Le Figaro : Why CGG said no to Technip

Jean-Georges Malcor, head of CGG, defends its strategy, despite the collapse of 29% of the course.
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Technip closed Sunday evening the folder CGG . The group had tried to convince the beginning of November specialist seismic oil with a proposed takeover bid to 8.30 euros per share, including the boss of Technip , Pilenko , again Monday defended the strategic interest. Jean-Georges Malcor , CEO of CGG, says Le Figaro the reasons for its refusal, on market turbulence bottom. The stock has lost 29.3% Monday , while Technip gained 1%.

Le Figaro. - Why CGG she refused Technip's redemption proposal?

Jean-Georges Malcor. - We rejected the proposal to Technip for reasons primarily industrial. CGG is a geosciences company whose entire strategy in four years is based on three pillars, our three business lines, such as equipment, data acquisition, including through our fleet of seismic vessels, and imaging and interpretation. This triptych became our DNA. Customers validate this model. Or, Technip has made clear that he wanted the separation of data acquisition business. It was a project which challenged the integrated model of CGG obviously unacceptable.

Since November 10, when the proposal was put on the table, Technip he has not changed on that?

Not. Therefore, no compromise could be found. Technip is committed to us in an unsolicited approach. CGG, it must be remembered, is not for sale. But we discussed this episode with an open mind. Our refusal is not dogmatic. CGG has demonstrated in the past its reactivity and pragmatism. But the board and I have considered that this project does not create value for our group.

Technip believes that your data acquisition activities outside complement its own and create a range of interesting services. This will he just seems?

I agree Pilenko when he explains that seismic activities are key. For our customers, knowledge of hydrocarbon reservoirs is strategic. The interest of Technip our sole GRR division validates the Group's strategy for four years! But I consider for my part, like Schlumberger, this also involves mastering the art of acquisition. One could consider other forms of commercial cooperation between our two groups like the alliances or joint ventures that we have with others and work very well.

Technip said he has social consequences of your project?

Not. Never. But we were convinced that the cost synergies promised by Technip could be achieved without consequences on employment. 400 to 500 jobs threatened us appeared in France in the acquisition division.

The method of Technip and her boss she shocked you?

Pilenko and I, we know each other very well. I think the use wished we led discussions upstream rather than receive a pre-offer. That said, the episode is closed and the debates that we had remained very professional.

The creation of a French champion does she tries not you?

I am not unsympathetic to the argument. Technip and CGG already are, each in its field, world leaders. But such a project can not be conceived by amputating one of two groups of one of his legs.

CGG is it alone in a position to face a depressed market by the oil price collapse?

The transformation plan that we consider unfold over three years has been accelerated and has been completed in fourteen months. CGG has with Sercel and GGR two divisions resilient cycle trough. CGG has reduced its fleet, lowered costs and was put in a position to face a very difficult market . The context pushes customers to cut their exploration budgets, but they do not reduce to zero as long seismic expenses, which will be the first segment to leave.

Some investors doubt that you can escape a capital increase. And the share price fell sharply on Monday ...

They already felt at the end of the first quarter and then the second, third ... They were wrong and we maintain that we come out of this cycle of low on our own. We renegotiated our debt maturities. We will continue our debt reduction efforts as appropriate by asset disposals. As in, the reaction seems mechanics. It does not surprise us.

Le Figaro : Pourquoi CGG a dit non à Technip

Jean-Georges Malcor, le patron de CGG, défend sa stratégie, malgré l'effondrement de 29 % du cours.

Technip a refermé dimanche soir le dossier CGG. Le groupe avait tenté début novembre de convaincre le spécialiste de la sismique pétrolière avec un projet d'OPA à 8,30 euros par action, dont le patron de Technip, Thierry Pilenko, a de nouveau défendu lundi l'intérêt stratégique. Jean-Georges Malcor, patron de CGG, explique au Figaro les raisons de son refus, sur fond de turbulence boursière. Le titre a perdu lundi 29,3 %, tandis que Technip gagnait 1 %.

