(Pimco) Can ECB Policy Heal Europe’s Ills?


  • Over the next 12 months, the eurozone will likely see real growth of around 1.5% and inflation around 1.0% as improving growth and a weakness in the euro should be sufficient to halt the decline in core inflation.
  • Looking at the UK, we see growth to be in a range of 2.5% to 3% and inflation near the official target of 2% in a range of 1% to 2% over the cyclical horizon.
  • Give the size of European Central Bank's (ECB) quantitative easing (QE) programme, technical flows will likely dominate investment strategies over the next few months. We expect to favour positions on the curve that benefit from duration extensions, an overweight to peripheral spreads and select corporate issuers, as well as an underweight to the euro versus the U.S. dollar.
  • The excess reserves generated by the ECB's (QE) programme are remunerated at the ECB's -0.20% deposit rate, which may raise the velocity of money as investors seek to reallocate their investments away from negative yields. This could have important implications for global capital markets.

>>> Kraft Foods and H.J. Heinz Company have entered into a definitive merger agr

Kraft Foods and H.J. Heinz Company have entered into a definitive merger agreement to create The Kraft Heinz Company; Kraft shareholders to receive a special cash dividend of $16.50 per share upon closing

Under the terms of the agreement, which has been unanimously approved by both Heinz and Kraft's Boards of Directors, Kraft shareholders will own a 49% stake in the combined company, and current Heinz shareholders will own 51% on a fully diluted basis. Kraft shareholders will receive stock in the combined company and a special cash dividend of $16.50 per share. The aggregate special dividend payment of ~$10 bln is being fully funded by an equity contribution by Berkshire Hathaway (BRK.A) and 3G Capital.
  • Together the new company will have eight $1+ billion brands and five brands between $500 million and $1 billion. The complementary nature of the two brand portfolios presents substantial opportunity for synergies, which will result in increased investments in marketing and innovation.
  • When the transaction closes, Alex Behring, Chairman of Heinz and the Managing Partner at 3G Capital, will become the Chairman of The Kraft Heinz Company. John Cahill, Kraft Chairman and Chief Executive Officer, will become Vice Chairman and chair of a newly formed operations and strategy committee of the Board of Directors.
  • Bernardo Hees, Chief Executive Officer of Heinz, will be appointed Chief Executive Officer of The Kraft Heinz Company. The new executive team for the combined global company will be announced during the transition period, but no later than transaction closing.
  • The synergy potential includes an estimated $1.5 billion in annual cost savings implemented by the end of 2017. Synergies will come from the increased scale of the new organization, the sharing of best practices and cost reductions.
  • The transaction is expected to be EPS accretive by 2017. Once the transaction is complete, The Kraft Heinz Company plans to maintain Kraft's current dividend per share, which is expected to increase over time. Kraft has no plans to change its dividend prior to closing.

(BFW) Kraft/3G Deal Implications Mixed for U.S. Food, RBC Says

Kraft/3G Deal Implications Mixed for U.S. Food, RBC Says
2015-03-25 09:23:24.71 GMT


By Gaurav Panchal
(Bloomberg) -- With exception of PF, BGS, MDLZ,
implications of a Kraft Foods acquisition, if confirmed, would
be mixed for US food, RBC Capital says.
* On negative side, other food companies speculated to be 3G
targets (CPB, GIS, K) would have that long-term possibility
diminished, likely off the table for at least several years:
RBC
* On positive side, if US food company executive teams, boards
and shareholders will increasingly view 3G’s food company as
a relevant benchmark for productivity: RBC
* Says deal potentially positive for Mondelez, Pinnacle Foods,
B&G due to disposals of non-core/regional business by
Kraft/3G
* Earlier views:
* 3G Bid for Kraft a Reason Why AB InBev Won’t Buy
SABMiller: RBC Link
* Kraft Not A Key Company 3G Would Consider As a Target:
Bernstein Bernstein Link
* 3G/Heinz Acquiring Kraft Wouldn’t Be a Complete
Surprise: BofAML Link
* 3G/Heinz Acquiring Kraft Wouldn’t Be a Complete
Surprise: BofAML Link</li></ul>
* 3G Said to Plan to Merge Kraft With Heinz Link


