Tuesday, 24 November 2015

Flag pole alert - part 3

The broker upgrades are coming thick and fast following Bryce Elder's piece on Imperial Tobacco late last week.

Yesterday, Citigroup upgraded Imperial Tobacco to a "buy" and now Exane BNP Paribas and Morgan Stanley have pieces out to clients on the topic. Below I have pasted the gist of the latest Exane note:
Merger Madness
Ever since the ABI/SAB offer was announced, the financial press has been rife with speculation that Imperial is next in line. While such stories have been recycled repeatedly over the years and much reporting looks ill informed, the sheer intensity of the reports raises questions. It seems like a good time to revisit our previous work on the anti-trust complexities and the chances of a deal.
Talk of BAT without JT makes no sense
Much of the speculation centres on BAT launching a bid. But BAT can't do this alone; JT would need to be involved. Even if it were (we have doubts) it would be in a position to drive a hard bargain on markets acquired. There are a number of complexities and questions to overcome.
Financially attractive, strategically questionable
Though the anti-trust specifics make value leakage/ dis-synergies likely, a deal would still create value through cost savings (previous big Tobacco M&A synergies 22-105% acquired EBIT). But buying a fragmented brand portfolio which would need to be further broken up is not 'on-strategy', and for JT to tie up its balance sheet for several years would require strong commitment.
What if it's true?
Putting our scepticism aside, a successful deal might be 15-20% EPS accretive for BAT, 20-30% for JT (with ROIC>WACC for both), though paying IMT shareholders a 25%+ premium would mean a stretched takeout multiple by historical standards.
True or not, it's a free option on a robust IMT investment case
Consolidation would be good for the entire industry. The initial upside though would likely be greatest at target IMT and if (as is our base case) a deal is not forthcoming we continue to see the stock as attractive based on the profit pool growth recovery in Europe and the resulting opportunity to show a consistency of growth delivery that has proved elusive for many years.

Shell/BG Group worries

Risk arbitrageurs (otherwise known as the hedge funds that bet on takeover deals) have been getting increasingly nervous about Shell's £43 billion bid for BG Group following a series of bearish articles on the transaction by my old employer, The Telegraph Media Group, publisher of The Daily Telegraph and The Sunday Telegraph.

I expect those worries to transform into full scale paranoia after The Times decided to follow the Telegraph's lead and publish a news story (re?) quoting Ian McVeigh's opposition to the mega deal.
If you don't recall, McVeigh of Jupiter Fund Management wrote a piece in The Sunday Telegraph a few weeks ago likening the transaction to Royal Bank of Scotland's disastrous acquisition of ABN Amro.

Monday, 23 November 2015

Friday, 20 November 2015

Squeaky bum time for Pathfinder Minerals - part 2

I'm presuming bums are getting particularly squeaky round at Pathfinder Minerals, the controversial mining company focused on Mozambique.

Readers might recall I did a piece in the summer about how auditors for Pathfinder Minerals had raised "going concern" issues at the company, which as far as I can see is now just a cash shell fighting over mining rights in Mozambique. Here is a link:

Thursday, 19 November 2015

Hedgies get hot under the collar over Dialog deal - part 2

So, Arrowgrass appears to have got one over rival Elliott Advisers - it's just been announced that Dialog Semiconductor's purchase of Atmel has been approved.

Here is a link to the a Reuters piece on the news, which has just broken:

Brookfield Infrastructure Partners said to have hired bankers to sell International Energy Group

Apologies for the delayed posting Betavillers - I've got a bit of sore head as I was out hobnobbing with the great and the good of the British business world last night at a brilliant party.

Anyway, I'm sure you can read about that over the weekend. Back in the real world (or perhaps I should say Betaville world) I can "exclusively reveal" that I stumbled across this rather interesting little jackanory a few days ago.

Tuesday, 17 November 2015

Hedgies get hot under the collar over Dialog deal

It sounds like there is an almighty dusty up brewing between some of Britain and America's top hedge funds.

The potential row is over Dialog Semiconductor's takeover of US rival Atmel for $4.6 billion.

Monday, 16 November 2015

RARE ALERT: Fagron said to have drawn interest from Cinven et al

I've been in two minds about writing on the Fagron auction. That's because there have been a lot of unsubstantiated (and possibly false) rumours going around the European markets in the last couple of weeks and as a result the stock has been volatile.

