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BN 07/29 05:30 *SCHNEIDER CUTS FULL-YEAR SALES, ADJ. EBITA TARGETS

*SCHNEIDER CUTS FULL-YEAR SALES, ADJ. EBITA TARGETS
2015-07-29 05:30:06.246 GMT

--KURT SCHUSSLER

-0- Jul/29/2015 05:30 GMT

Oaktree Sees Brew of China, Oil, Greece Cracking Global Markets
2015-07-28 18:59:54.812 GMT


By Devin Banerjee
(Bloomberg) -- The past few years have been frustrating for
the world’s biggest distressed-debt investor, as soaring markets
kept companies clear of trouble. For Oaktree Capital Group LLC,
its time to shine is getting closer as China, commodities,
Greece and Puerto Rico threaten to crack markets.
“Relative tranquility belies the fact that there’s still
plenty to worry about,” Bruce Karsh, Oaktree’s co-chairman,
said Tuesday on a conference call with the firm’s investors.
“The U.S. economy recovery remains tepid, interest rates are
poised to rise sometime in the coming year and the global
economic environment is quite unsettled with the overhang of the
Greek debt crisis and the slowing Chinese economy.”
Oaktree executives Karsh, Howard Marks and John Frank have
lamented the high-priced environment in the U.S. since at least
2013, when the Standard & Poor’s 500 index was still only in the
middle of a four-year run that started in 2011. Buoyant debt
markets have enabled troubled companies to refinance, with 53
defaults globally last year, an 80 percent drop from the peak in
2009, according to Moody’s Investors Service.
Oaktree has distributed almost all of the money and profits
from a $14.5 billion distressed debt fund raised before the 2008
financial crisis. The Los Angeles-based firm on Tuesday said
second-quarter profit dropped 37 percent from a year ago, when
it was selling assets from the Opportunities Fund VII pool.
The firm has prepared for a coming crisis by gathering
almost $10 billion for a new distressed debt vehicle,
Opportunities Fund X. A further slump in commodities prices or
the Chinese stock market may set off enough opportunities for
Oaktree to seek more money, Karsh said.

Global ’Cracks’

“To the extent that we see further cracks in the general
environment -- either commodities markets, effect of China
slowing -- we may well decide to increase the amount that we
raise above $10 billion,” he said. “Perhaps well above.”
Karsh also cited Puerto Rico’s “deteriorating” debt as
one of the factors heightening market volatility and creating
new investment opportunities.
Oaktree continues to evaluate potential oil and gas deals,
as oil this week traded in a bear market amid surplus supplies
and concern that Chinese demand will wane. Karsh said the firm
has “a lot of dry powder” available for energy investments.
“As things get worse and worse, the opportunity set for us
opens more and more,” he said of oil and gas industries. “The
psychology is starting to turn negative, but it’s just
beginning. We haven’t dived in yet.”

For Related News and Information:
Oaktree Said to Plan New Europe Fund in Bet Bank Retreat to Last
Oaktree Busier in Europe Than Ever for Bargain Hunt, Marks Says
Oaktree Is Said to Raise $7 Billion for Distressed Debt Fund
Top stories: TOP <GO>
Credit market watch: CMW <GO>
M&A database: MA <GO>
Private equity market: PEM <GO>

To contact the reporter on this story:
Devin Banerjee in New York at +1-212-617-1534 or
dbanerjee2@bloomberg.net
To contact the editors responsible for this story:
Christian Baumgaertel at +1-617-210-4624 or
cbaumgaertel@bloomberg.net
Pierre Paulden, Mary Romano

Altria, Philip Morris Should Become One Company Again: Real M&A
2015-07-28 17:32:14.531 GMT


(For a Real M&A column news alert: SALT REALMNA <GO>.)

