>>> BRokers Upgrades & Downgrades - 6th of february 2015

>>> Up
*ABB RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*ABERDEEN ASSET MANAGEMENT RAISED TO BUY VS HOLD AT SOCGEN
*MOBILE TELESYSTEMS RAISED TO NEUTRAL AT MACQUARIE
*PRUDENTIAL RAISED TO NEUTRAL AT JPMORGAN
*SABMILLER RAISED TO SECTORPERFORM VS UNDERPERFORM AT RBC
*TAG IMMOBILIEN RAISED TO BUY VS HOLD AT BANKHAUS LAMPE

>>> Down
*ALPHA BANK CUT TO NEUTRAL VS BUY AT GOLDMAN (Note attached)
*BARRATT CUT TO HOLD VS BUY AT LIBERUM
*BERKELEY RAISED TO BUY VS HOLD AT LIBERUM
*BOVIS HOMES CUT TO HOLD VS BUY AT LIBERUM
*COMPASS GROUP CUT TO SELL VS NEUTRAL AT GOLDMAN
*FLUGHAFEN ZUERICH CUT TO UNDERWEIGHT VS NEUTRAL AT HSBC
*LEGRAND CUT TO SELL VS HOLD AT SOCGEN
*LONMIN CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*NATIONAL BANK OF GREECE CUT TO NEUTRAL VS BUY AT GOLDMAN (Note attached)
*PERNOD CUT TO SECTORPERFORM VS OUTPERFORM AT RBC
*RED ELECTRICA CUT TO UNDERPERFORM FROM OUTPERFORM AT MAINFIRST
*RICHEMONT CUT TO NEUTRAL FROM BUY AT ODDO
*SPONDA CUT TO HOLD VS BUY AT DNB
*SWATCH CUT TO REDUCE FROM BUY AT ODDO
*TARKETT CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*TELENOR CUT TO SELL VS NEUTRAL AT CITI
*VOLVO CUT TO UNDERWEIGHT VS NEUTRAL AT JPMORGAN
*VOLVO CUT TO HOLD FROM BUY AT NORDEA

>>> PT Change


>>> Initiation
*SCA RATED NEW UNDERPERFORM AT EXANE, PT SEK180

>>> Call

(LeTemps.ch) Pasche, une banque sous pression à Genève

Une enquête est en cours au parquet financier national, à Paris, depuis la fin 2014. Les soupçons portent sur des pratiques de démarchage illicite et de blanchiment de fraude fiscale. Ils touchent le groupe basé à Genève, son ex-filiale monégasque, ainsi que la maison mère française, le Crédit Mutuel-CIC

Dans la rue de Hollande, au cœur du quartier des banques, à Genève, seule une plaque discrète signale la Banque Pasche. Filiale du groupe français Crédit Mutuel-CIC, l’une des principales banques de détail de l’Hexagone, la société disposait il y a peu d’entités à Monaco, au Liechtenstein ou aux Bahamas. Spécialisés dans la gestion du patrimoine de clients aisés, l’enseigne genevoise et son bureau zurichois demeurent les dernières briques du groupe Pasche. En 2013 et 2014, les activités des autres filiales ont été reprises par Havilland, une banque privée luxembourgeoise. Reste le siège de Genève. Selon plusieurs sources, il serait également à vendre.

Depuis la fin 2014, la Banque Pasche est particulièrement sous pression, comme son ancienne filiale monégasque et la maison mère française. Le groupe fait en effet l’objet d’enquêtes menées sur plusieurs fronts, en France, ainsi que sur le Rocher.

Après UBS, HSBC ou Reyl, elle rejoint la liste des banques soupçonnées de blanchiment de fraude fiscale, ainsi que de démarchage bancaire et financier illicite de grandes fortunes résidant dans l’Hexagone.

Le Temps a obtenu la confirmation qu’une «enquête est en cours au parquet financier de Paris», comme l’avait révélé Mediapart le 22 décembre dernier. Selon le site d’investigation, qui avait décortiqué l’affaire par le menu en juin 2014, «le Crédit Mutuel-CIC est suspecté […] d’avoir organisé un système d’évasion fiscale via sa filiale genevoise». Selon d’autres informations du Nouvel Observateur, le parquet financier a notamment été alerté sur des «procédures d’optimisation fiscale au bénéfice de ressortissants français». La Direction nationale des enquêtes fiscales est à pied d’œuvre.

Outre la France, une information judiciaire avait été ouverte par le parquet général de Monaco en novembre 2013. L’instruction est toujours en cours sur le Rocher. Des gardes à vue ont été prononcées, mais aucun ancien cadre n’a été mis en examen. Selon des informations réunies par Le Temps, les soupçons portent sur plusieurs «opérations douteuses», ainsi que sur des «trajets d’optimisation fiscale» pouvant permettre à des contribuables résidant en France d’échapper au fisc, via des montages bancaires et juridiques passant notamment par les Bahamas.

