(BFW) China Jan. Manufacturing PMI 49.8; Est. 50.2


BN 02/01 01:03 *CHINA JAN. MANUFACTURING PMI 49.8; DEC. 50.1
BN 02/01 01:03 *CHINA JAN. MANUFACTURING PMI 49.8; EST. 50.2
China Jan. Manufacturing PMI 49.8; Est. 50.2
2015-02-01 01:08:09.765 GMT


By Bloomberg News
(Bloomberg) -- National Bureau of Statistics and China
Federation of Logistics and Purchasing release figure; median
est. 50.2 (range 49.8-50.4; 22 economists).
* NOTE: A number above 50 indicates expansion

Link to Company News:{NBSZ CH <Equity> CN <GO>}

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WSJ : Lafarge, Holcim Near Deal to Sell Assets to CRH

Lafarge, Holcim Near Deal to Sell Assets to CRH
Ireland’s CRH Would Pay at Least $7 Billion for Cement Assets, Say Sources

Cement giants Lafarge SA and Holcim Ltd. are nearing a deal to sell at least $7 billion worth of assets to Ireland’s CRH PLC, according to people familiar with the matter.

CRH was a finalist in an auction for the assets, vying in the past few days with a private-equity consortium including Blackstone Group LP, Cinven and Canada Pension Plan Investment Board, said the people. The deal hasn’t yet been completed, but the people said CRH is now poised to win the auction. The acquisition could be announced by Monday, if it doesn’t fall apart at the last minute, they said.

The sale of the cement assets in Europe, Canada and elsewhere is a precondition of winning antitrust approval of the roughly $40 billion pending merger between France’s Lafarge and Switzerland’s Holcim. The two companies announced their merger last April, and said they hoped to close the deal in the first half of 2015.

To address competition concerns, the companies agreed to sell assets that generate roughly €5 billion ($5.6 billion) in annual revenue.

A variety of industry players and buyout firms participated in the auction, with some 60 parties submitting bids for all or pieces of the assets, which include cement plants. It now appears CRH will buy them all, though it could turn around later and sell some to a third party, the people said.

>>> Germany, ECB play hardball with Greece

Germany, ECB play hardball with Greece

BERLIN/HELSINKI (Reuters) - German Chancellor Angela Merkel ruled out a debt writedown for Greece on Saturday, and a European Central Bank policymaker threatened to cut off funding to Greek banks if Athens does not agree to renew its bailout package.

The euro zone's paymaster and the ECB are both taking a tough line with Greece's new leftist government, whose leader swept to victory last Sunday promising that five years of austerity, "humiliation and suffering" were over.

Alexis Tsipras has also promised to renegotiate agreements with the European Commission, ECB and International Monetary Fund "troika" and write off much of Greece's 320 billion euro ($360 billion) debt, which at more than 175 percent of gross domestic product is the world's second-highest after Japan.

Merkel flatly rejected such a possibility.

"There was already a voluntary waiver by private creditors; Greece has already been exempt from billions by the banks. I don't see a further debt haircut," she told German daily Die Welt in an interview published in its Saturday edition.

"Europe will continue to show solidarity for Greece, as for other countries hit particularly hard by the crisis, if these countries undertake their own reforms and savings efforts," Merkel added in a thinly veiled threat to Athens.

Without the support of international lenders, Greece would soon find itself back in an acute financial crisis.

Unable to tap the markets because of sky-high borrowing costs, Athens has enough cash to meet its funding needs for the next couple of months. But it faces around 10 billion euros of debt repayments over the summer.

"I'M WAITING," MERKEL TELLS ATHENS

Greece's new government opened talks on its bailout with European partners on Friday by refusing to extend the program or to cooperate with the international inspectors overseeing it.

Separately, the French finance ministry said on Saturday that Greek Finance Minister Yanis Varoufakis will meet with his French counterpart Michel Sapin in Paris on Sunday and issue a statement afterwards.

Europe's bailout program for Greece, part of a 240 billion euro rescue package also involving the International Monetary Fund, expires on Feb. 28. A failure to renew it could leave Athens unable to meet its financing needs and cut its banks off from central bank liquidity support.

