WSJ : comcast and Time Warner Cable to Meet With DOJ to Negotiate Merger

comcast and Time Warner Cable to Meet With DOJ to Negotiate Merger
Regulators examining whether Comcast lived up to NBCUniversal deal concessions, sources say


Comcast Corp. and Time Warner Cable Inc. are preparing to meet with officials from the U.S. Department of Justice Wednesday in a session aimed at negotiating possible concessions to address concerns that the merger of the two cable giants will hurt competition, according to people familiar with the matter.

The meeting would mark the first time the cable behemoths have sat down with regulators to try to hash out potential remedies in the more than 14 months since the $45.2 billion deal was announced, these people said. Staffers at both the Justice Department and the Federal Communications Commission remain concerned the combined firm would wield too much power in the Internet broadband market and give it unfair competitive leverage against TV channel owners and new market entrants who offer video programming online, said people with knowledge of the review.


The Justice Department, which evaluates antitrust concerns, and the FCC, which must decide if the deal is in the public interest, are nearing the final, crucial stages of scrutinizing the acquisition. Discussions on potential remedies would be an indication that the agencies haven’t yet made a firm or final decision on the merger.

But this meeting could be the first of many, and it’s also not clear whether the companies can offer concessions that will satisfy regulators.

Staff attorneys at the Justice Department’s antitrust division were leaning toward a recommendation to block the acquisition, Bloomberg reported on Friday, citing people close to the matter. The attorneys could submit their recommendation as soon as this week, according to the report. Such input by department staffers marks an initial milepost in the final decision-making process. Senior Justice Department officials will be the ones to decide whether to challenge the transaction.

A spokesman for the Justice Department declined to comment.

One potential concession that could be up for discussion is the divestiture of more of the roughly 30 million customers the combined company will serve if the deal closes. The companies have already agreed to deals with Charter Communications Inc. to sell or spin off systems serving 3.9 million customers if the Time Warner Cable purchase is completed.

Another factor is the FCC’s decision to impose stringent, utility-style regulations on Internet service earlier this year to make sure broadband providers treat all Web traffic equally. If regulators require Comcast to live under the new “net neutrality” regime regardless of whether they are held up in court in order to win deal approval, Comcast may walk away from the acquisition, people familiar with the matter said. Comcast wouldn’t owe Time Warner Cable any breakup fee if it were to abandon the deal.

Looming over any discussion about merger remedies will be the concessions Comcast made in 2011 to win approval to acquire NBCUniversal. People familiar with the current review process say the Justice Department has been examining whether Comcast has fully complied with those earlier commitments.

Specifically, the Justice Department is looking closely at Comcast’s role in Hulu, the streaming service it became a part owner of through the NBCUniversal purchase, people familiar with the matter said. In return for approval of the NBCUniversal takeover, Comcast agreed to have no management role in Hulu and be a silent partner.

The department is said to be asking questions about that arrangement, specifically with regards to the aborted effort by co-owners Walt Disney Co. and 21st Century Fox Inc. to sell Hulu in 2013. Comcast rivals DirecTV and AT&T were among the bidders at the time. Hulu ended up being taken off the sale block.

Comcast has argued that the Time Warner Cable deal isn’t anticompetitive and is necessary for the company to compete against an array of emerging threats to the traditional pay-TV model, including tech competitors like Apple Inc. and Netflix Inc. On Friday, in response to the Bloomberg report, Comcast spokeswoman Sena Fitzmaurice said “there is no basis for a lawsuit to block the transaction.”

The deal will result in “significant consumer benefits,” she said, including “faster broadband speeds, access to a superior video experience and more competition in business services resulting in billions of dollars of cost savings. These benefits have been essentially unchallenged in the record—and all can be achieved without any reduction of competition.”

Comcast’s purchase of Time Warner Cable has been dogged by regulatory delays, and the most recent expected closing date was bumped to the middle of the year. Meanwhile, Wall Street has remained cautious about the potential for the deal to be approved. After Bloomberg’s report, Time Warner Cable shares fell 5.4% to $149.61 on Friday, and Comcast slipped 2.1%. The stock drop left Time Warner Cable trading 11% below the value of Comcast’s all-stock bid, signaling skepticism among traders that the deal will close.