Deux affaires se conjuguent pour déboucher sur un dossier à ramifications multiples. Surnommée «la petite affaire Bettencourt», la première démarre à Lyon en 2004, après le décès d’une commerçante, Marguerite Chabot, qui a fait fortune avec son mari dans les vêtements de cuir et de peau. De leur vivant, les époux avaient caché une partie de leur argent en Suisse, d’abord dans un grand établissement de la place, puis à la Banque Pasche. Cette dernière a géré le patrimoine des Chabot via une structure créée au Liechtenstein, sur laquelle l’unique héritier du couple n’avait aucun droit. Après le décès de sa mère, le fils s’est battu pour récupérer ses avoirs, d’un montant de 55 millions de francs suisses à l’époque. Après d’âpres batailles juridiques, l’héritier a eu gain de cause. Il s’est vu restituer la majeure partie de son patrimoine en 2010 et a régularisé la situation auprès du fisc français.

Mais le dossier n’est pas encore bouclé: avec son avocat lyonnais, Philippe Genin, il se bat toujours contre la Banque Pasche. Il lui reproche d’avoir abusé de la confiance de sa mère. En parallèle, il s’en prend à la maison mère, la Lyonnaise de Banque, qui fait partie du groupe Crédit Mutuel et dont il dénonce les actes de démarchage.

La seconde affaire commence fin 2012 au sein de l’agence monégasque. A l’époque, elle était encore dans le giron du groupe Pasche. Trois salariés – un sous-directeur, un gestionnaire de clientèle ainsi qu’une assistante de gestion – s’interrogent sur des transactions financières dont ils sont les témoins et qui, selon eux, devraient faire l’objet d’une surveillance particulière de la part des gestionnaires de fortune. Selon nos informations, ils s’inquiètent notamment de divers dépôts en cash, transférés ensuite dans d’autres filiales.

Ils se mettent en contact avec une avocate pénaliste basée à Nice, Sophie Jonquet. Avant d’attirer l’attention du parquet de Monaco sur ce qu’elle qualifie d’«opérations pouvant s’apparenter à du blanchiment de capitaux», l’avocate va d’abord entrer en contact avec les dirigeants du Crédit Mutuel-CIC, et exposer la situation au président du groupe, Michel Lucas.

Entre la banque d’un côté, les employés et l’avocate de l’autre, le bras de fer se durcit après le licenciement des salariés. Sophie Jonquet dénonce le traitement «de parias» dont ils ont fait l’objet après avoir fait part de leurs soupçons. Dans un courrier adressé au premier ministre français, Manuel Valls, elle suggère d’ailleurs de «légiférer et d’offrir aux lanceurs d’alerte une protection contre l’éviction sociale». En décembre dernier, Sophie Jonquet a également adressé une lettre au parquet financier, dans laquelle elle signale de possibles procédures d’optimisation fiscale mises en place pour des clients de la banque.

De son côté, pour motiver les trois licenciements, la Banque Pasche a invoqué, dans deux cas, des suppressions de postes; dans le troisième une faute grave, ainsi qu’une violation du devoir de loyauté. Dans la bataille prud’homale qui se livre en parallèle des enquêtes judiciaires, elle considère les employés comme des affabulateurs qui cherchent à «obtenir des sommes d’argent qu’aucun tribunal ne leur accorderait».

Contacté par Le Temps, Nicholas Antenen, l’avocat de la Banque Pasche à Genève, affirme qu’il attend «avec sérénité le résultat des diverses procédures» menées tant en France qu’à Monaco. Il juge les accusations des anciens salariés «totalement infondées» et les qualifie de «gesticulations médiatiques» pour «faire pression» sur l’établissement. «La Banque Pasche regrette que ses contradicteurs, au lieu de s’en remettre à la justice qui a été appelée à se prononcer sur la légalité de leur licenciement, préfèrent porter atteinte à l’image de leur ancien employeur en multipliant les accusations fantaisistes», ajoute-t-il. S’agissant du dossier Chabot, l’avocat se dit certain qu’il se terminera par une «défaite du plaignant devant la justice».

Nicholas Antenen se refuse par contre à commenter le détail des affaires et des dénonciations. C’est également le cas du Crédit Mutuel en France, qui indique «ne pas communiquer» sur le sujet.

Par ailleurs, à ce stade, aucune procédure, y compris d’entraide judiciaire, n’est ouverte à Genève contre la Banque Pasche.

>>> Smith & Nephew CEO dismisses takeover speculation

Smith & Nephew CEO dismisses takeover speculation
Smith & Nephew (S&N) chief executive Olivier Bohuon has dismissed speculation regarding a potential takeover of the FTSE-100 medical devices manufacturer, the Financial Times reported. Bohuon said that despite talk of the need for scale, S&N has outperformed the knees and hips market.

