Frontrunning: March 17

Frontrunning: March 17
  • Putin Is No Mad Man to Russians as Power Play Trumps Economy (BBG)
  • Alibaba picks U.S. for IPO; in talks with six banks for lead roles (Reuters)
  • Russia hearts selling German energy: Billionaire Fridman’s L1 Buys RWE Unit for $7.1 Billion (Bloomberg)
  • Malaysia plane search straddles continent as police focus on crew (Reuters)
  • Saudi Crown Prince’s visit to China set to bolster investment (Al-Awsat)
  • Bugatti-Driving 26-Year-Old Tied to Penny-Stock Website (BBG)
  • Vodafone agrees $10 billion deal to buy Spain’s Ono (Reuters)
  • The Hidden Rot in the Jobs Numbers (WSJ)
  • SocGen Ex-Trader Kerviel Walks to Forget Loss as Judgment Looms (BBG)
  • U.S. Banks’ $75 Billion Payout at Stake in Fed Tests (BBG)
  • Goldman Sachs to RenCap Poach Dubai Equity Bankers on Rally (BBG)
  • France limits vehicle use in Paris amid soaring pollution (France 24)
  • Statistician Nate Silver’s ESPN Site Debuts in Blog Glut (BBG)

Overnight Media Digest


* More than 95 percent of Crimeans voted to break away from Ukraine and rejoin Russia, according to preliminary results, in a referendum that raises the stakes in the most acute East-West confrontation since the Cold War.

* Strange alliances have cropped up since armed militants overtook the city of Fallujah early this year and placed it under the control of the city’s Sunni majority. That majority may hate al Qaeda and its rigid theocratic mores – but they despise Nouri Al Maliki, the Shiite prime minister, even more.

* Vodafone Group Plc has reached an agreement with shareholders of Ono to buy the Spanish cable company for just over 7 billion euros ($9.73 billion) including debt.

* German utility RWE AG intends to sell its oil and gas production unit to Russian billionaire Mikhail Fridman for more than $7 billion.

* Senate lawmakers released their first draft of a bipartisan bill Sunday spelling out their proposal, previously announced last week, to eliminate Fannie Mae and Freddie Mac. The legislation replaces the mortgage-finance giants with a new system in which the government would continue to play a potentially significant role insuring U.S. home loans.

* American Financial Group Inc plans to withdraw its takeover bid for National Interstate Corp after a judge signaled he would block the deal and parties to a lawsuit over it were unable over the weekend to resolve their differences, an AFG spokeswoman confirmed.

* Hours after Chinese e-commerce giant Alibaba Group Holding Ltd kicked off the process for an IPO in New York, the head of the Hong Kong stock exchange, once the front-runner for the deal, urged regulators to allow changes of rules to accommodate new listings.

* Toyota Motor Corp has suspended operations at two auto assembly plants in India, following the failure of wage negotiations with the union, a company spokesman said Monday.

* Long frustrated in efforts to collect payments from some users of its software in China and other emerging markets, Microsoft Corp has enlisted help from an unlikely set of allies: attorneys general in states such as Louisiana and Oklahoma.

* Encana Corp is in advanced talks to sell its Wyoming natural-gas fields to private-equity firms Carlyle Group LP and NGP Energy Capital Management LLC for about $2 billion, according to people familiar with the matter.


Vodafone has agreed to buy Spanish cable company Ono for 7.2 billion euros ($10.03 billion), ending plans for private equity backed Ono to list in Madrid, people with knowledge of the negotiations said.

Barclays, Citigroup and Royal Bank of Scotland have frozen bonuses across many of their foreign exchange trading teams as internal investigations scrutinise the possible manipulation of key currency benchmarks.

Germany’s debt-burdened utility RWE AG has agreed the sale of its oil and gas production arm at an enterprise value of 5.1 billion euros to a group of investors led by Russian tycoon Mikhail Fridman.

Italy’s largest bank by assets UniCredit is planning to sell or float its Pioneer Investments asset management business as part of a wider disposal programme, people familiar with the matter said.

Labelux, the owner of Jimmy Choo, is considering a stock market listing of the luxury shoe business that could value it at 1 billion pounds, according to people close to the company.


* British telecommunications company Vodafone has reached a deal to buy Spanish cable company Ono for about $10 billion, according to two people familiar with the matter. The deal is expected to be announced Monday morning and values Ono at about 7.2 billion euros, including the assumption of debt.

