(BFW) Dijsselbloem Says Greece Strength Must Come From Its Industries


Dijsselbloem Says Greece Strength Must Come From Its Industries
2015-03-14 13:15:03.432 GMT


By Elco van Groningen
(Bloomberg) -- Greece can extend those sectors and attract
foreign investment, Eurogroup chairman Jeroen Dijsselbloem says
in radio interview, without naming them.
* “The big crux in that is trust. If Greece really tackles
its problems, stabilizes policy, then investors will return,
foreign companies will return and the Greek economy will
recover”: Dijsselbloem says in interview Saturday on Omroep
Zeeland.
* “That’s what we bet on, and where Greek government also has
to put its effort in”
* There are conditions to its loans, and he expects Greece to
seriously work on those conditions
* “It’s not a punishment. We want Greece to be put back in
order again and that the Greek economy will start working
again”
* “We won’t continue our help if they’re not seriously
putting the country back in order”
* NOTE: Dijsselbloem is also Dutch Finance Minister
* NOTE Earlier: Dijsselbloem doesn’t see Greece stalling to
avoid budget cut: AD


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To contact the reporter on this story:
Elco van Groningen in Amsterdam at +31-20-589-8517 or
vangroningen@bloomberg.net
To contact the editor responsible for this story:
Simon Thiel at +44-20-3525-2814 or
sthiel1@bloomberg.net

(BFW) Swiss, EU to Sign Automatic Tax Data Exchange Deal March 19: NZZ


Swiss, EU to Sign Automatic Tax Data Exchange Deal March 19: NZZ
2015-03-14 13:23:51.196 GMT


By Roxana Zega
(Bloomberg) -- The Swiss government will sign a deal for
the automatic exchange of bank client information with the
European Union on Thursday, March 19, Neue Zurcher Zeitung
reports, citing multiple sources.
* Switzerland to start collecting data from 2017 and exchange
it from 2018
* The deal implements a standard set by the Organisation for
Economic Cooperation and Development in order to fight
cross-border tax evasion
* NOTE: Switzerland signed the automatic data exchange deal
with Australia on March 3


For Related News and Information:
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To contact the reporter on this story:
Roxana Zega in Zurich at +41-44-224-4120 or
rzega@bloomberg.net
To contact the editor responsible for this story:
Cecile Vannucci at +44-20-3525-7032 or
cvannucci1@bloomberg.net

>>> US Close Dow-0,81% S&P-0,61% Nasdaq-0,44% Russell-0,36%

Closing Market Summary: Stocks Slide Amid Persistent Dollar Strength

The stock market finished the week on a defensive note with the S&P 500 (-0.6%) returning below its 50-day moving average (2,059). The benchmark index settled ahead of the Dow Jones Industrial Average (-0.8%), but behind the Nasdaq Composite (-0.4%).

Equity indices began the day with modest losses and spent the first two hours of action in a steady slide that involved all ten sectors. The S&P 500 hovered near its morning low into the afternoon, but was able to rally into the middle of its trading range during the final 90 minutes of the day.

Once again, the early pressure was largely due to continued greenback strength that sent the Dollar Index (100.22, +0.78) higher by 0.8% to extend its March advance to 5.1%. The unyielding strength fed concerns about the impact to earnings of multinational companies while also pressuring crude oil. The energy component fell 4.7% to $44.89/bbl and notched its low after the Baker Hughes rig count fell to 1125 (-67), registering its 14th consecutive weekly decline.

For the week, WTI crude lost 9.1% while the energy sector (-0.5%) fell 2.8%, ending the week well behind the remaining groups. Today, however, the sector finished ahead of the broader market thanks to a late rally amid speculation ExxonMobil (XOM 83.87, -0.35) may be interested in Whiting Petroleum (WLL 40.00, +1.64). Meanwhile, the materials sector (-1.0%) was the weakest performer on the cyclical side as steelmakers weighed with Market Vectors Steel ETF (SLX 30.97, -0.72) falling 2.3%.

Elsewhere, the technology sector (-0.5%) stayed ahead of the broader market thanks to relative strength among chipmakers. The PHLX Semiconductor Index gained 0.7% with NXP Semiconductor (NXPI 104.66, +6.09) jumping 6.2% after Needham initiated coverage of the stock with a ‘Strong Buy' rating. As for large cap names, Intel (INTC 30.93, +0.13), Microsoft (MSFT 41.38, +0.36) and Oracle (ORCL 42.38, +0.76) finished in the green while other major tech components registered losses.

