(MergerMarket) Jazztel/Orange unfazed by shareholder rebellion

Jazztel/Orange unfazed by shareholder rebellion 

Demands by some Jazztel [MCE:JAZ] shareholders for a higher price from Orange [EPA:ORA] are unlikely to flourish, according to sources from both camps.

Orange’s price of EUR 13 per share is a “significant” premium over historical levels, said a source close to the Spanish internet provider. In the last five years, the company’s shares have only gone above EUR 12 at the time of Orange’s bid. The shares were trading below EUR 4 as recently as 2011.

The fact that Jazztel's chairman and main shareholder, Leopoldo Fernandez Pujals, has decided to cash out after 10 years at the helm will also be influential for minority shareholders, the source predicted. The Cuban-American entrepreneur began a turnaround strategy for the Spanish alt-net in 2004.

Orange is also bullish on the chances of the bid going through at the current price. Any shareholder who fails to tender would be “foolish,” said one source familiar with the French company’s thinking.

Orange is only seeking 64.51% of the capital, including the 14.5% already pledged by Pujals. The offer is designed so that Orange can merge its Spanish business with Jazztel, keeping the company’s stock market listing, the source said.

To merge its Spanish business with Jazztel, Orange will need to pass an extraordinary resolution. Under Jazztel’s corporate statutes, extraordinary resolutions need 75% of the votes at a shareholder meeting.

Orange has previously studied an initial public offer (IPO) for its Spanish business, said the source familiar with its thinking. But, given that Jazztel uses Orange’s mobile network, buying the company and keeping its listing is an elegant solution, the source said.

It appears that rebellious shareholders control 10% or less than the capital at this stage of the game, said one person familiar with the issue. By contrast, at least 30% of the capital is in the hands of hedge funds who bought at less than EUR 13 per share, the person said, adding that this proportion could be significantly higher.

Jazztel minority shareholder Alken made headlines when it valued the company at EUR 20 per share. The investor raised its stake to 6.5% at the end of September.

At the same time, other significant shareholders, including Fidelity, appear to have been reducing their stakes. Spain’s National Securities Market Commission (CNMV) no longer lists any other shareholders as holding more than 3%, the level for notification. There is a clear trend for long-time shareholders to cash out early, the person said.

A spokesperson for Jazztel declined to comment. Alken declined to discuss the situation.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: LAD -10.5%, GY -2.9%

M&A news: DG -1.2% (receives second request from FTC, as expected, regarding proposed acquisition of Family Dollar (FDO))


Other news: GTAT -23.5% (cont vol pre-mkt), LAD -10.5% (still checking), SFLY -7.9% (PE firm Silver Lake abandons attempt to acquire and combine Shutterly and Snapfish, according to reports), LUX -7.2% (Enrico Cavatorta to submit to the Board his resignation as CEO, also downgraded to Neutral from Buy at Citigroup), GPRO -1.8% (cont vol pre-mket), MBLY -1.2% (cautious Barrons mention)

Analyst comments: STM -2.3% (downgraded to Neutral from Overweight at JP Morgan, downgraded to Underweight from Equal-Weight at Morgan Stanley), NGD -1.8% (downgraded to Neutral from Overweight at JP Morgan), JCI -1.2% (downgraded to Outperform at RBC Capital Mkts), CLF -1% (downgraded to Neutral from Overweight at JP Morgan), JCP -1% (downgraded to Sell from Neutral at UBS), CME -0.5% (downgraded to Market Perform from Outperform at Wells Fargo)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: MDXG +4.3%

M&A news: APL +12.8% (Targa Resources Partners and Targa Resources Corp. (TRGP) to acquire Atlas Pipeline Partners, L.P. (APL) and Atlas Energy, L.P. (ATLS)), ATLS +12.5%, CSX +9.2% (was approached for M&A deal with Canadian Pacific (CP) but CSX refused it, according to reports), TRGP +1.9%.

Select EU related names showing strength: NOK +2.3%, HSBC +2.1%, SAN +1.9%, YNDX +1.4%, RBS +1.1%, DB +0.9%

Select Ebola related stocks trading higher: IBIO +78.9% (outpacing strength seen this morning in most Ebola related names; checking around for company specific catalyst), HEB +20.6%, APT +18.7% (masks), LAKE +17.5% (masks), NLNK +4.7%, TKMR +4.1%, MLNX +2.2%, INO +1.1%, BCRX +0.7%, SIGA +0.7%

Select metals/mining stocks trading higher: MT +5%, RIO +4%, VALE +3.2%, BHP +2.7%, AU +2.3%, IAG +1.3%, GDX +1.3%, IAG +1.3%, ABX +1%

Select oil/gas related names showing strength: PBR +6.7%, SDRL +5.7%, TOT +1.6%, RIG +1.4%

Other news: DRL +66.4% (wins in Puerto Rico tax case), AHPI +7.6% (cont momentum), SHLD +4.9% (Kmart investigating payment system intrusion), AIXG +4.8% (Allianz Global Investors discloses 10.03% passive stake in 13G filing), KSU +2.6% (CSX peer), PXD +2.5% (Reliance Industries may sell PXD joint venture for $4.5 bln, according to reports), STO +1.5% (sells 15.5% share in Shah Deniz to Petronas for $2.2 bln), TASR +1.4% (announced four international orders -- Australia, France, the UK, and Poland -- for TASER brand next generation Smart Weapons).