* German utility RWE said it had reached a preliminary agreement to sell its oil and natural gas subsidiary RWE Dea to Russian billionaires Mikhail Fridman and German Khan for 5.1 billion euros, or roughly $7 billion.

* Silicon Valley, not content with changing how retailers, taxi companies and hotels do business, is taking its disruptive ways into outer space. Several young companies with roots in Silicon Valley are trying to elbow their way into a business long dominated by national governments and aeronautics giants like Boeing.

* More than two dozen attorneys general sent letters on Sunday to five of United States’ largest retailers, encouraging them to stop selling tobacco products in stores that also have pharmacies. The letters were sent to Rite Aid, Walgreen , Kroger, Safeway and Walmart, five companies that are among the biggest pharmacy retailers in the country.

* China’s online commerce giant, Alibaba Group , confirmed early on Sunday that it planned to begin the process of becoming a public company in the United States. Analysts speculate that Alibaba could fetch a valuation well north of $130 billion. Alibaba said that at some point, it might be open to a dual listing in China.

* Simbol Materials is building a plant that will use a novel extraction process, in the hopes that it can provide the lithium needed for the batteries in Tesla’s cars.

* Guinness USA has dropped its sponsorship of the St. Patrick’s Day parade in New York, joining protests of a ban on public expression of gay pride. The decision, brought about by the event’s ban on public expression of gay pride, was applauded by gay rights groups that had threatened to boycott the company’s products.



– Shanghai Pudong Development Bank Co Ltd will likely acquire Shanghai Trust as part of the Shanghai government’s plan to consolidate the city’s financial industry, sources said.


– China International Marine Containers (Group) Ltd plans to invest 7 billion yuan in a production base in southern Guangdong province to make logistics equipment.


– Singapore-based bakery chain BreakTalk said it has isolated all of the ingredients bought from a Hangzhou-based supplier after China Central Television accused the supplier of selling out-of-date goods.


The Telegraph


Russian oligarchs with extensive interests in Britain have been attempting to lower the risk to their assets from sanctions, which it is expected the European Union will impose over the Ukraine crisis.


Vodafone’s 6-billion-pound ($9.98 billion)acquisition of Ono could be completed as early as next week after it moved closer to an agreement with the Spanish operator’s shareholders.


Bernie Ecclestone has revealed that he will sell his 5.3 percent stake in Formula One when its controlling shareholder, the private equity firm CVC, exits the business.

The Guardian


Manufacturers are planning to hire workers at the fastest rate in more than a decade in the coming months, as recovery in Britain’s factories becomes more firmly entrenched, giving Finance Minister George Osborne some positive news before Wednesday’s budget.


Primark is to pay out a further $10 million in compensation to victims of the Rana Plaza factory collapse in Bangladesh weeks before the anniversary of the disaster in which more than 1,100 garment workers lost their lives.

The Times


Rio Tinto has bucked the trend set by its FTSE-100 peers and decided not to put its audit contract on the market this year, despite increasing pressure from domestic and European rulemakers to do so.


British Finance Minister George Osborne is considering forcing banks to refer credit-starved small and medium-sized companies to alternative providers of finance.


Smiths News has shifted its focus to distributing a variety of products, including books and paper towels for hospitals, as it seeks to reduce its dependence on the newspaper and magazine industries which are generating fewer editions as more readers move online.

Fly On The Wall 7:00 AM Market Snapshot


Domestic economic reports scheduled for today include:
Empire State manufacturing survey for March at 8:30—consensus 6.5
Industrial production for February at 9:15–consensus up 0.2%
NAHB housing market index for March at 10:00–consensus 50



Alon USA Partners (ALDW) upgraded to Buy from Neutral at Citigroup
Ashford Hospitality (AHT) upgraded to Outperform from Market Perform at JMP Securities
Baker Hughes (BHI) upgraded to Buy from Neutral at Goldman
CommVault (CVLT) upgraded to Buy from Neutral at Mizuho
Lorillard (LO) upgraded to Buy from Neutral at Goldman
Martin Midstream Partners (MMLP) upgraded to Buy from Neutral at UBS
Patterson-UTI Energy (PTEN) upgraded to Conviction Buy from Neutral at Goldman
Post Holdings (POST) upgraded to Buy from Neutral at SunTrust
Regeneron (REGN) upgraded to Buy from Neutral at Citigroup
STAAR Surgical (STAA) upgraded to Buy from Hold at Canaccord
Siemens (SI) upgraded to Buy from Neutral at BofA/Merrill
Siemens (SI) upgraded to Overweight from Neutral at JPMorgan
TC PipeLines (TCP) upgraded to Buy from Neutral at UBS
Watts Water (WTS) upgraded to Buy from Hold at BB&T