(BFW) Draghi Says Fed Preparing Very Carefully for Possible Rate Rise


Draghi Says Fed Preparing Very Carefully for Possible Rate Rise
2015-04-18 17:03:38.145 GMT


By Rebecca Christie and Stefan Riecher
(Bloomberg) -- Raising rates is an experience that’s being
prepared for very carefully, European Central Bank President
Mario Draghi says at press briefing in Washington, when asked
about potential Federal Reserve interest-rate increases.
* U.S. recovery is key for global recovery
* Draghi speaks at IMF/World Bank spring meetings

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(BFW) ECB’s Draghi Says It’s Pointless to Go Short on the Euro


ECB’s Draghi Says It’s Pointless to Go Short on the Euro
2015-04-18 16:55:00.239 GMT


By Rebecca Christie and Stefan Riecher
(Bloomberg) -- It’s premature to speculate about a Greek
exit from the euro, European Central Bank President Mario Draghi
says at press briefing in Washington.
* Draghi speaks at IMF/World Bank spring meetings

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Scott Lanman, Brendan Murray

(The Economist) A zeal for deals


A zeal for deals
Corporate takeovers are booming once again
MIX processed cheese and ketchup and you get revolting gloop. Put two manufacturers that make them (Kraft and Heinz) together and you get a much more efficient company. Or at least that is the theory behind one of the year’s biggest mergers.
Chief executives are dusting off their chequebooks once more. Figures from Dealogic show that global takeover activity in the first quarter reached $889 billion, up 21% from the same period in 2014. It was the strongest first quarter since the financial crisis.
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Academic evidence on the benefits of takeovers to the firms doing the acquiring is distinctly mixed, although much of it dates from the 1980s. That never stops chief executives from believing that their proposed deal will be different: like second marriages, mergers are a triumph of hope over experience.
Fashion plays its part. As the chart shows, takeover booms tend to be associated with periods when stockmarkets are doing well, such as the late 1990s or 2006-07. Executives can use their highly valued shares as currency. In the tech sector, the likes of Google and Facebook can scatter their shares like confetti. Equity-based deals are less risky for the predator, which does not have to saddle its balance-sheet with debts that might prove a dangerous burden in the next recession. But today’s very low level of interest rates also makes life easy for private-equity bidders, which rely mainly on debt.
During a merger boom, executives will be besieged by fee-hungry investment bankers eager to suggest plausible deals; the newspapers will be full of speculation about the next bid. A boom can thus create a “get rich or die trying” mentality. Managers reason that, if they are not a predator, they will turn into prey.
Even more cynical explanations are available. Running a bigger company can justify bigger salaries for executives. A study* in the Journal of Banking and Finance last year found that, in cases where the chief executive of the target company was retained after a merger, the acquirer paid a smaller premium to the initial share price than in other takeovers. That suggests executives are trading away shareholder value in return for personal benefits.
There is no sign, in the current boom, of the rise of the kind of acquisition-hungry conglomerates that marked the late 20th century: the likes of ITT, Hanson or Tyco. Indeed, GE, the longest-lasting conglomerate, is shrinking by lopping off its financial arm. Nor are we seeing the kind of cross-industry deal that usually denotes the top of the market, most famously in the case of the AOL-Time Warner merger of 2000. When investors start hearing the word “synergies”, they should head for the exit.
This merger boom seems to be focused more on consolidation within various industries, as with the Heinz/Kraft deal or Nokia’s offer for a rival telecom-equipment maker, Alcatel-Lucent. Such deals have a better chance of succeeding than most: the enlarged company can benefit from economies of scale. But they can also be a sign of an industry that is struggling to create growth: mergers are a way of boosting earnings per share by cutting costs. There were lots of oil mergers in the late 1990s, when the price of crude was low. Now the price has slumped again and Royal Dutch Shell has agreed to buy BG, another oil and gas producer, for £47 billion ($69 billion).
Indeed, companies seem rather pessimistic about their chances of achieving organic growth, as illustrated by their willingness to return cash to shareholders rather than to invest in new factories and equipment. According to S&P Dow Jones Indices, American companies spent $553 billion buying back their shares last year, and $903 billion if dividends are included. The combined figure may top $1 trillion this year. Meanwhile American domestic investment is well below pre-crisis levels as a share of GDP and profits fell last year according to the national accounts.
This cycle can become self-perpetuating, at least for a while. Companies buy back their shares to prop up prices and fend off takeovers. At the same time, the lack of business investment or organic growth makes it more necessary for firms to merge in order to cut costs and boost earnings per share. The game only stops when the stockmarket declines. But it is hard to envisage a crash when yields on cash and government bonds remain so low, even negative in some cases. Expect the takeover fever to continue.
* “Do target CEOs trade premiums for personal benefits?” by Buhui Qiu, Svetoslav Trapkov and Fadi Yakoub, January 2014