The ECB does not accept Greek sovereign bonds as collateral in its refinancing operations as they are below investment grade. However, it allows central bank financing to Greek banks as the country is in a bailout program.

Erkki Liikanen, a member of the ECB's policymaking Governing Council, said that funding, too, could dry up if Greece does not remain in a program.

"Greece's program extension will expire in the end of February so some kind of solution must be found, otherwise we can't continue lending," Liikanen, also the governor of Finland's central bank, told public broadcaster YLE.

Merkel said the ECB's Jan. 22 decision to pump billions of euros into the euro zone with a bond-buying program did not mean countries would end efforts to shape up their economies with structural reforms.

She put the onus on the new Greek government to present a credible economic policy.

"The goal of our policy was and is that Greece remains a permanent part of the euro-community," Merkel said.

"To that end, Greece and the European partners make their contribution. Apart from that, I am now waiting to see what concepts the Greek government will present."

RTR _ U.S. regulators recall 2.1 million vehicles in new air

U.S. regulators recall 2.1 million vehicles in new air bag issue

(Reuters) - The auto industry’s air bag troubles deepened on Saturday as U.S. federal safety regulators said three big automakers will recall about 2.1 million older vehicles to fix defects that could cause air bags to deploy when they are not supposed to.

The vehicles involved in the recall announced by National Highway Traffic Safety Administration are made by Toyota Motor Corp , Fiat Chrysler Automobiles NV and Honda Motor Co.

There have been about 400 reported cases of inadvertent air bag deployments in the recalled vehicles, NHTSA Administrator Mark Rosekind said. The incidents have caused some minor injuries, but no known deaths, he told reporters.

The agency said the recall concerned a defective chip in air bag systems and the fix involved replacing the entire air bag module, including circuits manufactured by parts maker TRW Automotive Holdings, Rosekind said.

The auto makers involved had issued three earlier recalls to fix the chip problems. But the NHTSA said it had reports that 39 vehicles fixed under those actions had experienced inadvertent air bag deployments, hence the new recall.

It was not related to millions of vehicles recalled over Takata Corp air bags. U.S. safety regulators have said defective Takata air bag inflators in certain vehicles can rupture and spray metal fragments inside the vehicle.

Air bag failures were also central to the controversy last year over General Motors Co’s delay in recalling millions of vehicles with defective ignition switches, that could unexpectedly cut off power to the safety systems.

Noting potential consumer concerns about air bags, the NHTSA said the chances of being involved in a crash in which an air bag could prevent serious injury or death were far greater than the risk of serious injury from an inadvertent bag deployment.

The NHTSA blamed the problems it reported on Saturday on "electrical noise" in the air bag system. It said a fully effective solution might not be available until late this year.

The agency said the models affected were: 2002-2003 Jeep Liberty and 2002-2004 Jeep Grand Cherokees (about 750,000 vehicles); 2003-2004 Honda Odyssey; and 2003 Acura MDX (about 370,000 vehicles) and 2003-2004 Pontiac Vibe; Dodge Viper; and Toyota Corolla, Toyota Matrix, and Toyota Avalon (about 1 million vehicles, not all of which were sold in the United States.)

The agency said the affected models had a part called an electronic control unit that controls deployment of its air bags. TRW supplied control units containing the same control circuit to all three automakers.

Although the recalls were not related to the Takata cases, the NHTSA said there was an overlap, in that about 1 million of the vehicles affected were also covered in separate recalls of Takata air bag inflator systems.

The recall highlights the difficulty automakers and regulators have with increasingly complex electronic systems. The agency said in a statement it could take several months for the companies to get enough parts to fix all the vehicles involved.

In the Takata cases, Honda on Friday said it has confirmed that a Takata air bag inflator ruptured in a Jan. 18 crash in Texas that killed the driver. Prior to that incident, air bags made by the Japanese company had been linked to at least five deaths.

