>>> Asian Update

Asian Mid-session Update: Kraft targeted by 3G Capital in potential $40B deal; New Zealand trade surplus misses estimates

***Economic Data***
- (JP) JAPAN FEB PPI SERVICES Y/Y: 3.3% V 3.3%E
- (NZ) NEW ZEALAND FEB TRADE BALANCE (NZD): 50M V 350ME (2nd consecutive month of surplus)
- (AU) AUSTRALIA FEB SKILLED VACANCIES M/M: 0.2% V 0.7% PRIOR (2nd consecutive increase)
- (KR) SOUTH KOREA Q4 FINAL GDP Q/Q: 0.3% V 0.4% PRELIM; Y/Y: 2.7% V 2.7% PRELIM; 2014 GDP 3.3% v 2.9% in 2013
- (PH) PHILIPPINES JAN TRADE BALANCE: -$752M V -$910Me

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.1%, S&P/ASX +0.1%, Kospi -0.1%, Shanghai Composite -0.2%, Hang Seng +0.5%, Jun S&P500 flat at 2,085

***Commodities/Fixed Income***
- Apr gold -0.2% at $1,190/oz, May crude oil -0.4% at $47.55/brl, May copper -0.2% at $2.79/lb
- (US) API PETROLEUM INVENTORIES: CRUDE: +4.8M (2nd straight build) v +5.5Me, GASOLINE: -2.6M v -2Me, DISTILLATE: -0.64M v -0.5Me
- (SA) Saudi Arabia observed moving military equipment and heavy artillery to areas near its borders with Yemen - press
- (CN) China MoF sells 3-yr bonds at avg yield of 3.22%
- (JP) BOJ offers to buy ¥300B in 1-3yr JGBs, ¥350B in 3-5yr JGBs, and ¥400B in 5-10yr JGBs
- USD/BRL: (BR) Brazil Central Bank (BCB) to end fx intervention program by end of March

***Market Focal Points/FX***
- 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.

- Trade data out of New Zealand was the most notable economic event in an otherwise quiet session. February marked the 2nd consecutive surplus, though well below estimates, sending NZD/USD down by about 35pips below 0.7630 in the aftermath. Both exports and imports were at roughly NZ$3.9B - the former missing consensus and the latter beating by NZ$0.2B. Among the notable components, shipments to China plunged by 36% y/y and the overall dairy exports were down 42%, even though US-bound shipments rose by over 25%. Interim report out of Fonterra was also less than inspiring. Net profit fell to NZ$183M v NZ$206M y/y, and even though Fonterra affirmed its FY14/15 payout of NZ$4.70/kg, its forecast for overall cash payout including dividend was reduced by 5c to NZ$4.90-5.00/kg. Fonterra CEO said the results are "below our farmers expectations... a snapshot of tough conditions in dairy with variable production, demand and pricing."

- Also down under, 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". Also of note, RBA Semi-Annual Financial Stability Review pointed to elevated risks in housing and commercial property sector, even though the overall financial system was deemed to be performing strongly. AUD/USD traded in a narrow 30pip range below $0.79.

- 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.

***Equities***
US equities / ADRs:
- KFX: Lexmark to Acquire Kofax for $11/shr in cash or about $1B; +45.3% afterhours
- KRFT: Private equity firm 3G Capital said to be in talks to acquire Kraft Foods - financial press; +16.2% afterhours
- STMP: Intends to Acquire Online Shipping Company Endicia From Newell Rubbermaid for $215M in cash; +9.6% afterhours
- MRK: Announces New $10B Share Repurchase Program (6% of market cap); +1.7% afterhours
- BDX: Said to weigh sale of respiratory devices unit; Valuation could be around $1.5-2.0B - financial press; flat afterhours
- SCS: Reports Q4 $0.22 v $0.21e, R$749.9M v $764Me; Raises quarterly dividend by 7.1% to $0.1125 (implied yield 2.3%); -0.9% afterhours
- NSM: Offering 17.5M shares (19% of shares outstanding); -5.2% afterhours

