FT : Fortress Ferrero resists bankers’ siege

Fortress Ferrero resists bankers’ siege

The drive from Milan’s financial centre to Alba, the headquarters of the Ferrero group, takes just two hours. But the two places could be worlds apart.
Perched on the edge of a river in the Piedmont region, the presence of Nutella is clear from merely smelling the air in the nearby medieval town where it is based. Here, Ferrero, which owns the Nutella, Tic Tac and Kinder brands, has defied the lure of 21st century capitalism and remained fiercely family controlled and conservatively run.

In Milan’s tight-knit financial community, Ferrero, which made €8.1bn in revenues in 2013, is known for being “unbankable”, in the words of the partner at a leading law firm. Bankers and lawyers talk of making repeated forays to Alba, only to be turned away on any proposition, from a stock market listing to issuing debt.
The death of the group’s patriarch, Michele Ferrero, aged 89 after a long illness has reignited speculation among bankers and financiers of a possible change of strategy.
But those familiar with the sprawling group, which remains in the hands of Mr Ferrero’s son Giovanni, the chief executive, do not expect it anytime soon.
“The strategy and the structure is so good so far that I don’t from a technical perspective see any need for any change,” says Luigi Consiglio of consumer goods consultancy GEA.
A longstanding Italian chief executive in the global consumer goods business adds: “It is a very slow-moving company. Indeed, it is more a group of brands than a company, nothing will happen there for years.”
Milan investment bankers were abuzz 18 months ago when rumours reached the city that Swiss group Nestlé had approached the reclusive Ferrero family, made up of Michele Ferrero, his wife and his son Giovanni, and the widow of his son Pietro, who died in 2011.
Ferrero is the fourth-largest confectionery brand in the world — after Mondelez, Mars and Nestlé — with €81.bn of revenues and €545m of net profit in 2013. Its Kinder brand is the world’s third-biggest by revenues after Wrigley and Cadbury. A merger with Nestlé would have made the group the biggest confectionery company in the world.
Nestlé at the time refused to comment and Ferrero in a statement in Italian newspapers said it had received no bid. Giovanni Ferrero added: “We were born a family company and intend to stay that way.”
According to three people with direct knowledge of the matter, Nestlé had made a tentative proposal for a cash and share swap that would have seen the Ferrero family becoming a big or even the biggest shareholder in the merged group, but the proposal was duly dispatched.
Giovanni and Pietro Ferrero had considered a big deal once before — a takeover of Cadbury in 2009 — but gave up the idea when it was vetoed by their father.
The only acquisition the group has made was a Turkish hazelnut supplier, bought last year. Organic growth through its brands has been its mantra — and thus far has served its expansion. One jar of Nutella is sold every 2.5 seconds worldwide, according to the company.
Jack Skelly, a food analyst at Euromonitor International, says one of Ferrero’s strengths is that it has balanced organic growth between developed and developing countries. In the Chinese and Russian markets, Ferrero’s sales in chocolate confectionery have increased by more than $600m in the past five years. The overall growth of China and Russia’s combined chocolate confectionery markets during that time is nearly $4bn.
Mr Skelly points out that Ferrero has also committed to improving its presence within other countries, such as the UK, the only European market where it does not have a top-three leadership position.
It is launching its Kinder range in so-called share bag format in a bid to build up its presence in the children’s confectionery market. Mr Skelly considers the Italian group also has room to “tinker with its formula to push the Ferrero Rocher brand in retailing and reinforce the brand’s premium image”.
Its most pressing issue, say industry experts, is not consolidation but its most precious asset — Nutella.
While hazelnuts remain a crucial part of the Nutella recipe — although far less than when it was created by Michele Ferrero more than 60 years ago — palm oil makes up as much as fifth of its ingredients.
Industry insiders say mounting consumer concerns about the use of palm oil — for both health and sustainability reasons — could affect sales of Nutella, especially since EU rules forced clearer labelling of ingredients since January this year.

>>> Schindler Holding could use cash for buys; expects opportunities in China

Schindler Holding could use cash for buys; expects opportunities in China

Schindler Holding (SCHN:SW), the Switzerland-based provider of elevators, escalators and related services, could spend its capital on acquisitions and is hoping to buy more assets in China, according to executives.

On Friday’s 4Q14 earnings call, an analyst noted that Schindler had cash on its balance sheet of around CHF 2.7bn and asked about the company’s strategy for these funds.

CFO Erich Ammann said Schindler had a lot of domestic cash which was not affected by exchange rates and gave the company more firepower. He said it would use this additional capital to make an extraordinary dividend and buy back shares.

“And obviously, we are continuously screening the M&A market. We believe that there'll be more targets coming up also in China,” the CFO continued, noting that this market could slow down somewhat and provide greater opportunities for M&A.

