– Koninklijke Ten Cate (KTC NA): Ten Cate says based on preliminary reports, it expects to have generated FY15 sales of approx €1.16bn implying organic growth of about 5% vs €1.042bn in 2014 and EBITDA (excl exceptional items) of approx €97.5mn or about 15% EBITDA growth vs €85m in 2014. In October 2015, TenCate had indicated to expect full-year organic sales growth of approximately 4%, similar to 2014, and EBITDA (excluding exceptional items) of approximately € 95 million. Although obviously a touch better than originally stated, these numbers hardly justify further stubborn opposition to Gilde’s 30%+ premium current EUR 24.60 cash offer (valuing Ten Cate around 9x 2015 EBITDA). After allowing for marginally better fundamental performance and using Dutch AEX index as reference index for downside calculation, we would obtain a downside break price of EUR 16-18 (or about 25-30% downside). Given a) consortium having already obtained 60.55% shareholder acceptances at 16-Dec first closing date; b) higher tender incentives with large and accelerating downside (since 16-Dec first closing date, downside has increased by about 5-7%); c) presence of at least 5-10% (weak hand) arbs (who have had chance to accumulate more since first closing date); and d) option of any bump will be completely gone (although notion of bump remains till 14 January deadline – with another potential extension); it looks increasingly that Gilde consortium will be getting (much) higher than required 66.67% shareholder acceptances, and will be successful in its offer.
– BG Group plc: Besides crude price further cratering towards $30 levels, the only marginal news flow relates to Standard Life’s split personality as owner of both BG and Shell shares, where Sky reported that Standard Life will vote its 1.3% BG stake in favour of the deal, despite its public opposition and call for Shell to renegotiate. Although very hard to read anything besides fact that Standard Life might be confident that Shell shareholders will approve the deal (and has luxury to vote against and get some marketing points for being defender of shareholder fiduciary/stewardship duties). Remains core position.
– Wincor Nixdorf (WIN GY): Bidder Diebold filed amended S-4, stating i) that it already filed with FTC with initial waiting period to expire on February 18, 2016 (while stating that Diebold and Wincor Nixdorf have been engaging in customary discussions with the DOJ about the proposed transaction’s lack of anticompetitive effects); and ii) that individual country approvals will be required from Austria, Poland, Portugal, Slovakia and Spain (and/or the European Commission, if and to the extent the European Commission has authority pursuant) and Brazil, China, Colombia, Morocco, Russia, Turkey, and Ukraine. No real update on timing, besides putting deadline to 21 November 2016 by which it wants to have obtained all regulatory approvals. Filing also confirms that ‘Wincor Nixdorf shareholders that are not German tax residents and holding the shares not as part of business assets in Germany are not subject to German taxation with the cash component of the exchange offer’. Although this deal somehow stays below the radar and the European individual country approvals process is better than EC ownership of the deal, this one remains long dated 9-12 month deal, with expected extended reviews (including in US). With spread more than 14%, there is limited near-term downside in setting this one up now – main next catalyst 18 February on FTC process.
– Bouygues SA (EN FP) / Orange SA (ORA FP): Bloomberg quotes Orange’s CEO Stephane Richard that Orange SA will walk away from a deal to buy Bouygues SA’s mobile-phone unit if it’s too risky to execute. He said he’s evaluating a potential Bouygues accord based on whether it creates value for Orange, puts jobs in jeopardy, and how risky it is to pull off. He cited regulatoryhurdles and the complexity of structuring a deal as potential obstacles. As previously indicated, there remains very significant execution risk on a tie up between Bouygues and Orange.