RTR - Surprise Asian consortium interested in Philips lighti

Surprise Asian consortium interested in Philips lighting: sources

FRANKFURT (Reuters) - A surprise Asian consortium has emerged in the auction for Philips' (PHG.AS) lighting components business worth roughly 2.5 billion euros ($2.6 billion), two sources familiar with the matter said.

Chinese LED startup Lattice Power, working with investors GSR Ventures and Singapore state fund Temasek [TEM.UL], has expressed interest in the business, a move that could potentially foil the chances of rival bids from buyout groups, they said.

"They have put in a last-minute bid," one of the sources said, adding that it is expected to have been competitive as it would otherwise would have no chance at this stage of the auction.

"It looks like the Chinese are there. But it is unclear if their chances are very big," another source said.

Philips' adviser Morgan Stanley (MS.N) aims to enter exclusive talks with one of the bidders early next week, wrapping up a process which started a year ago when the Dutch electronics group combined its so-called Lumileds and car lights divisions into a standalone company.

A consortium of private equity firms CVC [CVC.UL] and KKR (KKR.N) this month tabled a bid seen as leading, with runner-up Bain Capital having had the chance the hike its own offer, sources familiar had said.

Spokespeople for Philips, CVC, KKR and Bain Capital declined to comment, while representatives for Lattice, GSR, Temasek and Morgan Stanley were not available for immediate comment.

Lattice Power, a small company which last year secured $80 million in funding by Asia Pacific Resources Development Investment, already has some connection to Philips, as it made James Haworth, a former Philips executive, the head of its U.S. operations.

Philips, which started making light bulbs 123 years ago, has vowed to focus on higher-margin activities under pressure from Chinese makers of light-emitting diodes (LEDs).

In 2014, Philips' Lumileds/Automotive business posted earnings before interest, tax and amortization (EBITA) of 172 million euros on sales of 1.42 billion.

Peers such as Hella (HLE.DE), Cree (CREE.O) and Acuity (AYI.N) trade in a range of 6.6 to 13.4 times expected earnings before interest, taxes, depreciation, and amortization.

(BFW) Italy to Raise GDP Growth Forecast for Year to 0.8%: Sole


Italy to Raise GDP Growth Forecast for Year to 0.8%: Sole
2015-03-15 08:22:17.787 GMT


By Lorenzo Totaro
(Bloomberg) -- Italian government also sees deficit-to-GDP
at 2.6% in 2015, Il Sole 24 Ore says, citing new projections
that the Treasury may include in the economic and financial
document to be submitted to Parliament and European Commission
by April 10.
* NOTE: Last year govt said it saw Italy’s GDP at 0.5% in
2015, European Commission on Feb. 5 forecast Italian economy
to expand 0.6% this year Link
* NOTE: March 14, Padoan Sees Euro Nearing Natural Level as
Italy Poised to Grow Link


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Lorenzo Totaro

(BFW) Varoufakis Proposes EIB Bonds to Drive EU Growth as QE Will Fail


Varoufakis Proposes EIB Bonds to Drive EU Growth as QE Will Fail
2015-03-14 11:17:15.13 GMT


By Jenny Paris
(Bloomberg) -- ECB’s QE will prove unsuccessful in
stimulating an investment-led recovery in Europe as it will lead
to inflated asset prices and excess demand that isn’t met by
supply, Greek Finance Minister Yanis Varoufakis tells an
economic symposium in Cernobbio Italy.
* QE could prove both unsustainable and incapable of boosting
private credit growth and investment in productive
activities
* Proposes instead the creation of EIB bonds that will finance
European growth with ECB standing by to purchase these bonds
* “Imagine an alternative plan to QE where the EIB will take
its marching orders to lead an investment-led recovery for
Europe,” Varoufakis says; “I’d like to call that the
Merkel plan”
* It would solve operational problems of ECB because it would
buy only one, triple-A rated European paper, and avoids
problems faced with QE elsewhere of inflating asset prices
and failing to drive investments
* QE is bound to prove worse in a fragmented and fragmenting
euro zone
* Crisis getting worse, not better in my estimation; it’s a
challenge no Keynesian stimulus can meet
* Need to escape prison of false dilemmas, choices between
stabilty and growth, between austerity and stimulus
* “Risk is a toxic democratic deficit from which only
populists, nationalists, federalists, and indeed in my
country, nazis profit from”



