– Telecity plc (TCY LN) / Equinix (EQIX US): As flagged in our 05-Nov note, Telecopy announced the increased share ratio to reflect Equinix’ special scrip dividend: now Telecity shareholders will get 0.336 Eqix shares and Gbp 572.5 cash – based on latest prices this reflects offer price of GBp 1232 or spread of about GBp 41 (or 3.5%) – we would have 75% of our final position at these levels, as still believe very good chance that EC will clear the transaction on 13-Nov-15, so deal still have limited but very present case of closing in Jan-15. In unlikely situation that EC decides to launch a Phase 2, we would be aggressive setters should spread widen out above Gbp 80.
– Delhaize (DELB BB) / Ahold (AH NA): Ahold announces better than expected 3Q15 numbers with (small) beat on sales and operating income (Q3 sales €8.44bn vs €8.38bn est. & Op income €319m vs €306m). Says Delhaize deal on track for mid-2016 completion. Numbers beat came from both US and Netherlands with US margins up +30bp (vs -20bp in 1Q, +20bp in 2Q and flat expectations for 3Q), and Netherlands LFL came in at +4.0% (c3% 1H). Another comforting set of numbers by Ahold, we believe buying Delhaize (with market index) represents attractive post-event trade, as analysts and investors will start looking at pro-forma Ahold-Delhaize by 2016 (where we believe that synergies and timing is still being underestimated by the market).
– SABMiller plc (SAB LN) / Inbev (ABI BB): Most well flagged formal deal announcement came finally through today (after 2 PUSU extensions) – companies reach agreement on deal terms to create largest beer brewer in the world (responsible for about 1 out of 3 beers drank on this planet)- although main and most important details were already well known, couple of new data points. However nothing new of substance, so would continue to view as long-dated safe deal with closing in 3Q16 – and would always buy on any weakness over next 12 months. This deal is too strategic for Inbev, to not manage to close this deal.
SAB /ABI 2.7 announcement new data points:
– Targeted synergies of $1.4bn (on top of SAB own announced targeted numbers) : at low end of consensus range who had predicted anything between $1bn and 2.5bn
– SABMiller Shareholders will only be able to elect for the Partial Share Alternative in relation to their entire holding of SABMiller Shares and not part only: even further reduces chance that shareholders other than Santo Domingo and Altria will go for share alternative
– Agreed to the sale, conditional on Completion, of SABMiller’s interest in MillerCoors LLC to Molson Coors Brewing Company for USD 12bn
– Deal guidance closing at 2H16
– Deal structured by way of a three stage process involving: (i) a UK Scheme to which each UK Scheme Shareholder will receive 100 Initial Shares in Newco in respect of each of its SABMiller Shares; (ii) a Belgian law voluntary cash takeover offer by AB InBev for all of the Initial Shares pursuant to which SABMiller Shareholders who wish to elect to do so will receive the Cash Consideration in return for their Initial Shares and SABMiller Shareholders who wish to elect to receive the Partial Share Alternative will receive the cash element of the Partial Share Alternative and retain the relevant proportion of their Initial Shares, which will become Restricted Shares; and (iii) a Belgian law reverse merger of AB InBev and Newco under the Belgian Companies Code pursuant to which AB InBev Shareholders will become shareholders in Newco and Newco will be the surviving entity and the new holding company of the Combined Group