(BFW) Goldman’s Germany Chief Sees IPO Wave of Internet Startups: FAS


Goldman’s Germany Chief Sees IPO Wave of Internet Startups: FAS
2015-01-31 14:55:41.92 GMT


By Christoph Rauwald
(Bloomberg) -- Zalando and Rocket Internet IPOs had
“icebreaker function” for German Internet cos. and current
market environment is “extremely favorable,” Wolfgang Fink
tells Frankfurter Allgemeine Sonntagszeitung in interview.
* NOTE: On Jan. 20, The Mall Bites Back as Stores Offer
Experiences Lacking Online
* NOTE: On Nov. 26, Zalando Regains IPO Price as Profitable
End to Year Expected


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Barrons : European Stocks Stumble as Outlook on Greece Darkens


European Stocks Stumble as Outlook on Greece Darkens

Dow Jones Global Indexes|Global Stock Markets
European stocks were caught between Greece and its creditors this week as they traded blows over the country’s bailout terms.
It began with the resounding election victory of Greece’s radical leftist Syriza party, headed by Alexis Tsipras, who staunchly opposes austerity measures imposed on the country in return for its 240 billion euro ($269 billion) bailout.
Tsipras, who was named prime minister on Monday, wants to hammer out a new deal with the European Union and the International Monetary Fund that would write off some of Greece’s debt and free up cash that he would like to pump into financial relief for the country’s poor.
European investors were initially sanguine about the election on Monday, apparently having already priced in the risk that Greece might default and get bumped out of the euro zone.
And there were signs that Tsipras wouldn’t be the radical firebrand many had feared. His public comments suggested that he wanted Greece to remain in the euro zone and might compromise with the EU and IMF.
At the same time, the euro zone isn’t as vulnerable to a Greek exit as it was at the height of the debt crisis a few years ago. European banks are better protected against financial shocks following several years of restructuring and reforms.
With European investors still basking in the afterglow of the European Central Bank’s quantitative-easing plan announced the previous Thursday, Jan. 22, when the ECB pledged to pump billions of euros into markets between March and September, the Stoxx Europe 600 index ended 0.6% higher on Monday.
That initial calm faded by midweek as neither Greece nor its creditors appeared to be in a mood to compromise. German Finance Minister Wolfgang Schäuble took a swipe at Greece on Tuesday, when he told the European Parliament that Greece’s problems stemmed from decades of neglect by the country’s elite rather than austerity measures favored by Berlin and the EU.
Fears of a damaging clash between the two sides increased after Tsipras named bailout critic Yanis Varoufakis as his finance minister. Varoufakis describes himself as a libertarian Marxist.
The new government said it would halt plans to sell some state-owned assets and boost public-sector employment. With that, the widening gulf between the two sides stirred fears that Greece might fail to strike the deal it needs within the next few weeks.
The Stoxx Europe 600 index ended the week down 0.9%.
Not surprisingly, Greek stocks and bonds took a much heavier pounding than the broader European market, with the Athex Composite index plunging more than 14% over the week. The yields on short-term debt shot up as investors factored in the mounting risk of default.
MEANWHILE, OIL PRICES remained volatile amid growing signs that supply could outpace demand for some time.
This week, U.S. stockpiles hit an 80-year peak, keeping a lid on oil prices that have plunged close to 60% since last June. But while that’s bad for the energy sector, it may be good news for some businesses.
Airlines and shipping are two areas where cheap fuel is clearly having a swift and positive impact on overhead. But there are other, less obvious beneficiaries where the upside has yet to be realized.
Industries that make or use plastics and other oil-based products are enjoying reduced input costs that will feed through to bottom lines and lift stocks. “Even if the oil price were to recover anytime soon, it’s not going to bounce back swiftly to $80 or $100 a barrel,” says George Godber, who manages the Miton Value Opportunities fund for British-based money manager Miton Group.
He says some sectors that are being recognized by investors as beneficiaries of cheap oil in the U.S. are being overlooked in Europe. “For example, shares in some U.S. plastics manufacturers are on the way up, but we’re not seeing that over here,” Godber says.
One of his top picks is FTSE-250 listed RPC Group (ticker: RPC.UK), a plastic-packaging business. “It’s a well-run business and makes many of the products we use every day, from paint pots to Nestlé coffee capsules. On top of that, cheap oil is sharply reducing its production costs,” Godber says.
Panmure Gordon analyst Paul Jones has RPC at Buy with a target price of 8.28 British pounds ($12.44). Commenting on RPC’s recent £306 million acquisition of Icelandic rival Promens, Jones says, “We expect completion of the acquisition of Promens to be made toward the end of March as anticipated, and believe early indications are that all is as expected. The falling oil price remains a positive tail wind for profitability in future months, counterbalanced by the head wind of the pound-euro exchange rate.” RPC shares closed at £5.43 on Friday.