Talk of S&N as a takeover target has persisted since May last year when Kalamazoo, Michigan-based rival Stryker disclosed that it had done preliminary work on a potential bid for S&N, the item noted.

Bohuon would not comment about the chances of S&N receiving a takeover bid beyond adding that the board would have responsibility to make a decision in line with shareholders’ best interests, the report continued.

The article noted consolidation in the medical devices sector over the past year, with Medtronic completing a takeover of Irish counterpart Covidien in January and Zimmer acquiring Biomet last year.

Separately, Bohuon said S&N is looking for further bolt-on acquisitions, the item said.

A market report in The Daily Telegraph said S&N’s 4Q14 and FY14 financial results, released yesterday, were seen by some as making a bid from Stryker more likely. S&N reported 4Q14 revenues of USD 1.249bn (EUR 1.089bn), an increase of 2%.

Smith & Nephew's market capitalisation stood at GBP 10.70bn (EUR 14.30bn) at the close of trading on the London Stock Exchange yesterday, Thursday, 5 February.

Financial Times, Daily Telegraph

>>> Orkla rumoured to be a takeover candidate (NESN & UNA Mentionned) Dagens Nae

Orkla rumoured to be a takeover candidate - report (translated)
Story
Orkla, the Norwegian conglomerate which operates within consumer goods, aluminium and the financial sector, is rumoured to be a possible takeover candidate, according to Dagens Naeringsliv.

The Norwegian business daily reported without citing any specific sources that the rumours have increased since Orkla started placing more focus on its branded consumer goods and has become more like its larger international peers. The paper reported that it is speculated that Orkla may be a target for companies such as Swiss Nestle or UK/Dutch Unilever. The paper also reported that Orkla saw its share price rise yesterday after the release of its financial results which was unexpected by analysts. The paper wrote that Orkla passed a market value of NOK 60bn (EUR 6.9bn) for the first time in over six years.

The item cited a Nordea analyst who said that Orkla's results did not warrant such a share price increase considering the company has announced that it will take longer to reach its goals. He said further that he did not believe the price rise was caused by takeover speculation and pointed out that Orkla and the fishing sector are seen as safe places to invest right now due to the turbulent oil sector. He also believed Orkla to be too expensive to be a takeover target.

Meanwhile, a Danske Markets analyst said that the share price rise may be due to the expectation that Orkla's operations will improve and he also pointed to the unstable oil shares.

Dagens Naeringsliv

(BFW) Alcatel CEO Sees 2015 Gross Margin Slightly Above Estimates

Alcatel CEO Sees 2015 Gross Margin Slightly Above Estimates
2015-02-06 06:37:42.71 GMT


By Sam Chambers
(Bloomberg) -- Alcatel sees 2015 gross margins of 34% or
slightly above this level (est. 33.8%,) CEO Michel Combes says
on conf. call.
* CEO: U.S. mkt. remains healthy
* Seeing signs of relief in Europe, says carriers
beginning to reinvest
* Seeing signs of relief in Europe, says carriers
beginning to reinvest</li></ul>
* CFO Raby: Sees submarine cable unit IPO in 2H 2015 (prev.
saw IPO in 1H 2015)
* Says submarine unit order book is growing
* Says submarine unit order book is growing</li></ul>
* Earlier: Alcatel said it’s confident on 2015 FCF target,
reported 4Q sales in line with ests. Link


Link to Company News:ALU FP <Equity> CN <GO>

For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Sam Chambers in London at +44-20-3525-2021 or
schambers7@bloomberg.net

To contact the editor responsible for this story:
Sam Chambers at +44-20-3525-2021 or
schambers7@bloomberg.net

>>> Asian Update

Asian Mid-session Update: RBA cuts outlook for growth and inflation, Australia PM Abbott's leadership under threat

***Economic Data***
- (AU) AUSTRALIA JAN AIG PERFORMANCE OF CONSTRUCTION INDEX: 45.9 V 44.4 PRIOR; 3rd month of contraction
- (JP) JAPAN JAN OFFICIAL RESERVE ASSETS: $1.26T V $1.26T PRIOR

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.6%, S&P/ASX +0.3%, Kospi -0.2%, Shanghai Composite -1.1%, Hang Seng -0.3%, Mar S&P500 -0.1% at 2,053