Later on the call, an analyst asked if Schindler had any white spots or segments for which it would pursue buys in China. CEO Silvio Napoli said the company did not typically discuss details of its M&A plans.

“That China is an area of interest, I think, goes by itself based on what we said,” Napoli remarked. “We're looking for, at the risk of saying something obvious, solid companies with a focus on technology, most of all safety and quality, in an area that is ideally complementary to ours.”

The CEO said while organic growth was Schindler’s first priority, it was very keen to find another asset similar to XJ-Schinder.

“It is true that the slowdown in the market may provide new opportunities because companies that maybe before felt they could conquer the world, maybe now they reconsider that in a different way,” he added.

Schindler announced in July last year it had reached an agreement with the majority shareholders of XJ-Schindler (Xuchang) Elevator Co. to increase its holding from 46% to 51%.

In 2011, Schindler established a joint venture with the Chinese elevator and escalator company and acquired a 46% stake. The deal also gave Schindler the right to acquire a further 5% of the company in each of the forthcoming three years and to raise its participation to 66% in total by 2017.

XJ-Schindler, based in Henan Province, has its own design, manufacturing, installation and maintenance operation and was expected to generate revenues of more than CHF 300m for the full year 2014, according to a press release.

Schindler develops, manufactures, installs, maintains and modernizes elevators, escalators, moving walks and transit management solutions for application requirements including train stations and hospitals, as well as commercial and residential buildings.

The company has acquired in a wide range of geographies in the past decade, including Continental Europe, Asia, the Middle East and North America. Disclosed deal values have typically been less than CHF 100m.

While Schindler usually handles financial and legal advisory in-house when acquiring, it has used in-country law firms on several occasions, according to the Mergermarket M&A database. For a Canadian purchase in 2013, it used Osler, Hoskin & Harcourt, while Saudi Arabia-based Legal Advisors in Association with Baker McKenzie was retained for a deal in the country in 2009.

Deloitte and US law firm MorrisAnderson & Associates were used for a Japan-based acquisition in 2005.

Schindler has a market capitalisation of CHF 16.6bn.

>>> Sika management bolsters defence against Saint-Gobain's takeover bid

Sika management bolsters defence against Saint-Gobain's takeover bid

In a communiqué dated February 16, a group led by Walter Grüebler, former Chairman of the Board of Directors, explicitly expresses its support for the course adopted by Sika's Board of Directors and management. The group holds 25,000 shares, equivalent to about one percent of Sika's capital. In addition to Walter Grüebler, the group includes former Board members Hans Peter Ming, Thomas Bechtler, Robert Fechtig, Urs B. Rinderknecht, Toni Rusch, Fritz Studer and Georg Stucky, as well as former Sika employees and well-known members of the Swiss business community.

"This transaction jeopardizes the culture of a large Swiss family-owned company that has evolved over the decades and destroys value for Sika shareholders. The resistance being shown by the Board of Directors and management is justified," says the support group's communiqué.

Sika Management regards this fresh support as further corroboration of its course of defending the interests of all stakeholders, which are at acute risk as a result of Saint-Gobain's hostile takeover bid. This is because Saint-Gobain wants to assume full control of the company with only 16 percent of the share capital, thus creating huge conflicts of interest which endanger the superior business model and successful growth strategy of Sika.

Company Press Release(s)

WSJ: Iliad Could Be French Consolidation’s Achilles’ Heel


Iliad Could Be French Consolidation’s Achilles’ Heel
France’s wireless sector could benefit from Altice’s pursuit of Bouygues, but Iliad will also have a say


There is a third wheel in the potential courtship of Bouygues Telecom by Altice’s Numericable.

No bid is on the table, but Altice’s executive chairman Patrick Drahi publicly said last year the company would be interested in buying Bouygues Telecom. With a combined mobile market share of about 43%, a tie-up would bump current leader Orange to second place, according to Raymond James. Shares in both companies rose Monday.

But Iliad, the upstart operator that kicked off France’s mobile price war, appears the linchpin in any deal to consolidate the market from four to three players. Its stock gained more than the potential deal-makers.

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Altice, which holds a 60% stake in Numericable, outbid Bouygues last year in a fierce battle for Vivendi ’s mobile business SFR. But during the bid wrangling, Bouygues agreed to sell some of its network infrastructure and spectrum to Iliad for €1.8 billion ($2 billion) as a nod to regulators in the event it was the chosen buyer.

Losing out on SFR left Bouygues arguably as the most vulnerable of the French mobile operators. The company subsequently announced a 17% cut to its telecoms workforce and tried to stay competitive by slashing the price of cheaper tariffs and offering added services for premium contracts.