The Nasdaq settled a little ahead of the broader market thanks to those pockets of strength while biotechnology names also contributed to the outperformance. The iShares Nasdaq Biotechnology ETF (IBB 345.33, +0.50) added 0.1% after being up more than 1.0% this morning. On a related note, the health care sector (-0.2%) finished ahead of the remaining groups.

Treasuries ended flat after showing intraday gains with the 10-yr yield settling at 2.12%.

Today's participation was a bit light with fewer than 790 million shares changing hands at the NYSE floor.

Economic data included PPI and Michigan Sentiment:
  • Producer prices declined 0.5% in February after declining 0.8% in January while the Consensus expected an increase of 0.3% 
    • The drop in producer prices was a shock. Most analysts expected a rise in energy prices would offset any weaknesses from other sectors, but that did not happen 
      • Energy prices were flat in February after declining 10.3% in January 
    • Food prices declined 1.6% in February after declining 1.1% in January, which was the third consecutive monthly decline in food prices. Most of the drop resulted from a 17.1% decline in fresh and dry vegetable prices 
    • Excluding food and energy, core PPI also declined 0.5% in February after declining 0.1% in January while the consensus expected an increase of 0.1% 
  • The University of Michigan Consumer Sentiment Index dropped to 91.2 in the preliminary March reading from 95.4 while the consensus expected an increase to 95.8 
    • Slightly higher gasoline prices and a volatile equity market offset continued strengthening in the labor market 
On Monday, the Empire Manufacturing report for March will be released at 8:30 ET while February Industrial Production and Capacity Utilization will be announced at 9:15 ET. The day's data will be topped off with the 10:00 ET release of NAHB Housing Market Index for March.
  • Nasdaq Composite +2.9% YTD 
  • Russell 2000 +2.3% YTD 
  • S&P 500 -0.3% YTD 
  • Dow Jones Industrial Average -0.4% YTD 

(BN) Whiting Said to Draw Interest From Exxon as It Explores Sale


Whiting Said to Draw Interest From Exxon as It Explores Sale
2015-03-13 19:51:23.423 GMT


By Matthew Monks and Bradley Olson
(Bloomberg) -- Whiting Petroleum Corp., the North Dakota
oil explorer, has attracted interest from Exxon Mobil Corp. and
Continental Resources Inc. as it explores a sale of the entire
company, people with knowledge of the situation said.
Hess Corp. and Statoil ASA are also looking at Denver-based
Whiting, said the people, who asked not to be identified
discussing private information. Whiting has set up a data room
for potential buyers to evaluate the company’s financial
information and asked them to submit bids next week, the people
said. The discussions are ongoing and there’s no guarantee a
deal will be reached.
A potential deal for Whiting, the largest producer in North
Dakota’s Bakken shale formation, may be the first in an
anticipated pickup of merger activity for U.S. energy producers
as they grapple with heavy debt and an oil selloff.
Continental, Exxon, Hess and Statoil are already among the
10 largest holders of acreage in the Bakken, a giant slab of
oil-soaked rock that lies beneath Montana, North Dakota and
parts of Canada, according to data compiled by Bloomberg.
Consolidation is likely to pick up in the oil patch this
year as larger U.S. and international buyers seek to “snatch
up” valuable shale producers, according to a statement from
Paulson & Co., which owns 8.1 percent of Whiting.
Spokesmen for Whiting, Exxon, Continental, Hess and Statoil
declined to comment. The Wall Street Journal previously reported
that Whiting is seeking a buyer.

Bigger Footprint

Whiting is probably exploring a sale along with other
strategic alternatives, including selling assets, raising debt
and selling shares in order to address “investor liquidity
concerns,” Phillip Jungwirth, an analyst with Bank of Montreal,
wrote in a research note last week.
Bloomberg News reported in February that Whiting was
exploring selling up to $700 million of oil and natural gas
processing assets.
“While some reports implied Whiting was a distressed
seller, we don’t view this as the case,” Jungwirth wrote.
“We’d expect interest in Whiting to come from larger Bakken
peers that are looking to expand their footprint.”
Buying a shale producer such as Whiting is cheaper than it
has been at any time in recent years as companies used new
technology to unlock a boom in North American supplies, flooding
world markets and depressing prices. The value of reserves held
by about 75 drillers based on their reserves fell by a median of
25 percent by the end of 2014 compared to the previous year,
according to data compiled by Bloomberg.
U.S. crude prices fell 3.4 percent to $45.44 at 12:05 p.m.
in New York, the lowest level in almost six weeks, as the
International Energy Agency said a record surplus of oil put in
storage may soon renew a price slump.