***Commodities/Fixed Income***
- Apr gold +0.3% at $1,266, Mar crude oil +1.2% at $51.07/brl
- CME raises margin requirements on Coal, Crude Oil, Equity index, Metals, FX, and Nat Gas futures (http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv15-038.pdf)
- GLD: SPDR Gold Trust ETF daily holdings rise 5.4 tonnes to 773.3 tonnes; highest since Sept 25th
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥400B in 3-5yr JGBs, ¥240B in 10-25yr JGBs and ¥140B in JGBs with maturity over 25-yr
- (AU) Australia MoF (AOFM) sells A$600M in 2.75% bonds due 2019; Avg yield: 1.9977%; Bid-to-cover: 4.58x
- USD/CNY: (CN) PBoC sets yuan mid point at 6.1261 v 6.1366 prior setting (strongest Yuan setting since Jan 22nd)
- (US) Weekly Fed Balance Sheet Total Assets for week ending Feb 4th: $4.50T v $4.50T prior; M1 y/y change: 9.5% v 9.5% w/w; M2 y/y change: 5.8% v 5.8% w/w

***Market Focal Points/FX***
- Despite the latest PBOC RRR cut, Shanghai Composite is headed for its 2nd consecutive session of above-1% declines and also its 2nd consecutive week of net losses, testing below the 2-week low of 3,100. The focus is shifting from the intentions of the policy easing to next week's expected peak in mainland IPO filings. In fact, expectations for lending still show robust credit pipeline - according to CICC, Jan New Yuan Loans could reach as high as CNY1.6T v CNY697.3B in Dec, accompanying outsized activity going into the Lunar New Year. Meanwhile, a Xinhua report citing a PBoC official indicated this week's RRR cut should not be interpreted as the start of strong stimulus or a policy shift.

- USD majors are contained to narrow ranges, as is typically the case going into the non-farm payrolls report in the US on Friday. AUD/USD saw the most volatility with about a 60pip jump to $0.7860 following the release of Reserve Bank of Australia's quarterly policy statement. Although RBA cut its projections for 2015 GDP to 2.25-3.25% v 2.5-3.5% prior and headline inflation to 2-3% v 2.5-3.5% prior, traders saw little indication of a strong easing bias beyond this week's surprise 25bp rate cut to 2.25%. Most of the statement's language was also perceived as boilerplate, reiterating growth would be below trend for longer, non-mining activity remains subdued, and housing market bears watching. Moreover, RBA saw oil price decline subtracting 0.5 ppt in Q1 but also forecasting subsequent improvement in consumption. ANZ economists judged the quarterly statement to inflation and growth as less severe than feared, CBA report was still in favor of another 25bp move in May, while Morgan Stanley saw a more aggressive easing campaign taking OCR to 1.75% in 3 months. Separately in Australia, ruling party MP Luke Simpkins waged a "spill motion" challenging PM Abbott as the leader of the party, with potential vote of confidence coming as early as next week.

- In Japan, sources indicated the BOJ reportedly sees no need for easing action as long as the fall in core CPI is driven by falling oil prices, but also worries core CPI could turn negative if oil prices fell below $40/brl. BOJ Dep Gov Iwata spoke later in the session, reiterating board members' optimistic position that QE is having intended effects, inflation expectations are rising, and change in "deflationary mindset" is progressing. Ahead of next week's G20 meeting, Fin Min Aso remarked he would express that Japan will continue to tackle fiscal consolidation, but that overall economy is improving. USD/JPY volatility has been remarkably low for over 2 weeks, with the pair coiling within the 117-119 range.

***Equities***
US markets:
- UBNT: Reports Q2 $0.53 v $0.48e, R$153.1M v $153Me; +9.8% afterhours
- TWTR: Reports Q4 $0.12 v $0.06e, R$479M v $455Me; Confirms relationship with Google for real time search [*Note: 02/04: Twitter said to have reached deal with Google for tweets to be shown in search results - financial press] - conf call comments; +9.1% afterhours
- LNKD: Reports Q4 $0.61 v $0.53e, R$643M v $619Me; +7.7% afterhours
- BWLD: Reports Q4 $1.07 v $1.09e, R$408.9M v $405Me; +5.7% afterhours
- FTR: To acquire Verizon's Wireline Operations in California, Florida and Texas for $10.5B; AMT to acquire rights to towers for $5.1B; +4.9% afterhours
- ATHN: Reports Q4 $0.58 v $0.39e, R$213.2M v $207Me; +2.0% afterhours
- MCK: Reports Q3 $2.89 v $2.62e, R$47B v $44.6Be; +1.4% afterhours
- VZ: Announces $5B buyback (2.5% of market cap); +1.1% afterhours
- SRCL: Cuts FY15 $4.63-4.69 v $4.74e, R$2.8-2.85B v $2.85Be (prior guided $4.69-4.75, R$2.82-2.87B) - conf call comments; -0.7% afterhours
- OUTR: Reports Q4 $2.35 v $2.33e, R$601M v $601Me; Initiates quarterly dividend of $0.30/shr, implied yield 2.0%; Announces additional $250M share repurchase authorization (21.6% of market cap); -0.9% afterhours
- FLT: Reports Q4 $1.39 v $1.35e, R$255.5M v $321Me; -1.5% afterhours
- SYMC: Reports Q3 $0.53 v $0.49e, R$1.64B v $1.67Be; -1.8% afterhours
- VRSN: Reports Q4 $0.70 v $0.71e, R$255.9M v $256Me; -2.6% afterhours
- LGF: Reports Q3 $0.79(adj) v $0.65e, R$751M v $767Me; -2.7% afterhours
- NUAN: Reports Q1 $0.25 v $0.22e, R$489.0M v $486Me; -3.4% afterhours
- ATVI: Reports Q4 $0.94 v $0.88e, R$2.21B v $2.25Be; approves $750M buyback program (over 2 years, 4.8% of market cap); intends to pay down $250M in debt; -7.9% afterhours
- EXPE: Reports Q4 $0.86 v $1.00e, R$1.36B v $1.37Be; -8.0% afterhours
- BRS: Reports Q3 $0.70 v $1.34e (unclear if comp, 2 ests.), R$460.1M v $452Me; -8.2% afterhours
- DV: Reports Q2 $0.75 v $0.78e, R$484.9M v $487Me; -9.6% afterhours
- YELP: Reports Q4 $0.08 v $0.07e, R$109.9M v $108Me; -10.4% afterhours
- TPX: Reports Q4 $0.86 v $0.84e, R$745.5M v $742Me; -10.5% afterhours
- GPRO: Reports Q4 $0.99 v $0.69e, R$633.9M v $572Me; Guides Q1 $0.15-0.17 v $0.16e, R$330-340M v $315Me -15.3% afterhours
- P: Reports Q4 $0.18 v $0.19e, R$268M v $277Me; -19.5% afterhours