NY Post : Jay Z bids $56M for music streaming company

Jay Z bids $56M for music streaming company

Jay Z may be getting ready to do battle with Dr. Dre.
The New York rapper is in talks to buy a small, Swedish music streaming company called Aspiro for $56 million, according to a report.
Aspiro is the parent company behind Wimp, a music streaming service currently available only in Denmark, Germany, Norway, Poland and Sweden. It has 500,000-plus subscribers.
Wimp competes with Spotify, the giant subscription music streamer, which has 15 million paying subscribers and 45 million fans listening to its free version, and with Beats Music.
Beats, co-founded by Dr. Dre, was sold to Apple last year for $3 billion. If Jay Z — whose real name is Sean Carter — succeeds in buying Aspiro and expands it into the US, it will go head-to-head against Dre’s Beats.
Spotify is available in 58 countries, including the US.
Jay Z made the offer through Project Panther Bidco, a company he set up to make the deal happen, according to the report in the Financial Times.
“Panther believes that the recent developments in the entertainment industry, with the migration to music and media streaming, offers great potential for increased entertainment consumption and an opportunity for artists to further promote their music,” Panther said in a statement, according to the FT.
“Panther’s strategic ambition revolves around global expansion and up-scaling of Aspiro’s platform, technology and services.”

>>> Weekly Market Update: Greek Election and FX Fallout Squeeze Markets

Weekly Market Update: Greek Election and FX Fallout Squeeze Markets

There was a sense of wariness in global markets this week as participants moved beyond ECB easing to mull over the Greek government turnover, some upsetting corporate quarterly reports, and the Fed's steady course toward rate hikes. Syriza's victory in Greece was widely expected, and focus is now on how Athens and the Eurozone can work out a new deal that allows both sides to save face. The FOMC decision on Wednesday strongly suggested that the Fed is on track for rate liftoff later this year after upgrading its growth assessment to "solid" from "moderate", though it did acknowledge that "international developments" are being watched closely. Meanwhile, corporate giants like Microsoft, Caterpillar, and ConocoPhillips saw losses as they grappled with the strong dollar and weak oil prices. The US 10-year yield fell to new 2015 lows below 1.70%, levels not seen since 2012. The first look at US fourth quarter GDP was good, not great (+2.6% versus final Q3 +5.0%), although consumption remained strong. US durable goods orders were not pretty, while in China, December industrial production contracted 8%, twice the November decline. The Shanghai Composite lost ground on the week for the first time in nearly three months, while the DJIA fell 2.8%, the S&P500 declined 2.8% and the Nasdaq lost 2.6%.

In Greece, the anti-bailout Syriza swept into power in elections last Sunday with an overwhelming 10-point lead over the ruling New Democracy party. Syriza took 149 seats, just shy of the 151 required for an outright majority, requiring it to recruit the right-wing, anti-bailout Independent Greeks party (with 13 seats) as coalition partner. Syriza's mercurial leader Alexis Tsipras said the election marks the end of bailout agreement for Greece and cancels austerity. The new government immediately began preparing to cancel certain privatization deals and met with EU Commissioner Dijsselbloem to discuss a new deal with Europe. The euro sank on the news, with EUR/USD touching 1.1100, although it rebounded toward the 1.13 handle later in the week.

