless the company is able to engage with Baxalta and figure out a valuation that could appeal to the target, the second source familiar said. At the same time, Shire will be disciplined in the interest of its own shareholders, he cautioned.

Still, Baxalta believes at this point it is being undervalued, the first source familiar argued, noting that the company’s standalone prospects would unlock more value for its shareholders than the current Shire offer.

Baxalta's objective is to launch 20 new products by 2020, with more than USD 2.5bn of risk-adjusted sales, Hantson said on the call on Monday. “We have a great platform as an independent enterprise," he said.