Notable movers by sector:
- Consumer Discretionary: Myer Holdings Ltd MYR.AU +3.3% (shareholder raises stake); Intime Department Store Group 1833.HK +6.8% (FY14 results); Daphne International Holdings 210.HK +4.3% (FY14 results)
- Financials: China Overseas Land 688.HK +2.3% (FY14 results); Kaisa Group Holdings 1638.HK -3.0% (S&P cuts rating); Agricultural Bank of China 1288.HK -0.3% (FY14 results)
- Materials: Regis Resources RRL.AU -1.9% (shareholder cuts stake); Fortescue Metals Group FMG.AU +2.0% (founder calls for a cap in Australia iron ore production)
- Energy: Kansai Electric Power 9503.JP +2.6% (speculation on decommissioning reactors)
- Industrials: Sinotrans Air Transportation Development 600270.CN +4.2% (FY14 results); China International Marine Containers Group 000039.CN +3.8% (FY14 results)
- Healthcare: Humanwell Healthcare Group 600079.CN -3.9% (FY14 results)

WSJ : Kraft in Talks to Be Acquired by Brazil’s 3G Capital

Kraft in Talks to Be Acquired by Brazil’s 3G Capital
A deal for food company would likely top $40 billion

3G Capital Partners LP is in advanced talks to buy Kraft Foods Group Inc. through its H.J. Heinz Co. unit, according to people familiar with the matter, in a combination of two iconic brands that would intensify the private-equity firm’s shake-up of the U.S. food industry.

Any deal likely would be valued at more than $40 billion. It could be announced soon, said one of the people, and, according to another, 3G would make it using Heinz. It also is possible the talks could fall apart before a deal is reached.

Kraft and many other U.S. packaged-food giants have struggled with rapid changes in consumer tastes that have curbed sales and exposed overcapacity. That has spelled opportunity for 3G—an acquisitive Brazilian firm known for buying consumer companies it considers bloated and aggressively slashing costs.

The Wall Street Journal previously reported that 3G was looking for targets after it recently raised some $5 billion for deal making. The firm already has become a major player in the food sector. Billionaire co-founder Jorge Paulo Lemann was a big shareholder in brewer InBev, and helped engineer its 2008 acquisition of Anheuser-Busch.

In 2013, 3G teamed up with investor Warren Buffett’s Berkshire Hathaway Inc. to buy Heinz and its stable of ketchup and frozen-food brands for $23 billion—a deal widely viewed as a wake-up call for other established food companies.

In 2010, 3G took private fast-food restaurant Burger King Worldwide Inc. Last year, 3G bought Canadian coffee-and-doughnut retailerTim Hortons Inc. through its Burger King holding. The $11 billion deal was financed in part by Mr. Buffett.


3G’s Next Step May Involve Heinz… And Warren Buffett
Kraft had a market value of roughly $37 billion, before the Journal reported news of the possible deal late Tuesday. While it isn’t clear what price the two sides are negotiating, it could be well over that value, given typical premiums paid in takeover deals.

That would be a big bite for a private-equity firm, though 3G has proved itself capable of marshaling significant resources, especially with Mr. Buffett’s backing. Mr. Buffett has said he would work with 3G on another friendly takeover if the opportunity looks right. He couldn’t be reached Tuesday night for comment.

Acquiring Kraft would give 3G’s prize acquisition a way to grow. The firm has made major cost reductions at Heinz, laying off hundreds of workers and closing factories. But 3G has made clear that it wants to expand, something cost cuts alone can’t achieve.

Taking on Kraft, an even bigger company, would be 3G’s biggest operational challenge yet. Kraft, like Heinz is heavily focused on the U.S. market, where its brands—packaged-food staples such as Oscar Mayer deli meats, Cool Whip dessert toppings and Maxwell House coffee, in addition to its namesake cheese products—have been hit hard by consumers’ growing preference for fresher and healthier fare.

Kraft’s revenue last year was effectively flat at $18 billion, while net profit fell 62% to $1 billion, as it dealt with higher commodity costs and big charges related to post-employment benefit plans. The company has said it lost market share in 40% of its U.S. businesses and was flat in the rest.

Kraft has touted its leaner cost structure compared with other packaged food companies, having cut jobs and eliminated other costs.

At an industry conference in February 2014, Kraft’s then-chief executive, Tony Vernon, trumpeted improvements in the company’s productivity. But, nodding to the Heinz deal, he said: “The reality…is that with the likes of 3G now in our space, best-in-class overheads keep getting better, and we have more work to do.”

In December, Kraft unexpectedly named a new chief executive to replace Mr. Vernon, then 58 years old, who had been in the job for just over two years. A board member said at the time the company felt the need to accelerate the pace of change. Kraft Chairman John Cahill, then 57, took over as CEO.