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(BFW) ECB’s Visco Says Euro Decline `Stronger Than We Had Expected’


ECB’s Visco Says Euro Decline `Stronger Than We Had Expected’
2015-03-14 13:07:03.252 GMT


By Alessandro Speciale
(Bloomberg) -- ECB QE risks include “overshooting” as
“it is beyond doubt that the strength of the exchange rate
decline is larger than we had expected,” Bank of Italy’s
Governor Ignazio Visco says at Ambrosetti Forum in Cernobbio,
Italy.
* Euro decline possibly not only connected to QE
* Same also valid for bonds
* Limiting risk-sharing in ECB QE was “an error in the
perspective of the European Union but was justified with the
absence of a fiscal union and so there were risks on that
side”
* “I think this can only lead toward an improvement of the
European institution”
* Credit cost to fall on QE but “not in an extraordinary
way”
* Says QE will lead to aggregate demand growth of 1 percentage
point, according to Bank of Italy study
* Buying govt bonds is “most obvious instrument to create
money today”
* Before QE, “we had surely observed recently a grave risk of
price stagnation and decline, what we can define a deflation
risk”
* “There is no such thing as good deflation”
* QE reduces macroeconomic uncertainty, “improves the context
for structural reforms”
* “We cannot have interest rates at zero forever or for an
ultra-extended period, thus we need to try to return as fast
as possible on a path of inflation toward 2 percent”
* At same even in Cernobbio, Italy Finance Minister Pier Carlo
Padoan says “macroeconomic window of opportunity” is
“larger than thought a few weeks ago”
* Padoan says growth could be short-lived if govt doesn’t use
opportunity to increase medium-term growth prospects
* Padoan says favorable macro conditions mustn’t be seen as
“justifying weaker incentive to do reforms”


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(BFW) Dijsselbloem Says Greece Strength Must Come From Its Industries


Dijsselbloem Says Greece Strength Must Come From Its Industries
2015-03-14 13:15:03.432 GMT


By Elco van Groningen
(Bloomberg) -- Greece can extend those sectors and attract
foreign investment, Eurogroup chairman Jeroen Dijsselbloem says
in radio interview, without naming them.
* “The big crux in that is trust. If Greece really tackles
its problems, stabilizes policy, then investors will return,
foreign companies will return and the Greek economy will
recover”: Dijsselbloem says in interview Saturday on Omroep
Zeeland.
* “That’s what we bet on, and where Greek government also has
to put its effort in”
* There are conditions to its loans, and he expects Greece to
seriously work on those conditions
* “It’s not a punishment. We want Greece to be put back in
order again and that the Greek economy will start working
again”
* “We won’t continue our help if they’re not seriously
putting the country back in order”
* NOTE: Dijsselbloem is also Dutch Finance Minister
* NOTE Earlier: Dijsselbloem doesn’t see Greece stalling to
avoid budget cut: AD


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(BFW) Swiss, EU to Sign Automatic Tax Data Exchange Deal March 19: NZZ


Swiss, EU to Sign Automatic Tax Data Exchange Deal March 19: NZZ
2015-03-14 13:23:51.196 GMT


By Roxana Zega
(Bloomberg) -- The Swiss government will sign a deal for
the automatic exchange of bank client information with the
European Union on Thursday, March 19, Neue Zurcher Zeitung
reports, citing multiple sources.
* Switzerland to start collecting data from 2017 and exchange
it from 2018
* The deal implements a standard set by the Organisation for
Economic Cooperation and Development in order to fight
cross-border tax evasion
* NOTE: Switzerland signed the automatic data exchange deal
with Australia on March 3


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>>> US Close Dow-0,81% S&P-0,61% Nasdaq-0,44% Russell-0,36%

Closing Market Summary: Stocks Slide Amid Persistent Dollar Strength

The stock market finished the week on a defensive note with the S&P 500 (-0.6%) returning below its 50-day moving average (2,059). The benchmark index settled ahead of the Dow Jones Industrial Average (-0.8%), but behind the Nasdaq Composite (-0.4%).

