Verizon sued by shareholder over $130 billion Vodafone deal

A man is silhouetted against a video screen with Vodafone and Verizon texts as he poses with a Samsung Galaxy S3 in this photo illustration taken in the central Bosnian town of Zenica, September 3, 2013. Picture taken September 3.

Credit: Reuters/Dado Ruvic

By Jonathan Stempel

NEW YORK | Fri Sep 6, 2013 2:28pm EDT

NEW YORK (Reuters) - Verizon Communications Inc has been sued by a shareholder seeking to void its $130 billion buyout of Vodafone Group Plc's stake in the companies' wireless joint venture on the grounds the price is too high.

In a lawsuit filed in a New York state court on Thursday, just three days after the transaction was announced, Natalie Gordon said Verizon shareholders are being "shortchanged" by the purchase of Vodafone's 45 percent stake in Verizon Wireless, the largest U.S. mobile phone operator.

Verizon, which owns the other 55 percent, agreed to pay Vodafone $59 billion in cash, $60 billion in stock and other sums. Verizon Wireless has about 100 million customers.

Gordon said "it is evident that Verizon has overpaid," adding that "Wall Street analysts concur" and that Moody's Investors Service downgraded Verizon's credit.

She also pointed to a drop in Verizon's share price to $45.08 on September 3, the first trading day after the purchase was announced, from a peak of $48.60 on August 29, when news that Verizon and Vodafone had revived talks surfaced. The lawsuit characterized the 7.2 percent decline as "almost 10%."

The lawsuit seeks class-action status, and also names Verizon Chief Executive Lowell McAdam and 12 directors as defendants, accusing them of breaching their fiduciary duties.

It seeks to force Verizon to rescind the purchase or improve the terms, and force the individual defendants to pay damages.

"We believe this lawsuit is entirely without merit, and Verizon intends to defend itself vigorously," Randal Milch, Verizon executive vice president and general counsel, said in a statement.

Vodafone, which is not a defendant, declined to comment.

Gordon is represented by law firm Faruqi & Faruqi, and has within the last five years been a shareholder plaintiff in several other lawsuits filed by that firm, court records show.

Juan Monteverde, a partner at the New York-based firm, did not immediately respond to a request for comment.

The Verizon-Vodafone transaction would be the third-largest in corporate history, and end their 14-year joint venture.

Talks resumed in earnest this summer as Verizon grew concerned that rising interest rates might make a transaction too pricey.

The price rose from the $100 billion that Verizon had earlier floated, people familiar with the matter said.

Moody's one-notch downgrade left Verizon's long-term credit rating at "Baa1," a low investment grade, reflecting the company's plan to add $67 billion of debt and more than double its debt load. Nonetheless, Moody's ratings outlook is "stable."

The case is Gordon v. Verizon Communications Inc et al, New York State Supreme Court, New York County, No. 653084/2013.

(Reporting by Jonathan Stempel in New York; Additional reporting by Nate Raymond and Jennifer Saba in New York, and Leila Abboud in London; Editing by Eddie Evans, Andre Grenon and Jim Marshall)

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Sanofi cholesterol drug touted as potential $3 billion blockbuster

By Natalie Huet

PARIS | Wed Sep 25, 2013 11:53am EDT

PARIS (Reuters) - A new cholesterol-lowering drug from Sanofi and Regeneron has the potential to become a $3-billion-dollar-plus blockbuster, according to analysts awaiting imminent late-stage trial results.

The drug, dubbed alirocumab, is part of a group of biotech medicines known as PCSK9 inhibitors that offer a new way of fighting the build-up of artery-clogging fatty deposits that put millions of patients worldwide at risk of heart attacks.

PCSK9 inhibitors are eyed as potentially the biggest advance in the fight against heart diseases since statin drugs such as Lipitor and Zocor, now widely available as cheap generics, were launched more than two decades ago.

The drugs are self-injectable, man-made antibodies targeting a protein that prevents the body from eliminating "bad" LDL cholesterol from the bloodstream. They work differently from statins - pills that inhibit the liver's production of LDL cholesterol in the first place.

"Physician feedback suggests high awareness amongst cardiologists and planned prescribing habits support multi-billion dollar potential for the class," Deutsche Bank analysts wrote in a note on Wednesday, forecasting peak annual sales of alirocumab of more than $3 billion.