FT: Draghi warns of ‘uncharted waters’ if Greece crisis deteriorate


Draghi warns of ‘uncharted waters’ if Greece crisis deteriorate


Mario Draghi said the euro area was better equipped than it had been in the past to deal with a new Greek crisis but warned of “uncharted waters” if the situation were to deteriorate badly.
The European Central Bank president called for the resumption of detailed discussions aimed at resolving the country’s debt woes and urged the Greek authorities to bring forward proposals that ensured fairness, growth, fiscal stability, financial stability.

Asked about the risks of contagion from a new flare-up in Greece, he said: “we have enough instruments at this point in time . . . which although they have been designed for other purposes would certainly be used at a crisis time if needed.”
The two tools he referred to were the ECB’s so-called outright monetary transactions, which have never been used, and Quantitative Easing, which the ECB launched in January. He added: “we are better equipped than we were in 2012, 2011 and 2010.”
However Mr Draghi added: “Having said that, we are certainly entering into uncharted waters if the crisis were to precipitate, and it is very premature to make any speculation about it.”
The ECB president was speaking following meetings in Washington that have been overshadowed by renewed fears about the risk of a Greek debt default and possible exit from the euro.
US Treasury secretary Jack Lew warned on Friday that a full-blown crisis in Greece would cast a new shadow of uncertainty over the European and global economies, as he put pressure on Athens to come forward urgently with detailed reforms to its economy.
Mr Lew said that while financial exposures to Greece had changed significantly since the turmoil of 2012, it was impossible to know how markets would respond to a default.

There is mounting frustration among Greece’s partners over faltering attempts to sort out its financial woes. Pierre Moscovici, the European commissioner for economic and financial affairs, has set the mid-May meeting of eurozone finance ministers as the decisive moment for Greece to agree a new set of economic reforms or face possible default.
Greece is being urged to speed up technical discussions on a list of reforms it has submitted that, if agreed, would unlock €7.2bn in loans from Greece’s eurozone partners. Without this funding, Greece is likely to run out of money and default either to the IMF in May or June, or to the European Central Bank later in the summer when large numbers of bonds held by the central bank mature.
Expressing confidence in the euro’s continued stability, Mr Draghi said on Saturday it was “pointless” to go short on the single currency — challenging anyone who disagreed to do it.
The ECB president said that “good steps” had been taken but that there was a need for the restoration of policy dialogue so that “specific proposals can be made and quantified and exactly assessed.”
Delegates to the IMF’s spring meetings have expressed deep concern that Greece’s senior ministers are not taking the technical talks seriously and are in no mood to release the money without substantive progress.
Christine Lagarde, head of the International Monetary Fund, earlier this week said her advice was for Athens to take on the “tedious” technical work of designing reforms to the Greek economy and a credible implementation plan rather than hope for a grand political bargain.
Yanis Varoufakis, the Greek finance minister, said this week that Greece was willing to give ground in its negotiations but that “we are going to compromise, compromise, compromise without being compromised”.