Central bank calibration continued this week. The Singapore Central Bank (MAS) joined the currency wars with an intermeeting policy easing on Thursday. In the first unscheduled announcement in 13 years, the MAS cut its 2015 headline CPI forecasts while also lowering the slope of SGD policy band, sending the currency to its weakest levels since 2010. The Reserve Bank of New Zealand adopted a more cautious stance, tightening bias and also introduced the possibility of a rate cut as its next policy move. In Europe, the Danish Central Bank cut its CD rate for the third time in two weeks, to -0.50% from -0.35%, as the Danes struggle to maintain the EUR/DKK peg. Analysts say the DKK trading band could be widened soon if the pressure on the euro continues. Finally, the Russian Central bank took its one-week auction rate down to 15% from 17%, in what analysts called a highly political decision.

On Monday, OPEC Secretary General El-Badri tried to call a bottom in oil and insisted that prices would begin rising soon, with $200/bbl prices possible in three or four years if new oil investment really started falling. El-Badri insisted that Saudi policy under the new king would remain the same. The oil industry seemed to heed El-Badri's words as a number of the major E&P firms announced sharp y/y reductions in 2015 capex in their earnings reports. The closely watched Baker Hughes rig count registered another steep decline. The US rig count dropped 5.5% on the week, and that combined with a report of ISIS launching a fresh attack in Kurdish territory sent crude futures higher into the close on Friday. After grinding lower for most of the week, WTI crude futures rang up an 8% gain into the close on Friday, topping $48/bbl.

Oil majors detailed the impact from the decline in crude over final quarter of 2014 in quarterly reports. Shell, Total, Conoco and Chevron all announced double-digit percentage cuts to their 2015 capex plans versus 2014 (the standouts were Conoco cutting about 20% and Total cutting by 30%). Independent E&P firms Hess and Occidental Petroleum also cut capex levels (Occidental cut by 33%). The majors saw their upstream earnings plummet, while downstream earnings are barely helping them keep up. Shares of CVX, COP and XOM fell 4-5% on the week, while HES was off 8%. Meanwhile refiners Valero and Phillips 66 saw solid gains in profit from lower crude costs, and modest share gains this week.

Solid earnings reports from DR Horton and Pulte Homes helped drive gains for the major US homebuilders. Housing data out this week wasn't stellar: pending home sales dropped more than expected in December, however the month's total was still higher than the year-ago figure. Meanwhile the November S&P/Case Shiller index gained 4.3% y/y, the slowest in two years, indicating that lean inventories and tight lending standards have limited housing activities. Both Pultle and DR Horton said they were looking forward to a strong spring selling season.

Apple set a record for the most profits in a quarter ever reported by a public company with its first quarter results. iPhone shipments hit a new record high, at 74.5 million units as Apple's new large format phones were a hit, especially in China. Revenue absolutely crushed expectations on the strong sales of the high margin iPhone 6 and 6 plus. Investors did not react well to Microsoft's results, as net income contracted due to price cuts among its Windows and Xbox businesses. Facebook saw healthy y/y gains in both EPS and revenue, while mobile users were up 34% y/y.

Alibaba's shares peaked in early November and have been on the wane since, and this week's fourth-quarter report sent shares down close to 10% after revenue missed estimates. Some analysts cut the name, warning about revenue growth, while others doubled down on optimistic buy ratings. Meanwhile Yahoo disclosed its plan to spin off all of its Alibaba holdings to its shareholders, seen as a positive development, but the swoon in BABA shares dragged YHOO down right along with it. Yahoo's flat fourth-quarter search revenue and sinking display revenue did not help. Amazon had a very good holiday quarter, reporting margins back in the black and earnings way ahead of expectations. Shares of AMZN rose more than 10% after its report.

Dollar strength is becoming a big headache for US corporations with significant overseas revenue, including consumer and drug companies. Both Lilly and Pfizer turned in decent fourth-quarter results, and both cited big FX impacts for some less-than-impressive full-year guidance. Colgate-Palmolive and Proctor & Gamble both missed revenue targets and warned FX was becoming a problem. P&G said FX would reduce 2015 sales by 5% and net earnings by 12%, while Colgate said FX cut 9% off revenue in its fourth quarter.

China reported more troubling data this week. December industrial profits declined twice the amount seen in November, -8% versus -4.2% m/m, and 2014 industrial profit growth was just 3.3%. Officials acknowledged the downward pressure on the economy, but also said this is the "new normal." The PBoC injected liquidity for a second week in a row, again citing the anticipated cash squeeze going into the Lunar New Year holiday.