Independent research firm BioMedTracker sees sales of alirocumab reaching $3.7 billion by 2023.

Sanofi and U.S. biotech firm Regeneron are among leaders in the race to bring a drug from this new class to market, neck-and-neck with Amgen. Pfizer, Eli Lilly and Roche have rival products at earlier stages of clinical development.

If positive, results from a first 100-patient trial - due any day now - will boost Sanofi's confidence in its drug, which may reach the market by 2015. But its ultimate success depends on longer-term studies involving thousands of patients, some of which will only produce results in around five years.

In the first Phase III study, alirocumab, which has cut levels of LDL cholesterol by up to 72 percent in Phase II trials, is being tested against Merck's Zetia, which can lower LDL cholesterol by 19-24 percent. Deutsche analysts expect it to easily achieve its goal in the trial.

PRICE HURDLE

Alirocumab is likely to used in patients with genetically-high cholesterol levels, high-risk patients who do not hit their cholesterol goals on statins alone, and patients intolerant to statins, whose side effects can include muscle pain.

Doctors at the European Society of Cardiology congress in Amsterdam earlier this month said PCSK9 drugs could be a valuable new weapon against heart disease.

But many were wary of predicting widespread use before seeing final-stage clinical data, following past disappoints with other heart drugs, including pills raising "good" HDL cholesterol.

The requirement for the new medicines to be injected and their expected high cost are also seen as potential deterrents, with pricing expected to be especially an issue in Europe, where healthcare spending is pressured by deficit-slashing policies.

For alirocumab, analysts expect a price of around $15 per day, comparable to the cost of injectable diabetes drugs known as GLP-1s, such as Novo Nordisk's Victoza.

At an investor conference earlier this month, Sanofi's CEO Chris Viehbacher said the French drugmaker could look at nearly doubling its stake in Regeneron, voicing confidence in the drug's success.

"When you look at the number of patients who are willing to inject themselves daily for diabetes, and you know a lot of those patients are also going to be in your patient population for PCSK9, I actually think that the injectable part is not going to be as big a barrier as people think," Viehbacher said.

"I think it is going to be a paradigm shift for healthcare and a potentially huge opportunity for us."

(Additional reporting by Ben Hirschler in London; Editing by David Cowell)

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American Tower extends network reach with $3.3 billion deal

By Chandni Doulatramani

Fri Sep 6, 2013 12:07pm EDT

n">(Reuters) - American Tower Corp said it would buy the parent of telecom tower operator Global Tower Partners for $3.3 billion as it seeks a bigger share of the billions of dollars that U.S. telecom carriers are spending to upgrade their networks.

American Tower shares rose about 4.5 percent in late morning trade on the New York Stock Exchange as investors cheered the acquisition, the latest in a string of deals in the sector.

The company will also assume $1.5 billion in debt as part of the deal, which will increase its tower count by a quarter and cement its position as the largest U.S. operator.

The company is scouting for more deals, Chief Executive Jim Taiclet said on a conference call, adding that the Global Tower purchase was not the "end of the road."

American Tower and its U.S. peers Crown Castle International Corp and SBA Corp are in a scramble to beef up assets across the world as explosive growth in data traffic pushes carriers to spend heavily on upgrading their networks.

Major U.S. telecom companies such as AT&T Inc and Verizon Communications Inc have increased their spending budgets for the current year as they roll out 4G LTE, a high-speed wireless technology.

"With 4G handset penetration still under 10 percent, we continue to believe that we are in the early stages of the 4G deployment cycle," Taiclet said.

The deal comes a month after American Tower said it would acquire about 4,500 telecom towers in Brazil and Mexico from Latin American telecom service provider NII Holdings Inc for $811 million.

JP Morgan analyst Philip Cusick said American Tower might still be interested in buying AT&T Inc towers, which are up for sale. The analyst, however, expects smaller rival Crown Castle to clinch that deal.

MACQUARIE SELLS OUT

Global Tower, formed by its CEO Marc Ganzi in 2003 by acquiring 187 towers from American Tower, is controlled by a consortium of funds managed by the Macquarie Group.

