- Jackson Hole Theme: Labor Markets Can’t Take Higher Rates (BBG), or anything else for that matter
- Kidnappers free American missing in Syria since 2012 (Reuters)
- More unpatriots: Burger King in merger talks with Canada’s Tim Hortons (Reuters)
- California Quake to Cost Insurers Up to $1 Billion, Eqecat Says (BBG)
- Congo declares Ebola outbreak in northern Equateur province (Reuters)
- Missouri Governor Defends Ferguson Prosecutor (BBG)
- Kuroda Douses Japan Stimulus Expectations (WSJ)
- London Jihadi Call Vies With Banks in Canary Wharf Shadow (BBG)
- Netanyahu Signals Expansion of Air Attacks in Gaza (WSJ)
- Libya’s Islamist Militias Claim Control of Tripoli (WSJ)
- Iceland Monitors Tremors After Retracting Eruption Alert (BBG)
- Dutch Rage Over MH17 Strengthens Rutte in Putin Standoff (BBG)
- Roche to Acquire InterMune for $8.3 Billion (WSJ)
- McDonald’s Faces ‘Millennial’ Challenge (BBG)
- Syria says ready to cooperate in anti-terror fight (Reuters)
Overnight Media Digest
WSJ
* Burger King is in talks to buy Canadian coffee-and-doughnut chain Tim Hortons Inc, a deal that would be structured as a so-called tax inversion and move the hamburger seller’s base to Canada. (http://on.wsj.com/1pvlPWa)
* The extremist group Islamic State captured a major air base in northeastern Syria, marking another strategic gain and an end to any presence of Syrian regime forces in the province of Raqqa. (http://on.wsj.com/1t5lZWN)
* Roche Holding AG agreed to buy biotech company InterMune Inc for $8.3 billion in cash, the biggest acquisition in years for the Swiss pharmaceutical giant. (http://on.wsj.com/1tuYCEB)
* Federal Reserve officials are signaling they are on track to start slowly raising interest rates next year, a shift that means a delicate balancing act for investors.(http://on.wsj.com/1vdlKcK)
* Valeant Pharmaceuticals International Inc and William Ackman are seeking a judge’s help to speed up their $53 billion hostile takeover bid for Allergan Inc in hopes of overturning the Botox maker’s board before the company can strike a deal of its own. (http://on.wsj.com/XKZMAn)
* Best-selling novel “The Goldfinch” is giving Hachette Book Group a much-needed boost this summer as the publisher weathers the fallout from a lengthy e-book contract dispute with Amazon.com Inc. (http://on.wsj.com/1vdmvmk)
* Goldman Sachs Group Inc is likely to bestow its prestigious partner designation, which often comes with millions of dollars in annual pay, on no more than 70 employees, the Wall Street Journal reported, citing people familiar with the matter.(http://on.wsj.com/1qEPfxb)
* General Motors Co is considering whether to delay the expansion of its Russian plant near St. Petersburg amid lackluster sales and weakening consumer sentiment.(http://on.wsj.com/1ru8srT)
* Private-equity firm Oak Hill Capital Partners reached a deal over the weekend to acquire Berlin Packaging LLC for $1.43 billion including debt, said people familiar with the matter.(http://on.wsj.com/1smGaeK)
* President Obama faces pressure at home and in the Middle East to quickly step up strikes at Islamic State militants, but also reluctance from some within his own party and European allies to do so.(http://on.wsj.com/1qeHoKj)
* Engine Capital LP, which along with a partner controls more than 1 percent of ANN Inc stock, believes a strategic or private-equity buyer would be willing to pay between $50 and $55 a share for the women’s retailer, 47 percent above Friday’s closing price of $37.52 at the high end, according to people familiar with the matter.(http://on.wsj.com/YSWew3)
NYT
* Companies like Box Inc <IPO-BOX.N>, Dropbox and Hightail pioneered a new kind of internet service that allows people and companies to store all kinds of electronic files in an easy-to-use online locker. But as often happens, the much bigger companies like Amazon.com Inc and Google Inc liked the idea so much they decided to do the same thing, at a much lower price. To tackle the price issue, Box is trying to cater to special data storage needs, Hightail is trying to do something similar for customers like law firms, and Dropbox is trying to make sure that its consumer-minded service stays easier to use than what the big guys provide. (http://nyti.ms/1tJr3g8)
* Burger King Worldwide Inc may be home of the Whopper. But the fast-food chain may soon start calling Canada its new corporate residence. The restaurant operator said on Sunday that it is in talks to buy Tim Hortons Inc, the Canadian donut-and-coffee chain, in a potential deal that would create one of the world’s biggest fast-food chains. (http://nyti.ms/1qEV2D7)
