Wednesday 15 June 2016

Goldman Sachs tips Sky, Cairn Energy and Zealand Pharma as takeover candidates

I never quite know what to make of a equity research teams' M&A predictions.

Why? Well, investment bank's equity research teams are supposed to have "Chinese walls" but you would have thought it's unlikely a top investment bank would actually let its own equity research analysts predict a deal that its M&A advisory bankers are actually working on.

Perhaps, then, that's why Sky's shares have dropped like a stone - down almost 10pc in the last five days - despite a prediction yesterday from Goldman Sachs's scribblers that it could be taken over because it's a "strategic target".

Anyway, I'm well aware the Goldman Sachs note was floating around the market yesterday but I thought I would paste the juicy bits below for loyal readers who interested in it but haven't been able to access it or read it, yet.    

So, pasted below are the key parts of the note from Goldman Sachs writers Katherine Ward, Jenny Lim, Rahul Argawal, Aayushi Chaudhary. They form part of the "European Tactical Research Group".

M&A back in the headlines after a muted start to the year
European M&A volumes are down nearly 30% in the YTD, amidst broader market weakness and a backdrop of increasing policy uncertainty. However with Bayer/Monsanto and Microsoft/LinkedIn bringing deal-making back into the headlines, and the recently launched CSPP from the ECB raising new questions about balance sheet firepower in Europe, this seems an optimal time to rebalance our M&A basket (ticker: GSTRACQN). This basket contains the stocks where our analysts see the highest likelihood of M&A activity. Since launching in June 2015, the basket is up 5.3% vs. SXXP. Over that period, 13 companies under GS European coverage have been subject to bids, of which 8 have featured in the basket.


Additions with this rebalance:
The high fragmentation of the customer care interaction market creates a number of opportunities for consolidation in this space. On January 18, 2016, we initiated on Teleperformance, applying a rank of 2 based on our Business services M&A framework.
Our Telecom analysts have moved Bouygues to a rank of 2 (from a rank of 4) given the managements of Orange and Bouygues Telecom have formally announced talks, indicating that Bouygues appears to be a willing seller.
Elsewhere in the Telecoms, our analysts have included a 20% M&A premium weight in the price target of Tele Columbus to reflect the stock’s strategic appeal. As the final large- scale, independent cable operator left in Germany with no blocking stakeholder, our analysts believe that Tele Columbus presents an attractive M&A target and believe that meaningful synergies could accrue to any larger scale cable operator.
In the Media space, as the worlds of media and telecoms converge, with BT, Sky and TalkTalk all entering the mobile market, and Vodafone potentially entering TV, our analyst sees Sky as a strategic target, given the stickiness of the TV product and its growing pipeline of in-house content. A hypothetical move towards pan-European selling of rights could also incentivize further pan-European consolidation.
Our Oil team applies an M&A premium to strategic oil rich assets. Our analysts view the ‘SNE’ project as one of the few non-Brazilian deepwater projects that can thrive in the new world of US$60 pricing. Accordingly, they attach an M&A premium (rank of 1; 50% M&A weighting) to the asset in their SOTP valuation of Cairn Energy.
In the Financial space, our Real estate team incorporates an M&A score of 2 (from 3) in case of PSP Swiss Property based on the fact that stocks trading at a discount to NNNAV are potentially interesting to corporate acquirers and that those with particularly high levels of cost can offer potential synergies to an acquirer.
In the Biotech space, Zealand Pharma screens as an attractive target (Rank of 1). Zealand’s key asset (lixisenatide), is partnered with Sanofi. It has recently passed an FDA advisory committee vote, and hence is largely a derisked asset. In achieving FDA approval (PDUFA set for August 2016) and also with a sales launch, Zealand triggers a set of royalty payments, and hence an associated increase in cash flow. As a result, our analyst believes that Zealand offers significant strategic appeal. 

11 comments:

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  7. My life became devastated when my husband sent me packing, after 8 years that we have been together. I was lost and helpless after trying so many ways to make my husband take me back. One day at work, i was absent minded not knowing that my boss was calling me, so he sat and asked me what its was all about i told him and he smiled and said that it was not a problem. I never understand what he meant by it wasn't a problem getting my husband back, he said he used a spell to get his wife back when she left him for another man and now they are together till date and at first i was shocked hearing such thing from my boss. He gave me an email address of the great spell caster who helped him get his wife back, i never believed this would work but i had no choice that to get in contact with the spell caster which i did, and he requested for my information and that of my husband to enable him cast the spell and i sent him the details, but after two days, my mom called me that my husband came pleading that he wants me back, i never believed it because it was just like a dream and i had to rush down to my mothers place and to my greatest surprise, my husband was kneeling before me pleading for forgiveness that he wants me and the kid back home, then i gave Happy a call regarding sudden change of my husband and he made it clear to me that my husband will love me till the end of the world, that he will never leave my sight. Now me and my husband is back together again and has started doing pleasant things he hasn't done before, he makes me happy and do what he is suppose to do as a man without nagging. Please if you need help of any kind, kindly contact Happy for help and you can reach him via email: happylovespell2@gmail.com

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