After years of working at PepsiCo Inc. and Pepsi Bottling Group Inc., Mr. Cahill served as a partner at private-equity firm Ripplewood Holdings from 2008 to 2011 before joining Kraft, and analysts speculated that he might be more open to deal making.

Today’s Kraft was born in a huge corporate split in 2012, when it was spun off by its namesake, leaving an international snacks company now called Mondelez International Inc. Mondelez took on what were thought to be faster-growing global brands.

But Mondelez quickly turned to an aggressive cost-cutting plan, and brought activist investor Nelson Peltz onto its board—a move that relieved the pressure he had been putting on the company to consider merging with PepsiCo’s snack business.

Kraft has attempted to adapt its products to shifting tastes, such as by taking artificial coloring out of some of its macaroni-and-cheeses. It also has trumpeted a high-protein snack pack called P3—which combines meat, cheese cubes, and nuts—sold by its Oscar Mayer brand.Another recent effort stirred controversy: Kraft struck a deal to put The Academy of Nutrition and Dietetics’ “Kids Eat Right” logo on its single-sliced American cheese products, prompting ridicule from Comedy Central host Jon Stewart and criticism from members of the health-professionals group who said it shouldn’t have seemed to endorse the product.

Kraft has made headway revitalizing some older brands like Planters and Jell-O, but its efforts so far haven’t sparked a turnaround in sales and profits. “I don’t think Kraft has done as aggressive of a job in this regard as we need to,” Mr. Cahill said on a conference call last month.

Asked on that call whether he would support 3G-style cost cutting, Mr. Cahill declined to discuss Heinz but said “with respect to Kraft, I will tell you that as I see it today, there remains plenty of opportunity” to cut costs without jeopardizing sales growth.

3G has a different fundraising approach from most of its private-equity peers. The firm, formed in 2004, tends to turn to a small group of the world’s wealthiest investors, including Mr. Buffett and Pershing Square Capital Management LP’s William Ackman, for help funding its deals.

3G uses a process called “zero-cost budgeting,” in which each division of a company must justify its costs from scratch each year. Shortly after acquiring Heinz, for instance, 3G moved to close plants across the country and eliminated more than 1,000 jobs.

In February, Campbell Soup Co., thought to be another potential 3G target, announced plans to slash costs and adopt zero-based budgeting.

Unlike with typical private-equity firms, 3G’s founders like to invest for longer than the standard five- to seven-year timeframe.

>>>US Close Dow-0,58

Closing Market Summary: S&P 500 Registers Second Consecutive Decline

The stock market registered its second consecutive decline on Tuesday with the S&P 500 retreating 0.6%. The benchmark index ended in-line with the Dow Jones Industrial Average while the Nasdaq Composite (-0.3%) outperformed slightly.

Equity indices traded near their flat lines through the first half of the session before sliding to lows during afternoon action. All ten sectors finished the day in negative territory with technology (-0.3%) registering the slimmest loss.

Also of note, the Dollar Index (97.15, +0.12) was on track for its third consecutive decline, but an early morning rebound following an in-line CPI report (+0.2%) helped the Index finish with a slim gain. Meanwhile, crude oil endured some intraday volatility before settling higher by 0.1% at $47.51/bbl.

Strikingly, crude's flat finish could not stop the energy sector (-0.8%) from ending the day among the laggards. Notably, Whiting Petroleum (WLL 30.91, -7.48) sank 19.5% after pricing a secondary share and note offering.

Elsewhere among influential sectors, financials (-0.9%) and health care (-0.9%) lagged while the remaining groups settled closer to their flat lines.

The top-weighted countercyclical group—health care—slumped during afternoon action after showing early strength that was fueled by biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 355.95, -2.33) was up more than 1.0% in the early going, but settled lower by 0.7% to extend this week's decline to 2.9%.

The afternoon pullback in biotechnology sent the Nasdaq into negative territory, but the index still finished ahead of the broader market thanks to the relative strength among several large cap names. Google (GOOGL 577.54, +12.17) was a clear standout, surging 2.2%, after announcing that Ruth Porat will become the company's new CFO after holding the same position at Morgan Stanley (MS 36.24, -0.07).