Notable movers by sector:
- Consumer Discretionary: Japan Tobacco 2914 +1.1% (FY14 results)
- Financials: OzForex Group OFX.AU -4.3% (CEO to step down); Haitong Securities 6837.HK +0.9% (Jan Op result); Hutchison Whampoa 13.HK +1.1% (in talks to sell stake in port unit)
- Energy: Oil Search Ltd OSH.AU +1.5% (provides PNG LNG project update)
- Industrials: Suzuki Motor Corp 7269 -6.3% (9-month results); Virgin Australia VAH.AU +2.3% (Q2 results); Great Wall Motor 601633.CN +6.7% (Jan sales result); Geely Automobile Holdings 175.HK +1.2% (Jan sales result); Guangzhou Automobile Group 2238.HK -0.6% (Jan sales result)
- Technology: Nikon Corp 7731.JP -7.1% (9-month results); Genetic Technologies GTG.AU +29.3% (JPMorgan initiates stake)

>>> US After Hours : TWTR +9.4%, LNKD +7.6%, ONNN +4.2%, P -19.

After Hours Summary: TWTR +9.4%, LNKD +7.6%, ONNN +4.2%, P -19.7%, GPRO -15.2%, YELP -11.8%, EXPE -8% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: TWTR +9.4%, CRDC +8.3%, LNKD +7.6%, ONNN +4.2%, UQM +3.6%, TBI +2%, UEPS +1.7%, MCK +1.7%, PSDV +0.5%, ATHN +0.5%, CME +0.2%, ECOM +0.1%, VRSN +0.1%

Companies trading higher in after hours in reaction to news: GENE +13.6% (seeing headlines that JP Morgan has established a 7% stake in the company), FTR +7.1% (confirmed it will acquire Verizon's (VZ) wireline operations in California, Florida and Texas for $10.54 bln in cash), UQM +3.6% (entered into a cooperative production and supply agreement with the KESHI GROUP in Changzhou, China for explosion proof systems), DERM +1.2% (announced positive Phase 2b study results for DRM04; study sees dose-dependent, statistically significant reductions in the signs and symptoms of primary axillary hyperhidrosis), HAS +0.8% (appointed CEO Brian Goldner as Chairman of the Board; Basil Anderson named to newly created role of Lead Independent Director)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: P -19.1%, GPRO -15.2%, MCZ -14.3%, YELP -10.8%, DV -7.9%, IMPV -7.5%, EXPE -7.4%, DLA -7.1%, TPX -6.9%, ATVI -6.1%, RDEN -5.7%, LRAD -5.4%, WAIR -4.3%, NUAN -2.8%, LF -2.5%, SWIR -2.4%, LGF -1.9%, SYMC -1.8%, PXLW -1.8%, AHL -0.8%, SRCL -0.7%, FLT -0.2%

