Tuesday, December 16, 2014

Wall Street Breakfast: Repsol To Buy Talisman Energy For $13B


  |  Includes: AAPL, ADM, AMZN, BA, CZR, DIS, GOOG, GOOGL, GTATQ, KO, OLMIF, PCLN
Economy
Despite hiking interest rates to 17% from 10.5% in an emergency midnight move, Russia's central bank has still failed to halt the ruble's collapse. The currency fell more than 10% yesterday, its worst intraday drop against the dollar since the 1998 financial crisis. Erasing earlier gains, the ruble last traded at 69.48 rubles per dollar, compared to 65.50 before the announcement.
Ukrainian Prime Minister Arseny Yatseniuk has appealed to the EU for urgent financial aid, saying that his government is doing all it can to fix a shattered economy. Brussels has so far refused to organize a donors' conference to help Ukraine until Kiev produces a credible development plan. Along with a falling currency, Ukraine has lost 20% of its economy due to Russia's annexation of Crimea and the pro-Russian separatist uprising in the east.
Japan is considering lowering its corporate tax rate by 2.5 percentage points next fiscal year to increase corporate competitiveness, the Nikkeireports. Prime Minister Shinzo Abe had been planning to lower the corporate tax rate over several years to around 20% from more than 35% currently. Meanwhile, Japanese stocks continued their slump for a second day, dropping to 6-1/2 week lows, as an ongoing selloff in crude oil boosted demand for the safe haven yen.
Stocks
Talisman Energy has confirmed that Repsol (OTCQX:REPYY, OTCPK:REPYF) plans to purchase it for $8.3B, or $8 per share in cash. Repsol said it would also take on $4.7B of Talisman (NYSE:TLM) debt as part of the deal, putting TLM's enterprise value at $13B. Talisman Energy's board has approved the offer and recommends that shareholders accept it. TLM +45.1% premarket.
Google has approached retailers about creating a "buy' button" for Google (GOOG, GOOGL) Shopping that would work much like Amazon's (NASDAQ:AMZN) one-click ordering feature, the WSJ reports. Until now, Google Shopping has only referred shoppers to merchants’ websites via links in search results. The new move would keep users on its own pages for longer, instead of sending them elsewhere.
GT Advanced modified its settlement with former partner Apple (NASDAQ:AAPL) yesterday to produce more near-term cash to support its emergence from bankruptcy. The new terms should be worth $50M more than the original settlement, giving GT Advanced (OTCPK:GTATQ) four years to sell off the equipment from the abandoned sapphire manufacturing venture to pay down Apple debt. The stock, which now trades over the counter, shot 48% higher on Monday to close at $0.41 per share following the news.
Alongside a 25% dividend increase, Boeing (NYSE:BA) has lifted its repurchase authorization to $12B, replacing the $4.8B which had been remaining. Buybacks for 2014 are now complete at $6B, and are expected to resume in the new year. Boeing's new dividend represents an 88% increase over the past two years. BA +2.7% premarket.
Coca-Cola repeated its forecast that profit growth next year may trail its long-term target. Full-year EPS will increase 4%-5% this year, excluding the effects of foreign currency exchange-rate fluctuations, and profit growth on that basis next year won't be "significantly different." Coca-Cola (NYSE:KO) has a long-term goal of boosting annual earnings by a high single-digit percentage rate.
Tencent has struck the latest in a string of music distribution deals, this time with Sony Music Entertainment (NYSE:SNE), as it teams up with labels to try to develop China's paid-for music market. In November, the company signed a similar music distribution partnership with Warner Music Group. Tencent (OTCPK:TCEHY) is also investing heavily in content for its online video site, with a China streaming deal with U.S. network HBO and video subscription service through Disney (NYSE:DIS).


Priceline's Booking.com unit has proposed giving hotel partners more leeway to offer cheaper prices on rival sites (something often prohibited by its current deals), in order to end probes from French, Italian, and Swedish antitrust regulators. Priceline's (NASDAQ:PCLN) proposal would still require hotel owners to sign price parity agreements to not undercut Booking.com on their own websites.
Royal Bank of Scotland has agreed to sell £4.8B ($7.5B) of Irish property loans to an entity controlled by Cerberus for as much £1.1B ($1.7B). RBS (NYSE:RBS) expects the sale to be completed in the first quarter of 2015. U.K. banks are selling real estate loan books as they repair balance sheets damaged during the financial crisis after property prices crashed and loans soured.
Standard Chartered is selling its Hong Kong-based consumer finance business to a consortium that includes Pepper Australia Pty and York Capital Management, in a deal estimated between $600M-$700M. The sale of the unit, called PrimeCredit, comes as Standard Chartered (OTC:SCDRF, OTCPK:SCBFF) tries to address share price underperformance and difficulties in markets such as South Korea.
Bringing an end to its year-long effort to offload its chocolate and cocoa businesses, Archer Daniels Midlands (NYSE:ADM) has agreed to sell its global cocoa business to Olam International (OTCPK:OLMIF) for $1.3B. ADM sold its smaller chocolate business to Cargill earlier this year for $440M. The deal is expected to close in the second quarter of 2015.
Caesars Entertainment Operating Company, the main operating unit of Caesars Entertainment (NASDAQ:CZR), says it will not pay $225M in bond interest payments in light of ongoing discussions with first lien bondholders. Caesars’ restructuring proposal would put its biggest unit into Chapter 11 proceedings by Jan. 15, allowing it to emerge as a REIT, although the negotiations have not led to a deal.

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Today's Markets:
In Asia, Japan -2% to 16755. Hong Kong -1.6% to 22671. China +2.3% to 3021. India -2% to 26781.
In Europe, at midday, London +1%. Paris +0.3%. Frankfurt +0.6%.
Futures at 6:20: Dow +0.3%. S&P +0.2%. Nasdaq +0.1%. Crude -2.5% to $54.54. Gold -0.7% to $1199.10.
Ten-year Treasury Yield -2 bps to 2.1%
Notable earnings before today's open: DRI, FDS, NAV
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