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Telecom Italia is looking to conduct an in-depth analysis of PT Portugal and could aim to keep the asset if it launches an offer for its Brazilian owner Oi, it is understood.

Including PT Portugal in any Oi bid could force the Italian incumbent to launch a rights issue. But this would be palatable if the transaction creates value and will have a positive impact on Telecom Italia's (TI) future earnings, it was argued. The enterprise value of the whole of Oi is estimated at around EUR 19bn at current prices and exchange rates.

Extending Oi due diligence on its Portuguese and African activities is normal practice to assess the value of the company in the context of a potential bid, a person close to TI said.

Earlier this week, TI’s management was empowered by the board to explore a merger between its Brazilian arm Tim Participações, also known as Tim Brasil, and Oi, potentially joining the country’s second largest mobile operator with the leader in the fixed-line segment.

TI might need to raise around EUR 5bn to make an offer for the whole of Oi, which besides PT Portugal also includes some African assets that the target is planning to offload, according to reports. TI could try to sell on the Portuguese and African activities, it was also reported.

But PT Portugal is considered a good asset by TI’s management. It has good coverage and a smart strategy in place, a source close to the situation said, adding: “They have made all the investments that an incumbent should be making.”

This view is based on analysts’ presentations rather than a close look into the business, which needs to be conducted to evaluate any future proposal, it was said.

The process is still at preliminary stages. No due diligence has been conducted and the structure of any potential deal still needs to be discussed, the source close to the situation said. The Italian incumbent has more headroom to bid exclusively for Oi’s Brazilian assets than for the whole company, he noted.

Gaining exposure to the Portuguese market was never part of TI’s strategic plan, and including PT Portugal in an offer for Oi would have a significant impact on the bidder’s leverage, a banker following the situation pointed out.

TI’s adjusted net adjusted debt/TTM EBITDA stood at EUR 2.96x as of 30 September 2014, while Oi’s net debt/TTM EBITDA was 3.57x. But the latter’s leverage reaches 4.5x excluding one-offs related to sale of towers, the source close noted.

In the event TI decides to bid just for Oi’s Brazilian assets, and wants to limit the risk of selling on PT Portugal, one option would be to sign a bridge loan covering the cost of PT Portugal, which could be repaid once the asset is sold, the first banker and another following the situation said.

Oi has already received takeover offers for PT Portugal from Altice [AMS:ATC] and a consortium made up of private equity groups Apax Partners and Bain Capital, valued at EUR 7.025bn and EUR 7.075bn, respectively.

A bid for Oi excluding the Portuguese and African assets would have a limited impact on TI’s leverage and would require a modest cash component, even if TI takes a minimum 51% of the resulting entity, the second banker noted.

TI needs to keep the Brazilian activities consolidated on its balance sheet, as TI’s leverage would not be sustainable without the EBITDA contribution from these assets, bankers and other industry sources agreed.

Tim Brasil contributed 18% to TI’s 2013 EBITDA.

A Tim Brasil all-share bid on Oi at a 15% premium would give TI a 45% stake of the combined Tim/Oi entity. TI would then need to add about EUR 800m in cash to reach the 51% mark, according to Dealreporter analytics.

TI could look to raise the cash it needs at the subsidiary or parent company level, but the latter would be simpler, said the second banker. Considering the limited impact on leverage, it could even rely on existing credit lines as a form of acquisition financing, he noted.

According to a Kepler Cheuvreux research note, merging Tim Brasil and Oi, ex-Portugal and Africa, would generate EUR 9bn in synergies. But even after taking into account benefits such as avoiding the need to roll-out a fixed-line network, cost savings and revenues increases, a figure in the region of EUR 6bn-7bn looks more realistic, bankers agreed.

Rémy Cointreau Takes a Bet on China

French Drinks Maker is Convinced Chinese Billionaires Have a Taste for Top Cognac

PARIS— Rémy Cointreau SA is making a millionaire’s bet. The French drinks maker is convinced that ultra-rich Chinese will again sip from the world’s most expensive bottles of cognac following a slump in demand that stems from an anticorruption campaign by the Chinese government. The Chinese have stayed away from expensive liquor since the government banned extravagant gift-giving among officials more than a year ago.

“There are more and more millionaires and billionaires out there,” said Valérie Chapoulaud Floquet, the former L’Oréal SA executive who took over as chief executive of Rémy this autumn. “Especially the younger generation of very rich in China will still want to spend their money.”

Rémy is going against the grain of many of its competitors, such as France’s Pernod Ricard SA, which have launched cheaper drinks on the Chinese market and cut prices in the belief that the days of selling $2,000 or $3,000 bottles of cognac are over. Rémy is convinced that there will still be a niche market, where the wealthiest Chinese will buy the most exclusive brands, just more “discreetly,” according to Ms. Chapoulaud Floquet.

Ms. Chapoulaud Floquet said that Rémy is pushing the promotion of its very expensive products in private events such as dinners to a very elite and rich target group to make sure that the company is perceived as the most exclusive brand once the Chinese become more confident again about purchasing luxury items—even if that means suffering more in the short term.

