Sunday, March 16, 2014
- Consolidation continues in Europe's fragmented telecom sector, with Vodafone (VOD) inking a deal to buy Spanish cable company Ono SA for just over €7B, reports the WSJ. The U.K. player will assume Ono's €3.34B in debt and pay the rest in cash to Ono's shareholders. The planned Ono IPO approved just last week will obviously be preempted.
- Vodafone has struggled competing with Spanish telecoms offering bundled packages of high-speed home Internet, pay-TV, and cell phone service, but the Ono purchase will give it a much-needed fixed line operation.
- From Friday: A Vodafone/Ono deal is near.
- S&P 500 futures are off marginally as - to no one's surprise - the vast majority of voters in the Crimean referendum chose to secede from Ukraine and join Russia. Up next will be Western reaction should Russia move to annex the region. President Obama has authorized financial sanctions and EU ministers meeting tomorrow will discuss asset freezes and visa bans.
- The largest reaction is in precious metals, with gold ahead 0.6% to $1,387 per ounce - the highest since around Labor Day last year. Silver is up 0.6% to $21.55.
- Gold and silver ETFs: GLD, SLV, AGQ, IAU, PHYS, SIVR, USLV, ZSL, SGOL, UGL, DGP, GLL, DZZ, UGLD, DSLV, DGL, DBS, GLDI, DGZ, SLVO, AGOL, DGLD, TBAR, USV, UBG, GLDE, GYEN, GEUR, GGBP
- S&P 500 ETFs: SPY, IVE, SH, SSO, SDS, IVV, VOO, SPXU, UPRO, RSP, RWL, EPS, IVW, SPYG, RPG, RPV, SPYV, BXUB, VOOG, VOOV, TRND, SFLA, BXUC, BXDB, FTA
- The Commerce Department plans to give up oversight of the Internet Corporation for Assigned Names & Numbers (ICANN), the organization that manages Web names and address, when a contract expires between the government and ICANN in September 2015.
- The decision comes amid increasing suspicion about the U.S. amid the uproar caused by NSA spying revelations.
- ICANN plans to open up discussions later this month about a new oversight structure.
- France's government has banned Monsanto's (MON) MON 810 genetically modified maize even though the country's highest court has twice struck down similar measures.
- The agriculture ministry timed the latest diktat to prevent any sowing of the maize ahead of a debate on April 10 of a draft law that would ban genetically modified organisms.
- While France would like to ban GMOs in the EU, the bloc is divided on the issue.
- Total (TOT) could face prosecution in the U.K. over a seven-week gas leak at the company's Elgin platform in the North Sea in 2012.
- Total evacuated the platform and the neighboring Franklin and no-one was injured, but the incident prompted renewed fears about safety.
- Prosecutors in Scotland have received a government report into the leak and now have to decide whether to open criminal proceedings against Total for breaching regulations.
- A federal judge has left the annual rate at which Pandora (P) must pay songwriters for the use of their material at 1.85% of its revenue for 2011-2015.
- The American Society of Composers, Authors & Publishers (Ascap) wanted the figure to gradually rise while Pandora wanted it to drop to 1.7%, the rate for most commercial radio stations.
- The decision "further demonstrates the need to review the entire regulatory structure," said Ascap CEO John LoFrumento.
- Pandora faces a similar case against Broadcast Music Inc that is due to start later this year.
- Authorities raided Credit Suisse's (CS) headquarters in Germany last month as part of a probe into insider trading in shares of German solar maker Roth & Rau, which was bought by Swiss firm Meyer-Burger in 2011.
- Credit Suisse was Roth & Rau's adviser at the time, and while the Swiss bank is not one of the accused, one of its employees is reportedly under investigation for insider trading in connection with the deal. The worker has been suspended.
- Honda (HMC) is recalling almost 900,000 Odyssey minivans due to a possible fire risk related to a fuel pump that could crack and let gasoline leak in models from 2005-2010.
- The car-maker is not aware of any fires or injuries resulting from the problem.
- The action comes after Honda recalled 344,000 of its 2007-8 Odyssey minivans in November because of a breaking problem linked to a computer fault. Two months earlier, Honda recalled 318,000 2003-2004 Odyssey models due to an issue with the airbags.
- Alibaba has confirmed reports that it intends to carry out an IPO in New York - and not in Hong Kong - as it looks to become a "more global" and transparent company.
- The Internet giant could reportedly raise over $15B in the offering, which would make it biggest U.S. IPO ever by a Chinese company. Analysts reckon that the firm's market cap could top $130B.