Le Figaro. - Pourquoi CGG a-t-elle refusé la proposition de rachat de Technip?

Jean-Georges Malcor. - Nous avons refusé la proposition de Technip pour des raisons avant tout industrielles. CGG est une société de géosciences dont toute la stratégie depuis quatre ans est fondée sur trois piliers, nos trois métiers, que sont les équipements, l'acquisition de données, notamment au travers de notre flotte de navires sismiques, et l'imagerie et leur interprétation. Ce triptyque est devenu notre ADN. Les clients valident ce modèle. Or, Technip a clairement indiqué qu'il souhaitait la séparation du métier d'acquisition de données. C'était un projet qui remettait en cause le modèle intégré de CGG, évidemment inacceptable.

Depuis le 10 novembre, date à laquelle la proposition a été mise sur la table, Technip n'a-t-il pas évolué sur ce point?

Non. C'est pourquoi aucun compromis ne pouvait être trouvé. Technip s'est engagé à notre égard dans une démarche non sollicitée. CGG, faut-il le rappeler, n'est pas à vendre. Mais nous avons abordé cet épisode avec l'esprit ouvert. Notre refus n'est pas dogmatique. CGG a fait la preuve par le passé de sa réactivité et de son pragmatisme. Mais le conseil d'administration et moi-même avons considéré que ce projet n'était pas créateur de valeur pour notre groupe.

Technip estime que vos activités hors acquisition de données complètent les siennes et créeraient une gamme de services intéressante. Cela vous semble-t-il juste?

Je rejoins Thierry Pilenko quand il explique que les activités sismiques sont clés. Pour nos clients, la connaissance des réservoirs d'hydrocarbures est stratégique. L'intérêt de Technip pour notre seule division GRR valide la stratégie du groupe depuis quatre ans! Mais je considère pour ma part, à l'instar de Schlumberger, que cela passe aussi par la maîtrise du métier de l'acquisition. On pourrait envisager d'autres formes de coopérations commerciales entre nos deux groupes à l'image des alliances ou des coentreprises que nous avons avec d'autres acteurs et qui fonctionnent très bien.

Technip vous a-t-il précisé les conséquences sociales de son projet?

Non. Jamais. Mais nous avions la conviction que les synergies de coûts promises par Technip ne pouvaient se réaliser sans conséquences sur l'emploi. 400 à 500 emplois nous paraissaient menacés en France dans la division acquisition.

La méthode de Technip et de son patron vous a-t-elle choqué?

Thierry Pilenko et moi, nous nous connaissons très bien. Je pense que l'usage aurait voulu que nous menions des discussions en amont plutôt que de recevoir une pré-offre. Cela dit, l'épisode est clos et les débats que nous avons eus sont restés très professionnels.

La création d'un champion français ne vous tente-t-elle pas?

Je ne suis pas insensible à l'argument. Technip et CGG sont déjà, chacun dans son domaine, des leaders mondiaux. Mais un tel projet ne peut se concevoir en amputant un des deux groupes de l'une de ses jambes.

CGG est-elle, seule, en situation d'affronter un marché déprimé par l'effondrement des prix du pétrole?

Le plan de transformation que nous envisagions de dérouler sur trois ans a été accéléré et aura été achevé en quatorze mois. CGG possède avec Sercel et GGR deux divisions résilientes en creux de cycle. CGG a réduit sa flotte, a abaissé ses coûts et s'est mis en situation de faire face à un marché très difficile. Le contexte pousse nos clients à couper dans leurs budgets d'exploration, mais ils ne réduisent pas pour autant à zéro leurs dépenses de sismiques, qui sera le premier segment à repartir.

Certains investisseurs doutent que vous puissiez échapper à une augmentation de capital. Et le cours de l'action a lourdement chuté ce lundi…

Ils le pensaient déjà à la fin du premier trimestre, puis au deuxième, au troisième… Ils avaient tort et nous maintenons que nous sortirons de ce bas de cycle par nos propres moyens. Nous avons renégocié nos échéances de dette. Nous poursuivrons nos efforts de désendettement le cas échéant par des cessions d'actifs. Quant au cours, la réaction me paraît mécanique. Elle ne nous a pas surpris.