Analyst comments: FOMX +8.3% (initiated with an Overweight at Barclays; initiated with a Outperform at Oppenheimer), GOLD +4.8% (upgraded to Buy from Neutral at UBS), TKAI +3.2% (initiated with an Outperform at William Blair), PRQR +3.2% (initiated with a Buy at H.C. Wainwright), SPWR +3% (upgraded to Outperform from Mkt Perform at Raymond James), SPLK +2.4% (upgraded to Outperform from Mkt Perform at William Blair), AZN +2.3% (upgraded to Buy from Hold at Jefferies), INFY +2% (upgraded to Buy form Hold at Deutsche Bank), TILE +2% (upgraded to Overweight from Equal Weight at Barclays), OUTR +1.9% (upgraded to Neutral from Sell at B. Riley & Co), SFUN +1.4% (upgraded to Buy from Hold at Deutsche Bank), TMUS +0.7% (upgraded to Outperform from Neutral at Macquarie
)

>>> US Early premarket gappers

Early premarket gappers

Gapping up: DRL +56.9%, APT +18.8%, AHPI +16.7%, CSX +8.6%, TKMR +7.1%, SDRL +6.8%, PBR +6.1%, MT +4.9%, GOLD +4.7%, RIO +4%, ALU +3.7%, GIS +3.6%, BHP +3%, NOK +2.8%, PXD +2.7%, INFY +2.4%, MLNX +2.2%, HSBC +2%, RIG +2%, SAN +1.9%, SPLK +1.9%, TOT +1.8%, AZN +1.8%, ALV +1.4%, STO +1.3%, IAG +1.3%, YNDX +1.1%

Gapping down: GTAT -11.1%, LUX -7.4%, LAD -4.7%, STM -2.3%, NE -2%, JCP -1.7%, CLF -1.4%, GPRO -0.6%

WSJ: JPM to increase cyber Security by100%

--> +ve FTNT

J.P. Morgan CEO: Cybersecurity Spending to Double
James Dimon Appears on Panel in First Public Remarks Since Throat Cancer Treatment

J.P. Morgan Chase & Co. Chairman and Chief Executive James Dimon said the bank would double spending on cybersecurity over the next five years, his first public remarks following the data breach that hit the nation’s largest bank this summer.
Mr. Dimon was speaking in his first public appearance since July, when he disclosed that he had been diagnosed with throat cancer.
“We had a little problem recently,” Mr. Dimon told the audience at the Institute of International Finance panel discussion, referring to the widespread hack into J.P. Morgan’s servers. Last week, J.P. Morgan said the breach had compromised contact information—but not sensitive account data—for 76 million households and about seven million small businesses.
He said J.P. Morgan over the next four to five years was likely to double its spending on cybersecurity from $250 million annually in 2014. “We have to be vigilant,” he said, adding that issues around cybersecurity “will happen for a long time.”
“We need help and [need to continue] working together with the government,” he added. “The government knows more than we do.”
Investigators have said at least 13 companies were targeted by the unknown hackers, making it one of the most significant cyberattacks disclosed in the U.S. To date, only J.P. Morgan and Fidelity Investments are believed to have had data stolen. An unspecified number of companies’ systems had some contact from computer addresses linked to the hackers but didn’t lose any data, according to people close to the investigation.
A Fidelity spokesman said Thursday the company “continues to deploy multiple layers of security to help protect the privacy of our customers.…We can reiterate and have confirmed with the FBI that there is no indication Fidelity customer accounts, information, services or systems were affected by the recent attack that impacted [J.P. Morgan].”
At Friday’s panel discussion, on issues from regulation to the global economy, Mr. Dimon seemed close to his usual self, though somewhat slimmer.
His voice was clear and he grinned a few times at comments made by the three other executives on the stage: Deutsche Bank Co-Chief Executive Officer Anshu Jain, Morgan Stanley Chairman and CEO James Gorman and Bank of America Corp. Chairman and CEO Brian Moynihan. Mr. Jain welcomed Mr. Dimon back and said all on stage were pleased that he was able to make the event.
After finishing roughly eight weeks of treatment for cancer in September, Mr. Dimon has started ramping up his travel and client meeting schedule.
Mr. Dimon arrived in Washington on Thursday and took part in a joint IIF/ Financial Services Forum meeting for about three hours, which included CEOs from the world’s largest banks, a person familiar with his schedule said.
The J.P. Morgan chief remains under the close watch of doctors, who will monitor his progress during the coming months to determine whether he is cancer-free, people familiar with the matter have said. Mr. Dimon may still face additional side effects and, possibly, more treatment, and doctors will continue to watch for problems for several years, the people said.
At the hourlong panel session Friday, Mr. Dimon talked about interest rates, the importance of weeding out bad actors at banks and his belief that China’s economy will avoid a “hard landing.” He said he was “less worried” about growth slowing in China and more focused on moves toward market overhaul and democracy in the country over the next few years.
After the panel discussion was over, Mr. Dimon shook hands with the other executives and walked briskly toward an exit at the side of the room. Asked how he was feeling, he replied “Good, thank you. I’m OK.”