Atwood Oceanics (ATW) downgraded to Buy from Conviction Buy at Goldman
Cameron (CAM) downgraded to Neutral from Buy at Goldman
Constellation Brands (STZ) downgraded to Neutral from Buy at Goldman
Extra Space Storage (EXR) downgraded to Neutral from Outperform at Macquarie
General Dynamics (GD) downgraded to Equal Weight from Overweight at Barclays
Gray Television (GTN) downgraded to Market Perform from Outperform at Wells Fargo
Harris (HRS) downgraded to Underweight from Equal Weight at Barclays
Huntington Ingalls (HII) downgraded to Underweight from Equal Weight at Barclays
Kinder Morgan Management (KMR) downgraded to Market Perform at Wells Fargo
LIN Media (LIN) downgraded to Market Perform from Outperform at Wells Fargo
National Oilwell (NOV) downgraded to Neutral from Buy at Goldman
Nexstar (NXST) downgraded to Market Perform from Outperform at Wells Fargo
Sinclair Broadcast (SBGI) downgraded to Market Perform from Outperform at Wells Fargo
Sovran Self Storage (SSS) downgraded to Neutral from Outperform at Macquarie
VeriSign (VRSN) downgraded to Market Perform from Outperform at Cowen


Guaranty Federal Bancshares (GFED) initiated with an Outperform at Raymond James
RPX Corp. (RPXC) initiated with an Outperform at Cowen
WidePoint (WYY) initiated with a Buy at B. Riley


Sucampo (SCMP), Takeda said Amitiza NDA will not be filed in second half of 2014
Alibaba said it will begin U.S. IPO process
Honda (HMC) recalling almost 900,000 Odyssey minivans in U.S on possible fuel leakage
American Financial Group (AFG) terminated tender offer for National Interstate (NATL)
SINA’s (SINA) Weibo filed preliminary prospectus to raise up to $500M in U.S. IPO
Sears (SHLD) said board approved separation of Lands’ End business
Vodafone (VOD) agreed to acquire Ono for total consideration of EUR7.2B


Companies that beat consensus earnings expectations include:
Intercept (ICPT)

Companies that missed consensus earnings expectations include:
Sterling Construction (STRL), Harvest Natural (HNR), Coastal Contacts (COA)


Royal Bank of Scotland (RBS) in talks to resume paying dividend, FT reports
Qualcomm (QCOM), Intel (INTC) threatened as upstarts grab tablet share, Bloomberg says
Nissan (NSANY) could meet EV sales target before 2020, WSJ reports
Encana (ECA) in talks to sell Jonah Hill fields to Carlyle (CG), NGP for $2B, WSJ reports
BHP Billiton (BHP) gets closer to share buyback program, Sunday Times says
Hertz (HTZ) nears spin-off of construction equipment rental business, FT says
Yahoo (YHOO) redesigning Flickr again, sources say, Re/code reports
Toyota (TM) suspends operations at two plants in India, WSJ reports
Jos. A. Bank (JOSB) is no bargain, Men’s Wearhouse (MW) shares could drop 20%
Fresh Del Monte (FDP) shares could rise from Chiquita (CQB), Fyffes merger
Uncertainty, spill cleanup could cause sell-off of Matson (MATX) shares
Liberty Media (LMCA) wise to split into two stocks and drop Sirius (SIRI) bid, Barron’s says
Praxair (PX), FEI Co. (FEIC), Red Hat (RHT), EMC (EMC) should benefit from reinvestment


Orchid Island Capital (ORC) files to sell 4M shares of common stock
Tableau (DATA) files to sell $345M of Class A common stock
The Dixie Group (DXYN) files to sell $75M of common, preferred stock
YRC Worldwide (YRCW) files to sell 20.1M shares for selling stockholders

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