(BFW) LVMH May Be a Logical Buyer of Burberry, Tiffany, MainFirst Says

LVMH May Be a Logical Buyer of Burberry, Tiffany, MainFirst Says
2015-06-17 09:56:10.429 GMT


By Heather Burke
(Bloomberg) -- LVMH rated new outperform at MainFirst; says
in note co.’s size/scale, geographic and category diversity,
structure offer opportunities; EU185 PT implies ~15% upside from
yday close.

* Co. has focused on sales, mkt shr growth over returns for
>10 yrs; focus may be moving towards more balance where
extra cash from “1,000lb brand gorilla” Louis Vuitton used
to back growth of smaller brands; LV to generate ~75% of
co.’s FCF in 2015
* LVMH, Richemont only logical “trade” acquirers strong
enough to make >EU10b bids for Burberry and Tiffany, the 2
“elephants” in luxury/branded goods sector
*
* Both deals would be accretive assuming calendarized
2016E EV/EBITDA 15.0x acquisition multiples
* Future cash could lead to EU2.5b buyback if no big M&A
* Focusing on smaller brands would help positive oper.
leverage, luxury mkt shr
* Future brand IPOs such as Marc Jacob could offer shrholder
returns in medium to long term; Marc Jacobs part IPO (49%)
could net stakeholders and LVMH shareholders over >$1b
* Moet Hennessy undervalued, has some of most prestigious
brands
*
* Values LVMH’s 66% stake at ~EU16b or EU32/shr or ~EU19b
or EU37/shr on merger basis
* Diageo still very interested in Moet Hennessy brands,
Hennessy cognac; outright disposal by LVMH doesn’t make
sense
* Only viable deal that can see would be a merger for the
whole or part of Moet Hennessy with Diageo


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To contact the reporter on this story:
Heather Burke in London at +44-20-3525-2044 or
hburke2@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-3525-2645 or
jludden@bloomberg.net

(BofA-ML) Vivendi - Why TI? Strategic upside for pay TV; Apple contracts

Why TI? Strategic upside for pay TV; Apple contracts

* Why Vivendi could seek to increase its stake in TI
VIV will take an 8% stake in TI as part of the GVT sale & has said it could increase its stake. Why? It would turn a minority stake valued at a discount into a strategic stake valued at a premium, allowing VIV to control TI’s board, strategy, and destiny. We think potential options could then include: A) exit to another telco in 2-3 yrs; or B) change TI’s strategy from a “dumb pipe” to become an integrated quad play (with Mediaset Premium) to support the take up of fibre & then sell to a telco. It could also drive TI’s exit from TIM Brasil.

* We’ve been too bearish on C+ … attractive strategic options
While C+ has good visibility on costs (without the hyperinflation Sky saw in the UK & could see in Germany), we value C+ group at just €5.5bn (cons €7bn) to reflect structural pressures. However, Vivendi has strategic options to create value: A) Organic growth into Africa: there are 220m French speakers in the world – half of them in Africa. That is expected to increase to 700m (!) in 2050 with 80% in Africa. C+ already has 1.5m subs (ARPU $18 / m) across 22 African countries & is uniquely positioned to exploit this opportunity as it can: leverage its programing investment in France into Africa; exploit Studio Canal’s library of >5k titles & bundle music to drive take up. Bollore’s understanding of the continent could smooth execution. B) Consolidation: Vivendi swaps a 100% stake in C+ for a c30% stake in ‘Sky C+’ &
then exits over time – returning cash & giving investors a pure play on music.

* More visibility on Apple Music contracts
Press reports suggest Apple will not pay Independent labels during the free 3m trial but will compensate them by paying out a higher proportion of revs on an ongoing basis (c73% vs c70% for Spotify with c13% going to publishers & c60% to the record labels) – See pg 7. The 3 major labels have already signed deals with Apple. While our industry model already assumes no payment during free trials, UMG, with a c35% mkt share, may have negotiated better terms. UMG will also likely receive an upfront payment & will have some flex as to when it recognises revenue. See pg 5 for …. Music – structural growth opportunities do not come better than this!

* Valuation – free option on music (& African pay TV)
VIV offers an asymmetric opportunity with downside risk mitigated by cash returns & a free option on music & Africa with the core trading on just 13x 2016E EPS

>>> A2A signs letter of intent to merge with Linea

A2A signs letter of intent to merge with Linea

A2A, the listed Italian utility, has signed a letter of intent with Lombardy-based utility Linea for a possible merger, Il Sole 24 Ore reported. The two sides have entered into exclusive negotiations until 31 July to reach a deal, the Italian- language daily noted citing a company statement.

A2A will take a controlling stake in Linea, the report noted citing unspecified rumours.

Linea closed 2013 with an EBITDA of EUR 95m and net debts of EUR 358m.

Sourced from print copy: pages 27-28

Il Sole 24 Ore

>>> Molson Coors could attract buyer or acquire 100% interest in MillerCoors - r

Molson Coors could attract buyer or acquire 100% interest in MillerCoors 

Molson Coors Brewing (NYSE:TAP) could become a takeover target or buy London, England-based SABMiller's 58% stake in a joint venture, reported The Globe and Mail on its website Tuesday.

Barry Schwartz, chief investment officer at Baskin Wealth Management, which owns Molson Coors stock, said in the report that Denver, Colorado-based Molson, which has recently pursued acquisitions in India and Eastern Europe, will eventually either be taken over or buy the stake in Chicago, Illinois-based MillerCoors that it does not already own. According to the report, Molson's stake in the JV is 42%.

