>>> Brokers Upgrades & Downgrades - 1st of December 2014

>>> Up
*ACACIA MINING RAISED TO NEUTRAL VS SELL AT CITI
*GECINA RAISED TO NEUTRAL VS SELL AT UBS
*GENEL ENERGY RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
*NYRSTAR RAISED TO BUY VS NEUTRAL AT CITI
*REMY COINTREAU RAISED TO NEUTRAL VS REDUCE AT NOMURA
*VIVENDI RAISED TO BUY VS NEUTRAL AT NOMURA

>>> Down
*AFREN CUT TO UNDERWEIGHT VS OVERWEIGHT AT JPMORGAN
*ALMIRALL CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*DET NORSKE CUT TO UNDERWEIGHT VS NEUTRAL AT JPMORGAN
*ENQUEST CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*ETALON CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*FERREXPO CUT TO SELL VS NEUTRAL AT CITI
*ICAP CUT TO SELL VS NEUTRAL AT UBS
*INTERCONTINENTAL HOTELS CUT TO SELL VS NEUTRAL AT UBS
*MEDIASET ESPANA CUT TO REDUCE VS NEUTRAL AT NOMURA
*SVENSKA CELLULOSA CUT TO NEUTRAL VS BUY AT NOMURA
*TELECITY CUT TO NEUTRAL VS BUY AT UBS
*WEIR CUT TO NEUTRAL VS BUY AT BOFAML

>>> PT Changes


>>> Initiation
*VOLVO RATED NEW OUTPERFORM AT CREDIT SUISSE, PT SEK105

>>> Call
>> Stock
*MAERSK ADDED TO UBS LEAST PREFERRED LIST
*IAG REMOVED FROM UBS MOST PREFERRED LIST
*LUFTHANSA EXITS UBS LEAST PREFERRED LIST, ADDED TO MOST

>>> BT investor backs multi-billion-pound rights issue to finance mobile acquisi

BT investor backs multi-billion-pound rights issue to finance mobile acquisition

A top-five shareholder in BT has come out in support of a rights issue to finance the acquisition of UK mobile companies O2 or EE, The Daily Telegraph reported. The unidentified investor said he would favour a cash call in the single-digit billions (GBP) as he would like the UK-based telco’s shares to remain liquid. He added, however, that he would be supportive of giving Spain-based Telefonica, the owner of O2, a partial BT stake if that would smooth negotiations over price, the item reported. It noted reports have suggested Telefonica might sell O2 in return for a 20% BT stake.

The shareholder stated that he had talked to the management team at London-listed BT recently and it was evident no options have yet been ruled out, the report said.

Financing bankers cited in the piece said BT’s options for funding a deal are already under discussion and a multi-billion-pound cash call would easily secure support.

Moody’s, the credit-rating agency, indicated that a cash-only takeover offer would probably result in a downgrade for BT from its current Baa2 rating, the item reported.
Daily Telegraph

>>> Coca-Cola again is target of rumors that 3G Capital will buy it

Coca-Cola again is target of rumors that 3G Capital will buy it

Coca-Cola (NYSE: KO) again is in rumors that the trio Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira are talking about buying the world’s largest soft drinks business, O Globo reported Sunday without giving a source.

If confirmed, Coca-Cola would become the fourth prestigious US brand acquired by the trio through their 3G Capital, the Rio de Janeiro-based Portuguese-language newspaper reported in the widely read column of Ancelmo Gois.

The brands already acquired by the Brazilian investors are Anheuser-Busch (NYSE: BUD), Burger King Worldwide (NYSE: BKW) and Heinz, O Globo reported.

The question of what 3G would buy next with the backing of Warren Buffett was raised by The Wall Street Journal in a column this past 3 September. Buffett told shareholders earlier this year he is still seeking large acquisitions and continues to love 3G, the firm he teamed up with to buy Heinz in 2013, according to the WSJ report in September.

Belgium-based Anheuser-Busch InBev controls Cia. de Bebidas das Americas (Bovespa: AMBV3), a brewer known as AmBev that controls about two-third’s of Brazil’s beer market.

Berkshire Hathaway (NYSE: BRKA), which is controlled by Buffett, teamed with 3G in 2013 to buy Heinz, the large catsup maker, as reported.

The item in O Globo Sunday did not mention if 3G might team with Buffett to make a bid for Coke.