“There are no signs of recovery in the market for now and no one can say with certainty when consumption will again pick up,” the chief executive said. Pernod Ricard last month said that it expects sales in the country to continue to improve gradually in the months to come.

Rémy Cointreau has been among the hardest hit by the Chinese slump as it relies for more than half of its sales and margins on its flagship Rémy Martin cognac, for which China was one of the biggest markets.

Net profit at the company fell 25% in the first half of its financial year to €64 million ($80 million) from €85.5 million as cognac sales continued to drop sharply in China.

Operating profit fell 23% to €102 million, a lower-than-expected drop as the company kept operating costs to a minimum even as sales fell 16% over the period. Shares rose 2.5% on the better-than expected numbers.

Rémy said that it still targets organic growth both in sales and operating profit in the full year. This target excludes the loss of a distribution contract in the U.S., which would have weighed on sales further.

Carlos Slim to Invest Up To $875.4 Million in Spain’s FCC

FCC Will Sell Shares at More Than 50% Discount to Market

MADRID—Two companies owned by Mexican billionaire Carlos Slim will invest up to 700 million euros ($875.4 million) in Fomento de Construcciones y Contratas SA in exchange for 25.6% of the debt-laden Spanish builder.

The deal follows months of discussions with several potential investors, including with George Soros , who had been in exclusive talks with Ms. Koplowitz as late as last week. Ms. Koplowitz will see her ownership in FCC drop to 22.4% from just over 50%.

Mr. Slim’s investment adds to the all-star cast of FCC. Late last year, Microsoft Corp. Chairman Bill Gates paid €108.5 million for a nearly 6% stake the company.

FCC, which employs 80,000 people in 56 countries, was hard hit by a six-year property slump in Spain, and has struggled to pay its debts while it strove to diversify its business into sectors other than construction.

FCC said it would sell shares in the planned capital increase at €7.50 apiece. That implies a discount of more than 50% compared with its current market price of €15.3 a share.

Over the past year, Mr. Slim, hedge fund tycoons such as Mr. Soros and John Paulson , and investor Warren Buffett , have snapped up Spanish assets at deep discounts, betting that the country is on its way to a sustained recovery after two recessions over five years. The European Commission has said it expects Spain’s economy to expand 1.2% this year and 1.7% next year.

Under the terms of the deal, Mr. Slim and Ms. Koplowitz will each name four board members. Mr. Slim has also agreed to remain as an anchor investor for at least four years.

Shares in FCC were halted earlier on Thursday pending the announcement, and will resume trade later on Thursday.

FCC plans to use proceeds from the share sale to lower its debt as part of a refinancing agreement with its creditors.

At the meeting of the Board of Directors on 27 November 2014, Jean-Bernard Lvy, who has been appointed Chairman and Chief Executive Officer of EDF, tendered his resignation to the company's directors and it was accepted.

On the proposal of the French State and Dassault Aviation, the Board of Directors has appointed M. Philippe Logak as Acting Chairman and Chief Executive Officer of Thales until the final decision is taken.

The French state, via the State Shareholdings Agency (APE), holds 26.39% of the Thales Groups capital. Dassault Aviation holds 25.3%.

- EU will need to see information on the execution of the 2014 budget which will only be available at the end of March

Face au discours de prospective décliniste de l'essayste Jéremy Rifkin sur les effets d'Internet sur le capitalisme, Jacques Attali; Jean-Marc Daniel et la présidente de GE France y voient plutôt un vecteur de croissance pour les entreprises, positif ou... négatif.

En visio-conférence, mardi 25 novembre, lors d'une conférence sur le thème "Internet va-t-il tuer le capitalisme ?" organisée par l'institut G9+, Jeremy Rifkin a prédit l'avènement d'une troisième révolution industrielle due notamment au développement exponentiel de l'Internet des objets, vers la fin du capitalisme. Combiné à de nouvelles formes d'énergie, de transport et de logistique, il ferait passer l'économie de marché à une économie du partage et de la mutualisation, rendant le coût marginal des services proche de zéro. Pour illustrer ses propos, il met en avant l'Internet de l'énergie aidant à l'exploitation des ressources inépuisables du soleil "qui n'envoie pas sa facture".

Une valeur qui dépend des informations et de l'intelligence

Les trois Français, quant à eux, voient un système capitaliste qui s'adaptera et jouira de nouvelles opportunités avec l'Internet des objets. Clara Gaymard, timorée lorsqu'il s'agit de parler de l'avenir "dont on ne sait rien", se focalise sur le présent, avec un discours empreint de ses expériences vécues dans GE: "Aujourd'hui, la valeur ajoutée ne dépend pas seulement de la production mais de plus en plus des informations et de l'intelligence qu'il y a autour. On est passé à une économie de partage des connaissances".