Link to Company News:{PF US <Equity> CN <GO>}
Link to Company News:{BGS US <Equity> CN <GO>}
Link to Company News:{MDLZ US <Equity> CN <GO>}
Link to Company News:{KRFT US <Equity> CN <GO>}
Link to Company News:{4071428Z US <Equity> CN <GO>}

For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}

To contact the reporter on this story:
Gaurav Panchal in London at +44-20-3525-0511 or
gpanchal2@bloomberg.net

To contact the editor responsible for this story:
James Cone at +44-20-3525-2572 or
jcone@bloomberg.net

WSJ : Improbable Dream: London Startup Gets $20 Million From Andreessen Horowitz

Herman Narula shows just how much connections matter in Silicon Valley.

Narula, 26 years old, just raised $20 million from Menlo Park, Calif., firm Andreessen Horowitz for his London-based startup, Improbable.

The company is working on software that allows simulated worlds, such as those in videogames played by thousands or millions of people across the world at the same time, to stay up and running without interruptions that can occur if systems are overloaded.

A few weeks ago, Narula and his team flew to Silicon Valley, where they had meetings set up by some of their early investors, including Jaan Tallinn, a co-founder of Skype.

They quickly had had three investment offers. “One of the firms actually said, ‘You know, this is a good offer, but we’d understand if Marc Andreessen showed up and offered you $20 million or something,’” Narula said, referring to a general partner in the investment firm. “And a few days later, that’s exactly what happened.”

The deal was the latest example of American money pouring into London, amid a global rise in venture-capital investment. It is also at least the second Andreessen Horowitz investment in London this year. In January, the firm said it would invest in TransferWise, a currency transfer company.

One other connection of note: A TransferWise co-founder, Taavet Hinrikus, a former Skype employee, is also an angel investor in Improbable.

Narula met his co-founder Rob Whitehead during their last few weeks at the University of Cambridge. They spent several years building their product and hiring engineers away from places like Google, fueled by their own money and £1.5 million ($2.2 million) in so-called angel investment.

The problem they were trying to solve was highly technical: how to create a way for virtual entities—characters in a game, or cars in a simulation—to coexist and interact in a single virtual world without overloading the networks and servers. He described Improbable as being like an operating system on the cloud, where games run like apps.

The effect is that the virtual worlds running off of Improbable are always “on,” even when a player or user isn’t actively in an area. Narula said there have been times when game developers testing out the platform have forgotten that.

The technology could be used to simulate experiments, said investor Chris Dixon, an Andreessen Horowitz partner and new member of the Improbable board.

“Improbable is useful in any field that models complex systems—biology, economics, defense, urban planning, transportation, disease prevention, etc.,” Dixon wrote in a blog post on Tuesday.

Narula said the company went with Andreessen Horowitz over other offers in part because of the wealth of in-house services the firm offers startups, such as plans for marketing.

>>> What to look at today - 25th of March 2015

Dow -0.58% S&P -0.61% Nasdaq -0.32% Russell -0.10%
US Market closed lower, with USD trading lower testing the 1.10 level, Crude closed flat buty Energy sector was under pressure, financials (-0.9%) and health care (-0.9%) lagged while the remaining groups settled closer to their flat lines, Tech Outperformed, GOOGL +2.2% on news of new CFO...volume were below average @ 735mil shares...After partnering with Berkshire last year to acquire Heinz, Brazilian private equity firm 3G Capital has set reportedly set its sights on Kraft. The mega-deal is rumored to be valued as much as $40B or up to $50B when including debt. Shares of KRFT spiked up 16% in extended session. Recall overnight there was also some speculation that Yum Brands could be a potential target for 3G, though YUM was little changed afterhours. In Japan, Dep BOJ Gov Iwata went against the formal position driven by Gov Kuroda, questioning the likelihood of achieving 2% inflation target within the intended 2-year time frame. Iwata did acknowledge that real wages are rising as a trend and the end of deflation was in sight. Earlier, a Nikkei report noted the equity holdings by the BOJ have now topped ¥10T in market value and ¥5.7T in book value, making the central bank the biggest holder of Japan stocks next to GPIF's ¥27T. Report noted that while the BOJ does not publicly disclose the details of its share-buying operations, it frequently steps into the market and buys ¥30-40B in stocks when prices fall in the AM session. Australia top-3 iron ore producer Fortescue CEO stirred up controversy by calling on giants BHP and Rio Tinto to follow him and cut production to boost prices. The call resulted in a warning from competition regulator ACCC, and Treasurer Hockey also remarked that the govt is not supportive of "cartels".