* The Swiss drug maker Roche Holding AG agreed on Sunday to buy InterMune Inc, which sells a drug to treat a deadly lung disease, for $8.3 billion, as pharmaceutical companies continue to seek new products to bolster their offerings. (nyti.ms/1zpCn2L)
* Goldman Sachs Group Inc is paying its largest bill yet to resolve a government lawsuit related to the financial crisis. The bank said on Friday that it had agreed to buy back $3.15 billion in mortgage bonds from Federal Home Loan Mortgage Corp and Federal National Mortgage Association to end a lawsuit filed in 2011 by the Federal Housing Finance Agency, the federal regulator that oversees the two mortgage companies. The agency estimates that Goldman is paying $1.2 billion more than the bonds are now worth. (http://nyti.ms/VK6epu)
* Richard Handler, the chief executive of the Leucadia National Corp, will join the board of a new hedge fund company, Folger Hill Asset Management LLC, run by a former executive of SAC Capital Advisors, according to a regulatory filing on Friday. (http://nyti.ms/VNnGt6)
* Vogue is expected to unveil a new website on Wednesday, its latest attempt to reflect the magazine’s ethos online. Both the editor-in-chief, Anna Wintour, and the creative director for digital, Sally Singer, acknowledge that Vogue’s site has yet to fulfill its potential and hope that this revamping represents a deeper change in what it offers web and mobile readers. (http://nyti.ms/1mFXDvr)
* The German government has approved the sale of the utility RWE AG’s oil and natural gas subsidiary, RWE Dea, to a team of Russian investors, the company confirmed on Friday. (http://nyti.ms/1pWPbfZ)
* The City of Chicago and two California counties are challenging the drug industry’s way of doing business, contending in two separate lawsuits that “aggressive marketing” by five companies has fueled an epidemic of addiction and cost taxpayers millions of dollars in insurance claims and other health care costs. The lawsuits assert that drug makers urged doctors to prescribe the drugs far beyond their traditional use to treat extreme conditions, such as acute pain after surgery or injury or cancer pain, while underplaying the high risk of addiction. (http://nyti.ms/1zpJdFs)
* Medicare, which has been assigning hotel-style ratings to nearly every nursing home in the country for the last five years, has assigned a five-star rating to Rosewood Post-Acute Rehab, a nursing home in this Sacramento suburb. But an examination of the rating system by The New York Times has found that Rosewood and many other top-ranked nursing homes have been given a seal of approval that is based on incomplete information and that can seriously mislead consumers, investors and others about conditions at the homes. (http://nyti.ms/1zpP8dw)
* Now Motif Investing, a new online broker backed by JPMorgan Chase & Co, has started a product that lets investors buy stock in 25 companies viewed as potential inversion targets. (http://nyti.ms/1smRlnD)
Canada
THE GLOBE AND MAIL
** The Toronto Port Authority has won a key early showdown with the city on the controversial issue of expanding the island airport to allow jets. City staff are participating in an environmental assessment for the expansion without the port authority having signed off on limits on the numbers of passengers and aircraft. This comes only months after Toronto’s deputy city manager warned that agreement on that issue was “essential for moving forward.” (http://bit.ly/1mH1acQ)
** Colder summer weather across Ontario has put pressure on tourism-dependent businesses that rely on July and August to generate the bulk of their profits. The bad weather has also had an impact on the boating industry in Ontario and the marinas and gas bars that support them. (http://bit.ly/1tvz6io)
Reports in the business section:
** Bank of Canada Governor Stephen Poloz wants to make something perfectly clear: When the Federal Reserve starts raising interest rates, Canada’s central bank won’t necessarily follow immediately. “The main thing people should understand is that our policy is quite capable of being fully independent, as it has been these past few years,” Poloz said in an interview at the annual gathering of central bankers and economists at Jackson Hole, Wyoming, over the weekend. (http://bit.ly/1nsPieJ)
NATIONAL POST
** Prime Minister Stephen Harper is “on the wrong side of history” in his refusal to launch a public inquiry to study the high number of missing and murdered aboriginal women, federal Liberal Leader Justin Trudeau said on Saturday. Trudeau was in Moncton, New Brunswick, where he said the recent case of Tina Fontaine, a 15-year-old aboriginal girl found dead in Winnipeg, highlights the need to begin an inquiry. Harper said earlier this week that Fontaine’s death was a crime and should not be viewed as a “sociological phenomenon.” (http://bit.ly/1p7LVPG)
** Seeking to profit from Canada’s new medical marijuana regulations – which put the production and sale of high-grade weed into the hands of corporations and penny-stock outfits – promoters are turning to former police chiefs and prominent politicians to help sell their products and attract mom and pop investors. (http://bit.ly/1AMkLk1)
FINANCIAL POST