Berkshire Hathaway was the largest institutional shareholder with 400 million shares in Coca-Cola for a 9.1% stake as of this past 30 September, according to a tabulation published by Yahoo Finance. The shares held by Berkshire were worth USD 17.1bn on 30 September, according to the report.


Source O Globo, Wall Street Journal, yahoo.finance

>>> PT Portugal suitor Altice's raised bid of EUR 7.4bn beats rival Bain/Apax of

PT Portugal suitor Altice's raised bid of EUR 7.4bn beats rival Bain/Apax offer 

PT Portugal will be sold to Altice by Oi for EUR 7.4bn after the French telco raised its original EUR 7.025bn offer, reported Diario Economico.

Sources familiar with the situation told the Lusophone business paper that Altice has boosted PT Portugal's value to EUR 7.4bn in its offer and reduced future earn-out conditions from EUR 800m to EUR 500m.

Oi will select the Altice offer in favour of a rival EUR 7.075bn bid from Apax Partners and Bain Capital, in partnership with Semapa, the Portuguese cement group, the sources said. Oi investors reached a decision on the PT Portugal sale over the weekend and the process is expected to conclude by the end of this week, the report said.

Meanwhile, Jornal de Negocios also reported Altice's raised offer on PT Portugal and said the process is fully financed by Morgan Stanley, Goldman Sachs, JP Morgan, Credit Suisse and Deutsche Bank.


Source Diario Economico, Jornal de Negocios

>>> REE considers acquisitions for international expansion (translated)

REE considers acquisitions for international expansion (translated)

Red Electrica de Espana (REE), the listed Spanish electricity grid operator, is looking at international acquisition opportunities, especially in Latin America, Expansion reported. The utility has up to EUR 600m set aside for international development including acquisitions, REE chairman Jose Folgado was cited as saying in the Spanish-language report.

Targets will need to operate in countries where there is “regulatory stability”, Folgado said, making special mention of Chile, Colombia, Mexico, Brazil and Peru.
Expansion

>>> Asian Update

Asian Market Update: China PMIs at multi-month lows; Japan CapEx data bode well for upward GDP revision

***Economic Data***
- (CN) CHINA NOV FINAL HSBC MANUFACTURING PMI: 50.0 V 50.0E (6-month low)
- (CN) CHINA OFFICIAL NOV MANUFACTURING PMI: 50.3 V 50.5E (8-month low)
- (AU) AUSTRALIA Q3 COMPANY OPERATING PROFIT Q/Q: +0.5% V -1.3%E; INVENTORIES Q/Q: 0.7% V 0.2%E
- (AU) AUSTRALIA NOV TD SECURITIES INFLATION M/M: 0.1% V 0.2% PRIOR; Y/Y: 2.2% V 2.3% PRIOR
- (AU) AUSTRALIA NOV CORELOGIC HOUSE PRICES M/M: -0.3% V +1.0% PRIOR; first decline in 6 months
- (AU) AUSTRALIA NOV AIG PERFORMANCE OF MANUFACTURING INDEX: 50.1 V 49.4 PRIOR (1st expansion in 4 months)
- (NZ) NEW ZEALAND Q3 TERMS OF TRADE INDEX Q/Q: -4.4% V -4.5%E
- (JP) JAPAN Q3 CAPITAL SPENDING Y/Y: 5.5% (fifth quarter of expansion) V 2.0%E; CAPITAL SPENDING EX-SOFTWARE Y/Y: 5.6% V 1.5%E
- (JP) JAPAN NOV FINAL MARKIT/JMMA MANUFACTURING PMI: 52.0 V 52.1 PRELIM
- (KR) SOUTH KOREA NOV HSBC MANUFACTURING PMI: 49.0 V 48.7 PRIOR (3rd consecutive contraction)
- (KR) SOUTH KOREA NOV TRADE BALANCE: $5.6B V $6.2BE

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.8%, S&P/ASX -1.6%, Kospi -0.8%, Shanghai Composite +0.7%, Hang Seng -1.9%, Dec S&P500 -0.4% at 2,057

