– No new situations
– Rexam plc (REX LN) / Ball Corp (BLL US): EC extended its deadline for Phase II decision by 10 working days till 23 December – this is second occasion on which EC extended the deadline under Article 10(3)2, which allows parties and officials to prolong the review duration at any time, with the agreement of the notifying parties. Although these extensions are normal modus operandi when parties believe they will need more time to assess and solve any case, an extension so late in Phase 2 (just after companies received their SO and at a time when we expect large scale remedies), might be marginally perceived as negative as it looks case has become increasingly complex. Still expect negative headline before potential clearance. Wait and see approach and add/buy spread above Gbp 70 (terms: 1 REX = Gbp 407 + 0.0457 BLL).
– SABMiller plc (SAB LN) / Anheuser-Busch Inbev (ABI BB): Inbev reported mixed 3Q15 numbers , but on balance the positives outweigh the negatives: 3Q headline miss at EPS of -16% which was driven almost entirely by higher tax and financial items. However, underlying trading was stronger with volumes +1.5% (consensus +0.9%), driven by better-than-expected performance in Mexico, Brazil and N America (although impacted by phasing of shipments in the US) and revenue per hl growth also stronger than expected. Some small tweaks to guidance but broadly unchanged. No update on SAB deal. InBev remains very much long pension trade which will be high FCF generating machine once SAB deal will be completed and integrated. Buy ABI in low EUR 100s. Buy SAB in low GBp 3900s.
– BG Group (BG/ LN): BG reported strong financial and operational 3Q15 results with EBITDA of $1,244m beating consensus by 9%, driven largely by better upstream volumes (716kboe/d vs consensus 682kboe/d). Production was strong given early start-up of FPSO #6 in Brazil (country production has peaked at 175kboe/d vs 3Q average of 158kboe/d), deferred maintenance to 4Q and FY16 (most notably in the UK) and better uptime (Brazil, Australia, UK). The key comes from BG’s strong operational progress in its main geographies that interests Shell (particularly Brazil and Australia). With Ben van Beurden’s comments yesterday that Shell is firmly committed to the BG transaction and will use the deal as a platform to lower capital intensity, we BG/Shell spread above GBp 100 remains very attractive spread (terms: 1 BG/ LN = GBp 383 + 0.4454 RDSB LN).