The Globe and Mail

(CS) EUROPEAN AUTO SUPPLIERS: We decrease estimates by an -6% average (’15-’17)

EUROPEAN AUTO SUPPLIERS: We decrease estimates by an -6% average (’15-’17) on China risk. There is significant risk in our view that 2Q15 earnings and beyond could disappoint given the worsening sales of the JVs. European suppliers are overweight exposure with c.70-95% of China sales to JVs. We expect the market shift away from JV brands to continue for some time – structural consumer trends, product mix, licensing restrictions, and government actions all continue to drive underperformance of JV brands. Faurecia is most at risk with poor customer and product mix.

(CS) UK RETAIL FOOD: We initiate coverage of the UK Food Retailers

UK RETAIL FOOD: We initiate coverage of the UK Food Retailers with a negative stance on the sector. We see few opportunities within a group that has historically misallocated capital, is faced with extreme competitive pressures and operates in a very low-growth environment. We initiate with Underperform ratings on Tesco (TP 169p) and Sainsbury (TP 219p) and a Neutral rating on Morrisons (TP 176p) and a Outperform rating on Ocado (TP 466p). Beside Aldi and Lidl that are disruptive and powerful, we see other competitors are nibbling (and chomping) away as well with Tesco and Morrisons have borne the brunt of rising competition. The weak operating environment could force consolidation within the industry, as we have seen in previous times of stress. In addition to the listed companies, The Co-operative (5.0% market share) and Iceland (2.2% market share) are large enough to matter.

(CS) UK RETAIL FOOD: We initiate coverage of the UK Food Retailers

UK RETAIL FOOD: We initiate coverage of the UK Food Retailers with a negative stance on the sector. We see few opportunities within a group that has historically misallocated capital, is faced with extreme competitive pressures and operates in a very low-growth environment. We initiate with Underperform ratings on Tesco (TP 169p) and Sainsbury (TP 219p) and a Neutral rating on Morrisons (TP 176p) and a Outperform rating on Ocado (TP 466p). Beside Aldi and Lidl that are disruptive and powerful, we see other competitors are nibbling (and chomping) away as well with Tesco and Morrisons have borne the brunt of rising competition. The weak operating environment could force consolidation within the industry, as we have seen in previous times of stress. In addition to the listed companies, The Co-operative (5.0% market share) and Iceland (2.2% market share) are large enough to matter.

(Les Echos) The telecoms sector optimistic on the coming recovery

The telecoms sector optimistic on the coming recovery

After years of turmoil, the market is going to land in Europe, according to Idate.Les challenges in terms of investment in networks remain important.

European telecom operators foresee the end of the tunnel. In recent weeks, the signs of recovery are increasing in the area. According to Idate, which organized the "Forum DigiWorld" Tuesday, with many players invited, the sector is expected to experience in 2017 a "very slight growth," after years of turmoil. These forecasts confirm those of Arthur D. Little and Exane BNP Paribas, in a recent study, and are consistent with the most optimistic speeches of operators since the start of the year.

To date, the growth dynamics of the telecom sector in Europe should even be similar to that of the United States, which has not happened for years. "It is anticipated roughly 1% growth in Europe and this will be the same in the US, while in 2012 there were 8 point gap between the two continents," says Didier Warbler, telecom specialist at 'Idate. In value terms, however, the differences are obviously very important, telecom subscriptions in the country of Uncle Sam being much more expensive than in Europe.

For "telcos" European, more growth means more revenue, more margin and therefore more investment capacity. This is essential to deal with the explosion of the expected data traffic on networks. "The volume of datas in the mobile doubling every year for two years," recalled Olivier Roussat, the boss of Bouygues Telecom, guest at the Idate Forum. The fault of course to Google, Netflix and other web players are drinking ever networks more content. A boon for operators who can sell greediest packages, and therefore more expensive, but a real challenge in terms of investment to build sufficiently robust networks.

Battle networks

The rivalry between "telcos" and web giants on the investment theme is not new, the first reproaching the latter not to pay the toll to use their information highways. "In three years, web players have invested $ 100 billion globally in web infrastructure," defended Carlo d'Asaro Biondo, director of partnerships and strategic relationships of Google for Europe, at the symposium, recalling also its projects in the fiber in the United States. "The myth that the giants of not webn'investissent in networks is false," he added. Not sure that the scales are nonetheless similar. "For 2013 alone, telecom operators spent alone 250 billion euros," retorted Didier Warbler.

If operators in Europe can expect a stabilization of short-term market, they can also count on new growth as connected objects or cloud services. Margin recovery, and thus the ability to invest, also go through the maintenance of good cost discipline according to Idate. "Margins of 30% still needed for operators to finance their investments, considers Didier Warbler. When a mobile operator has an EBITDA margin of less than 20%, such as Bouygues Telecom in France, for example, is that there is a problem. " These savings can go through the sharing of networks, infrastructure sharing, or through collaboration between operators.

The consolidation will remain relevant in the coming years. "It is the sense of history. There is a real correlation between the number of operators and their ability to invest, "Judge Stephane Richard, the owner of Orange, who pleaded again and again for a return to three actors in France," in the image of the logic underway in the rest of Europe. " Even disagree with its main shareholder, the state, which does not want to hear about consolidation ... for the sake of investment.