Sunday, September 21, 2014
- Siemens (OTCPK:SIEGY) is reportedly on the verge of a $6B all-cash deal to acquire U.S. oilfield equipment maker Dresser-Rand Group (NYSE:DRC).
- Siemens is expected to pay low- to mid-$80s per share. DRC closed Friday at $79.91, and is +18% since Wednesday over takeover speculation.
- Sources say the all-cash bid has trumped a competing offer from Sulzer AG (OTC:SULZF), which was looking to merge with Dresser-Rand in an all-stock deal.
- Discussions are continuing and could still fall apart.
- Without stating a reason, Microsoft (NASDAQ:MSFT) has delayed the launch of its Xbox One in China, which had been set for release on Tuesday. The company now says the game console will be released by the end of the year.
- Microsoft announced it would start selling the Xbox One in China last spring, after the Chinese government ended its longstanding ban on foreign videogame consoles and games.
- The delay is the latest setback for Microsoft in China, where it is under investigation for anti-monopoly violations related to its Windows operating system and Microsoft Office.
- Proclaiming its largest single order by number of planes from an African carrier, Boeing (NYSE:BA) announces it has received an order for 20 737 MAX 8s from Ethiopian Airlines.
- The order is worth more than $2.1B at list prices and also includes options and purchase rights for a further 15 737 MAX 8s.
- Akira Amari, Japan's Minister for Economic Revitalization, has indicated that a second increase in consumption tax will go ahead as planned, saying it is necessary to meet the rising costs for social security and the country’s budget deficit.
- Weeks of disappointing data previously caused some advisers to Prime Minister Shinzo Abe to call for a delay in the increase to 10%, due to take effect next October, arguing that the first rise in April, from 5% to 8%, had taken too heavy of a toll.
- Amari says that extra monetary and fiscal stimulus will ensure that the tax hike will not endanger the country’s recovery. The government will also offer tax breaks for small businesses to spur capital spending.
- ETFs: DXJ, EWJ, DFJ, NKY, DBJP, EZJ, EWV, SCJ, JPNL, DXJS, JSC, ITF, JPP, JPNS, HEWJ, FJP, DXJH, DXJR, DXJF, DXJC, DXJT, FXY, YCS, JYN, YCL
- Air France (OTCQX:AFLYY) pilots have voted to extend their strike over the airline's transfer of services to its low-cost unit Transavia and have asked to meet with France’s prime minister to make their case against the plan.
- The strike, which began last Monday, has now been extended to by another four days until Sept. 26.
- Air France has estimated the cost of the strike at €10M-15M ($12.8-19.2) a day.
- General Motors (NYSE:GM) has recalled 221.5K Cadillac XTS and Chevrolet Impala sedans due to defective brake pads.
- The electronic parking brake that applies pressure to the back of the brake pads might not fully retract after it is disengaged, causing excessive brake heat and increasing the risk of a fire.
- The recall impacts Cadillacs from 2013-2015 and Impalas from 2014 and 2015 .
- TAT Technologies (NASDAQ:TATT) signs a seven-year landing gear maintenance support agreement with Republic Airways Holdings (NASDAQ:RJET).
- The agreement covers the current fleet of 160 aircraft and the total value may exceed $45M.
- TAT CEO Itsik Maaravi: "This contract will position us as a world leading maintenance service provider for Embraer E - 170/190 Landing Gear as the fleet is just entering first wave of major overhaul requirements. It constitutes an important step in our strategy of solidifying TAT Technologies and subsidiaries as world leading service providers."
- TATT +3.1% in Tel Aviv.
- Fortune magazine profiles Michigan startup Sakti3, backed by GM (NYSE:GM), Itochu (OTCPK:ITOCF, OTCPK:ITOCY) and others. The company is looking to disrupt the power-storage industry using a solid-state lithium-ion battery that it says could double the energy density of today’s lithium-ion technology at one-fifth the cost.
- Tesla (NASDAQ:TSLA) relies on traditional lithium-ion batteries. CEO Elon Musk announced earlier this month he’s building a $5B plant near Reno that experts say could drive kilowatt-hour prices down to $250 from a current $500. Sakti3 claims its batteries will reach $100/kWh.
- But remember that many battery companies before Sakti3 have dazzled in theory only to fizzle in the marketplace; A123 (OTC:AONEQ) and Ener1 (NASDAQ:HEV) ended up bankrupt and sold off to the Chinese and Russians, respectively. "Sakti3’s big challenge is going to be the cost of manufacturing and the yield it’s going to get. It’s great to demonstrate a small battery in the lab, but making batteries bigger and making a lot of them is not trivial," one analyst says.
- Barron's says Vitamin Shope (NYSE:VSI) could rally 20% or more as an aging population and a greater focus on health drive demand for supplements and vitamins.
- VSI has increased same-store sales for the past 35 quarters, yet shares are -30% since Feb. 2013 over what some saw as overly aggressive growth tactics.
- VSI is the No.2 U.S. retailer of nutritional products, behind GNC Holdings (NYSE:GNC). Some think GNC may take a run at VSI, especially following recent news that CEO Tony Truesdale will retire next June.
- Barron's says containerboard makers International Paper (NYSE:IP), Rock-Tenn (NYSE:RKT), and Kapstone (NYSE:KS) could see shares rise 50-100% if they convert their mills into MLPs.
- In July, hedge fund Perry Capital said the firms could boost their stock prices by forming MLPs for many of their mills. Shares of the three failed to move higher since then, possibly due to investor worries about industry fundamentals.
- IP and RKT have said they would consider the idea. Note that Westlake Chemical (NYSE:WLK) has gained almost 50% since announcing its intention to create an MLP in April.
- Notwithstanding the MLP play, Barron's notes the U.S. containerboard industry has a cost advantage over most global rivals, and says the trio give investors "a chance to play an attractive, consolidating industry with shareholder-friendly managements."
- Just months before its recent C-suite shuffle, Clorox (NYSE:CLX) reportedly rebuffed a takeover offer from a rival.
- The spurned suitor valued Clorox at a 20% premium to its trading price.
- Logical suitors include Church & Dwight (NYSE:CHD), Procter & Gamble (NYSE:PG), Jarden (NYSE:JAH) and Unilever (UL, UN)
- In 2011 activist investor Carl Icahn offered $78/share for the company. Many believe the move was designed to tease out a strategic buyer. Shares closed Friday at $90.57.
- The bidding is now open on Energy Future Holdings' 80% stake in Oncor, a Texas transmission business that's being auctioned in a Chapter 11 proceeding.
- The deadline to pick a stalking horse (lead bidder) is Oct. 23. Competitors that make it to the second round must have their refined offers in by Nov. 21.
- Interested bidders may include NextEra Energy (NYSE:NEE), CenterPoint Energy (NYSE:CNP), and Iberdrola (OTCPK:IBDRY, OTCPK:IBDSF).