For readers unfamiliar with Fagron, it's a listed Belgian company that provides ingredients for pharmacies and hospitals. The business said last month that it had hired JP Morgan to carry out a strategic review after receiving several takeover approaches.

Back on Tip TV talking about IHS, BG Group and Fagron

It's a Monday, so here is a link to today's session on Tip TV:


Sunday review on a Monday

There were a couple of stories that caught my eye in yesterday's Sunday newspaper business sections.

Oliver Shah's Prufrock item in The Sunday Times on Guy Hands's global restaurant preferences drew a wry smile, particularly as the financier's taste in eateries didn't appear to be particularly good.

Thursday, 12 November 2015

Revealed: Argus Media Group appoints bankers to carry out sale of up to £1 billion - part 3

It was only yesterday that I broke the story about Argus Media Group but already the names of serious buyers of the energy data business are coming out of the woodwork.

Indeed, I understand several private equity firms have a strong interest in Argus Media Group, such as Hellman & Friedman, which has an established track record in the sector having previously invested in Wood Mackenzie, the commodities research and publishing group.

Wednesday, 11 November 2015

Revealed: Argus Media Group appoints bankers to carry out sale of up to £1 billion - part 2

It's always great when a scoop is formally confirmed by the company involved. Here is a statement that has just been released by Argus Media Group following my piece from earlier today:

Argus Media statement
11 November 2015
Argus Media today confirmed that it has appointed financial advisers to review strategic options for the next phase of its development as a leading provider of pricing information to global commodity markets.

Revealed: Argus Media Group appoints bankers to carry out sale of up to £1 billion

Argus Media Group, the publishing company that sets world energy prices, could be about to change hands for up to £1 billion.

According to well-placed sources, Argus Media Group has begun working with Bank of America Merrill Lynch on a strategic review and contacted some of the City's top private equity firms to gauge their interest in the company.

Krafty 3G / Coincidence - part 3

Finally, SAB Miller announces a £70 billion plus recommended offer from Anheuser-Busch Inbev and confirms what I have been banging on about since the beginning of the year: that 2015 is the year ABI and 3G plan to bid for the FTSE 100 beer company. And in case you don't recall, here are links to some of my "exclusive" articles on the topic:


Tuesday, 10 November 2015

Dubens's firm Oakley hungry for Ed's Easy Diner

Hip, high-end burgers - think Honest Burger, Dirty Burger and, possibly even, Byron Burger - are all the rage with British trendy, metropolitan types but it seems like the City's private equity firms are more interested in tired, old burger chain brands.

Indeed, I hear Oakley Capital, the private equity firm set up by entrepreneur Peter Dubens, has been participating in the £100 million auction for Ed's Easy Diner, which I used to visit in my teens.

Friday, 6 November 2015

Introducing Europe's "best" activist investor

Fortune magazine recently declared it Europe's "best" activist investor. That's Cevian Capital, the investment firm in which Lord Myners, the former Labour City minister, is a partner. Here is a link the Fortune magazine article:

It's M&A Friday!

Hat tip to Russell Lynch over The Evening Standard who just delivered a brilliant scoop about ICAP and Tullett Prebon holding merger talks of their broking businesses. Here are links to Russell's story and also the confirmation:


Wednesday, 4 November 2015


Here is a random thought for the day.

Whilst ruminating on the fact that SAB Miller and Anheuser-Busch Inbev asked for a second extension to the Takeover Panel's put-up or shut up deadline, I started to wonder: what was that Veja story in June about 3G weighing a multibillion takeover bid for Diageo all about?

Tuesday, 3 November 2015

Tuesday review - part 2

I should have mentioned this piece from the Financial Times - http://www.ft.com/cms/s/0/3a26241c-81b0-11e5-8095-ed1a37d1e096.html#axzz3qQcDFYoP - in my earlier post.

It's bit of "old" news (the fact that Pfizer approached GlaxoSmithKline before Allergan) that hadn't made into the public domain. But as it has been shown here on little old Betaville, "old" news can often become "new" news, so in the right circumstances is definitely worth reporting. Hat tip, then, to the raft of FT hacks who discovered the "old" news.