Shale on Sale as Oil Crash Tilting Seller Markets to Buyers
Whiting Petroleum Said to Hire Bank to Pursue Potential Sale
L-Shaped Oil Recovery Flattens V-Shaped Market Optimists:Energy
Whiting news: WLL US <Equity> CN BN <GO>
Bloomberg Intelligence Oil Analysis: BI OILS <GO>
Top stories: OTOP <GO>

--With assistance from Kelly Bit in New York.

To contact the reporters on this story:
Matthew Monks in New York at +1-212-617-8111 or
mmonks1@bloomberg.net;
Bradley Olson in Houston at +1-713-547-8408 or
bradleyolson@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net;
Susan Warren at +1-214-954-9455 or
susanwarren@bloomberg.net
Elizabeth Wollman

WSJ : Generali Faces Another Uphill Climb


Generali Faces Another Uphill Climb
New capital rules, earnings power cause some concern

Mario Greco must feel like Sisyphus. Having completed one big job at Generali, the chief executive of the Italian insurer finds himself with another big task ahead.

Mr. Greco set a series of goals for the insurer two years ago. With the company’s annual results, which came out on Thursday, Generali not only met those goals but did so a year ahead of schedule. Yet Generali’s stock ended this week down.

The reason is that, since Mr. Greco launched his overhaul, the world has moved on. There are concerns that Generali looks slightly weak in terms of new capital rules for European insurers that kick in at the start of 2016. There are also questions over its earnings power.

Mr. Greco’s targets were to sell €4 billion ($4.25 billion) worth of unwanted assets, boost Generali’s capital to 160% of its minimum requirement under the existing Solvency I rules and operating return on equity to above 13%. All have been hit.

But when it comes to capital, the figure Generali reported this week for its so-called “economic capital,” which is a guide to its best estimate of where its capital will be under the new Solvency II regime, was only 151% of its requirement. That is down from 184% at the end of 2013, driven partly by the decline in interest rates—which makes it harder for Generali to meet guarantees on products sold in Germany especially—but also by an increase in the riskiness of bonds the company has invested in.

Generali acknowledges it started work on measuring capital under Solvency II rules much later than other large European rivals and so it is less sure about what its final capital number will be at the start of next year.

Given that its ratio is already behind rivals such as Allianz, which reported a ratio of 191% for 2014, this could limit the amount of dividends Generali can pay in the next year or two.

On earnings, Generali’s underlying results for 2014 failed to meet expectations. In part, this was because the nonlife business didn’t increase its profitability or grow as much as hoped. Also, profits on the life side were driven almost entirely by unrealized investment gains from the rally in government bonds over the past year. Such gains are seen as lower quality for life insurers because they are outside management control and can be lost when interest rates change direction.

Generali still trades at a slight premium to rivals Axa and Allianz in terms of multiples of earnings. And its prospective 2015 dividend yield of 3.9% is lower than both with Axa at 4.3% and Allianz at 4.5%. With work still to do at Generali, its premium looks unjustified.

WSJ : Goldman’s Buybacks May Not Be So Stressed


Goldman’s Buybacks May Not Be So Stressed
Stock may be pricing in a capital return that’s too small

Despite having to revise its capital plan to pass the Federal Reserve’s stress test, Goldman Sachs Group may have quietly secured its place at the head of the class.

Some analysts have interpreted the fact Goldman had to revise its capital-return proposal as pointing toward lower buybacks this year. But there is good reason to think the capital return plan approved by the Federal Reserve Thursday likely exceeds estimates. So Goldman’s stock may be pricing in too small a capital return.

Following the release of Fed verdicts on bank capital plans Thursday, Goldman said it had received approval to raise its quarterly dividend to 65 cents from 60 cents. But it kept mum about the level of share repurchases the Fed approved.

Goldman Sachs, led by CEO Lloyd Blankfein, said it had received approval after the Federal Reserve “stress tests” to raise its quarterly dividend to 65 cents from 60 cents. ENLARGE
Goldman Sachs, led by CEO Lloyd Blankfein, said it had received approval after the Federal Reserve “stress tests” to raise its quarterly dividend to 65 cents from 60 cents. PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES
Given this, analysts and investors have tried to estimate Goldman’s buybacks based on stress-test data and the differences between the initial and revised request. This has led some to conclude that although Goldman’s dividend increase was approved, it likely had to reduce its buyback program below last year’s $5.5 billion level.