Barron's:Telecom Italia Is Still a Good Call


Telecom Italia Is Still a Good Call

Telecom Italia has been a stock market darling in 2015, but some investors may be hanging up too soon. The ordinary shares (ticker: TIT.Italy), which closed Friday at 1.08 euros ($1.16), have dialed up 26% in gains since the start of the year, outperforming a 19% rise in the Stoxx Europe 600 telecom sector. (Telecom Italia’s American depositary receipts (TI) were trading Friday at $11.66, and have climbed 10%.)
It’s hard to blame investors for taking profits, but it isn’t too late to reverse that call, or for latecomers to join in. Telecom Italia’s ordinary shares could ring up another 25% over the next 12 months.
The Rome-based former telecom monopoly trades at 16 times projected 2015 earnings, in line with rivals. On a measure of enterprise value to Ebitda (earnings before interest, tax, depreciation, and amortization) of 5.2, Telecom Italia looks attractive. Fans say it is the best-value large-cap telecom play in Europe.
Telecom Italia provides fixed-line services to 20 million customers in Italy and mobile services to 30 million. It offers IT services and operates Italy’s No. 3 digital terrestrial TV network. It runs TIM Brasil, Brazil’s No. 2 mobile operator, with 75 million customers. Its domestic business has suffered against a backdrop of tough regulations and fierce competition; a string of write-downs erased profits from 2010 through 2013.
However, the environment shows signs of stabilizing. Revenue fell last year, but the rate of decline eased, and the absence of a write-down allowed the company to report a profit. It earned €1.35 billion last year, or seven cents a share, despite an 8% drop in revenue to €21.57 billion. This year is expected to be flat, with net income at €1.37 billion, or seven cents a share, but improvement is forecast for 2016, with net income projected at €1.47 billion, or eight cents a share.


TELECOM ITALIA ISN’T SITTING STILL. It plans to invest €10 billion in Italy through 2017 in technology, so that it will reach 75% of the population with optic fiber and over 95% with its 4G network. That could bring in another million customers. And Telecom Italia is taking advantage of low interest rates to refinance some of its debt and reduce interest payments. It has a debt load of €26 billion – equivalent to about three times Ebitda – and pays an average interest rate of 5.4%. In January, it issued €1 billion in bonds at 3.3%, an indication of the potential savings on offer.
If Telecom Italia can refinance its bonds maturing over the next five years at that rate, it could save €321 million in interest costs a year by 2019, analysts at Berenberg estimate. That would provide a big injection to profits.
It could benefit from consolidation in Italy. Reports that VimpelCom’s (VIP) Wind and Hutchison Whampoa’s (13.Hong Kong) 3 Italia may combine would be positive for Telecom Italia, but it could become a target. At a €20 billion market value, a suitor would need deep pockets.
Another possibility: sale of TIM Brasil. Telecom Italia CEO Marco Patuano has indicated he is open to talks. At 7.5 EV/Ebitda, Telecom Italia’s 67% stake in TIM Participacoes (TIMP3.Brazil), the holding company that controls TIM Brazil, could be worth €9 billion. Offloading TIM Brasil could push Telecom Italia’s shares to €1.24. Consolidation in Italy, which seems more likely, could drive them to €1.36, 25% above the current price. It pays to stay on the line.

FT : Tesco poised to report annual loss of up to £5bn


Tesco is set to announce an annual loss of as much as £5bn next week — the worst performance in the near-100-year history of Britain’s biggest retailer.
A raft of write-offs and charges in its full-year results will be used to clear the way for chief executive Dave Lewis to attempt a turnround of the supermarket group, said several people familiar with the situation. But they suggested that the resulting loss would be bigger than initial City forecasts.

By announcing a multibillion-pound statutory pre-tax loss next Wednesday, Tesco will mark the end of a tumultuous year, in which it ousted chief executive Philip Clarke, after finding that its half-year profit had been overstated by £263m.
“At a statutory level, its going to be a horror show,” said Clive Black, analyst at Shore Capital. “But, for shareholders, it is about Dave Lewis and the future.” Shore Capital forecast that Tesco’s annual loss would be at least £3bn.
Shares in Tesco closed down 1.8 per cent to 236.70p on Friday. Tesco declined to comment.
Tesco is also close to pressing the button on the sale of Dunnhumby, the data analysis company that runs Tesco’s Clubcard loyalty scheme, which analysts have valued at between £1bn to £2bn.
The retailer will send a sales memorandum to prospective buyers of a majority stake, including WPP, as early as May. People familiar with the transaction said Tesco was now close to resolving issues with Kroger, a US supermarket client of Dunnhumby’s, which had potentially acted as a brake on the business’s growth in North America.
Tesco’s statutory pre-tax loss is expected to be exacerbated by £4bn of property write downs in the wake of plans to close 43 stores and jettison 49 development projects purchased at a much higher rate than their current value.
Wednesday’s numbers will also reflect the cost of the profit overstatement, including £145m for prematurely counting money received from suppliers in prior years, and £300m from cutting thousands of jobs.