***Commodities/Fixed Income***
- Feb gold -2.1% at $1,151, Jan crude oil -2.2% at $64.70/brl, Mar copper -1.6% at $2.80/lb
- (CH) Switzerland votes "No" on gold referendum that would have required SNB to hold 1/5 of reserves in Gold; Vote was 78% in opposition to proposal
- GLD: SPDR Gold Trust ETF daily holdings fall 1.2 tonnes to 717.6 tonnes; Lowest level since Sept 2008
- (JP) BOJ offers to buy ¥110B in JGB with maturity less than 1-yr, ¥450B in 1-3yr JGB, ¥450B in 3-5yr JGB
- (KR) South Korea MoF sells 3-yr govt bonds at average yield of 2.06%

***Market Focal Points/Key Themes/FX***
- Jan crude oil extended its decline to as low as $64.10 - a 4 1/2 year low - as traders in Asia responded to a post OPEC-production hold with a follow-through selloff. Gold was also a big mover in commodities space, falling over $20/oz as Swiss "NO" vote on gold-reserve minimum referendum was defeated by a sound margin. Silver tracked gold losses with its own outsized decline.

- China twin PMIs for November saw an 8-month low for the Official and a 6-month low for HSBC Final prints respectively. AUD/USD hits its lows of the day after the official PMI release below $0.8420, down over 80pips from Friday close. Employment component deteriorated another 0.2pts to 48.2, while Export orders fell 1.5pts to 48.4. The final HSBC PMI remained on the cusp of falling into contraction, even though HSBC chief China economist forecasted stabilisation in property and manufacturing sectors in the coming months thanks to the latest PBoC rate cuts. Separately in China, the Cabinet unveiled the details on proposed bank deposit insurance, covering 100% of deposit amount up to CNY500K. In Hong Kong, tensions resurfaced after police authorities were forced to use batons and pepper spray against protesters attempting to surround the office of Chief Executive Leung.

- Japan Q3 CAPEX figures were much better than expected, prompting analysts to offer rosier projections for Q3 GDP than initially reported. Recall the preliminary GDP figures plunged Japan into a technical recession and sealed the delay in 2nd round sales tax hike. Japan final manufacturing PMI saw a downtick to 52.0, even though new orders and employment components rose. PM Abe said he would undertake more steps to boost consumption, declaring "Abenomics is still only halfway" to achieving its goals.

- Australia PM Abbott's ruling coalition was undermined after losing control of the state of Victoria - Australia's 2nd most populous state - to opposition Labor. Press reports attribute the loss to Abbott having broken a number of election promises "including a pledge not to raise taxes." Australia Q3 corporate profits recovered, with the focus now turning to the RBA cash rate decision tomorrow and the quarterly GDP figures on Wednesday.

- US Black Friday report card is mixed - online sales as measured by ChannelAdvisor exceeded estimates with a 22% y/y increase while National Retail Federation said 2014 Thanksgiving spending was down 11% y/y as a result of heavy discounting that started early. Traffic fell 5.2% y/y, and Online sales were about 43% of total, little changed from 2013.

- Ahead of this week's ECB decision, Bundesbank's Lautenschlaeger hardened the German opposition to expanding QE, noting a "broad purchase program of government bonds does not give a positive outcome" in consideration of costs and benefits. She added that long-term interest rates in Spain and Italy are already lower than in US and UK, urging for unanimous monetary policy to maintain price stability.

***Equities***
US shares/ADRs:
- GSK: Said to cut hundreds of jobs in the US as part of a 3-year $1.6B cost initiative - financial press
- PT: Altice SA said to have reached a deal to acquire company for €7.4B; Deal may be announced on Monday - financial press
- PG: Said to have hired an advisor to sell its hair care unit valued at $7B - financial press

Notable movers by sector:
- Consumer Discretionary: Pola Orbis Holdings 4927.JP +5.6% (raises FY14/15 guidance)
- Financials: Ping An Insurance 601318.CN +3.7% (to issue H-shares)
- Materials: Metcash MTS.AU -14.2% (H1 results)
- Energy: Sundance Energy Australia SEA.AU -10.4%, Santos STO.AU -6.8%, Drillsearch Energy DLS.AU -9.3% (WTI Crude below $65/barrel)
- Industrials: UGL Ltd UGL.AU -1.5% (Chairman comments on possible write-downs)