Nikkei +0.17% Hang Seng +0.41% Shanghai -0.59%

RUB $57.74 WTI $47.36 (-0.34%) Brent $55.12 (flat) CHFEUR 0.9544 CHF 0.96

Eur$ 1.0912 S&P -0.05% EuroStoxx-0.49% Dax -0.46% SMI-0.32%

Macro :
- Soros Says Ukraine Needs Large Scale Investments: Handelsblatt


Keep an eye on :
- AC FP : Eurazeo & Colony would sell 10% stake (22.5m shares) in Accor, they will keep 11% stake
- ALCLS FP : Cellectis Prices Upsized 5.5m-ADR IPO at $41.50
- AOX GY : Alstria Sells 7.9m New Shrs for EU13/Shr in Capital Increase
- ARYN VX : Aryzta Selling Up to 49m Shrs in Origin Enterprises
- BAS GY : BASF Bid to Block Makita Power Tools to Be Investigated by ITC
- BO DC : HP to Replace Apple’s Beats With Bang & Olufsen: AppleInsider
- CWC GY : Cewe Sees 2015 Profit EU20m-EU24m vs EU21.4m Y/y
- CWI AV : Conwert Says Deutsche Wohnen Offer Doesn’t Reflect Value
- AM FP : Airbus to Sell About 1.38m Shares in Dassault Aviation
- DSY FP : Dassault Systemes Plans Div. of 43c/Shr; Misses BDVD Forecast
- FUR NA : Goldman adds 30% weight to Fugro Valuation for M&A
- GLPG NA : Galapagos Considers Plan to Raise $100m in U.S. Listing: Tijd
- GSK LN : FDA Approves Revisions to Glaxo’s Epivir and Ziagen Labels
- RMS FP : Hermes to Propose an EU5/Shr Exceptional Div.
- HOFI SS : Hoist Finance Sets Price at SEK58/Shr in Stockholm IPO
- KBC GY : Kontron 2014 Sales Rise 2.6%; Adj. Ebit Loss Narrows
- KU2 GY : Kuka Cuts Forecast for 2015 Ebit Margin to 3.5% From 5.5%
- LEG GY : LEG Immobilien Plans Div. of EU1.96/Shr; Matches BDVD Forecast
- MDG1 GY : Medigene 2014 Net Loss Narrows, Sees 2015 Ebitda Loss Widening
- MGN GY : Mologen 2014 Net Loss EU17.1m; R&D Spending Rises 68% to EU13.3m
- NDA SS : Nordea CEO Says Russia Credit Portfolio Likely to Decrease, Nordea Still Plans to Raise Dividend Payout Ratio Above 70%
- P1Z GY : Patrizia 2014 Operating Result Rises 32%, Plans Bonus Shares
- PC IM : Pirelli Not Planning Special Div Before Tender Offer: Il Sole
- RBI AV : Raiffeisen Says Could Have 2015 Net Loss on EU550m Revamp Costs
- RNO FP : Russia May Raise Carmakers Scrappage Fee by 20%-25%: Kommersant
- SAB LN : traded down yest. , should be under pressure today on Kraft/3g news...
- SAX GY : Stroeer Says 2014 Earnings a Record, Sees Further Growth in 2015
- GLE FP : SocGen Says Performance Is in Line With Its 2016 Targets
- TLSN SS : TeliaSonera Says Turkcell Shareholders Agreed on Div Proposal
- VIV FP : Vivendi Receives 3 Requests for Resolutions From Shareholders
- VONN SW : Vontobel in M&A Talks on Meriten; Plans 60% Stake in TwentyFour
- ZO1 GY : Zooplus Forecasts Revenue, Pretax to Rise in 2015