Companies trading lower in after hours in reaction to news: NTGR -13.5% (disclosed that it expects to incur restructuring charges of between $7-9 mln during the first half of 2015, as part of a plan to reduce the cost structure of the Service Provider Business Unit and supporting functions), EOX -11.3% (launched $25 mln public offering of common stock), CTRL -10.3% (announced the acquisition of Nexus Technologies Pty., Ltd. (Leaf) for ~$9 mln; also announced a shift in its distribution model in Germany), ATVI -7.2% (filed for an ~41.5 mln share common stock offering by a selling stockholder), TROV -6.0% (announced an offering to sell shares of its common stock in an underwritten public offering; size and price details not disclosed), NMM -5.2% (co plans to offer 4 mln common units representing limited partnership interests in a public offering), RSHC -4.1% (co filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy 

WSJ : Adidas Investors Losing Patience, Want Faster Turnaround


Adidas Investors Losing Patience, Want Faster Turnaround
Shareholder Says Management Deserves ‘Yellow Card’ for Poor Performance

FRANKFURT— Adidas AG shareholders are getting vocal about their discontent with the company’s performance.

Shares in the German sports brand fell roughly 40% last year after two profit warnings within 10 months. Chief Executive Herbert Hainer has taken some steps to reverse the decline at the company he has led since 2001, but a growing number of investors and analysts say Adidas must do more.

“We have no trust in the management anymore,” said Ingo Speich, a fund manager in Frankfurt at Union Investment, one of Adidas’s largest and most outspoken shareholders, with a stake of roughly 1.2%. “We want Hainer to leave the company.”

Adidas “categorically rejects” criticism from Mr. Speich and Union Investment, a spokeswoman said. Adidas “is and will remain a healthy growth company,” she added.

Group sales at Adidas rose 6% last year, adjusted for currency fluctuations, but the company’s performance in the U.S. and Russia—two of its largest markets—is sliding fast. Those troubles are part of the reason the world’s second-largest sporting-goods company last summer cut its 2014 profit goal almost 30%, to €650 million ($737 million), which it achieved.

Some Adidas shareholders are calling for the ouster of longtime Chief Executive Herbert Hainer. ENLARGE
Some Adidas shareholders are calling for the ouster of longtime Chief Executive Herbert Hainer. PHOTO: GETTY IMAGES
Shareholders last fall began pressing Mr. Hainer to accelerate a turnaround. They argued he should have reacted faster to sliding sales at the TaylorMade golf division and the collapse of Russian demand.

Adidas’s management “deserves a yellow card but not yet a red one,” said Stefan Grüner-Bauknecht, a fund manager at Deutsche Asset & Wealth Management, a large Adidas investor. A yellow card is a referee’s warning in a soccer game, and a red card sends a player off the field.

Mr. Grüner-Bauknecht blamed Adidas’s slide on a mix of poor judgment and bad luck, particularly in the collapse of the Russian ruble.

Adidas shares have risen almost 11% this year after the company met its reduced 2014 financial targets and in expectation of a new five-year strategy that the company plans to announce next month. But its share price is still almost 25% below its level one year ago, while Germany’s broader DAX index is up roughly 20% over the period.


Several analysts have said during interviews over recent months that many large Adidas investors they talk to are dissatisfied with management.

Many Adidas investors also hold stakes in larger U.S. rival Nike Inc., said Cedric Rossi, an analyst at investment bank Bryan Garnier. Nike shares are up more than 30% over the past 12 months.

“It’s easy for [investors] to compare the performance of both groups, and the conclusion is easy to make,” Mr. Rossi said.

Adidas’s struggling U.S. business has been a strong focus of investor dissatisfaction. Adidas last fall fell behind Baltimore-based Under Armour Inc. to the No. 3 spot among U.S. sports brands, and Adidas’s North American sales dropped 10% in euro terms in the first nine months of 2014.

An Adidas shoe on display in Moscow. Adidas group sales rose 6% last year, adjusted for currency fluctuations, but its performance in the U.S. and Russia—two of its largest markets—is sliding fast. ENLARGE
An Adidas shoe on display in Moscow. Adidas group sales rose 6% last year, adjusted for currency fluctuations, but its performance in the U.S. and Russia—two of its largest markets—is sliding fast. ILLUSTRATION: BLOOMBERG
Adidas’s board decided last March to extend Mr. Hainer’s contract by two years, to 2017. The company said the extension offered time to find a successor before Mr. Hainer’s planned retirement.

“The Adidas Group has made excellent progress in the past 13 years under the leadership of Herbert Hainer,” Igor Landau, Adidas’s supervisory board chairman, said in March.

Mr. Hainer is the longest-serving chief executive ever among companies in Germany’s blue-chip DAX index. Between 2001 and 2013, company earnings quadrupled, and in several years it reported growth of as much as 20%.

Investors’ outspokenness could add to pressure on Mr. Hainer, who has so far weathered criticism. Adidas is widely held, and all its shares trade openly. Its largest shareholder, Thornburg Investment Management Inc., holds roughly 4.8% of the company.

Adidas is now preparing a new five-year strategy that will be presented by the end of March.