Lower oil prices showed up in Japan's CPI data. December core nationwide CPI and January Tokyo CPI declined to 9- and 10-month lows, respectively. Meanwhile, Japan is approaching the consumption tax hike roll-off in April, which could send annual CPI levels back to negative territory and leave Abenomics even further from its key objective of 2% inflation. Other December datapoints were similarly troubling: household consumption fell y/y for the ninth straight month and industrial output missed consensus, although exports stayed strong, rising 12.9% y/y. None of this stopped the cabinet from maintaining its economic assessment of "gradually recovering" for the fourth consecutive month. USD/JPY bounced around in a range between 117.40 and 118.60

>>> US Close Dow-1,45% S&P-1,30% Nasdaq-1,03% Russell-2,08%

Closing Market Summary: Stocks End January on Defensive Note

The stock market ended a down month on a sharply lower note. The Dow (-1.5%) and S&P 500 (-1.3%) widened their respective January losses to 3.7% and 3.1% while the Nasdaq Composite (-1.0%) lost 2.1%. Furthermore, this marked the first time since early 2012 that the market registered losses in two consecutive months.

The key indices struggled at the start after a disappointing GDP report for the fourth quarter introduced a new wrinkle into a deteriorating outlook for global growth. Overnight, Japan and the eurozone saw a slowdown in their respective inflation data while a handful of U.S. companies joined a growing chorus of names that have reduced their guidance for the first quarter. On that note, consensus Q1 earnings growth has contracted to just 0.2% from 8.6% on December 1, according to S&P Capital IQ.

Equities followed their lower open with another slip, but the S&P 500 turned around just north of the 2,000 level and spent the afternoon working back to its flat line. The rebound coincided with a Der Spiegel report indicating Germany is ready to back EUR20 billion in aid for Greece, but the package would be contingent on Greece accepting reform conditions imposed by the troika. This contrasted with earlier comments from Greek Finance Minister Yanis Varoufakis who said Greece will no longer negotiate with the troika. Furthermore, Germany's government was quick to deny the report from Der Spiegel.

The afternoon rebound also featured a surge in crude oil, which spiked to end the day higher by 8.0% at $48.17/bbl. However, crude notched its high just ahead of the 14:30 ET pit close and inched away from that level in electronic trade while the S&P 500 slumped back below its 100-day moving average (2,010) to a new low.

Nine of ten sectors registered losses while energy (+0.7%) benefitted from the spike in crude. However, today's surge was a small victory considering the sector lost 4.9% in January. Dow component Chevron (CVX 102.53, -0.47) shed 0.5% after its plans to cut capital expenditures by 13.0% overshadowed better than expected results.

Speaking of the Dow, the index stayed near the S&P 500, but a 2.8% spike in the shares of Visa (V 254.91, +6.91) masked the fact that 15 of 30 Dow members lost more than 2.0% while four of the 15 tumbled 3.0% or more. As for Visa, the payment processor spiked after beating estimates and announcing a 4:1 split, which will become effective March 19 and remove some of Visa's influence over the price-weighted index.

In other earnings of note, Amazon.com (AMZN 354.53, +42.75) soared 13.7% after beating operating income estimates and issuing cautious guidance for the first quarter. The stock helped the consumer discretionary sector (-1.1%) finish a few steps ahead of the broader market.

Although the market endured a whipsaw session, that was not the case with Shake Shack (SHAK 45.90, +24.90), which made its public debut today. Shares of the hamburger chain rocketed higher by 118.6% after pricing the IPO at $21.

Treasuries spiked, ending near their highs with the 10-yr yield down eight basis points at 1.67%.

Today's participation was well ahead of average with more than a billion shares changing hands at the NYSE floor.

