– Home Retail Group plc (HOME LN): Largely positive UK weekend press highlighting that i) talks are still very much progressing (Daily Mail stated that the two sides were locked in talks yesterday) and ii) that bid-ask might have been reduced to Gbp 150-160/165 (with largest Home Retail’s shareholders Schroders and Toscafund are said to have pushed Home Retail into negotiating with Sainsbury’s, with Schroders believed to be willing to accept 165p). Although break risk will be the highest in the next 2 days (ahead of tomorrow’s 5pm deadline), we still believe (and have been consistently stating) that companies agree to GBp 160-170 cash and shares offer (or at least agree to an extension – which would equally be highly positive) given a) significant pressure for Home Retail’s CEO to strike a deal (or facing risk of getting voted out by Home’s shareholders), b) Sainsbury’s share price pricing in and reflecting Sainsbury’s not overpaying, and c) shrinking bid-ask. Would be aggressive buyers up to Gbp 145.  Any recommended deal to be trading 4-6% pa on 3-4 month timetable – implying 1-2% gross spread. 

– Kuoni Reisen Holding AG: Sunday Times article stated that EQT, the bidder who won the auction for Kuoni, was said to be planning a £800m raid on Hotelbeds to merge it with Kuoni- as Tui, the owner of the Thomson and First Choice holiday brands, had put Hotelbeds up for sale last year. Interesting fact relates to disclosure of price (£850m) that article states that EQT has paid for Kuoni – although there might be some questionability of substance to that number, this would be first time that public press suggested a price level, a £850m would translate in about CHF 310 cash per share for Kuoni, and would indeed represent a take under vs Kuoni currently trading at CHF 327. Remain 1/3 of our position which we initiated in low 280s.