The company plans next month to release more details of its 2014 earnings, which it outlined in January. Its long-troubled Reebok unit, purchased in 2006, posted 5% sales growth last year, adjusted for currency fluctuations.

Analysts remain cautious. J.P. Morgan recently cut its forecast for Adidas’s results this year, saying that the continued devaluation of the Russian ruble would hurt profits. It also said it feared the strengthening of the U.S. dollar against the euro would “more than offset” lower commodity prices.

>>> US Close Dow+1,20% S&P+1,02% Nasdaq+1,03% Russell+1,44%

Closing Market Summary: S&P 500 Turns Positive For 2015

The major averages zoomed higher on Thursday, allowing the S&P 500 (+1.0%) to reclaim its loss from yesterday and then some. The benchmark index erased the remainder of its decline from January while the Dow (+1.2%) and Russell 2000 (+1.3%) outperformed.  

Equity indices made the bulk of their advance during the opening hour and spent the rest of the trading day in narrow ranges near their highs. The opening spike took place after investors realized that yesterday's ECB decision to lift a waiver that allowed for the acceptance of Greek government bonds as collateral was political at its core.

For the time being, Greek banks are still allowed to turn to the Bank of Greece, which in turn has access to funds through Emergency Liquidity Assistance from the European Central Bank. To that point, Germany's Die Welt reported that the ECB has granted up to EUR60 billion in funding to the Bank of Greece through ELA channels.

That being said, the negotiations are unlikely to unfold without a hitch, evidenced by today's press conference after Greece's Finance Minister Yanis Varoufakis met with his German counterpart Wolfgang Schaeuble. Mr. Schaeuble said he was advised to say the two "Agreed to disagree," but Mr. Varoufakis countered, saying "We didn't even agree to disagree."

The S&P 500 opened just above its 50-day moving average (2,044) and built on its early gain with the assistance from most sectors. The materials space (+2.4%) finished in the lead while health care (+1.6%) and energy (+1.4%) also outperformed.

The energy sector received a helping hand from crude oil, which followed yesterday's 9.3% plunge with a 4.2% spike to $50.47/bbl. Despite the surge, the energy component remains below its 50-day moving average, which resides in the $55.00/bbl area.

Meanwhile, the health care sector benefitted from strength in the biotech group with the iShares Nasdaq Biotechnology ETF (IBB 319.91, +7.36) climbing 2.4% to snap its four-day losing streak. Furthermore, Dow component Pfizer (PFE 32.99, +0.92) added 2.9% after agreeing to acquire Hospira (HSP 87.64, +22.84) for $90/share, which represents a 38.9% premium to HSP's closing price from yesterday.

Elsewhere among influential sectors, financials (+1.0%), industrials (+1.0%), and technology (+0.9%) finished near the broader market while the consumer discretionary sector (+0.6%) underperformed. Homebuilders struggled amid today's increase in Treasury yields with the iShares Dow Jones US Home Construction ETF (ITB 26.20, -0.15) shedding 0.6%. Also of note, apparel names ended in mixed fashion with Michael Kors (KORS 69.77, -1.61) falling 2.3% after cautious guidance and below-consensus comparable store sales overshadowed a bottom-line beat.

Treasuries retreated, ending near their lows with the 10-yr yield higher by six basis points at 1.81%.

Today's participation was below average with roughly 775 million shares changing hands at the NYSE floor.

Economic data included Initial Claims, Trade Deficit, Productivity/Unit Labor Cost Data, and Challenger Job Cuts:
  • The initial claims level increased to 278,000 from an upwardly revised 267,000 (from 265,000) while the consensus expected an increase to 290,000 
    • For the first few weeks of January, the initial claims level suddenly accelerated above 300,000. There was no supporting evidence that explained the increase, but we assumed that it must have been the result of increased layoff activities in the oil and gas sector 
  • The trade deficit widened to $46.60 billion in December from a downwardly revised $39.8 billion ($39.0 billion) in November while the consensus expected a decrease to $38.00 billion 
    • According to the advance fourth quarter GDP report, the BEA assumed that the trade deficit would widen in December to roughly $45.00 billion. Not only did the December deficit exceed those expectations but inclusion of the downside November revisions means that the trade deficit will subtract more from GDP growth in the second estimate than it did in the advance release 
  • Nonfarm labor productivity declined 1.8% in the fourth quarter after increasing an upwardly revised 3.7% (from 2.3%) in Q3 2014 while the consensus expected an increase of 0.2% 
    • Unit labor costs increased 2.7% in the fourth quarter after declining in both the second and third quarters. The increase resulted from a 0.9% jump in hourly compensation coupled with lower output gain 
  • The Challenger Job Cuts report for January indicated a 17.6% increase to follow the prior rise of 6.6% 
Tomorrow, the Nonfarm Payrolls report for January will be released at 8:30 ET (consensus 235K) while the Consumer Credit report for December will cross at 15:00 ET (consensus $15.00 billion).
  • Nasdaq Composite +0.6% YTD 
  • Dow Jones Industrial Average +0.4% YTD 
  • Russell 2000 +0.3% YTD 
  • S&P 500 +0.2% YTD

(BN) Pfizer Not Done With Deals Even After Hospira Purchase: Real M&A

Pfizer Not Done With Deals Even After Hospira Purchase: Real M&A
2015-02-05 21:02:35.362 GMT


(For a Real M&A column news alert: {SALT REALMNA <GO>}.)