Similar to Google, social media names displayed strength with Facebook (FB 85.31, +0.88), LinkedIn (LNKD 264.16, +2.32), and Twitter (TWTR 51.47, +3.01) gaining between 1.0% and 6.2% with Twitter surging to its best level since late October.

In the Treasury market, the 10-yr note spent the bulk of the day near its flat line before spiking to a fresh high in the afternoon. The benchmark yield fell four basis points to 1.87%.

Today's participation was below average with roughly 735 million shares changing hands at the NYSE floor.

Economic data included CPI, FHFA Housing Price Index, and New Home Sales:
  • The CPI increased 0.2% in February after decreasing 0.7% in January, which is what the consensus expected. 
    • An uptick in energy prices catalyzed the first monthly increase in consumer prices since October. Energy prices rose 1.0% in February after declining 9.7% in January. A 2.4% increase in gasoline prices was a main contributor to higher energy prices. 
    • Food prices increased 0.2% in February after reporting no change in January. 
    • Excluding food and energy, core CPI increased 0.2% for the second consecutive month while the consensus expected an increase of 0.1% 
  • The FHFA Housing Price Index for January rose 0.3%, which followed a revised increase of 0.7% (from 0.8%) in December 
  • New home sales increased 7.8% in February to 539,000 from an upwardly revised 500,000 (from 481,000) in January while the consensus expected a decline to 465,000 
    • Higher mortgage rates didn't seem to harm sales as 593,000 new homes were sold, representing the highest rate since February 2008 
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the Durable Orders report (consensus 0.4%) will be reported at 8:30 ET.
  • Nasdaq Composite +5.5% YTD 
  • Russell 2000 +5.0% YTD 
  • S&P 500 +1.6% YTD 
  • Dow Jones Industrial Average +1.1% YTD

(TEL) 888 Family Owners Would Support An All-share Merger


888 Family Owners Would Support An All-share Merger
2015-03-24 18:18:35.790 GMT


Ashley Armstrong
March 24 (Telegraph) -- Chief executive of gaming company
says the family shareholders are "not natural sellers for cash"
as it hands investors a special payout after the failed takeover
by William Hill
The chief executive of 888, the gaming firm which called off
takeover talks last month with William Hill, has revealed that
its major shareholders would back an all-share merger with a
rival.
Brian Mattingley, who is being promoted to executive
chairman of the group in May, said that after intense discussions
with 888’s major family shareholders there has been a commitment
from them to be supportive of management.
888 is controlled by the Shaked family, who own 48pc and the
Ben-Yitzhak family, who own around 10.5pc. Avi Shaked is
understood to have derailed talks with William Hill after
resisting a proposed 200p-a-share takeover. Mr Mattingley said
that the major shareholders were "not natural sellers for cash
but they would be supportive of 888 being a consolidator". He
added that they would see an all-share combination with a rival,
rather than a cash takeover, "as a positive move".
The 888 boss said that the company was also looking to make
its own acquisitions which could boost its sports business and
replace the earnings lost as a result of a new duty on online
gaming profits - the UK's point of consumption tax .
"We will not be making knee-jerk acquisitions or panic
buying, but we will not need shareholder approval to make these
deals", Mr Mattingley said.
The company, which offers casino, poker and bingo games,
toasted “another record year” after reporting that it had ended
the year debt-free after growing pre-tax profits by 28pc to $68m
(£45.7m) during 2014.
888 also reported earnings had lifted by a third to $101m
and a 14pc jump in revenues to $455m during 2014, boosted by a
strong performance in its Sports division.
888 said it would hand investors a special dividend of 7
cents-a-share, on top of a final dividend of 4.5 cents. Mr
Mattingley said that the payout was "not compensation for the
aborted takeover" and it was rather part of the group's strategy
to return excess cash to shareholders.
888, along with its gambling rivals, has suffered at the
hands of regulators who have introduced a rash of new rules
including the point of consumption tax.
However, Brian Mattingley, chief executive said that a
potential legal challenge to HMRC would unlikely result in the
duty being scrapped.

