FT : Sime Darby makes £1.1bn bid for New Britain Palm Oil

Sime Darby, one of Malaysia’s largest conglomerates, has made a £1.1bn all-cash offer for London-listed New Britain Palm Oil, in a move that highlights a push by the world’s biggest palm oil producers into sustainable production of the commodity.
An acquisition of New Britain by Sime Darby, already one of the world’s biggest producers of palm oil, would be the biggest by the company since 2007.

Sime Darby is offering £7.15 per share for New Britain, which represents a premium of 85 per cent to the company’s closing price on the London Stock Exchange on Wednesday.
New Britain has about 80,000 hectares of oil palm plantations, more than 7,700 hectares of sugar cane and a further 9,300 hectares of grazing pasture in Papua New Guinea. It also owns 12 mills and two refineries – one in PNG, the other in Liverpool, UK.
The Malaysian group’s move for New Britain, one of the world’s largest producers of sustainable palm oil, will bolster its position in Europe, where demand for sustainable palm oil is growing faster than any other region.
Palm oil is a key ingredient in processed food and cosmetics made by companies such as Unilever and Procter & Gamble. It also accounts for about a third of all vegetable-oil consumption, according to Rabobank.
Heightened pressure from consumers buying products made using palm oil – including Gillette shaving cream, Oreo cookies and Colgate toothpaste – has prompted some consumer goods companies to switch to using sustainable palm oil.
Sustainable palm oil is produced according to environmentally friendly methods, including avoiding sourcing oil grown using “slash and burn” methods that contribute to deforestation.
Wilmar, the Singapore-listed agribusiness that also controls 45 per cent of the global production of and trade in palm oil, said last year it would ensure that both Wilmar’s own plantations and companies from which it sources would only provide products produced on a sustainable basis.
Mohd Bakke Salleh, Sime Darby chief executive, said that production at the Liverpool refinery could be combined with the company’s existing capacity in the Netherlands.
“We can see a lot of benefits coming out of this because we don’t have any refinery in the UK and New Britain doesn’t have any other refinery outside the UK, so it’s a nice fit,” he said.
The move comes amid a prolonged period of depressed crude palm oil (CPO) prices. Asked if the company was overpaying Mr Salleh said: “We are confident that the CPO price will move up – and we’ve seen that over the years. It may be seen that we are paying a high price today but there are strong fundamentals for oil palm.”
Crude palm oil futures on Bursa Malaysia for December delivery have risen 13 per cent since late August, partially reversing an eight-month decline. They were trading at Rm2,180 ($673) per metric tonne on Thursday, according to Bloomberg.
Sime Darby plans to pay for 20 per cent of the acquisition with existing cash reserves, with the rest from borrowings.
The offer for the whole of New Britain comes two months after Sime Darby started talks with Kulim, another Malaysian company, to acquire its 49 per cent stake in New Britain. Sime Darby went ahead with a full offer after the PNG government said a full takeover would “not be contrary to PNG’s national interest”.
The company is being advised by Citibank and Clifford Chance, the law firm.

WSJ : Tianhe Chemicals Shares Plunge After Long Trading Halt

Tianhe Chemicals Shares Plunge After Long Trading Halt
Company Issues Rebuttal to Anonymous Analytics Report

HONG KONG—Shares of Tianhe Chemicals Group, 1619.HK -38.53% the Chinese company accused by “hacktivist” group Anonymous Analytics of falsifying some of its financial reporting, fell 43% after their monthlong trading halt was lifted.

Late Wednesday, the company released a 55-page rebuttal to the Anonymous Analytics accusations. It said the group’s report amounted to “twisted facts and intertwined fiction.”

In early September, Anonymous Analytics released a report alleging that Tianhe, which had been a market darling following its Hong Kong listing, falsified its accounting, revenue and margins and overstated sales of a lucrative chemical agent called anti-mar.

Tianhe, which is part-owned by Morgan Stanley, is down 43.3% midday Thursday at HK$1.31, which is 27% lower than its float price. The company raised US$748 million with its June initial public offering in Hong Kong. Between its IPO and the initial report from Anonymous Analytics, Tianhe shares rose 28%, outperforming the benchmark Hang Seng Index, which rose 6.7% over the same period.