Equity indices began the day with modest losses and spent the first two hours of action in a steady slide that involved all ten sectors. The S&P 500 hovered near its morning low into the afternoon, but was able to rally into the middle of its trading range during the final 90 minutes of the day.

Once again, the early pressure was largely due to continued greenback strength that sent the Dollar Index (100.22, +0.78) higher by 0.8% to extend its March advance to 5.1%. The unyielding strength fed concerns about the impact to earnings of multinational companies while also pressuring crude oil. The energy component fell 4.7% to $44.89/bbl and notched its low after the Baker Hughes rig count fell to 1125 (-67), registering its 14th consecutive weekly decline.

For the week, WTI crude lost 9.1% while the energy sector (-0.5%) fell 2.8%, ending the week well behind the remaining groups. Today, however, the sector finished ahead of the broader market thanks to a late rally amid speculation ExxonMobil (XOM 83.87, -0.35) may be interested in Whiting Petroleum (WLL 40.00, +1.64). Meanwhile, the materials sector (-1.0%) was the weakest performer on the cyclical side as steelmakers weighed with Market Vectors Steel ETF (SLX 30.97, -0.72) falling 2.3%.

Elsewhere, the technology sector (-0.5%) stayed ahead of the broader market thanks to relative strength among chipmakers. The PHLX Semiconductor Index gained 0.7% with NXP Semiconductor (NXPI 104.66, +6.09) jumping 6.2% after Needham initiated coverage of the stock with a ‘Strong Buy' rating. As for large cap names, Intel (INTC 30.93, +0.13), Microsoft (MSFT 41.38, +0.36) and Oracle (ORCL 42.38, +0.76) finished in the green while other major tech components registered losses.

The Nasdaq settled a little ahead of the broader market thanks to those pockets of strength while biotechnology names also contributed to the outperformance. The iShares Nasdaq Biotechnology ETF (IBB 345.33, +0.50) added 0.1% after being up more than 1.0% this morning. On a related note, the health care sector (-0.2%) finished ahead of the remaining groups.

Treasuries ended flat after showing intraday gains with the 10-yr yield settling at 2.12%.

Today's participation was a bit light with fewer than 790 million shares changing hands at the NYSE floor.

Economic data included PPI and Michigan Sentiment:
  • Producer prices declined 0.5% in February after declining 0.8% in January while the Consensus expected an increase of 0.3% 
    • The drop in producer prices was a shock. Most analysts expected a rise in energy prices would offset any weaknesses from other sectors, but that did not happen 
      • Energy prices were flat in February after declining 10.3% in January 
    • Food prices declined 1.6% in February after declining 1.1% in January, which was the third consecutive monthly decline in food prices. Most of the drop resulted from a 17.1% decline in fresh and dry vegetable prices 
    • Excluding food and energy, core PPI also declined 0.5% in February after declining 0.1% in January while the consensus expected an increase of 0.1% 
  • The University of Michigan Consumer Sentiment Index dropped to 91.2 in the preliminary March reading from 95.4 while the consensus expected an increase to 95.8 
    • Slightly higher gasoline prices and a volatile equity market offset continued strengthening in the labor market 
On Monday, the Empire Manufacturing report for March will be released at 8:30 ET while February Industrial Production and Capacity Utilization will be announced at 9:15 ET. The day's data will be topped off with the 10:00 ET release of NAHB Housing Market Index for March.
  • Nasdaq Composite +2.9% YTD 
  • Russell 2000 +2.3% YTD 
  • S&P 500 -0.3% YTD 
  • Dow Jones Industrial Average -0.4% YTD 

(BN) Whiting Said to Draw Interest From Exxon as It Explores Sale


Whiting Said to Draw Interest From Exxon as It Explores Sale
2015-03-13 19:51:23.423 GMT


