– Syngenta (SYNN VX): WSJ reports that Dow Chemical and DuPont are in advanced talks over a potential $120bn merger. A deal is expected to be announced tomorrow and would be a merger of equals, followed by a break up of the combined group into three separate businesses housing the companies’ agricultural, materials and material sciences and specialty-products businesses. If true (and it looks increasingly so), this will put the entire rest of the agrichemical industry in huge flux, and will make it increasingly hard for Syngenta to be left alone (at the altar): it would increase the rationale for other players like Monsanto or the Chinese to step up and try again to acquire Syngenta. Dow-DuPont tie up also removes risk that Syngenta could have bought the DuPont ag business. We continue to like Syngenta below CHF 360. Downside: CHF 290-320, upside: CHF 400-470 (10-15% pa spread on CHF 470-500 cash offer).
– Ten Cate (KTC NA): Dutch financial press highlights that Dutch PE house Waterland was equally refused take over talks in April this year (Ten Cate responded to Waterland that it was not apropriate to hold take over talks then, but then announced a deal with Gilde 3 months later in July). This follows earlier reports this week that another house HAL was also refused access for talks. Further display on how flawed the Gilde offer process and Ten Cate’s Board’s fiduciary duties have been. Situation has become increasingly ugly/ binary, where EUR 24.50 cash offer seems dead: either bump to EUR 26 or deal break (although improving fundamentals and interest from other PE houses should mitigate the downside).
– Deutsche Wohnen (DWNI GY)/ Wincor Nixdorf AG (WIN GY): Clearstream issued a statement that foreign shareholders for Gagfah’s cash and shares offer would not be subject to the 26.275% capital gains tax: this statement now sets a strong precedent for future cash and shares offers where foreign investors should not fear a potential significant tax leakage on the cash portion of any offer. This very positive news removes large uncertainty/value obstacle for the other 2 current German cash and shares deals.