>>> Vodafone shareholders sceptical over Liberty Global buy rationale

Vodafone shareholders sceptical over Liberty Global buy rationale

Vodafone should not overreact to the prospect of fixed-mobile consolidation in the UK by buying Liberty Global, two top 20 shareholders said.

The UK operator should prioritise increasing returns to cover its dividend, the shareholders said. It should wait to see returns on Project Spring – a GBP 7bn network investment programme – before taking part in large M&A transactions, the first shareholder added. The project will be neutral to EBITDA by the end of Vodafone’s 2017 financial year.

An acquisition of Liberty Global would put too much pressure on Vodafone’s balance sheet, the shareholders said. An all-share deal would be difficult because Vodafone trades lower than Liberty Global, with Vodafone at 7x EBITDA and Liberty Global at around 10x EBITDA, they said.

Vodafone would see pressure on its Baa1 credit rating if it significantly increased leverage in order to finance acquisitions, according to Moody’s, as previously reported.

There are also questions around whether Vodafone needs M&A to address its lack of fixed-line offering in the UK, the shareholders said. Shareholders have raised the subject with Vodafone management this week after it was confirmed that BT is in talks with O2 and EE.

It is too early for Vodafone to embark on such a large acquisition to address problems that may arise from BT teaming up with a mobile operator, the first shareholder said. Talk of Vodafone buying Liberty Global – or vice versa – is premature, a second shareholder said.

A third shareholder added Vodafone should wait to see how the UK market for bundled offers (when mobile is sold with fixed telephony, broadband and TV services) develops before participating in consolidation.

But, Vodafone may have missed an opportunity to take part in fixed-mobile consolidation when Virgin Media was bought by Liberty Global last year, the second shareholder said.

Virgin Media would have been a better fit for Vodafone than TalkTalk, which does not mesh with its demand for high-quality networks, he said.

An acquisition of Tesco’s film and TV streaming service BlinkBox, however, would likely be supported by Vodafone investors, the second shareholder said. The two companies are reportedly in deal talks.

(BFW) Telecom Italia CEO Says Stock Value Not ’Satisfying’: Radiocor

Telecom Italia CEO Says Stock Value Not ’Satisfying’: Radiocor
2014-12-02 18:56:49.81 GMT


By Chiara Vasarri
Dec. 2 (Bloomberg) -- Radiocor cites Telecom Italia CEO
Patuano speaking at Rome event.
* Says co. needs to be more ambitious; mgmt still working on
business plan aimed at convincing mkts
* NOTE: Telecom Italia Exiting Price War in Mobile, Fixed-Line
Mkt: CEO {NSN NFYP1Q6TTDT5<Go>}

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>>> Gagfah bid premium attractive given pre-offer run

Gagfah bid premium attractive given pre-offer run (MergerMarket)

Deutsche Annington’s [ETR:ANN] 16% takeover premium for Gagfah SA [FRA:GFJ] is fair given the company’s 27% stock price rise in the six months prior to the offer, according to two top ten shareholders in the target.

The first investor, in the top five, said he would eschew the opportunity to cash in the bid premium before the deal closes. Content with the deal terms, he is keen to tender stock and become a Deutsche Annington shareholder.

Neither shareholder had yet been contacted by the bidder, with the top five investor expressing some surprise he had not been approached for his opinion. Deutsche Annington only approached Gagfah “a short while ago”, a person familiar with the situation said. Deutsche Annington could not be reached for comment. Gagfah declined to comment.

Deutsche Annington has offered EUR 122.52 in cash and five of its own shares for every 14 Gagfah shares, implying a value of EUR 18 for each Gagfah share. The offer is at a 16.1% premium to Gagfah’s closing price on 28 November, or an 18.1% premium to the volume weighted average price (VWAP) over three months. Shares closed today (Tuesday) at EUR 17.83.

The offer values Gagfah at EUR 3.84bn and is dependent on 50% minimum shareholder acceptance.

Though each sector deal should be considered on its own merits, 16% is a solid premium considering the maturity of Gagfah’s business, the second investor said. Gagfah was fully valued before the offer and the company had reached its potential as a standalone business, he argued.

European real estate bids this year with Songbird [LON:SBD] and Corio [AMS:CORA] as targets have seen pre-announcement offer premia of 12.6% and 15.9%, respectively. Deutsche Wohnen’s [FRA:DWNI] takeover of GSW Immobilien [ETR:GIB] in 2013 was the last major German deal in the sector – it came with a 14.7% premium to the pre-announcement share price and a 15.4% premium to the VWAP.

Some Gagfah investors might have preferred more cash in the offer, but the equity portion should be value accretive, the first shareholder said. The combined property portfolio is adequately balanced and “size matters” in real estate given the scope for economies of scale, he added.

Deutsche Annington has estimated the merger will reinforce its position as the largest real estate company in Germany and create the second largest in Europe, with a gross asset value of about EUR 21bn. The acquirer’s estimate of EUR 84m in cost synergies, combined with analyst assumptions of financial and operational benefits of the deal, are all positives, the first shareholder said.