>>> Asian Update

Asian Mid-session Update: China HSBC Flash PMI falls into contraction for the first time in 8 months


***Economic Data***
- (CN) CHINA HSBC DEC FLASH MANUFACTURING PMI: 49.5 V 49.8E (7-month low, 1st contraction in 7 months)
- (CN) CHINA NOV ACTUAL FOREIGN DIRECT INVESTMENT (FDI) Y/Y: +22.2% V +1.1%E; First rise in 5 months
- (JP) JAPAN DEC PRELIM MARKIT/JMMA MANUFACTURING PMI: 52.1 V 52.0 PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 110.2 v 110.4 prior
- (RU) RUSSIA CENTRAL BANK (CBR) RAISES ONE-WEEK AUCTION RATE BY 650BPS TO 17.00%; Cites rising currency devaluation and inflation risks- EMERGENCY MEETING

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -1.8%, S&P/ASX -0.5%, Kospi -0.5%, Shanghai Composite +0.7%, Hang Seng -1.2%, Mar S&P500 +0.2% at 1,987

***Commodities/Fixed Income***
- Feb gold -0.9% at $1,196, Jan crude oil -0.5% at $55.61/brl
- GLD: SPDR Gold Trust ETF daily holdings fall 2.4 tonnes to 723.4 tonnes
- (CN) PBoC won't conduct open market operations (OMO) in today's session (6th consecutive halt)
- JGB: (JP) Japan's MoF sells ¥2.49T in 0.1% (0.1% prior) 5-yr notes; Avg yield: 0.083% v 0.160% prior; Bid to cover: 4.24x v 3.70x prior
- JGB: Japan's 5-yr JGB yield falls to record low 0.06% following MoF auction

***Market Focal Points/Key Themes/FX***
- Tokyo stocks are leading the decline once again as the reversal in overextended Yen weakness continues to highlight the general risk-off environment. USD/JPY fell to within 10pips of its 3-week lows near 117.30, while the latest 5-year JGB auction saw very strong demand, taking the yield on the 5-yr to a record 0.06%. BOJ's Tankan survey of corporations revealed inflation expectations for 1-yr at 1.4% v 1.5% prior, 3-yr unchanged at 1.6%, and 5-yr unchanged at 1.7%. Separately, a note out of Moody's said the weekend parliament elections results were important for credit standing, but strong reforms are still required to make Abenomics successful.

- China flash manufacturing PMI contracted for the first time in 7 months, even though employment decrease slowed and new export orders increased faster. Disinflationary factors were increasingly more apparent and weighed on the index, with output and input prices decreasing at a faster rate. HSBC economist said about as much, stating "rising disinflationary pressures, which fundamentally reflect weak demand, warrant further monetary easing in the coming months." Separately, November FDI rose for the first time in 5 months, primarily boosted by the 7.9% YTD increase in the services component.

- Reserve Bank of Australia December meeting minutes offered mainly familiar tones for policy outlook, noting rate stability would be the most prudent course but also acknowledging increasing probability of further easing being priced in the fixed income markets. RBA also reiterated further fall in A$ is needed for the economy, and inflation outlook is consistent with the 2-3% target range. Out of New Zealand, the Finance Ministry gave up on posting a budget surplus in FY14/15 announcing it will not engage in slash and burn spending cuts to achieve surplus target. Fin Min English also noted dairy prices would fall further in the next few months but then recover in 2015.

- Russian Central Bank shocked the Ruble to a 10% spike after a surprise 650BPS rate hike to curb inflationary pressures from the weaker currency and prevent more outflows. USD/RUB fell as low as RUB60 in the Asian session after collapsing in the US hours, tracking the free-falling oil prices to mid $50's/brl.