** Tim Hortons Inc’s coffee could soon be the property of Burger King Worldwide Inc, with the two companies confirming late Sunday night that they are in discussions for the U.S. burger chain to buy Canada’s coffee and donut chain. The big draw for Burger King, according to a report from the Wall Street Journal, is the potential for tax inversion – effectively relocating the company’s home base to Canada to take advantage of the country’s comparatively lower tax base. (http://bit.ly/XLryg9)
** Eugene Melnyk, the billionaire owner of the Ottawa Senators and founder of drugmaker Biovail Corp, is waging war against the company that now controls his one-time business. Melnyk alleges that Valeant Pharmaceuticals International Inc is masquerading as a Canadian company to make use of this country’s international fiscal treaties and dodge U.S. taxes. He predicts it will all eventually implode if American authorities claw back the taxes he believes Valeant may owe. (http://bit.ly/1t5LLKi)
Hong Kong
SOUTH CHINA MORNING POST
— The National People’s Congress Standing Committee kicks off a week-long meeting on Monday that will play a decisive role over whether Hong Kong will elect its new leader by one person, one vote for the first time in 2017. (bit.ly/1tJ6JM2)
— The $6.3 million lawsuit filed by Deutsche Bank against Industrial and Commercial Bank of China (ICBC) executive Zhang Hongli will hurt the German lender’s long-term relationship with the mainland bank, people who worked at Deutsche Bank at the same time as Zhang said. (bit.ly/1ok7FBV)
— Outdoor advertising firm Clear Media is looking to aggressively acquire advertising locations as the rates for bus-shelter panels on the mainland drop and small advertising firms go out of business in the economic slowdown. (bit.ly/1smc8Yp)
THE STANDARD
— MTR operations director Jacob Kam Chak-pui should not have apologized for the killing of a stray dog on the tracks before the investigation has been completed, the staff union says. The corporation does not have guidelines on how to handle animals on the track, a union spokesman said. (bit.ly/1qEvCpd)
— Five volunteers of Macau’s unofficial referendum on electoral reform, including one of its organizers, were held by police for hours after the activists ignored strong objections from Beijing. (bit.ly/1qdTxiA)
— Sound Global expects further profit growth from its wastewater treatment business in small towns, after posting a net profit of 239 million yuan ($39 million) in the first half, up 38.2 percent from the previous year. (bit.ly/1qaD7Xw)
HONG KONG ECONOMIC JOURNAL
— Tianhe Chemicals Group Ltd saw its first-half net profit surging 45 percent year on year to 1.48 billion yuan ($240.6 million) and said it would continue to expand production capacity on the mainland.
HONG KONG ECONOMIC TIMES
— Jiangsu Expressway Co Ltd said its first-half net profit fell 6.36 percent from the same period a year ago to 1.34 billion yuan ($217.85 million) while revenue rose 7.04 percent at 3.93 billion yuan.
— BYD Co Ltd , which posted a 16 percent year on year decline in first-half net profit, warned that it net profit for the January to September period may fall by 11 to 22 percent due to shrinking market share of China’s local brands and persistent losses in its solar business.
MING PAO DAILY NEWS
— ENN Energy Holdings Ltd said it had entered into a strategic cooperation framework agreement with Sinopec’s unit Sinopec Sales Co Ltd to strengthen ties in procurement and transportation of natural gas.
Britain
THE SUNDAY TIMES
BG PRIMED TO SELL TANZANIA GAS FIELD STAKE
Oil giant BG Group has quietly begun looking for a buyer for part of its prized Tanzanian operation. It is understood the company wants to sell its entire 60 percent stake in an exploration area in Tanzania known as Block 3, while holding on to Blocks 1 and 4.
BALFOUR POLISHES HIDDEN JEWELS TO SOOTHE CITY
Balfour Beatty is to embark on a City charm offensive to appease disgruntled investors – including a hike in the value of its book of infrastructure investments – after the collapse of merger talks with smaller rival Carillion.
Balfour is expected this week to pump up the value of its book of private finance initiative contracts from 766 million pounds to more than 1 billion pounds.