China Resources Enterprise, Tesco’s partner in China, also recently wrote down the value of the assets in the joint venture.
Retail executives said Tesco could take the opportunity to clear the decks further, by booking charges for stock that has reduced in value.
Tesco’s loss will dwarf the £1bn charge it took two years ago for ending its failed foray into the US.
Together with a forecast increase in Tesco’s pension deficit to about £4bn, the loss will put further pressure on the group’s balance sheet, and is likely to renew speculation about a rights issue — although Mr Lewis has consistently played down this possibility.
“It is not off the agenda,” said one institutional investor, referring to the possibility of a cash call.
Other people close to the situation said Tesco was likely to wait for the arrival of Matt Davies, recruited from Halfords to be chief executive of Tesco’s UK business, before deciding on any funding requirements. Mr Lewis has said there will be no fire sales of assets.
In December, the supermarket group said that its trading profit — before exceptional items, goodwill amortisation and property profits — would be no more than £1.4bn for the year to the end of February, compared with £3.3bn in the year earlier.

(BFW) Starwood Hotels Sum-Of-The-Parts Value $100/Shr, Citi Says

--> Stock Closed @ $81,89.
Starwood Hotels Sum-Of-The-Parts Value $100/Shr, Citi Says
2015-04-17 19:02:12.946 GMT


By Joshua Fineman
(Bloomberg) -- Starwood’s upscale brands Westin, Sheraton
and luxury St. Regis, W likely to be of “profound” interest to
major hotel chains, Citi wrote in note.
* Potential $4b valuation of HOT real estate doesn’t seem
“unreasonable”
* HOT’s time share unit likely interesting to cos. in the
space
* HOT remains buy at Citi, PT to $93, Bloomberg avg. $86
* NOTE: Earlier, Starwood Hotels Is Giving Activists Reason to
Check In: Real M&A
* NOTE: March 26, Starwood May Be Worth $103/Shr in Takeout:
SunTrust
* NOTE: March 26, Starwood Rises After FTC Early
Termination on Senator Investment
* NOTE: March 26, Starwood Rises After FTC Early
Termination on Senator Investment</li></ul>


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(BFW) Dijsselbloem Says Greek Deal Could Come Together in Weeks

BFW 04/17 21:15 Dijsselbloem Says No Need for ‘Game of Chicken’ on Greek Crisis
MORE: Dijsselbloem Says Greek Deal Could Come Together in Weeks
2015-04-17 21:20:15.980 GMT


By Rebecca Christie
(Bloomberg) -- “At least a couple of more weeks are
needed, that is my estimate” for getting a deal on Greece’s
next rescue step, Eurogroup President and Dutch Finance Minister
Jeroen Dijsselbloem says, asked about Greece’s reluctance to
make deal with creditors.
* Says deal won’t be ready by Apr. 24 Eurogroup meeting
* “Too little progress has been made but some progress has
been made so we’ll need more time”


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>>> Mylan downplays report of potential Teva bid; 'fully committed' to stand-alo

Mylan downplays report of potential Teva bid; 'fully committed' to stand-alone strategy, Perrigo proposal

Mylan N.V. (NASDAQ: MYL) is being sized up by Teva Pharmaceutical (NYSE:TEVA), although the Israel-based company has not made a formal acquisition approach as of now, according to a newswire report.

Bloomberg News cited people with knowledge of the situation as saying Teva has approached advisors and potential lenders. It noted that Teva is still debating whether to pursue the deal, and could decide not to make a play.

Mylan Chairman Robert Coury issued a statement today saying the company is fully committed to its stand-alone strategy, including its proposal to acquire Perrigo (NYSE:PRGO), and said "today's speculation has no impact whatsoever on this strategy."

"We have studied the potential combination of Mylan and Teva for some time and we believe it is clear that such a combination is without sound industrial logic or cultural fit," Coury said. "Further, there would be significant overlap in the companies' businesses and we believe that it is unlikely that any such combination could obtain anti-trust regulatory clearances."

The statement included a fiduciary statement indicating that Mylan's board would carefully consider an offer offer to acquire Mylan should it materialize. "We do not intend to comment further on media speculation and will maintain our unwavering focus on executing on our business plan and concluding a successful transaction with Perrigo," the company said.