Bouygues is seeing some progress. At the end of September, 22% of its mobile customers were enrolled in the more expensive 4G tariff band compared with only 9% the year before. Nevertheless the outlook is tough, with the telecoms business continuing to operate at a loss.

French regulators—wary of more job losses—have indicated they would welcome consolidation. But a tie-up between Numericable and Bouygues would throw up the same antitrust concerns over its network that the latter previously tried to avoid. Any discussion between the two would likely need to cast Iliad in a supporting role to acquire a chunk of the network assets.

As the smallest operator with a 12% market share, and the price aggressor, Iliad could sway regulators. But it is already rolling out its own infrastructure, strengthening its position without rivals’ help.

French mobile subscription rates are among the lowest in Europe, with Orange, SFR and Bouygues reporting negative underlying service revenue growth since 2012, Barclays says. The opportunity for Altice and Bouygues to consolidate France’s mobile market won’t last forever; shareholders are right to cheer them on.

(BFW) Puma Sees 2015 FX-Adj. Sales Up Mid-Single-Digit Range

Puma Sees 2015 FX-Adj. Sales Up Mid-Single-Digit Range
2015-02-16 09:03:28.45 GMT


By Heather Burke
(Bloomberg) -- Puma sees 2015 FX-adj. net sales rising in
medium-single digit range.
* 2015 gross margin expected to improve “slightly” due to
lower discounting and favorable product mix
* 2014 sales EU3b, est. EU2.97b
* 4Q sales EU751m, est. EU753.3m
* 4Q Ebit ex-items EU11m, est. EU15.1m

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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

(El Conficencial) La Caixa negotiating with the French Government to increase to

{http://www.elconfidencial.com/empresas/2015-02-16/la-caixa-negocia-con-el-gobierno-frances-incrementar-al-10-su-participacion-en-suez_712490/}

La Caixa negotiating with the French Government to increase to 10% its stake in Suez


La Caixa wanted to continue investing in its investment in Suez, but has met with distrust Elysee. His desire was to reach 10% by the French group

La Caixa negotiating with the French Government to increase its presence in the French multinational Suez Environnement . However, the aim of raising the bet by the Catalan firm has met with distrust Elysee. Financial sources have explained that the Spanish company wanted to reach 10% by the French group, but so far has failed to breach the usual corporate protectionism that the government of the neighboring country has with its large corporations.
The issue is settled between three protagonists: a Catalan, President of La Caixa, Isidre Faine ; French, president of Suez, Gérard Mestrallet , who Faine has an excellent relationship; and a Frenchman of Catalan origin, Manuel Valls , who is the limit has to attempt to La Caixa to consolidate its position in Suez.
Suez is a giant bill more than 14,600 million annually with the water business and environmental management. It is highly internationalized, to the point that only 36% of their business is for the French market, and one of his main interests is Agbar.
So Faine wanted to take the recent exchange of 24.4% of Agbar which partly changed by a significant package in Suez, slightly above 4% - to continue growing in the French conglomerate. The deal agreed initially expected that La Caixa could reach 7% in the capital of the French multinational water treatment and environment.
But Faine wanted more, as part of international diversification of Criteria , the holding of subsidiaries of La Caixa not hang directly from CaixaBank, such as packages Natural Gas , Saba or Abertis , for example. Official sources of La Caixa have declined to comment on the plans of Spanish group Suez and how they were received by the French Government.
While Mestrallet agreed to strengthen their alliance with a group like La Caixa, which in industrial issues thinking long term, the French government has considered the operation Spanish excessive prominence in one of the crown jewels of French capitalism, and investment has been average. La Caixa gained from the sale of 24.4% total additional 299 million in cash, contingent on related investments, including reach 7% of Suez. However, the participation of Criteria has been limited so far to 5% of the French group .
Second shareholder
Despite political constraints, La Caixa has become the second largest shareholder of Suez. Its 5% are valued at market prices by more than 430 million . The first shareholder of Suez Environnement is the energy giant GDF Suez, with 35.7%. But 33.6% of GDF is still owned by the French state , which in the end the French government has much to say on what occurs in the shareholding of the company.
Faine is on the board of Suez since October last year but has fallen short of its goal, which was more involved. In addition, since July, when the agreement to redeem the securities of Agbar by Suez was announced, shares in French group have risen 14% , which has lost some opportunity cost.
The operation has some fringe. So, Criteria Agbar has bought 15% of Aigues de Barcelona Mixed, the company that controls the entire supply management metropolitan water of the Catalan capital and surrounding municipalities by 50.5 million euros. That appreciates this company 336 million euros . The majority shareholder of this company is the Agbar own, with 75% of capital. Another fringe is to buy Suez 15% of Aguas de Valencia, which Criteria would remain the minority shareholder of that company.