***Equities***
US markets/ADRs:
- TLM: Board said to meet to review takeover offer from Repsol; Repsol's board said to have approved launching full takeover bid for Talisman - financial press; +19.9% afterhours
- FCEL: Reports Q4 -$0.02 v -$0.05 y/y, R$54.4M v $53Me; +6.5% afterhours
- BA: Increases share repurchase authorization to $12B (approx 13.7% of market cap), Raises dividend 25% to $0.91 from $0.73; +2.4% afterhours
- WHR: Guides initial FY15 Adj $14.00-15.00 v $14.57e; Cuts FY14 $10.90-11.10 v $11.67e (prior guided $11.50-12.00); +1.4% afterhours
- LLY: Increases quarterly dividend 2% to $0.50 from $0.49; -0.2% afterhours; +0.5% afterhours
- ESRX: Reaffirms FY14 $4.86-4.90 v $4.88e; approves additional 65M share buyback program (9% of shares outstanding); initiates CFO transition process; flat afterhours
- ADM: Olam to acquire ADM's worldwide cocoa business for $1.3B; flat afterhours
- KO: Guides FY14 currency neutral EPS growth expected to be 4% to 5% currency headwind of 7%; -0.2% afterhours
- PAY: Reports Q4 $0.44 v $0.41e, R$491M v $485Me; -0.6% afterhours
- ELY: Raises FY14 guidance to $0.17-0.19 v $0.18e (prior $0.15-0.18); Maintains Rev guidance of about +6%; Guides FY15 Rev +2-3%; -0.6% afterhours

Notable movers by sector:
- Consumer Discretionary: China Dongxiang Group 3818.HK +2.1% (FY14 guidance); Qantas Airways QAN.AU +4.9% (Nov Op result; WTI crude lower); Recall Holdings REC.AU -3.7% (Iron Mountain maintains bid); Skymark Airlines 9204.JP +21.6% (to start code share with ANA and JAL)
- Materials: BHP Billiton BHP.AU -3.2% (demerger plans in doubt due to iron ore, oil prices)
- Industrials: China Communications Construction 601800.CN +4.9 % (in talks for projects in Pakistan); China State Construction 601668.CN +0.3% (Nov new contract result); Wuhan Golden Laser 300220.CN +3.7% (private placement)

WSJ Dalian Wanda Commercial Properties Raises $3.7 Billion in IPO

Dalian Wanda Commercial Properties Raises $3.7 Billion in IPO
Offer Prices Near High End of Expected Range

HONG KONG—Dalian Wanda Commercial Properties Co., which is controlled by Chinese billionaire Wang Jianlin, has raised US$3.7 billion in a Hong Kong initial public offering after pricing the deal near the high end of an indicative price range, according to people familiar with the situation Tuesday.

Dalian Wanda Commercial’s IPO is now the largest-ever listing by a real-estate company globally, besting the 2010 debut of Singapore’s Global Logistic Properties Ltd. , according to Dealogic. Last month, Paramount Group Inc. raised US$2.6 billion in the U.S.

Dalian Wanda Commercial, the property arm of Dalian Wanda Group, which bought cinema chain AMC Entertainment Holdings two years ago, sold 600 million shares at 48 Hong Kong dollars (US$6.19) a share, near the high end of a price range of HK$41.8 to HK$49.6 a share, the people said.

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Including the listings of Dalian Wanda Commercial and BAIC Motor Corp., a Chinese car maker that priced its US$1.4 billion a few days ago, Hong Kong has climbed up to the second spot globally as far as global listing destinations from the fourth position previously. The New York Stock Exchange holds the top spot and Hong Kong is now followed by the Nasdaq Stock Market and the London Stock Exchange.

The Dalian Wanda Commercial listing comes after China’s central bank cut interest rates last month. Investors expect the move will ease pressure on heavily-indebted property companies, whose share prices rose after rates were cut. Dalian Wanda Commercial, which has 178 projects in 112 cities and 29 provinces across China, had a debt-to-equity ratio of 87.8% at the end of June, according to its listing prospectus.