It was acquired by the group for $1.42 billion and structured as a REIT in 2007. Its parent company is MIP Tower Holdings LLC, a privately held real estate investment trust.

The deal will add about 15,700 towers in the United States and Costa Rica to American Tower's existing portfolio of 56,000 towers.

The deal is expected to immediately add to the company's adjusted funds from operations and is expected to close in the fourth quarter of 2013.

The portfolio is expected to generate about $345 million in revenue in 2014. American Tower had revenue of $2.88 billion in 2012.

American Tower was advised by Goldman, Sachs & Co and EA Markets Securities LLC, while Global Tower's adviser was Deutsche Bank Securities Inc.

American Tower shares were up at $71.84 on Friday on the New York Stock Exchange.

(Reporting by Chandni Doulatramani in Bangalore; Editing by Saumyadeb Chakrabarty)

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Verizon Beats $9 Billion Suit over Idearc Spin-off

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Germany's JAB to buy Douwe Egberts firm in $9.8 billion deal

Packets of Douwe Egberts coffee are seen at a supermarket in Amsterdam April 12, 2013.

Credit: Reuters/Toussaint Kluiters/United Photos

By Sara Webb and Martinne Geller

AMSTERDAM | Fri Apr 12, 2013 4:35pm EDT

AMSTERDAM (Reuters) - German investor Joh A Benckiser (JAB) is to buy the owner of Douwe Egberts coffee in a 7.5 billion euro ($9.8 billion) deal to create a global hot drinks empire aimed at taking on market leaders Nestle (NESN.VX) and Mondelez International (MDLZ.O).

D.E Master Blenders 1753 (DEMB.AS), the Dutch owner of Douwe Egberts coffee and Pickwick tea, said on Friday it had reached conditional agreement on a 12.50 euros per share cash takeover offer from a group of investors led by JAB.

JAB, the investment vehicle of the billionaire Reimann family, has been building a hot drinks business in a bid to tap strong growth driven by new products, such as single-serve coffee brewers, and demand from emerging markets.

It owns Caribou Coffee Co Inc JABECC.UL and Peet's Coffee & Tea Inc PEETC.UL in the United States, and has had its eye for some time on D.E Master Blenders, which has a strong position in Europe.

The offer is below an original proposal from JAB of 12.75 euros per share. But it still represents a 36 percent premium to the stock's average closing price in the three months before the proposal was disclosed.

Analysts said the price compared favorably with recent similar deals and saw little chance of a rival bid, not least because JAB already owns around 15 percent of D.E Master Blenders, meaning it will actually pay about 6.4 billion euros.

Chief Executive Jan Bennink, who will step down after the takeover, said D.E Master Blenders had not had contact with other potential buyers.

"We consider the probability of a higher offer to be slim," KBC Securities analysts Pascale Weber and Jan-Willem Billiet said in a note, recommending investors accept the offer.

They said the price represented a ratio of enterprise value (debt plus equity) to expected 2014 earnings before interest, tax, depreciation and amortization (EBITDA) of 15.7 times.

In comparison, analysts pointed to a deal by Warren Buffett's Berkshire Hathaway (BRKa.N) and 3G Capital to buy H.J. Heinz Co (HNZ.N) at a 2013 EV/EBITDA of 14.6 times.

D.E Master Blenders' stock closed down 0.98 percent at 12.11 euros.

FROM BEER TO BEANS

JAB's Bart Becht, a former chief executive of Reckitt Benckiser (RB.L) who will become chairman of the Dutch company, said D.E Master Blenders would provide a platform for organic growth and for acquisitions in the coffee and tea sectors.

He said JAB plans to keep the Dutch company separate from its U.S. coffee shop business, since there are few synergies between the retail side and packaged goods side. The brands are unknown in each other's markets and the businesses are run quite differently, Becht said.

JAB is still open to more deals both on the retail side, which is home to U.S. chain operators such as Starbucks Corp (SBUX.O) and Dunkin Brands (DNKN.O), and the packaged coffee side, which includes players such as J.M. Smucker Co (SJM.N) in the United States and Lavazza in Italy.

Given the credentials of JAB's principals and their connections to deal-making consumer products giants such as Reckitt Benckiser, Anheuser Busch InBev (ABI.BR) and Mars, observers expect JAB to move to build its coffee business into a much bigger player.