By Tara Lachapelle
(Bloomberg) -- It may be time to put Altria Group Inc. and
Philip Morris International Inc. back together.
The world’s most valuable tobacco companies split apart
more than seven years ago to set free the faster-growing
overseas operations while the U.S. business was entangled in
smoker lawsuits. But things have changed since then, and the
rationale that justified the separation no longer exists.
Altria, the $108 billion maker of Marlboro cigarettes that
will release second-quarter results Wednesday, has largely put
the legal morass behind it. And Philip Morris, its $133 billion
international counterpart, has lost its luster as cigarette
demand wanes in Europe. Both stocks are now trailing rival
Reynolds American Inc., which in June completed its $28 billion
acquisition of Lorillard Inc., owner of the Newport brand.
As a result of that merger, the industry is consolidated to
a point where the only remaining takeover options for Altria and
Philip Morris are probably one another. They’ve already begun
working more closely together in recent months, joining forces
to develop new products such as electronic-vapor cigarettes.
“This could be a step toward an eventual recombination,”
Ken Shea, an analyst for Bloomberg Intelligence, said in a phone
interview. “Being geographically diverse is probably a good
thing for a tobacco company now. Philip Morris is the best
option for Altria to team up with.”

Spinoff Rationale

Iro Antoniadou, a spokeswoman for Philip Morris, said that
“many of the reasons articulated by the board at the time of
the spinoff are still relevant today.” She declined to comment
on whether Philip Morris is considering a merger with Altria, as
did Bill Phelps, a spokesman for Altria.
“Altria spun off Philip Morris International so that each
business could focus exclusively on their own opportunities and
to address their own challenges with the ultimate goal of
building long-term shareholder value,” Phelps said by phone.
“It’s important to look at the results Altria has achieved
since the spinoff.”
Altria’s share price has more than doubled since Philip
Morris began trading separately in March 2008. It is projected
to climb less than 6 percent over the next 12 months, according
to analysts’ estimates compiled by Bloomberg.
As smoking rates diminish in most regions of the world,
growth is hard to find. Becoming one company again would allow
Altria and Philip Morris to fuse their research and development
efforts and share resources.
It would also make Altria a global entity once again, while
giving Philip Morris renewed exposure to the U.S., where
cigarette makers have strong pricing power. The three most
popular brands -- Marlboro, Newport and Camel -- are owned by
two competitors: Altria, the U.S. market leader, and Reynolds,
which is No. 2.

Activist Bait

With so few of Altria’s and Philip Morris’s shares owned by
insiders, neither company is safe from activist investors,
should any take interest. Officers and directors at Altria own
just 0.2 percent of the stock. The figure is 0.3 percent at
Philip Morris, data compiled by Bloomberg show.
While the companies’ size could be a deterrent -- a 5
percent stake in Altria would cost more than $5 billion -- some
activists have had success taking even small positions in large
companies. Nelson Peltz owns just 1.25 percent of PepsiCo Inc.
yet has had influence as an activist shareholder at the $141
billion soda giant.
Investors also tend to get behind activist campaigns when a
stock is underperforming, as Philip Morris’s has. The share
price has fallen 4.9 percent in three years, while the Standard
& Poor’s 500 Index added 55 percent. Altria gained 52 percent in
that span.
“There really is no blockade from an ownership
standpoint” at Altria and Philip Morris, Shea said. “It could
allow activists to challenge the status quo.”

For Related News and Information:
Broader Altria-Philip Morris R&D Collaboration May Lead to M&A
Low Philip Morris, Altria Insider Stakes May Invite Activists
U.S. Tobacco Industry Is Enjoying Return to ‘Old Days,’ CEO Says
Reynolds’s Shrinking Sales Spark Tobacco Takeover Talk: Real M&A
Bloomberg Intelligence - Tobacco Industry: BI TOBC <GO>
Real M&A columns: NI REALMNA <GO>
Top deal stories: DTOP <GO>

To contact the reporter on this story:
Tara Lachapelle in New York at +1-212-617-8911 or
tlachapelle@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Elizabeth Wollman