>>> After Hours : FCEL +6.5%, WG +1.8%, WHR +1.4%, PAY +0.3%

After Hours Summary: FCEL +6.5%, WG +1.8%, WHR +1.4%, PAY +0.3%, AXAS -2.7%, ELY -0.6%, KO -0.4%, ESRX -0.2% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: FCEL +6.5%, WG +1.8%, WHR +1.4%, PAY +0.3%

Companies trading higher in after hours in reaction to news: STRI +11.6% (announced closing of sale of controlling interest to Zhenfa Energy Group; declared special dividend of $0.85 per share; increased size of Board of Directors), LADR +10.7% (announced  that it is commencing the steps necessary to elect Real Estate Investment Trust status with an expected effective date of January 1, 2015), PRTA +10.6% (announced that the FDA granted Fast Track designation to NEOD001, a novel monoclonal antibody for the potential treatment of AL amyloidosis), AUY +5.5% (announced 'significant' new discoveries at Chapada and El Penon; discoveries improve operational outlook), IMN +4.8% (Clinton Group intends to nominate three candidates for the Imation Board of Directors), BA +2.3% (increased share repurchase authorization to $12 bln and raised dividend by 25%), PKI +1.4% (FDA approved marketing of the EnLite Neonatal TREC Kit to help detect Severe Combined Immunodeficiency)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: AXAS -2.7%, ELY -0.6%, KO -0.4%, ESRX -0.2%

Companies trading lower in after hours in reaction to news: WAVX -3.6% (elected David Cote Chairman of the Board), AXAS -2.7% (provided Q4 and FY15 production guidance; co reduced 2015 drilling budget to ~$54 mln from $200 mln due to current commodity price weakness), PGH -0.8% (announced first steam at the initial 12,500 barrel per day commercial project at Lindbergh), BLUE -0.5% (announced proposed public offering of $150 mln in common stock) 

WSJ Repsol Readies Bid for Canada’s Talisman Energy


Repsol Readies Bid for Canada’s Talisman Energy
Spanish Firm’s Board Backs $8.3 Billion Takeover Offer

MADRID— Repsol SA is preparing an US$8.3 billion bid for struggling Talisman Energy Inc. of Canada, a takeover that would roughly double the Spanish company’s oil output right away and boost its potential for further expansion.

The Madrid company’s board met Monday evening and unanimously approved the offer, which has an enterprise value of $13 billion including debt. Repsol said it was preparing to offer $8 a share for Talisman, a significant premium over the Calgary-based company’s closing price Friday.

A spokesman for Talisman declined to comment late Monday. In New York, Talisman rose 19% to $5.12. But the shares are still down about 56% so far this year.


A takeover of Talisman would allow Repsol to control assets that include oil rigs in the North Sea and off the coasts of Indonesia and Malaysia, and shale acreage in Texas, New York and Alberta.

Taking on Talisman’s 2,809 employees would nearly double Repsol’s exploration and production staff. While the Spanish company has a market value five times as big as Talisman’s, it remains a tiny competitor in oil production and for more than a year has been shopping for an acquisition that would bolster its production capacity.

Historically a refiner, Repsol has in recent years acquired stakes in several of the world’s largest oil finds. But its production unit lacks the scale and expertise needed to develop promising fields offshore in Brazil and the Gulf of Mexico.

A near-halving of oil prices since June has squeezed smaller energy companies, which are recording dwindling revenues and struggling to fund new exploration. Talisman is no exception.

Repsol, meanwhile, is cash rich and short on assets. It received $5 billion in compensation for the 2012 expropriation of its Argentine unit YPF SA, and last year sold its liquid-natural-gas unit.

The sharp slide of oil prices is “a great opportunity for anyone who is liquid, and has not been hurt too badly by this drawdown,” said Michael Hulme, a fund manager with Carmignac Gestion who manages a commodities fund with ownership in several U.S. and Canadian oil and natural-gas explorers. “There is a state of near-panic among many oil producers, particularly in the U.S.,” he said, and a “tableau of middle-ranking oil companies in situations of potential stress.”

Repsol and Talisman first flirted with a deal during the summer, but talks cooled because of differences over price. As oil prices sank, Repsol started to look elsewhere for a deal, while Talisman’s share price sank.