Anonymous claimed last month that reported revenue for two Tianhe units, Jinzhou DPF-TH and Fuxin Hengtong, was much lower than claimed, citing accounts that the company submitted to China’s State Administration of Industry and Commerce. On Wednesday, the company said its shareholders can inspect the financial statements and tax receipts of the two units if they can prove they are registered stockholders.

“This type of anonymous and hyperbolic market discourse has no accountability for truth,” the company said in its filing to Hong Kong’s stock exchange. “The company, on the other hand, is fully responsible for every fact that we meticulously set forth in the pages to follow.”

Tianhe also denied Anonymous allegations that its key customers had ties to the company and that it overstated anti-mar sales. The chemical agent is used in products including smartphones and digital cameras.

On Thursday, Anonymous Analytics said on its website that the Chinese company hasn’t responded to its satisfaction. It said it is sticking to its initial claims.

“Given the amount of time it took for management to concoct its defense, we expected something grandiose in nature,” it said.

WSJ : Altice’s Portugal Deal Could Provide Oi’s Brazilian Solution

France’s Altice ATC.AE -1.45% could be the key that unlocks a telecom puzzle in Brazil.

Patrick Drahi, the billionaire behind telecom company Altice, is in talks to buy Oi OIBR4.BR -8.43% ’s Portugal Telecom, PT -2.87% which could potentially fetch as much as €7 billion ($8.9 billion).

A deal could help reduce the debt load at Brazil’s Oi; it has net debt of about five times earnings before interest, taxes, depreciation and amortization on a five-year-average basis, according to FactSet.

That, in turn, could help resolve a long-standing issue for Telecom Italia. TIT.MI -1.16%

Brazil delivers three-quarters of Oi’s revenues, but an economic slowdown and stiffer competition has hurt sales. Oi needs to invest in domestic infrastructure to stay in the game.

The company’s deal to buy Portugal Telecom, agreed to last year, should have strengthened its balance sheet but instead left Oi embroiled in the collapse of Espírito Santo Financial Group. Oi’s Zeinal Bava, the architect of the merger, resigned as chief executive Tuesday, which could clear the way for a sale.

Selling Portugal Telecom could give Oi more financial flexibility to buy TIM Brasil, TIMP3.BR +1.26% the mobile operator 67% owned by Telecom Italia. In a market where bundles of services are proving popular, Oi would then be well positioned, with its fixed-line network combined with the second- and fourth-largest wireless carriers.

Antitrust regulators would likely require some assets to be sold to remaining competitors. But a consolidation led by Oi—the only Brazilian-owned telecom group left among the four biggest operators—could pass muster.

If Oi could demonstrate its ability to invest in fixed-line coverage, that could work in its favor. And TIM’s net debt is only about 0.2 times Ebitda. Depending on how a deal is financed, the combined company’s leverage should drop to below four times Ebitda.

Telecom Italia has expressed reluctance to sell: It counts on TIM for growth. But the Italian operator is also financially strapped, with net debt of three times Ebitda and is under pressure to invest at home. Having lost out to Telefónica TEF.MC -0.21% in buying Vivendi VIV.FR -0.65% ’s Brazilian network provider GVT, it is running short on options strategically.

Ultimately, both Oi and Telecom Italia need to prioritize investment on home turf over international expansion. For Oi, the quickest way there is to bypass Portugal.

>>> Barcap - Ebola Impact on Luxury Sector

BArcap FX research published a piece yesterday (link) discussing the human tragedy of the current Ebola outbreak and the potential impact this could have on markets and the global economy. This note has a narrower scope, focusing on the potential impact on luxury trading. A comparison with the SARS outbreak of 2002-03 suggests that luxury stocks would see a short, sharp negative impact, with wholesale and hard luxury names the hardest hit and leather goods more resilient. Tourism is the main sensitivity, with 50% of luxury purchases influenced by global travel flows, according to LVMH. Clearly,
anything that disrupts tourism would be a negative for the sector, which is even more exposed to tourism today than in 2003 given a higher contribution from Chinese consumers abroad. This implies that Swatch and Richemont would be the most exposed fundamentally along with soft luxury wholesale driven models (e.g. Tod's, Hugo Boss).