NY Post : Congress proposing to cut corporate tax rate by 10%

Congress has a bill ready to cut the corporate tax rate to 25 percent as a measure in combating US firms merging with overseas companies to solely lower their tax bill.
“At 35 percent, US corporations are at a major competitive disadvantage,” says Elaine Kamarck, a co-chairwoman of the bi-partisan group Reforming America’s Taxes Equitably (RATE).
Her group, lobbying to lower the corporate rate to 25 percent, is pushing a tax-reform proposal pending in the House by Ways and Means Committee Chairman Dave Camp.
The tax reform is essential to creating jobs for young Americans seeking to begin their adult lives, Camp (R-MI) said in a statement.
But some proponents of the measure are saying even a 25-percent rate is far too high and won’t stop the bleeding of US firms’ revenue to more tax-friendly foreign enclaves.
Kamarck, a former Clinton administration official, said the difference in tax rates between the US and other major trading partners is dangerous for the country. She notes that Canada — which until recently had a 21 percent rate — has dropped it to 16.5 percent.
“We’re talking about a major trading partner that is much more competitive,” Kamarck warned. “And if we don’t fix this, we’ll have more tax inversions, more corporations moving their headquarters elsewhere, taking lots of jobs with them and hurting the economies of American cities.”
And less tax revenue from the proposed 28 percent cut from a rate of 35 percent to a rate of 25 percent.
“Lowering the corporate tax rate from 35 percent to 25 percent not only would increase America’s ability to compete internationally, but would also ensure that American corporations have more resources here in the United States to invest, hire and grow their businesses,” according to a committee tax reform memo.
Proponents of the 25 percent rate say it would add 581,000 jobs annually and increase GDP growth by 1 percent.

NY Post : Hermès customers say their Birkin bags smell like marijuana

Hermès’ iconic bag, the Birkin, has a pungent problem — customers are returning some recent orders of the wildly expensive bags to the boutiques, complaining they smell of marijuana.
Customers — some of whom have paid about $20,000 or more for the exclusive bags — have been told by staff at the luxury goods store that there was a problem with a “badly tanned” batch of leather from a supplier to Hermès.
They claim the tanning process somehow makes the leather smell like marijuana whenever it heats up in warm temperatures, such as in direct sunlight or in a hot car.
A source tells us:
‘“Owners are returning the Hermès bags back to boutiques across the US, including the Madison Avenue store, saying they smell of skunk. The bags are being sent back to Paris as nobody knows quite how to deal with this embarrassing situation.”’
Apparently, this is a worldwide problem as Hermès bags are distributed to boutiques in limited quantities and are often on back or special order.
While the problem does not affect all Hermès leather products, we are told this does affect multiple bags in varying colors, ranging in designs such as the Birkin, the Kelly and the Elan clutch, which retail from $5,000 to more than $20,000, all of which had been purchased in 2013 and 2014. It is not believed the problem affects the Hermès crocodile skin bags, which can sell for more than $60,000. Customers are reporting that Hermès staff are saying the bags have to go back to Paris, have the bad-smelling leather panels removed and the entire bag rebuilt.
While a New York-based Hermès rep didn’t respond to requests for comment, the so-called “skunk stinky syndrome” has become a subject of discussion on Web forums devoted to luxury goods.
One Kelly bag owner posted on PurseBlog:
‘“After riding in the car with her for about 30 minutes, I smelled what I thought was a dead skunk. Another 30 minutes later I could still smell the dead skunk, and I thought it was odd, but never imagined it could be my bag. I keep (it) in an armoire . . . When I opened the cabinet door this morning, the smell hit me, and I immediately knew it was the bag.”’