By Brooke Sutherland
(Bloomberg) -- Pfizer Inc.’s deal aspirations are probably
bigger than Hospira Inc.
Buying the injectible drugmaker doesn’t give Pfizer the
innovative products and lower tax rate that the $208 billion
pharmaceutical giant was seeking in its failed bid for
AstraZeneca Plc last year. Pfizer’s $17 billion bill for Hospira
is just a fraction of the almost $120 billion it was willing to
pay for AstraZeneca, so the New York-based company has plenty of
capacity to go after more targets. Chief Executive Officer Ian
Read said Pfizer continues to look at opportunities.
A deal for Actavis Plc, which is wrapping up its $66
billion purchase of Botox-maker Allergan Inc., could fulfill
Pfizer’s remaining needs, according to Kevin Kedra, a Rye, New
York-based analyst at Gabelli & Co. The company could also look
to further bolster its oncology and vaccine offerings, said John
Boris of SunTrust Banks Inc. Big drugmakers such as
GlaxoSmithKline Plc, AbbVie Inc. and Bristol-Myers Squibb Co.
have also been named by analysts as potential Pfizer targets.
“You don’t go from potentially paying $120 billion for a
major deal to something that’s basically an hors d’oeuvre,”
Boris of SunTrust said in a phone interview. “M&A will continue
to be dominant.”

Cash Balance

Pfizer had $33 billion in cash at the end of September, the
most recent date for which information is available. It’s using
some of that to cover a portion of the cost for the Hospira deal
and issuing new debt to pay for the rest. That will still leave
the company with plenty of resources for other acquisitions.
“I’m not going to sneeze at a $17 billion deal -- it’s a
fairly significant move,” David Heupel, a Minneapolis-based
fund manager at Thrivent Financial for Lutherans, which oversees
about $90 billion, said in a phone interview. “But they
certainly, particularly when you think about ex-U.S. cash, have
plenty of money that they could deploy. This doesn’t necessarily
close the door on any acquisition.”
The Hospira deal will add scale and growth to Pfizer’s
established products business, putting the company in a better
position to eventually spin it off as it has discussed doing.
What Hospira doesn’t offer is a pipeline of innovative products
that could replace Pfizer’s own blockbusters that are losing
patent protections and help reverse four years of revenue
declines.

Actavis Appeal

That could drive Pfizer to a deal with Actavis, Kedra of
Gabelli said. Actavis is in the process of buying Allergan to
add fast-growing drugs including the anti-wrinkle treatment
Botox and Restasis eye-drops. Once it completes the deal, the
Dublin-based company may also be big enough for Pfizer to
overcome the U.S. Treasury’s stricter rules on inversions and
strike a deal to lower its tax rate, Kedra said.
Buying Hospira “checks off some of the boxes they would
have gotten from AstraZeneca but certainly not all of them,”
Kedra said in a phone interview. With an Actavis takeover, “you
would certainly pick up some innovative growth assets,
especially through the Allergan portfolio. That would help check
off a lot of the boxes that still seem to be out there.”
Mylan is also a possibility as the companies already have a
relationship on several projects including EpiPen, though Pfizer
would have to work out the tax implications of a takeover, said
Boris of SunTrust. Mylan is seeking to lower its tax bill by
buying Abbott Laboratories’ generic drugs business in developed
markets and moving its legal address to the Netherlands.
The Hospira acquisition may tip Pfizer’s hand on where it’s
looking for its next deal, Thrivent’s Heupel said.
“There are plenty of assets out there that they could buy
that would provide some revenue and feasible growth to the
existing infrastructure the company has -- I think that’s part
of what this tells us,” he said. “You could run the gamut in
the generic specialty space. I think anything would be feasibly
viewed as on the table.”

For Related News and Information:
Pfizer Flexes Muscle With Priciest Purchase of Decade: Real M&A
Drug Buying Spree Still Bustling as Pfizer Leads Hunt: Real M&A
Real M&A’s 2015 Guide for Deal Watchers: Pfizer to MegaBrew
Pfizer $33 Billion Question Remains After Teva, Actavis Feelers
Top Deal Stories: DTOP <GO>
Real M&A Columns: NI REALMNA <GO>

To contact the reporter on this story:
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Elizabeth Wollman