>>> Brokers Upgrades & Downgrades - 25th of March 2015

>>> Upgrade
*ABERTIS RAISED TO NEUTRAL VS UNDERPERFORM AT BOFAML
*DEUTSCHE ANNINGTON RAISED TO BUY VS HOLD AT BANKHAUS LAMPE
*HUNTING RAISED TO BUY VS NEUTRAL AT GOLDMAN (Potential Takeover target)
*SENIOR RAISED TO ADD VS HOLD AT NUMIS
*SKF RAISED TO BUY AT JEFFERIES
*URALKALI RAISED TO BUY VS NEUTRAL AT UBS

>>> Downgrade
*ING GROEP NV CUT TO NEUTRAL VS BUY AT GOLDMAN
*KUONI REISEN CUT TO NEUTRAL VS BUY AT GOLDMAN
*LEROY SEAFOOD CUT TO SELL FROM HOLD AT NORDEA
*SCOR CUT TO HOLD FROM BUY AT SOCGEN
*TALANX CUT TO HOLD FROM BUY AT BERENBERG
*TRAVIS PERKINS CUT TO NEUTRAL VS BUY AT BOFAML

>>> PT Change


>>> Initiation
*BBA AVIATION RATED NEW OUTPERFORM AT RBC CAPITAL
*PLASTIC OMNIUM RATED NEW UNDERPERFORM AT CREDIT SUISSE, PT EU20
*RHOEN KLINIKUM RATED NEW BUY AT BANKHAUS LAMPE, PT EU29
*SAETA YIELD RATED NEW BUY AT CITI, PT EU11.7
*SEADRILL RATED NEW REDUCE AT HSBC, PT $8.02

>>> Call

FT : Buyout groups to cut Accor stake

Buyout groups to cut Accor stake

Private equity firms Eurazeo and Colony Capital said they would sell a near 10 per cent stake in Accor, almost halving their long-term investment in the French hotel group.
The firms said they planned to sell 22.5m Accor shares in a private placement in a move that would significantly increase the hotel group’s free float.

The decision will approximately halve their investments in Europe’s largest hotel group by number of rooms, winding down a position they have held for about a decade.
Before Tuesday night’s announcement they held a combined 21 per cent in Accor.
In 2013, Accor’s board appointed Sébastien Bazin, until then the European head of California-based Colony Capital, as chairman and chief executive. Since then, Accor shares have rallied, hitting a seven-year high this month.

FT : 3G in talks over $40bn Kraft deal

3G in talks over $40bn Kraft deal

Kraft cheese productsKraft cheese products for sale at a grocery store in New York©BloombergKraft’s portfolio of brands ranges from household consumer products and snack foods to beverages and condiments©BloombergFoil-wrapped Cadbury Creme Eggs©BloombergAn employee serves customers at Burger King in Marseille airport in southern France©AFPJorge Paulo Lemann, 3G Capital chief©BloombergAlex Behring, 3G Capital managing partner (left), speaks to reporters alongside Bill Johnson, HJ Heinz chief executive officer©Bloomberg
Next Thumbnails
3G Capital, the Brazilian private equity group that controls Burger King and Heinz, is in advanced talks to acquire Kraft Foods Group in a deal that could be worth as much as $40bn, according to a person close to the matter.