FT : Altice agrees €7.4bn Portuguese deal

Altice agrees €7.4bn Portuguese deal

Altice has struck a €7.4bn deal to acquire the Portuguese assets of Portugal Telecom from Brazil’s Oi in what would be the latest high-profile acquisition for the French cable and telecoms group founded by billionaire Patrick Drahi, according to people familiar with the matter. The deal comes only a year after PT and Oi agreed to combine and will set the stage for further dealmaking by Brazil’s largest telecoms operator. These people added that the two companies were still finalising the agreement, but said an announcement could come as soon as later Sunday. Altice outlasted private equity groups Apax and Bain, which combined with Portuguese conglomerate Semapa to offer more than €7bn for Portugal Telecom. The French company said late last week that it would form a strategic alliance with CTT, the Portuguese postal operator, if it were to win the battle for Portugal Telecom. Altice already owns Portuguese cable businesses Cabovisao and Oni. The acquisition of PT would enable it to drive consolidation in the market, but it may have to make disposals to get regulatory approval. Oi is expected to use the sale proceeds to help pay down its significant debt burden so that it avoids breaching covenants with its bondholders early next year. Oi would also be able to take a stronger position in any forthcoming deals in Brazil, where it has been linked with a bid for Telecom Italia’s Brazilian business in partnership with rival groups such as Telefónica in the country. The transaction marks the latest sign of Altice’s desire to expand across Europe, just months after the company acquired the French mobile operator SFR from Vivendi for €17bn. Altice has been highly acquisitive over the past few years since striking a deal to acquire control of Numericable, the French cable group, two years ago. It has also bought a Caribbean business sold by Orange. The rapid pace of deals has led to questions about the high levels of debt carried by the group, although chief executive Dexter Goei said two weeks ago that it still had considerable headroom for the Portuguese acquisition as well as a potential bid for another French mobile business owned by Bouygues. He said that Altice saw considerable synergies in buying Portugal Telecom, which offers mobile and fast fibre broadband to most of the country, allowing it to offer "quad play" bundles of TV and telecoms, as well as cutting costs and improving procurement. Portugal Telecom has invested heavily in its networks in recent years, making it one of the most advanced providers of superfast fibre broadband in Europe with more than 60 per cent country coverage.

ALTICE IN EXCLUSIVE PACT TO BUY PORTUGAL TELECOM AT EU7.4B CASH

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BN 11/30 21:20 *ALTICE IN EXCLUSIVE PACT TO BUY PORTUGAL TELECOM AT EU7.4B CASH

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*ALTICE IN EXCLUSIVE PACT TO BUY PORTUGAL TELECOM AT EU7.4B CASH 2014-11-30 21:21:08.809 GMT

--REBECCA JONES

-0- Nov/30/2014 21:21 GMT

WSJ : European Car Recovery Could Still Sputter

European Car Recovery Could Still Sputter Auto Registrations Are Rising, But Profitability Is Still Pressured

Europe’s auto industry is wheeling toward its first year of growth since the financial crisis. That doesn’t mean it has decisively turned a corner.

New car registrations in the European Union jumped 6.1% in the first 10 months of 2014, surpassing annual consensus growth forecasts ahead of the usually strong final two months of the year. All of the top 10 car makers reported growth except General Motors , largely because it will stop selling the Chevrolet brand in Europe. Of the top five markets, only France has gone into reverse, with a 3.8% drop in car sales.

But this recovery follows the worst year in two decades, and six consecutive years of decline. And the boost in sales is at least partly artificially supported by measures such as government-backed cheap credit and subsidies. Also, auto makers stuck with too much inventory are cutting prices, eating into margins. In Germany, where overall registrations rose 3%, the share of sales to private car owners actually fell 2% in the first 10 months, according to information firm IHS. This is offset by higher sales to companies or rental businesses, but those likely involve more discounting. Margins in Europe have remained flat or fallen slightly for most car makers, credit insurance provider Euler Hermes says.

One reason: Overcapacity hasn’t been addressed, and more-optimistic sales forecasts could further hamper progress. Europe’s factories aren’t running close to flat out but are still making at least 20% more cars than natural demand can sustain, IHS estimates. Since 2009, at least 17 U.S. factories closed, versus just four in the EU, Euler Hermes says.

Rather than implement overhauls at home, European car makers have looked overseas, especially to the U.S. and China. Those with greater exposure to these markets tend to trade at a premium. Volkswagen trades at 7.2 times 2015 earnings versus Renault , which relies on Europe for about half of its brand sales, at 6.5 times.

But growth in China is now showing signs of slowing. By ignoring problems at home, Europe’s car makers risk stalling on the road to recovery.