Economic data included Q4 GDP, Employment Cost Index, Chicago PMI, and Michigan Sentiment:
  • According to the advance estimate, GDP increased 2.6% in Q4 2014 (consensus 3.2%), down from a 5.0% increase in the third quarter 
    • Real final sales increased 1.8% in the fourth quarter after increasing 5.0% in the third quarter 
    • Much of the GDP gain was the result of lower prices adding a boost to the "real" economy. Nominal GDP growth was anemic (2.5%), which was down by more than 50% from both second (6.8%) and third quarter (6.4%) growth levels 
    • Consumption spending was a bright spot, increasing 4.3%, which was the largest jump since 2006 
  • The Employment Cost index Increased 0.6% in Q4, down from a 0.7% increase in Q3 while the consensus expected an increase of 0.5% 
    • Wages and salaries decelerated, up 0.5% after increasing 0.8% in Q3 2014 
    • Benefits spending growth increased 0.6% for a second consecutive quarter 
  • The Chicago PMI for January increased to 59.4 from 58.8 while the consensus expected a drop to 58.0 
    • Production levels accelerated as the related index increased to 64.1 in January from 62.7 in December 
  • The University of Michigan Consumer Sentiment Index was virtually unchanged in January, ticking down to 98.1 from 98.2 (consensus 98.2) 
    • Lower gasoline prices and improvements in the labor market were key for overall sentiment growth in January 
On Monday, December Personal Income, Personal Spending, and Core PCE Prices will be reported at 8:30 ET while the ISM Index for January and December Construction Spending will be released at 10:00 ET.
  • Nasdaq Composite -2.1% YTD 
  • S&P 500 -3.1% YTD 
  • Russell 2000 -3.4% YTD 
  • Dow Jones Industrial Average -3.7% YTD

>>> Zoetis shareholders indicate support for activist board seats

Zoetis shareholders indicate support for activist board seats (Deal Reporter)

Some Zoetis (NYSE:ZTS) investors appear receptive to supporting activist Pershing Square Capital Management in its pursuit of board seats at the animal health company, according to two large Zoetis shareholders.

In a move that seems designed to avoid a proxy fight, Pershing’s Bill Ackman is negotiating board representation with Zoetis, according to a Reuters report which cited unidentified sources.

The activist fund is the largest single shareholder in Zoetis, with an 8.3% stake in the animal health products maker. Sachem Head Capital, another hedge fund managed by a former Ackman protégée, has acquired a 1.6% stake in the Florham, New Jersey-based company.

One of the shareholders said “it’s a great sign” that Zoetis may be amenable to negotiating with Pershing, rather than fighting the move. Zoetis’ resistance could lead to an expensive and time-consuming proxy battle, which would be in neither side’s interest, the shareholder said. It also shows that Zoetis could potentially be “receptive” to influence from shareholders.

A second shareholder said he would “probably support” any Ackman nominees for the Zoetis board. “I don’t think the company needs an activist, but it doesn’t hurt,” said the investor. “He’s not looking to get control.”

This shareholder said his firm invested in Zoetis because it sees a macro trend of increased spending on animal and pet health, which benefits Zoetis. He noted that the stock has “already priced in a reasonably good possibility that it will get sold”.

In an interview with this news service earlier this month, Zoetis CEO Juan Ram Alaix declined to say whether Pershing was seeking board representation, calling any talks with shareholders “private”. However, the pursuit of board seats, backed by the threat of a proxy battle, is a common tactic for activists seeking to influence a company.

The deadline for board nominations for Zoetis’ annual shareholders meeting is 12 February.

Representatives for Zoetis and Pershing declined to comment. Sachem could not be reached for comment.

Pershing has not disclosed its intentions for the company, other than to hint in a letter to investors that the company could be sold. Zoetis was spun off from Pfizer (NYSE:PFE) in 2013.

“News reports indicate that Pfizer considered selling Zoetis in late 2013 and that several large, well-capitalized buyers, including Bayer (XETRA:BAYN) and Novartis (NYSE:NVS), participated in the sales process. In part because a sale would have triggered large taxes for Pfizer, Pfizer instead decided to pursue a tax-free split-off of Zoetis to its shareholders,” the letter to investors said.

Zoetis shares were trading at USD 43.24 late Friday, giving it a market value of USD 21.7bn. Its shares have gained 41% over the last year.