In early November, Repsol’s chief financial officer, Miguel Martínez, signaled to investors that the company was still keen to make an acquisition, and that it expected the oil-price plunge to serve up better opportunities.

Around that time, with oil prices in free fall, Talisman put out new feelers with Repsol, asking whether the company would be willing to resume talks on a deal, according to a person familiar with the talks.

Repsol demurred before agreeing and talks moved quickly over the past 10 days. Repsol executives traveled to Calgary last week to discuss a potential bid.

On Monday, Repsol’s board approved its offer. By that time, Talisman had lost more than half its market value from the start of the year. Oil prices had fallen more than 45% and remained close to multiyear lows.

>>> PetSmart: JANA Partners, 9.8% stakeholder, discloses it does not intend to n

PetSmart: JANA Partners, 9.8% stakeholder, discloses it does not intend to nominate any individuals for election to PETM Board in light of acquisition by BC Partners

The filing states, "On December 14, 2014, the Issuer disclosed it had agreed to be acquired by a consortium led by private equity firm BC Partners. The Reporting Person therefore does not currently intend to nominate any individuals for election to the Issuer's board of directors at the Issuer's next annual meeting."

Puma Owner Kering Said to Have Explored Sale of Sportswear Maker

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Puma Owner Kering Said to Have Explored Sale of Sportswear Maker 2014-12-15 19:53:59.721 GMT

By Aaron Kirchfeld, Dinesh Nair and Ruth David (Bloomberg) -- The owner of Puma SE has explored a sale of the German sportswear maker as efforts to revive the brand drag into a fifth year, according to people familiar with the matter. Kering SA, which also owns Gucci, contacted potential buyers earlier this year to gauge interest, said the people, who asked not to be identified because talks are private. Sovereign- wealth funds from the Middle East such as Qatar as well as Asian investors were approached, they said. The discussions have yet to lead to any sort of takeover proposal and it remains unclear whether the company will still pursue a sale of the brand, the people said. Representatives for Kering, Puma and Qatar declined to comment. Kering owns about 86 percent of Puma, having acquired control of the sporting-goods maker in 2007. Puma, which has a market valuation of about 2.5 billion euros ($3.1 billion) based on the remaining traded shares, is revamping athletic shoes and stepping up marketing as it seeks to reorient the company’s positioning around performance gear. Kering is also making changes at Gucci, where the top two executives are stepping down amid faltering growth. In April, Kering Chairman Francois-Henri Pinault said he was convinced the company should have a sports and lifestyle division that wouldn’t be expanded until he’d revived Puma. Mario Ortelli, an analyst at Sanford C. Bernstein, is skeptical about Kering owning a maker of sporting products, which have much lower margins than luxury goods. Competitors such as Adidas AG and Nike Inc. are much bigger than Puma, meaning they can spend more on marketing and developing their products, he has said. Puma, known for its leaping cat logo, this fall unveiled its “Forever Faster” ad campaign, featuring athletes such as sprinter Usain Bolt and soccer player Mario Balotelli, helping boost footwear sales for the first time in seven quarters. The brand’s ad budget and sponsorship deals, including with English Premier League team Arsenal, are cutting into profit, which in 2014 may be less than half what it was a decade ago, according to analyst estimates.

For Related News and Information: Kering Reorganizes Luxury Unit Amid Confidence for Gucci, Puma M&A Data Search: MA <GO> Top Stories:TOP <GO>

--With assistance from Andrew Roberts in Paris, Manuel Baigorri in London and Aaron Ricadela in Frankfurt.

To contact the reporters on this story: Aaron Kirchfeld in London at +44-20-3525-8830 or akirchfeld@bloomberg.net; Dinesh Nair in London at +44-20-3525-3212 or dnair5@bloomberg.net; Ruth David in London at +44-20-3525-8095 or rdavid9@bloomberg.net To contact the editors responsible for this story: Celeste Perri at +31-20-589-8505 or cperri@bloomberg.net Paul Jarvis