Wednesday, July 29, 2015
- VimpelCom (NASDAQ:VIP) finished a steady climb today to close up 15.8%, again on (new) chatter that it might be close to merging its Italian operation, Wind Telecomunicazioni, with Hutchison's (OTCPK:HUWHY) Three Italia to create the country's largest mobile company.
- Talks between the two have been going on for well over a year and they have been reported to be close to a deal several times, though Bloomberg is reporting that a deal could be announced in the coming week, which could include a capital increase of €2B.
- Two months ago, talk centered on an equal venture for the two companies and an IPO for the combination, which would have more than 30M customers. Wind and Three posted about €2B in combined EBITDA for 2014, which could mean a deal worth $18B at standard multiples.
- Hong Kong-based Hutchison has been trying to pursue European telecom consolidation, and the Italy talks mark a critical foothold in the continent if it's to be part of that.
- Previously: VimpelCom, Hutchison consider IPO for Italy unit merger (May. 27 2015)
- Previously: VimpelCom, Hutchison Italy merger talk focuses on even split (May. 13 2015)
- Previously: Bloomberg: VimpelCom, Hutchison agree on Italy merger management (May. 12 2015)
- Previously: Italy deal key to Hutchison Whampoa's European telecom hopes (Mar. 13 2015)
- Exelon (EXC +0.5%) is higher after reporting Q2 earnings and revenues that were improved from a year ago and surpassed analyst estimates.
- EXC recorded a $143M hedging-related gain in the quarter, after taking an $8M hedging-related hit in last year's Q2, the gain added $0.16 to EPS, whereas hedging activity shaved a penny off the prior-year period’s result.
- Weather was mostly a negative factor in Q2, especially in the ComEd segment, which services nearly 4M customers in Illinois and is EXC’s largest, as profit fell 11% Y/Y to $99M.
- Q2 profit at the company’s PECO segment, which provides electricity and natural gas to ~2.1M customers in southeastern Pennsylvania, fell 17%.
- EXC also says it and Pepco Holdings have extended the termination date for EXC's proposed $6.8B takeover to Oct. 29 from July 29; the merger still needs approval from the Public Service Commission of the District of Columbia.
- Bombardier (OTCQX:BDRBF +7.6%) says it is sticking with a tentative plan for an IPO of its rail business in Q4, and refutes an earlier report of merger talks with Siemens (OTCPK:SIEGY +0.2%) over the unit.
- An IPO or sale of the rail unit would help Bombardier pare debt that ballooned to more than US$9B during development of the CSeries jet, which has been delayed by more than two years and is ~US$2B over budget.
- "Qualcomm (QCOM +0.2%) is very likely to be some form of actor in the consolidation of the semiconductor industry," CEO Steve Mollenkopf tells Bloomberg. “The timing of which is always the debate.”
- The remarks come a week after Qualcomm said it would (following pressure to do so from Jana Partners) consider a breakup, along with other strategic options. There has been some speculation Qualcomm's chip unit (QCT) could merge with Intel (has been seeing heavy mobile division losses) following a spinoff; antitrust regulators would closely vet such a deal. Others have argued Qualcomm could by an RF chipmaker such as Skyworks or Qorvo, or (with the goal of expanding into the data center) acquire an ARM server CPU developer.
- Qualcomm hasn't exactly been averse to M&A in recent years. Noteworthy acquisitions since 2011 include Atheros (Wi-Fi chips), Wilocity (WiGig chips), and CSR (Bluetooth/Wi-Fi chips).
- Update: Some other Qualcomm news of interest: Mollenkopf discloses he bought 15,815 shares yesterday at $63.31, and CFO George S. Davis discloses he bought 8,100 shares yesterday at $62.34.
- After beating Q2 EPS estimates and slightly missing on revenue, NCR is reiterating full-year guidance for revenue of $6.525B-$6.675B and EPS of $2.60-$2.80 (consensus is at $6.54B and $2.65). However, free cash flow guidance has been hiked by $25M to $350M-$400M.
- Q3 revenue guidance of $1.63B-$1.65B is below a $1.67B consensus. A strong dollar is expected to have a 2% impact on 2015 revenue growth.
- Meanwhile, when asked on the earnings call (transcript) about NCR's strategic review, CEO William Nuti stated the review is ongoing and expected to "conclude in the near future." The remarks come amid a flurry of M&A reports.
- Cloud/SaaS revenue rose 8% Y//Y in Q2 to $135M. However, hardware revenue fell 2% to $622M, software license/maintenance revenue 2% to $168M, professional services 8% to $137M, and other services 6% to $542M. Forex had a 7% impact on total revenue growth. Within verticals, financial services revenue fell 7%, retail was flat, hospitality up 1%, and emerging industries up 2%.
- Q2 results, PR
- Germany's K+S (OTCQX:KPLUY) has asked economy minister Sigmar Gabriel for help in resisting an unwanted takeover approach by Potash Corp. (NYSE:POT), and has discussed the option of German state bank KfW taking a stake in K+S, the Handelsblatt newspaper reports.
- KfW could take a blocking minority stake but Germany's economy ministry and finance ministry are doubtful they could come up with a "common good" justification for such an intervention, according to the report.
- K+S earlier this month rebuffed POT's proposed bid of €41/share as too low.
- Bombardier ([[BDRAF, OTCQX:BDRBF) may combine its train business with Siemens' (OTCPK:SIEGY) rail unit, sources told WSJ, stating that the Canada-based company is simultaneously preparing to float a minority stake of its transportation unit.
- The news comes some months after Siemens downplayed the idea that it could combine its rail assets, which include trains, trams and signaling technology, with those of France's Alstom (OTCPK:ALSMY).
- Belgian chemical group Solvay (OTCPK:SVYZY) has agreed to buy Cytec Industries (NYSE:CYT) for $6.4B, including debt, to become the world's second-largest maker of aerospace composite materials.
- The Belgian group will finance the transaction with a €1.5B ($1.66B) rights issue, €1B of hybrid instruments and a senior debt issue.
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