It is unclear whether the acquisitive Brazilian group, headed by Jorge Paulo Lemann, is planning to do a deal alone, or whether because of the size of the transaction it would require a partner. A merger with Heinz could also be considered.
3G has previously teamed up with Warren Buffett’s Berkshire Hathaway, whose firepower helped Burger King buy coffee chain Tim Hortons for $11.4bn last year. Berkshire also combined with 3G two years ago to acquire ketchup maker Heinz for $23.2bn.
Brazilian sage retains his top-table touch

Jorge Paulo Lemann and his partners at 3G Capital, Marcel Telles and Carlos Sicupira, may need an introduction outside of Brazil, but not in their home country.
Continue reading
In Berkshire’s annual letter in February, Mr Buffett said that “we welcome the chance to work with them again” as he described 3G Capital as “marvellous partners” and praised it for its operational acumen.
Kraft shares jumped 16.5 per cent to $71.44 in after-hours trading on Tuesday following a Wall Street Journal report about a potential deal, giving it a valuation of about $42bn. At Tuesday’s official close Kraft was trading at $61.32, giving the company a market capitalisation of $36bn.
A deal with 3G — which has been searching for its latest target in the US for several months — could end up valuing Kraft at more than $50bn including about $9bn in net debt. However, a transaction could still fall apart.
Kraft’s portfolio of brands includes household consumer products from beverages to condiments to snack foods, including Kool-Aid, Grey Poupon, Philadelphia Cream Cheese, Planters and Cadbury chocolate.
Jorge Paulo Lemann©Bloomberg
Jorge Paulo Lemann
A takeover of Kraft would be the latest transformation of the food group, which was spun off from Altria in 2007. Under the leadership of then chief executive Irene Rosenfeld, Kraft acquired the UK’s Cadbury in a hostile deal in 2010.
The Cadbury deal provided the impetus for Ms Rosenfeld to break up the company in 2012 into a snacks-focused business called Mondelez, which she currently runs and which makes products such as Trident gum and Oreo cookies. Kraft Foods emerged as a North American groceries-focused business led by John Cahill, who has since served as chairman and added the chief executive role at the end of last year.

Over the past decade, Mr Lemann and 3G’s other Brazilian founders have spearheaded some of the largest deals in the global consumer industry.
Mr Lemann, a Harvard-educated former tennis champion who moved to Switzerland after gunmen tried to kidnap his children in the 1990s, is highly respected in his home country for his ability to improve the efficiency of multinationals and his eye for contrarian investment.
After the downfall of oil and mining tycoon Eike Batista in 2013, he now ranks as Brazil’s richest man with an estimated net worth of $25.2bn, according to Forbes.

>>> After Hours : KRFT +16%, CYCC +6.3%, TRQ +5.6%, AMPH +2.4%, SONC +0

After Hours Summary: CYCC +6.3%, TRQ +5.6%, AMPH +2.4%, SONC +0.4% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: CYCC +6.3%, TRQ +5.6%, AMPH +2.4%, SONC +0.4%

Companies trading higher in after hours in reaction to news: KFX +45.5% (agreed to be acquried by Lexmark for $11 per share in cash), KRFT +16% on 3G Interest, STMP +9.8% (announced intention to acquire Endicia from Newell Rubbermaid for $215 mln in cash), CLDN +2.7% (co and Novasep executed a MYDICAR API supply agreement), MRK +1.2% (announced new $10 bln share repurchase program)

After Hours Losers:

Companies trading lower in after hours in reaction to news: LPTN -28.1% (announced Phase 2a single-agent, open-label study of ASONEP did not meet the primary endpoint of statistically significant progression-free survival in patients with advanced renal cell carcinoma), ENLK -5.7% (announced secondary offering of 22.8 mln common units by a subsidiary of Devon Energy (DVN)), AMSC -5.6% (announced 1-for-10 reverse stock split), NVAX -4.7% (announced proposed public offering of $175 mln of common stock), ACHN -2.9% (disclosed that on March 18, 2015, Dr. Gautam Shah, EVP and Chief Regulatory Officer provided notice of his departure from the Company effective March 31, 2015), HTZ -1.5% (received Nasdaq notice on delayed 10-K filing, as expected)