-0- Mar/24/2015 18:18 GMT

(BFW) Mediaset 2014 Net Income EU23.7m vs Est EU41.4m


Mediaset 2014 Net Income EU23.7m vs Est EU41.4m
2015-03-24 17:08:21.656 GMT


By Jim Silver
(Bloomberg) -- 2014 total rev. EU3.41b vs est EU3.42b.
* 2014 Ebitda EU1.33b vs est EU1.14b
* Plans EU0.02 dividend vs BDVD forecast of no dividend
* Ad spending at start of 2015 confirms improvement
* Unable to make full-yr forecasts, co. says
* Statement


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asnyder5@bloomberg.net
Jim Silver

(BFW) Telefonica Agrees to Sell O2 UK to Hutchison for GBP10.25B


BN 03/24 17:00 *TELEFONICA AIMS TO CUT DEBT TO OIBDA RATIO TO LESS THAN 2.35X
BN 03/24 16:59 *TELEFONICA AGREES TO SELL O2 TO HUTCHISON FOR 10.25B POUNDS
Telefonica Agrees to Sell O2 UK to Hutchison for GBP10.25B
2015-03-24 17:07:03.68 GMT


By Charles Penty
(Bloomberg) -- Telefonica reaches definitive agreement to
sell O2 UK to Hutschison Whampoa for GBP10.25b firm value.
* Accord includes GBP9.25b initial payment, delayed payment of
GBP1b
* Telefonica aims to use substantial part of proceeds to cut
net debt/oibda ratio to less than 2.35X
* Telefonica comments in regulatory filing today

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(BFW) Vivendi Receives 3 Requests for Resolutions From Shareholders


Vivendi Receives 3 Requests for Resolutions From Shareholders
2015-03-24 17:19:12.523 GMT


By Jim Silver
(Bloomberg) -- Vivendi mgmt board Tuesday decided not to
approve the resolutions, will recommend shareholders vote
against them or abstain, co. says in e-mailed statement.
* One proposal involves non-application of French law on
double voting rights
* Second proposal seeks increase in distribution proposed to
shareholders for 2014
* Third proposal calls for payment of an exceptional dividend
* NOTE: Earlier, Vivendi Investor PSAM Seeks EU9B Special
Dividend 2015


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Andrea Snyder at +1-202-624-1831 or
asnyder5@bloomberg.net
Jim Silver

(BFW) Israel Securities Authority May Probe HSBC Report: Globes


Israel Securities Authority May Probe HSBC Report: Globes
2015-03-24 18:01:21.307 GMT


By Karen Goldfarb
(Bloomberg) -- Link

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(BFW) Moneysupermarket.com Founder Nixon Selling About 35m Shrs

Moneysupermarket.com Founder Nixon Selling About 35m Shrs
2015-03-24 16:49:30.472 GMT


By Jim Silver
(Bloomberg) -- Shrs represent 6.4% stake, sole bookrunner
Citigroup says in statement.
* Nixon’s remaining shrs subject to 180-day lockup after sale
* Shrs being sold with right to dividend payable May 8
* Nixon had 16.5% stake as of March 3: company website
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RTR - Centerbridge in $1.35 billion deal for Great Wolf Resorts: sources

Centerbridge in $1.35 billion deal for Great Wolf Resorts: sources

(Reuters) - Private equity firm Centerbridge Partners LP has reached a deal to acquire Great Wolf Resorts Inc, the largest U.S. operator of indoor water parks, for $1.35 billion, including debt, people familiar with the matter said on Tuesday.

Centerbridge prevailed in an auction for Great Wolf by agreeing to pay the equivalent of more than ten times the company's annual earnings before interest, tax, depreciation and amortization, the people said. A deal could be announced as early as Tuesday, the people added.

Great Wolf is currently owned by private equity firm Apollo Global Management LLC, which took the company private in 2012 for $703 million. Apollo stands to make around 2.5 times its investment on the deal, one of the people said.

The sources asked not to be identified because the deal is not yet public. Apollo declined to comment, while Centerbridge and Great Wolf representatives did not immediately respond to a request for comment.

Madison, Wisconsin-based Great Wolf is a resort chain offering entertainment and hotel rooms in addiction to ropes courses and water park rides.

The first Great Wolf Lodge hotel resort opened in 1997 in Wisconsin Dells, Wisconsin, and the company now has about a dozen resorts throughout North America.

Reuters reported last month that Apollo was working with investment banks Goldman Sachs Group Inc and Deutsche Bank AG in a so-called dual-track sale process for Great Wolf.

An initial public offering registration for Great Wolf had been filed confidentially with the U.S. Securities and Exchange Commission. This provided an option for the company to go public if the offers did not meet Apollo's valuation expectations.