Ainsi, avec le développement du big data, ceux "qui contrôleront les données et sauront les utiliser détiendront la valeur ajoutée". Une référence aux Gafa, les quatre géants du web: Google, Apple, Facebook et Amazon. Concrètement, pour Clara Gaymard, "la combinaison du big data avec l'imprimante 3D et la robotique conduit à des accélérations au sein des entreprises industrielles".

Vecteur de forte concurrence

Clara Gaymard appelle par ailleurs à renverser la tendance d'une "information qui part dans la Silicon Valley avec des bénéfices énormes à la clé, et quitte parallèlement l'Europe, qui perd ainsi un vecteur de valeur ajoutée. Et de positiver toutefois, laissant présager d'un avenir plus rose:

"On a su conserver des clusters (concentration d'entreprises indépendantes) avec des ingénieurs qu'on nous envie dans le monde entier. [...} Dans les salons dédiés au digital comme celui de Seattle, les Etat-Unis sont les plus présents. La France arrive 2e largement devant Allemagne."

Pour Jean-Marc Daniel, l'Internet et l'accès au Big Data sont des portes ouvertes à la concurrence dans l'éducation par exemple (avec les moocs, cours en ligne). A condition notamment que le monopole de Google soit brisé. Cela permettrait le développement d'"une concurrence saine" nécessaire au bon fonctionnement des rouages capitalistes, selon lui. D'après le directeur de l'ESCP, la santé pourrait également être soumise à une concurrence accrue offrant de nombreuses opportunités. Par exemple, "avec le développement Internet combiné à celui de l'automatisation,'on pourra opérer de New York quelqu'un situé à Paris'."

L'Internet des objets, nouvelle forme de "dictature"

Internet "invente autrement le capitalisme", assure Jacques Attali, au cours d'un discours bref mais dense. S'il pourfend la vision décliniste de Jéremy Rifkin annonçant la fin du capitalisme et l'Internet de objets comme pilier de l'économie, l'économiste porte également une vision sombre. Il voit dans l'Internet des objets, une "tentative de prise de contrôle de nos vies".

"Les maîtres de demain seront les agrégateurs de données et les compagnies d'assurance. Nous offrons nos données gratuitement, en échange on accède à Google. On donne à ceux qui vont agréger nos propres données pour nous les revendre sous forme de prime d'assurance."

Et d'ajouter: "On va nous amener à nous surveiller nous-mêmes, notamment dans la santé. Avec les capteurs associés à nos données, on nous dira si l'on adopte les bons comportements pour perdre du poids, etc."

Dans un élan lyrique, il n'hésite pas à conclure en comparant cette mainmise sur le bigdata à une nouvelle "forme de dictature".

India is unlikely to launch an appeal against the recent Rs30bn ($490m) tax victory won by British telecoms group Vodafone, in a sign that Prime Minister Narendra Modi is shedding his government’s image for aggressively targeting the taxation affairs of foreign businesses.

India’s attorney general has recommended against an appeal to the country’s supreme court, following Vodafone's victory in a ruling from the Bombay high court last month, three people familiar with the situation confirmed.

If India’s cabinet agrees with the recommendation, it will signal a further softening of the country’s traditional policy of doggedly pursuing similar tax cases, which Mr Modi's centre-right Bharatiya Janata party once criticised as “tax terrorism”.

It would also provide a welcome signal to Anglo-Dutch oil group Shell, which won a similar victory in a $3bn ruling earlier this month, that the government was unlikely to launch a supreme court appeal in its own case..

Numerous other global businesses including US-based technology group IBM and British energy explorer Cairn, have found themselves caught in a range of typically lengthy and complex tax rows with New Delhi.

Vodafone won its appeal in October in a case relating to “transfer pricing” – the way that global organisations account for services provided by local subsidiaries to divisions in other countries. The area has been the cause of numerous disputes in India.

India’s previous government had typically launched appeals in similar cases, a policy supported by revenue officials. But Mukul Rohatgi, India’s attorney general, said he had recommended against an appeal in Vodafone’s case.

“I have asked the income department to accept the judgement of the high court. I have said in my opinion don’t file an appeal,” Mr Rohatgi said, according to Press Trust of India, a local wire news service.

Although the change of heart may now face resistance from India’s revenue service, the signal was welcomed by tax analysts, who said it showed that Mr Modi had understood that frequent tax battles had damaged India's reputation as an investment destination.

“This is very good news, given the ordinary tendency is to appeal high court decisions,” said Mukesh Butani, the tax practice leader at BMR Advisors, an India-based professional services group.

“The new leadership clearly wants to create a non-adversarial tax environment, and so I would expect Shell and others to benefit from similar treatment, given the principles in their cases are identical to Vodafone.”

Vodafone’s victory last month has no bearing on another long-running $2.6bn case relating to its 2007 acquisition of an Indian telecom group, perhaps the most celebrated corporate taxation battle in recent Indian history. The case is awaiting international arbitration.

Mr Modi disappointed investors earlier this year by refusing to repeal a 2012 tax law change that allowed his government to reopen old tax disputes retrospectively, a measure that could have ended Vodafone’s dispute.