By Matthew Monks and Bradley Olson
(Bloomberg) -- Whiting Petroleum Corp., the North Dakota
oil explorer, has attracted interest from Exxon Mobil Corp. and
Continental Resources Inc. as it explores a sale of the entire
company, people with knowledge of the situation said.
Hess Corp. and Statoil ASA are also looking at Denver-based
Whiting, said the people, who asked not to be identified
discussing private information. Whiting has set up a data room
for potential buyers to evaluate the company’s financial
information and asked them to submit bids next week, the people
said. The discussions are ongoing and there’s no guarantee a
deal will be reached.
A potential deal for Whiting, the largest producer in North
Dakota’s Bakken shale formation, may be the first in an
anticipated pickup of merger activity for U.S. energy producers
as they grapple with heavy debt and an oil selloff.
Continental, Exxon, Hess and Statoil are already among the
10 largest holders of acreage in the Bakken, a giant slab of
oil-soaked rock that lies beneath Montana, North Dakota and
parts of Canada, according to data compiled by Bloomberg.
Consolidation is likely to pick up in the oil patch this
year as larger U.S. and international buyers seek to “snatch
up” valuable shale producers, according to a statement from
Paulson & Co., which owns 8.1 percent of Whiting.
Spokesmen for Whiting, Exxon, Continental, Hess and Statoil
declined to comment. The Wall Street Journal previously reported
that Whiting is seeking a buyer.

Bigger Footprint

Whiting is probably exploring a sale along with other
strategic alternatives, including selling assets, raising debt
and selling shares in order to address “investor liquidity
concerns,” Phillip Jungwirth, an analyst with Bank of Montreal,
wrote in a research note last week.
Bloomberg News reported in February that Whiting was
exploring selling up to $700 million of oil and natural gas
processing assets.
“While some reports implied Whiting was a distressed
seller, we don’t view this as the case,” Jungwirth wrote.
“We’d expect interest in Whiting to come from larger Bakken
peers that are looking to expand their footprint.”
Buying a shale producer such as Whiting is cheaper than it
has been at any time in recent years as companies used new
technology to unlock a boom in North American supplies, flooding
world markets and depressing prices. The value of reserves held
by about 75 drillers based on their reserves fell by a median of
25 percent by the end of 2014 compared to the previous year,
according to data compiled by Bloomberg.
U.S. crude prices fell 3.4 percent to $45.44 at 12:05 p.m.
in New York, the lowest level in almost six weeks, as the
International Energy Agency said a record surplus of oil put in
storage may soon renew a price slump.

Shale on Sale as Oil Crash Tilting Seller Markets to Buyers
Whiting Petroleum Said to Hire Bank to Pursue Potential Sale
L-Shaped Oil Recovery Flattens V-Shaped Market Optimists:Energy
Whiting news: WLL US <Equity> CN BN <GO>
Bloomberg Intelligence Oil Analysis: BI OILS <GO>
Top stories: OTOP <GO>

--With assistance from Kelly Bit in New York.

To contact the reporters on this story:
Matthew Monks in New York at +1-212-617-8111 or
mmonks1@bloomberg.net;
Bradley Olson in Houston at +1-713-547-8408 or
bradleyolson@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net;
Susan Warren at +1-214-954-9455 or
susanwarren@bloomberg.net
Elizabeth Wollman

WSJ : Generali Faces Another Uphill Climb


Generali Faces Another Uphill Climb
New capital rules, earnings power cause some concern

Mario Greco must feel like Sisyphus. Having completed one big job at Generali, the chief executive of the Italian insurer finds himself with another big task ahead.

Mr. Greco set a series of goals for the insurer two years ago. With the company’s annual results, which came out on Thursday, Generali not only met those goals but did so a year ahead of schedule. Yet Generali’s stock ended this week down.

The reason is that, since Mr. Greco launched his overhaul, the world has moved on. There are concerns that Generali looks slightly weak in terms of new capital rules for European insurers that kick in at the start of 2016. There are also questions over its earnings power.