HAMBRO TO BARTER GOLD FOR BAILOUT
Mining veteran Peter Hambro is in talks over a bailout that would hand over future gold production to a Chinese state bank in exchange for an immediate cash injection.
Petropavlovsk, which Hambro founded in 1994, has been caught out by an ill-timed decision to take on more than $1 billion in debt to expand its eastern Siberian gold mines just as the price of the precious metal slumped.
HEDGE FUND BACKS MAN U
One of London’s top hedge funds has emerged as owner of most of the Manchester United shares recently sold by the football club’s owners, the Glazer family. Lansdowne Partners is understood to have bought about 3 percent of the 5 percent sold by the Glazers last month.
MINISTERS SEIZE CONTROLS AT NETWORK RAIL
Ministers are to tighten their grip on Network Rail, the operator of Britain’s railway network, with a package of sweeping reforms, including new powers to hire and fire its chairman and board.
The changes will be put this week to a special meeting of Network Rail’s “members”, 43 people who take the place of shareholders.
CENSURED MORTGAGE FIRM PLOTS STOCK MARKET LISTING
A specialist mortgage lender whose founder was censured by the City watchdog for “serious” failings two years ago is considering a stock market float.
Jerrold Holdings, which offers first and second charge home loans under the brands Blemain Finance, Cheshire Mortgage Corporation and Lancashire Mortgage Corporation, is considering a float or partial sale next year to provide an exit for one of its backers.
It has yet to appoint investment bankers, although it has a close relationship with Rothschild.
CHINA WANTS TO BUILD NUCLEAR PLANT IN ESSEX
China’s nuclear power giants are in early talks about building an atomic reactor on the Essex coast at Bradwell.
The site, home to a partly decommissioned Magnox power plant, has emerged as the favourite for a new Chinese-built and designed plant, industry sources said.
TATA AND GM JOIN BUSINESS RATES REVOLT
Two of the nation’s biggest industrial investors have called for reform of business rates, which contribute 22 billion pounds to the Treasury every year but are blamed for harming high streets.
General Motors, which makes Vauxhall Cars, and Tata Steel, which owns Jaguar Land Rover, said the tax on commercial property was making Britain less attractive for industry.
JUMBO HEADACHE FOR BA AS DOUBLE-DECKERS TAKE OFF LATE
British Airways’ punctuality is suffering on key routes where it has introduced the Airbus A380 superjumbo, with more than a third of BA flights from Heathrow to Hong Kong, Johannesburg and Los Angeles failing to take off on time in May and June.
THE SUNDAY TELEGRAPH
CITY POISED FOR WAVE OF FLOTATIONS AFTER SUMMER LULL
The City is gearing up for another float frenzy with a wave of listings expected to be unveiled immediately after the summer lull.
In the coming weeks, a raft of household names including Jimmy Choo, the upmarket shoe brand; RAC, the breakdown service; and United Biscuits, are preparing to announce plans to go public. Countryside, the house builder; British Car Auctions, the second-hand car seller; and Aldermore, the challenger bank, are also expected to be among the flurry of companies rushing to join the London stock market.
CLIMATE CRUSADER GORE BACKS UK POWER MINNOW’S BATTLE WITH BIG SIX
Al Gore, the former U.S. Vice President and climate change campaigner, has invested 8 million pounds in Ovo Energy, one of the UK’s fastest growing new power suppliers.
The U.S. politician-turned-investor began talks with the firm last year through his sustainable investment fund, Generation Investment Management. The mezzanine finance deal was completed in January. Mr Gore’s fund has taken a minority stake and will share in the growth of the challenger brand.
SOCGEN TO FIGHT LIBYAN CASE
Societe Generale has opted to allow a bribery case brought by Libya’s sovereign wealth fund to go to court, having previously indicated it would attempt to have the case thrown out.
The French bank is accused by the Libyan Investment Authority (LIA) of paying some $58 million in bribes to key officials in the Gaddafi regime and at the top of the fund to smooth over trades that lost the LIA hundreds of millions, in the years before Muammar Gaddafi was overthrown in 2011.
Societe Generale says it “refutes the claims which it believes are entirely without merit”.
ITSU SHARPENS CHOPSTICKS AHEAD OF AMERICAN EXPANSION PLAN
ITSU, the takeaway sushi chain, is preparing to battle the giants of the fast-food industry on their home turf, by launching its first stores in America.
The business aims to open its doors on the East Coast next year, tapping into demand for affordable, healthy food, which founder Julian Metcalfe says has been largely ignored by the fast-food giants.