That would be odd. It’s clear the Fed has an implicit preference for buybacks over dividends, on the basis that banks more readily reduce repurchases than dividends during times of stress. As well, it is a mistake to assume the Fed would penalize Goldman for having to revise its proposal. That is now a normal part of the process and doesn’t earn regulatory demerits.

More important, the improvement in Goldman’s capital ratios seen from its initial and its revised proposals don’t automatically indicate smaller capital returns. Goldman appeared to have initially requested a combined capital return of $6 billion to $8 billion. The low end would imply a buyback program smaller than last year’s—and the revised plan would be even smaller. Some analysts see buybacks falling to about $4 billion.

Things probably aren’t so dire. The stress test measures capital adequacy quarter by quarter, with some periods putting more stress on earnings and assets than others. So, some improvement in Goldman’s test scores likely came from a change in the timing of its planned payouts rather than reductions in their overall amount.

Given this, it seems likely Goldman was approved for capital actions above last year’s combined $6.5 billion. This would mean the firm should be able to maintain its payout ratio of around 80%—putting it well above big-bank peers.

That could lead to a happy surprise for the stock as the year, and the buybacks, proceed.

(BN) Children’s Place Is Takeover Target Fit for an LBO: Real M&A


Children’s Place Is Takeover Target Fit for an LBO: Real M&A
2015-03-13 17:36:50.269 GMT


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

By Brooke Sutherland
(Bloomberg) -- Private-equity funds may take their hunt for
retail buyout targets to the playground.
Children’s Place Inc., the $1.3 billion seller of clothing
for youngsters, jumped the most in more than three years
Thursday after a pair of activist investors called on it to
explore a sale. The company is a logical private-equity target
because it’s cheap, has little debt and is in the sweet spot of
less than $6 billion in enterprise value.
The company has already been implementing some of the
changes that Barington Capital Group and Macellum Advisors are
pushing for, including updating its antiquated allocation and
inventory-management systems and closing underperforming stores.
That process could be accelerated, which would help improve
Children’s Place’s lagging margins, said Susan Anderson of FBR &
Co.
“It definitely looks attractive from an LBO perspective,”
Anderson said in a phone interview. There’s still “low-hanging
fruit” for private-equity firms to profit from.
Children’s Place could fetch about $70-a-share based on
recent retail deals, a 20 percent premium to its average price
in the last month, said Oppenheimer Holdings Inc. Even after
this week’s gains, the Secaucus, New Jersey-based company trades
at a lower multiple of revenue than most other similar-sized
U.S. apparel retailers, according to data compiled by Bloomberg.
“The public market is not rewarding them for the largest
market-share positioning in the kid’s category in specialty, and
the operating-margin opportunity down the road,” Anna Andreeva,
a New York-based analyst at Oppenheimer, said in a phone
interview.
Children’s Place shares fell 2.2 percent on Friday to
$61.57 at 1:36 p.m. in New York after rising almost 9 percent on
March 12.

CEO Criticized

Barington and Macellum say that the discount is because of
investor concern over the company’s “deteriorating operating
performance since 2010 under the leadership” of Chief Executive
Officer Jane Elfers. The activist investors criticized
Children’s Place’s poor merchandising and inventory management
and questioned Elfers’ “managerial expertise.”
Norman Matthews, chairman of the board, said in a statement
that was read on the company’s earnings call Thursday that
Children’s Place appreciates constructive input from all
shareholders and will review the letter. He added in the
statement, which was read by Group Vice President of Finance Bob
Vill, that the board firmly believes Elfers “has done an
excellent job and is the right leader for our company.”

Some Progress

Children’s Place has been making progress on efforts to
improve itself. The company last year rolled out a new
enterprise resource-planning system to help it better manage the
business. The kids clothing retailer said Thursday that it was
increasing the number of planned store closures to 200 through
2017, up from a targeted 125 through next year.
Still, the changes are taking longer than most would have
hoped, Andreeva said. Children’s Place’s gross margin of 35
percent trails the median for U.S. specialty-apparel peers and
its operating margin is one of the lowest in the group.
“Children’s Place doesn’t have systems that other
retailers have used for, I want to say, 10 years,” she said in
a phone interview. “They’re very, very much behind the curve.”
A private-equity firm with retail expertise could boost
profitability by accelerating the upgrade and store closures,
and then increase growth by ramping up international expansion,
according to Andreeva. With little debt and a high free-cash-
flow yield, there’s plenty of room for a buyout firm to leverage
it up.
“They’re actually fixing the stuff that’s wrong with it
now so it’s not like it’s totally a broken story,” Anderson of
FBR said. The company could just use a bit of private-equity
help, she said.