Gagfah had given notably confident mid-term guidance, the second shareholder said. In its 9M14 report, the company said it targeted annual LFL rental growth of 2.3%-2.5% over 2015-17 and annual EPRA NAV per share growth of 3.5%-4.5% over the same period.

Initially sceptical of real estate companies’ business models in a low interest rate environment, the first investor said Gagfah’s funds from operations (FFO) and dividend yield levels convinced him of the investment case for remaining long the stock. Gagfah’s 9M14 FFO yield was “on track” to hit the FY14 target of 6.3% (vs 9M13 at 4.1%), the company said last month.

At its 1H14 report in August, Gagfah hiked its FY14 dividend outlook to EUR 0.30-EUR 0.35 from EUR 0.23-EUR 0.25.

June 2014 saw Fortress Investment Group sell its final 27.78% stake in Gagfah for EUR 740m (or EUR 12.00 per share) after a number of earlier placements.

(BFW) BP, Shell Speculated Deal Unlikely Imminent: Gimme Credit

BP, Shell Speculated Deal Unlikely Imminent: Gimme Credit
2014-12-02 17:59:52.752 GMT


By Arie Shapira
Dec. 2 (Bloomberg) -- Any buyer of BP would likely want
more visibility about BP’s remaining Macondo disaster liability
and value of BP’s equity stake in Rosneft, Gimme Credit analyst
Phil Adams writes in report.
* BP ADRs up as much as 3.4% vs S&P 500 Energy index +1.4% on
Shell takeout speculation


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(BFW) Macron: France, Germany Need Ambitious Investment Plan in Weeks

BN 12/02 16:18 *SAPIN SAYS CDC, KFW MAY PARTICIPATE IN INVESTMENT PLANS
BN 12/02 16:10 *SAPIN SAYS TRANSACTION TAX AGREEMENT WILL BE `FIRST STEP'
BN 12/02 16:10 *FRANCE DETERMINED TO GET FIN. TRANSACTION TAX ACCORD: SAPIN
BFW 12/02 16:02 *SAPIN SAYS FRANCE WILL RESPECT EU BUDGET RULES
BN 12/02 16:01 *SAPIN SAYS FRANCE WILL RESPECT EU BUDGET RULES
BN 12/02 16:01 *SAPIN SAYS FRENCH STRUCTURAL REFORMS WILL LIFT GROWTH
BN 12/02 15:50 *FRANCE, GERMANY NEED JOINT INVESTMENT PLANS IN DECEMBER: MACRON
BFW 12/02 15:48 *MACRON: FRANCE, GERMANY NEED `AMBITIOUS' INVESTMENT POLICIES
Macron: France, Germany Need Ambitious Investment Plan in Weeks
2014-12-02 16:15:07.261 GMT


By Mark Deen
Dec. 2 (Bloomberg) -- French Economy Minister Emmanuel
Macron says that France and Germany need to come up with
“ambitious” proposals to compliment the European Commission
investment plan.
* French and German joint proposals need to be made before the
next summit of European leaders in mid December, Macron says
* France and Germany need to work towards economic
convergence, Macron says
* Macron speaks at press conference in Berlin
* Speaking at the same press conference French Finance
Minister Michel Sapin says that the German-French plan
shouldn’t be confused with the EU one
* “Don’t confuse the Juncker plan with investment in
countries. For example in France the implementation of 21
billion in savings next year doesn’t include even 1 million
euros of cuts to investment,” Sapin says

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>>> RSH - Halted: Believes Claimed Covenant Breaches By Term Lenders Are Wrong A

Halted: Believes Claimed Covenant Breaches By Term Lenders Are Wrong And Self-Serving 
- received a notice from Salus Capital Partners, a unit of Harbinger Group, Inc., claiming covenant breaches under the $250 million Term Loan facility provided by Salus and Cerberus Business Finance, a unit of Cerberus Capital Management. The claims relate primarily to the recapitalization and investment agreement and amendment to the Company's ABL credit facility, which in each case were entered into by the Company on October 3, 2014. RadioShack believes these claims are wrong and self-serving. 

RadioShack intends to vigorously contest the claims. The Company has been advised by lenders holding a majority of the loans and commitments under its ABL credit facility that they intend to continue to extend credit to the Company in accordance with the terms of the ABL credit facility.

- Company has reconfigured store hours at select locations that are expected to reduce annual operating costs by $35 million and have also completed major cost reduction projects, principally saving costs in IT and more efficient DC operations, of over $39 million.As the Company has communicated clearly to the term lenders, it has additional cost-reduction measures in process that it intends to announce in connection with its upcoming quarterly earnings release, which it believes could save an additional $200 million or more in operating expenses beyond the impact of the store closures, dramatically improving the cash flow of its business.

- Earlier this year, RadioShack asked the term lenders for consent to close these stores, which the Company estimates would have enhanced overall EBITDA by about $83 million and created an additional $87 million of liquidity from reduced and focused inventory levels. They refused unless the Company paid significant fees, prepaid a substantial portion of their debt and agreed to other covenants and concessions that the Company believed to be unreasonable, even though these store closures would have clearly benefited the Company and its stakeholders.