- Alibaba hasn't decided which exchange it will list on, nor on a date.
- Credit Suisse, Deutsche Bank, Goldman Sachs and JPMorgan will play major roles in the IPO, while Citigroup will have a smaller part.
- Alibaba said that it might consider listing its shares in China in the future, although it didn't provide details.
- Alibaba investors Yahoo (YHOO) and Softbank (SFTBF) should be in line for a healthy bonanza from the IPO.
- The WSJ provides a primer on Alibaba's busines model, calling the company a "a mix of Amazon, eBay and PayPal with a dash of Google thrown in." Alibaba also has "some uniquely Chinese characteristics."
- ETF: IPO (PR)
- Sears (SHLD) plans to spin off Lands' End on April 4 in a move that will turn the clothing unit into an independent company that will trade on Nasdaq under the symbol LE.
- Sears' stockholders of record as of March 24 will receive 0.3 of a share in Lands' End for each share of Sears they hold.
- Prior to the spin-off, Lands' End will pay a $500M dividend to Sears funded by a new senior secured term loan.
- Lands' End is the latest asset that Sears is offloading amid rising losses and declining sales after it spun off Orchard Supply Hardware Stores in 2011 and Sears Hometown & Outlet Stores in 2012. (PR)
- Hartford Financial Services Group (HIG) is reportedly close to an agreement to sell its Japan operations to Orix Corp for $875M.
- The sale would be part of Hartford's efforts to limit liabilities connected to life and retirement plans that were issued in the past.
- Sterne Agee & Leach analyst John Nadel expects any sale to free up at least $600M that was supporting Hartford's Japanese obligations.
- GM (GM) has been sued for $6-10B over the faulty ignition switches that led the car-maker to recall 1.6M cars.
- Plaintiff lawyer Bob Hilliard said the lawsuit is about the fall in value of the vehicles rather than any deaths caused by the defect. GM has linked 12 deaths to the issue, although the Center for Auto Safety believes the number is much higher.
- Hilliard also believes that GM shouldn't be protected from any problems stemming from before its bankruptcy, with the argument being that the company knew about the defect as it was going through Chapter 11 but didn't reveal it. "If you are aware of potential exposure to litigation and you don't reveal it, that's fraud," he said.
- GM has started what it said will be an internal investigation into its decade-long failure to disclose the issue. However, the probe has already attracted criticism for using King & Spalding, the law firm that has defended the company in lawsuits over the fault, potentially causing major conflicts of interest.
- China will allow the yuan to trade 2% either side of the government-set parity rate against the dollar vs 1% until now.
- The move is another step in China's strategy to liberalize and internationalize the renminbi, and increase the role of the free market as part of a major economic overhaul. (PR)
- ETFs: FXI, PGJ, GXC, FXP, YINN, CYB, KWEB, HAO, CNY, ASHR, DSUM, CHIQ, TAO, CHIX, YANG, CQQQ, MCHI, PEK, QQQC, XPP, YAO, CHXX, CHII, FXCH, CHXF, YXI, ECNS, CHIM, CHIE, KFYP, FCA, TCHI, CHLC, CHNA, KBA
- Chinese micro-blogging service Weibo has filed to raise $500M in an IPO in the U.S.
- The company had 129M users at the end of last year vs Twitter's 241M, while 2013 revenue almost tripled to $188M. However, the firm made losses of $38M and warned of uncertainty due to Chinese regulation (read censorship).
- Weibo's filing comes ahead of an expected IPO submission from Internet giant Alibaba, which owns a 19% stake in Weibo. Sina (SINA) owns 78%.
- ETF: IPO
- Almost 2M Crimeans are going to the polls today in a referendum over whether to join Russia or to stay in Ukraine but take on a wide autonomous status that would facilitate a break-away later on.
- The measure doesn't offer maintaining the status quo and is expected to pass, although the West has said it doesn't recognize the referendum and has been preparing limited sanctions that will take effect on Monday.
- Ahead of the ballot, Russian troops entered parts of Ukraine that are outside Crimea for the first time, increasing fears that Russia will invade its neighbor.
- Russian companies have been withdrawing billions of dollars from western banks on concerns that any international sanctions could lead to an asset freeze, the FT reports. NY Fed data shows that in the week to March 12, foreign holdings of U.S. Treasurys at the Federal Reserve dropped by a record $105B to a 15-month low of $2.855T, prompting speculation that tied Russia to the move.
- Russian and Eastern European ETFs: RSX, RUSL, ERUS, RUSS, RSXJ, RBL, RUDR, GUR, ESR