GYM CHAIN GETS READY FOR SALE
Gym group LA Fitness has hired a private equity specialist as its new chairman, fuelling speculation that the rump of the chain will be sold after it offloaded scores of clubs to survive.
Sports Direct founder Mike Ashley has bought 13 of 33 clubs LA Fitness is offloading via a CVA – a controversial insolvency procedure.
Fly On The Wall Pre-market Buzz
FUTURES:
Near 7:00 am ET:
S&P: +8 vs. fair value
Dow: +61 vs. fair value
Nasdaq: +19 vs. fair value
ECONOMIC REPORTS
Chicago Fed national activity index for July at 8:30–consensus 0.2
Markit services PMI for August at 9:45–consensus 58.0
New home sales for July at 10:00–consensus up 5.7% to 429K rate
ANALYST RESEARCH
Upgrades
CBOE Holdings (CBOE) upgraded to Outperform from Market Perform at Raymond James
Silver Bay Realty (SBY) upgraded to Overweight from Neutral at JPMorgan
U.S. Steel (X) upgraded to Outperform from Underperform at Credit Suisse
Downgrades
Foot Locker (FL) downgraded to Neutral from Overweight at Piper Jaffray
HNI Corporation (HNI) downgraded to Market Perform from Outperform at Raymond James
InterMune (ITMN) downgraded to Hold from Buy at Stifel
Steel Dynamics (STLD) downgraded to Neutral from Outperform at Credit Suisse
Thoratec (THOR) downgraded to Neutral from Overweight at Piper Jaffray
Initiations
Avalanche Biotechnologies (AAVL) initiated with an Overweight at Piper Jaffray
Camden Property (CPT) initiated with a Buy at Mizuho
HealthEquity (HQY) initiated with an Overweight at JPMorgan
Home Properties (HME) initiated with a Neutral at Mizuho
J2 Global (JCOM) initiated with a Neutral at Citigroup
Macrocure (MCUR) initiated with a Buy at Jefferies
Mid-America Apartment (MAA) initiated with a Buy at Mizuho
Spark Energy (SPKE) initiated with an Outperform at RW Baird
UDR, Inc. (UDR) initiated with a Neutral at Mizuho
COMPANY NEWS
Roche (RHHBY) said it will acquire InterMune (ITMN) for $74.00 per share for a total transaction value of $8.3B on a fully diluted basis.
Tim Hortons (THI), Burger King (BKW) confirmed talks regarding potential strategic transaction. The new publicly-listed company would be headquartered inCanada
Goldman Sachs (GS) will pay $3.15B to settle mortgage claims
Engine Capital, Red Alder urged Ann Inc. (ANN) to explore strategic alternatives
Boeing (BA) announced an order by BOC Aviation for 50 737 MAX 8s, 30 Next-Generation 737-800s and two 777-300ERs valued at $8.8B at list prices
Allergan (AGN) confirmed Pershing written request regarding a Special Meeting of stockholders, board still views Valeant (VRX) offer inadequate
EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Qihoo 360 (QIHU)
Qihoo 360 (QIHU) sees Q3 revenue $360M-$365M, consensus $357.39M
IF Bancorp (IROQ) reports Q4 EPS 25c vs. 22c a year ago
NEWSPAPERS/WEBSITES
Roche (RHHBY) drops pursuit for remainder of Japan’s Chugai to focus on $8.3B acquisition of InterMune (ITMN), Bloomberg reports
FCC seeks more data from Comcast (CMCSA) regarding Time Warner Cable (TWC) deal, Reuters reports
Twitter (TWTR) collaborates with Stripe on commerce strategy, Re/code reports
Russian official says no plans to close McDonald’s (MCD), Reuters reports
Occidental Petroleum (OXY) in talks to sell $3B gas stake to Mubadala, Bloomberg reports
Amazon (AMZN) develops ad sales program in challenge to Google (GOOG) and Microsoft (MSFT), WSJ reports
Dresser-Rand (DRC) not currently running formal sales process, dealReporter says
Hasbro (HAS) shares could return 20% in a year, Barron’s says
PepsiCo (PEP) holders would benefit more from split up, Barron’s says
Home Depot (HD) holders should hold on, Barron’s says
SYNDICATE
ONEOK Partners (OKS) files to sell $650M of common units representing limited partners
Summer Infant (SUMR) files $30M mixed securities shelf
Web.com (WWWW) files to sell 213,200 shares of common stock for holders
via Zero Hedge http://ift.tt/1mHCWPP Tyler Durden