Tuesday, 24 November 2015

Flag pole alert - part 3

The broker upgrades are coming thick and fast following Bryce Elder's piece on Imperial Tobacco late last week.

Yesterday, Citigroup upgraded Imperial Tobacco to a "buy" and now Exane BNP Paribas and Morgan Stanley have pieces out to clients on the topic. Below I have pasted the gist of the latest Exane note:

Merger Madness
Ever since the ABI/SAB offer was announced, the financial press has been rife with speculation that Imperial is next in line. While such stories have been recycled repeatedly over the years and much reporting looks ill informed, the sheer intensity of the reports raises questions. It seems like a good time to revisit our previous work on the anti-trust complexities and the chances of a deal.
Talk of BAT without JT makes no sense
Much of the speculation centres on BAT launching a bid. But BAT can't do this alone; JT would need to be involved. Even if it were (we have doubts) it would be in a position to drive a hard bargain on markets acquired. There are a number of complexities and questions to overcome.
Financially attractive, strategically questionable
Though the anti-trust specifics make value leakage/ dis-synergies likely, a deal would still create value through cost savings (previous big Tobacco M&A synergies 22-105% acquired EBIT). But buying a fragmented brand portfolio which would need to be further broken up is not 'on-strategy', and for JT to tie up its balance sheet for several years would require strong commitment.
What if it's true?
Putting our scepticism aside, a successful deal might be 15-20% EPS accretive for BAT, 20-30% for JT (with ROIC>WACC for both), though paying IMT shareholders a 25%+ premium would mean a stretched takeout multiple by historical standards.
True or not, it's a free option on a robust IMT investment case
Consolidation would be good for the entire industry. The initial upside though would likely be greatest at target IMT and if (as is our base case) a deal is not forthcoming we continue to see the stock as attractive based on the profit pool growth recovery in Europe and the resulting opportunity to show a consistency of growth delivery that has proved elusive for many years.

2 comments:

  1. HOW I GOT A LEGIT LOAN WITHIN THREE DAYS OF APPLYING @ 2% INTEREST RATE

    Do you need a loan to pay debt, Pay bills, buy a new home and refinance your business? if yes, contact VICTORIA LAWSON LOAN FIRM VIA email: marianlawson@outlook.com for easy and fast loan amount transfer. When i could not face my debt and i need a hug money for hospital bills, to get a home improvement and to refinance i came on line to search for lender and i met how VICTORIA LAWSON had help several person. i immediately contact her company with my details and my loan amount was approve within 48hours and i receive the credit in my bank. contact VICTORIA LAWSON LOAN FIRM with (marianlawson@outlook.com) For fast approved loan.

    *Full Name:_________

    *Address:_________

    *Tell:_________

    *loan amount:_________

    *Loan duration:_________

    *Country:_________

    *Purpose of loan:_________

    *Monthly Income:__________

    *Occupation__________

    *Next of kins :_________

    *Email :_________

    Contact her company Via Email: marianlawson@outlook.com

    ReplyDelete
  2. Life is good and sweet when you are with your true love, i am saying this because when i had issues with my husband i never seen life as a good thing but thanks to Dr Frank Ojo of LOVE AND PROSPERITY TEMPLE, for bringing back my husband ,and brought great joy to me and my family once again..! My name is Lisa Mindy. I'm happily married to a lovely and caring husband with two kids. A very big problem occurred in my family seven months ago,between me and my husband .so terrible that he took the case to court for a divorce.he said that he never wanted to stay with me again,and that he didn't love me anymore.So he packed out of the house and made me and my children passed through severe pain. I tried all my possible means to get him back,after much begging,but all to no avail.and he confirmed it that he has made his decision,and he never wanted to see me again. So on one evening,as i was coming back from work,i met an old friend of mine who asked of my husband .So i explained every thing to him,so he told me that the only way i can get my husband back,is to visit a spell caster,because it has really worked for him too.So i never believed in spell,but i had no other choice,than to follow his advice. Then he gave me the email address of the spell caster whom he visited.{Templeofloveandprosperity@gmail.com}. So the next morning,i sent a mail to the address he gave to me,and the spell caster assured me that i will get my husband back the next day.What an amazing statement!! I never believed,so he spoke with me,and told me everything that i need to do. Then the next morning, So surprisingly, my husband who didn't call me for the past 9 months,gave me a call to inform me that he was coming back.So Amazing!! So that was how he came back that same day,with lots of love and joy,and he apologized for his mistake,and for the pain he caused me and my children. Then from that day,our relationship was now stronger than how it were before,by the help of a spell caster. So, If you have any problem contact him, I give you 100% guarantee that he will help you, Thanks to Dr Frank Ojo for bringing back my husband ,and brought great joy to my family once again, so here his email address { Templeofloveandprosperity@gmail.com } Website address: http://lovespell2.yolasite.com, i Lisa recommend Dr Frank Ojo is the bast spell caster online contact him if you have any problem.!!

    ReplyDelete