>>> Schlumberger in auction procees for oilfield tools rental business Thomas To

Schlumberger in auction procees for oilfield tools rental business Thomas Tools; PPHB advising 

Schlumberger Ltd (EPA:SLB) is running an auction process for Thomas Tools, its oilfield tools rental business based in New Iberia, Louisiana, according to a newswire report.

Reuters, citing a person familiar with the situation, reported that oilfield service boutique PPHB is serving as sellside advisor.

Thomas Tools generates EBITDA in the area of USD 80m, and could command a 7.5x multiple, Reuters reported. Private equity is among the potential bidders, according to the article.

Thomas Tools was founded in 1961, and supplies oilfield rental tools, tubulars, and surface equipment. The business was originally part of Smith International, which was acquired by Schlumberger in 2010.

Newswire Round-up

>>> Exor willing to dilute stake in Fiat Chrysler as part of merger with another

Exor willing to dilute stake in Fiat Chrysler as part of merger with another car maker
Exor, the holding company of the Italian Agnelli family, would be willing to dilute its stake in Fiat Chrysler as part of a strategic merger with another car group, Italian language daily Milano Finanza reported. The item cited Exor chairman John Elkann who made his comments in an interview with US magazine Business Week.

The item cited Elkann as saying that such a merger could take place in the next five to 10 years.

The item also cited comments made by Fiat Chrysler CEO Sergio Marchionne in the same interview who said that consolidation in the car sector would lead to a new number one and that Fiat Chrysler is ready to take part in such a merger process.

The report also cited Marchionne as saying that he would step down as CEO of Fiat Chrysler after 2018.

Fiat has a market cap of EUR 8.81bn.


Source Milano Finanza daily edition

>>> Tieto could be a target for Indian IT companies; merger with Evry also a pos

Tieto could be a target for Indian IT companies; merger with Evry also a possibility

Tieto, the Finnish IT services company, could make an interesting target for Indian IT companies or merger with Evry could be a possibility, according to Kauppalehti.

In its unsourced analysis, the Finnish-language piece wrote that the Indian outsourcers have been expanding in Finland. Tieto could make an interesting target because of its customers.

The company has years of experience in large Finnish IT projects with banks and governmental organisations. It said that Tieto could also be sold in parts and especially its software business could be of interest and it could have synergies with the Indian TCS for instance.

Tieto could also separate its product development services unit but this may not be of interest to buyers because of its poor performance.

The Norwegian IT house Evry is also for sale, and Tieto and Evry could jointly form a large Nordic IT house. The Finnish state is the second largest owner of Tieto with the main owner being the Swedish Cevian Capital, run by the Swedish Christer Gardell who is known for his skilled strategies.

Gardell is unlikely to give up his shares for a low price however. Besides, selling Tieto could be politically difficult because Indian outsourcers do not have the best of reputations in Finland.


Source Kauppalehti

>>> Tui Travel shares down on concerns that weak trading could derail merger wit

Tui Travel shares down on concerns that weak trading could derail merger with Tui 

Tui Travel shares fell 3.9% yesterday, 8 October on talk that weak trading might derail the UK-based travel company’s merger with Tui AG, the Financial Times reported. The newspaper's market report section did not cite a source for the speculation.

Tui Travel’s trading weakness is due to the outbreak of the Ebola virus, the report said.

The item noted that Tui Travel's proposed merger with German parent company Tui AG will be subject to a vote scheduled in the final week of this month.

A market report in The Daily Telegraph also mentioned concerns that the Ebola outbreak might have an impact on the merger with Tui AG. The newspaper did not cite a source for the speculation.

Tui Travel’s share price closed 15p down at 367p in London yesterday, giving the company a market capitalisation of GBP 4.46bn (EUR 5.66bn). 


Source Financial Times, Daily Telegraph