"We have done this before," Bart Becht said in an interview.

Following the acquisition, D.E Master Blenders board would include Becht, and other JAB principals Peter Harf, a former chairman of AB InBev, Olivier Goudet, head of its audit committee and Alexandre Van Damme, who is also connected to AB InBev. Also involved is Alejandro Santo Domingo, a board member of SABMiller (SAB.L).

"They see a lot of similarities between the coffee and beer industries, for example in terms of production, marketing and branding," said a person familiar with the deal. "They want to consolidate and build the brands."

But Becht said: "These people made a lot of money in beer and they are looking to diversify their portfolios. That's the principle reason why we've been talking to them."

Because JAB is controlled by the German Reimann family, Becht said the firm enjoyed working with other family-owned investors, including the beer-derived holdings involved in this deal.

"It's much easier to agree on the long-term nature of our investments. We are looking at this as a 15-20 year investment," he said.

FAMILY FORTUNES

The Reimann fortune comes from the Benckiser chemicals company, founded in 1823. The family also controls perfumes and cosmetics group Coty COTY.UL, and owns Labelux Group, manager of luxury brands Bally, Belstaff and Jimmy Choo.

Douwe Egberts coffee is one of the best-known brands in the Netherlands and its parent company, D.E Master Blenders, ranks third in terms of coffee sales after market leader Nestle and Mondelez International, according to Euromonitor International.

But the Dutch firm, which also owns Senseo coffee, has had a rocky time since it was spun off last year from Sara Lee Corp, which has since changed its name to Hillshire Brands (HSH.N).

Within weeks of its listing, it shocked investors with the news its Brazilian unit had been hit by fraud, tax and inventory problems, forcing it to restate past financial statements.

Previous CEO Michael Herkemij quit in December, just six months after the stock market debut, and in February the firm reported lower-than-expected profits and cut its outlook for 2013 citing pricing pressures in austerity-hit Europe.

JAB said it would finance the deal through a combination of roughly 3 billion euros of debt and about 4.9 billion euros in equity, and said it had committed financing from arrangers Bank of America, Citibank, Rabobank and Morgan Stanley.

It does not plan to sell any of its 10 percent stake in Reckitt Beckiser to finance the coffee deal, a spokesman said.

The deal is conditional on issues including regulatory approval.

Leonardo & Co., BDT & Company, Bank of America Merrill Lynch and Rabobank/Rothschild are financial advisers to JAB. Lazard is lead financial adviser to D.E Master Blenders, with Goldman Sachs and JP Morgan also acting as financial advisers.

($1 = 0.7618 euros)

(Reporting by Martinne Geller in New York; Editing by Bernard Orr)

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HD Supply files for $1 billion IPO

n">(Reuters) - Industrial and construction supplies distributor HD Supply Holdings Inc, a former division of Home Depot Inc (HD.N), filed for a $1 billion initial public offering of its shares to take advantage of the rebounding U.S. housing market.

Bain Capital, Carlyle Group (CG.O) and Clayton, Dubilier & Rice, who took the company private for $8.5 billion in 2007, each own about 28 percent of the company.

Home Depot continues to hold a 12.4 percent stake in the company, according to HD Supply's prospectus filed with the Securities and Exchange Commission on Friday. (link.reuters.com/nyv37t)

Atlanta, Georgia-based HD Supply is one of the largest distributors of construction, industrial and maintenance supplies in North America.

The company said BofA Merrill Lynch, Barclays, J.P. Morgan and Credit Suisse are the lead underwriters of the IPO.

The company plans to use the proceeds from the offering to repay debt and for general corporate purposes.

Low interest rates and rising rents have pushed many consumers to buy homes, reviving the U.S. housing market.

Homebuilder TRI Pointe Homes Inc (TPH.N), Taylor Morrison Home Corp (TMHC.N) and Boise Cascade Co (BCC.N), whose products are used in residential construction and remodeling projects, went public this year.

HD Supply did not disclose the number of shares on offer or their proposed price.

The amount of money a company says it plans to raise in its initial filings is used to calculate registration fees. The final size of the IPO could be different.

(Reporting by Tanya Agrawal in Bangalore; Editing by Don Sebastian)

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YouTube tops 1 billion monthly users (USA Today)

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