Mr. Greco’s targets were to sell €4 billion ($4.25 billion) worth of unwanted assets, boost Generali’s capital to 160% of its minimum requirement under the existing Solvency I rules and operating return on equity to above 13%. All have been hit.

But when it comes to capital, the figure Generali reported this week for its so-called “economic capital,” which is a guide to its best estimate of where its capital will be under the new Solvency II regime, was only 151% of its requirement. That is down from 184% at the end of 2013, driven partly by the decline in interest rates—which makes it harder for Generali to meet guarantees on products sold in Germany especially—but also by an increase in the riskiness of bonds the company has invested in.

Generali acknowledges it started work on measuring capital under Solvency II rules much later than other large European rivals and so it is less sure about what its final capital number will be at the start of next year.

Given that its ratio is already behind rivals such as Allianz, which reported a ratio of 191% for 2014, this could limit the amount of dividends Generali can pay in the next year or two.

On earnings, Generali’s underlying results for 2014 failed to meet expectations. In part, this was because the nonlife business didn’t increase its profitability or grow as much as hoped. Also, profits on the life side were driven almost entirely by unrealized investment gains from the rally in government bonds over the past year. Such gains are seen as lower quality for life insurers because they are outside management control and can be lost when interest rates change direction.

Generali still trades at a slight premium to rivals Axa and Allianz in terms of multiples of earnings. And its prospective 2015 dividend yield of 3.9% is lower than both with Axa at 4.3% and Allianz at 4.5%. With work still to do at Generali, its premium looks unjustified.

WSJ : Goldman’s Buybacks May Not Be So Stressed


Goldman’s Buybacks May Not Be So Stressed
Stock may be pricing in a capital return that’s too small

Despite having to revise its capital plan to pass the Federal Reserve’s stress test, Goldman Sachs Group may have quietly secured its place at the head of the class.

Some analysts have interpreted the fact Goldman had to revise its capital-return proposal as pointing toward lower buybacks this year. But there is good reason to think the capital return plan approved by the Federal Reserve Thursday likely exceeds estimates. So Goldman’s stock may be pricing in too small a capital return.

Following the release of Fed verdicts on bank capital plans Thursday, Goldman said it had received approval to raise its quarterly dividend to 65 cents from 60 cents. But it kept mum about the level of share repurchases the Fed approved.

Goldman Sachs, led by CEO Lloyd Blankfein, said it had received approval after the Federal Reserve “stress tests” to raise its quarterly dividend to 65 cents from 60 cents. ENLARGE
Goldman Sachs, led by CEO Lloyd Blankfein, said it had received approval after the Federal Reserve “stress tests” to raise its quarterly dividend to 65 cents from 60 cents. PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES
Given this, analysts and investors have tried to estimate Goldman’s buybacks based on stress-test data and the differences between the initial and revised request. This has led some to conclude that although Goldman’s dividend increase was approved, it likely had to reduce its buyback program below last year’s $5.5 billion level.

That would be odd. It’s clear the Fed has an implicit preference for buybacks over dividends, on the basis that banks more readily reduce repurchases than dividends during times of stress. As well, it is a mistake to assume the Fed would penalize Goldman for having to revise its proposal. That is now a normal part of the process and doesn’t earn regulatory demerits.

More important, the improvement in Goldman’s capital ratios seen from its initial and its revised proposals don’t automatically indicate smaller capital returns. Goldman appeared to have initially requested a combined capital return of $6 billion to $8 billion. The low end would imply a buyback program smaller than last year’s—and the revised plan would be even smaller. Some analysts see buybacks falling to about $4 billion.

Things probably aren’t so dire. The stress test measures capital adequacy quarter by quarter, with some periods putting more stress on earnings and assets than others. So, some improvement in Goldman’s test scores likely came from a change in the timing of its planned payouts rather than reductions in their overall amount.

Given this, it seems likely Goldman was approved for capital actions above last year’s combined $6.5 billion. This would mean the firm should be able to maintain its payout ratio of around 80%—putting it well above big-bank peers.

That could lead to a happy surprise for the stock as the year, and the buybacks, proceed.