For Related News and Information:
LBO Comeback Nears as PetSmart Leads Busy Two Months: Real M&A
Pier 1, Dick’s Are Retail Buyout Picks After PetSmart: Real M&A
PetSmart Activists Wave Cash Flow at Private Equity: Real M&A
Private-equity news: NI PE <GO>
Top deal news: DTOP <GO>
Real M&A column: NI REALMNA <GO>

To contact the reporter on this story:
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Elizabeth Wollman

(NYT) Valeant Planning to Raise Its Bid for Salix Pharmaceuticals


Valeant Planning to Raise Its Bid for Salix Pharmaceuticals
2015-03-13 17:33:28.440 GMT


By DAVID GELLES
(New York Times) -- Valeant Pharmaceuticals is planning to
team up with Pershing Square Capital Management and other top
shareholders, including ValueAct Capital, to raise its bid for
Salix Pharmaceuticals this weekend, according to people briefed
on the matter.
The raised offer will be above $160 a share and consist
entirely of cash, these people said. The exact price of Valeant’s
new offer was not yet known.
Valeant hopes that the increased offer will be enough to end
a bidding war that has erupted over Salix, a maker of
gastrointestinal drugs.
Valeant agreed to buy Salix for $158 a share in cash, or
about $10 billion, last month. But earlier this week, the drug
giant Endo International offered $11.2 billion, or $175 a share,
mostly in stock, for Salix.
The Salix board is meeting on Saturday to consider the rival
offers, these people said.
While the Endo bid is higher, it also introduces several
uncertainties to the sale process for Salix. Among the top
concerns for analysts are the need for shareholder votes, a large
stock component and the results of a pending treatment approval
by the Food and Drug Administration.
Nonetheless, the Endo offer sent Salix shares trading
substantially higher, making it difficult for Valeant to stand by
its lower bid. Details of Valeant’s new bid were still coming
together on Friday afternoon.
To finance the increased offer, Valeant is turning to top
shareholders, including Pershing Square, the hedge fund run by
William A. Ackman. Pershing Square and Valeant worked closely
together for much of last year in an attempt to acquire Allergan,
them maker of Botox.
But Allergan was eventually acquired by Actavis, earning an
enormous profit for Mr. Ackman but leaving Valeant with little to
show for its efforts.
Then earlier this month, it emerged that Pershing Square had
taken a nearly 5 percent stake in Valeant but pledged to remain a
passive investor.
Acquiring Salix would be a much-needed victory for Valeant.
Speaking on CNBC on Friday, Mr. Ackman expressed confidence
in Valeant and its chief executive, J. Michael Pearson.
“I know Mike Pearson very well,” Mr. Ackman said. “I worked
with him for a year. He’s the most disciplined buyer of
companies. He’s not going to overpay for Salix.”
Mr. Ackman also suggested Salix shareholders would be wary
of taking so much Endo stock, compared with the cash being
offered by Valeant.
“In order for them to take the Endo transaction they have to
walk away from an all-cash deal,” Ackman said. “If you think
Valeant is getting it on the cheap, then you should buy Valeant
stock, which is what we did. We think Valeant stock is very
cheap.”
Other investors, including ValueAct Capital, another
activist hedge fund that is a big Valeant shareholder, are also
said to be helping finance the raised offer for Salix. It was not
immediately clear whether the hedge funds would simply lend money
to Valeant or use another mechanism to smooth the way for Valeant
to prevail in the bidding war.
Valeant is hesitant to take on more debt from banks because
it does not want to hurt its credit rating, people briefed on the
matter said.
Salix still hasn’t commented on the Endo offer, other to say
that it had received it and was reviewing it with its advisers.
Speaking at the Barclays Global Healthcare Conference on
Thursday, Endo’s chief executive, Rajiv De Silva, said he hoped
the bidding war over Salix would not last too long.
“We have no interest in a long drawn-out process,” Mr. De
Silva said. “We hope that this will be resolved quickly. This is,
I believe, in the best interest of the shareholders of all three
parties involved.”

Copyright 2015 The New York Times Company

-0- Mar/13/2015 17:33 GMT