European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Societa Cattolica di Assicurazioni / Event-Driven

On 31 May, <a href="https://www.smartkarma.com/entities/assicurazioni-generali-spa" target="_blank" data-smartkarma-citation="entities:21191:1" rel="noopener">Assicurazioni Generali (G IM)</a> SpA launched a voluntary tender offer to acquire the 76.33 of <a href="https://www.smartkarma.com/entities/societa-cattolica-di-assicuraz" target="_blank" data-smartkarma-citation="entities:21168:1" rel="noopener">Societa Cattolica Di Assicuraz (CASS IM)</a> it does not already own.
Generali will offer €6.75/share, cum dividend.
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A 15.3% premium to Cattolica's closing share price on 28 May 28, for an implied equity value of €1,541.3 mn and an implied EV of €2,437.3 mn. The offer represents 0.67x P/21e BV and 11.2x Fwd P/E. 
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In case of total acceptance of the offer, at the current bid price, Generali will pay a consideration of €1.176 bn.
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Minimum acceptance condition: 66.67% of the share capital, which could be lowered to 50% plus one share.
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Synergies in operating costs, technical ratios and revenues, are estimated to reach a run-rate pre-tax of more than €80 mn p.a., with cost of synergies €150 mn - €200 mn.
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Generali expects the transaction to finalize by mid-November 2021, subject to all necessary approvals and authorizations. There should not be any antitrust issues, as in any of the three main segments, combined market share would be around 20%.
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On 31 May, shares of Cattolica closed at €6.97, a 15% increase vs. the prior trading session and 3.2% above the offer. Cattolica trades at 0.7x vs an 0.9x average of Italian insurers.
Fair value on a standalone basis is €6.64/share (average of comparables median implied Fwd P/E and discounted excess returns, WACC = 8.5%, g=1.8%, estimates from Capital IQ).
Synergies, taxed and capitalized, could be worth up to €1.28/share. Assuming that Cattolica's shareholders capture 60% of the PV of those synergies, TP of Cattolica as a target is €7.4/share. This represents 8.7% upside to the offer price.
Although the Board of Cattolica has not yet issued a reply, this situation may follow a script similar to <a href="https://www.smartkarma.com/insights/creval-credit-agricole-playing-hard-to-get" target="_blank" data-smartkarma-citation="insights:45742" rel="noopener">Creval - Crédit Agricole: Playing Hard to Get</a>, <a href="https://www.smartkarma.com/insights/creval-credit-agricole-grounds-for-an-improved-offer" target="_blank" data-smartkarma-citation="insights:50036" rel="noopener">CreVal - Crédit Agricole: Grounds for an Improved Offer</a> and <a href="https://www.smartkarma.com/insights/credit-agricole-creval-purchase-obligation" target="_blank" data-smartkarma-citation="insights:50658" rel="noopener">Credit Agricole/CreVal: Purchase Obligation</a>. Therefore, a sweetened offer is highly likely, in my view.
Recommendation is long CASS IM, TP €7.4.

On 31 May, Assicurazioni Generali (G IM) SpA launched a voluntary tender offer to acquire the 76.33 of Societa Cattolica Di Assicuraz (CASS IM) it does not already own.
Generali will offer €6.75/share, cum dividend.


A 15.3% premium to Cattolica's closing share price on 28 May 28, for an implied equity value of €1,541.3 mn and an implied EV of €2,437.3 mn. The offer represents 0.67x P/21e BV and 11.2x Fwd P/E. 


In case of total acceptance of the offer, at the current bid price, Generali will pay a consideration of €1.176 bn.


Minimum acceptance condition: 66.67% of the share capital, which could be lowered to 50% plus one share.


Synergies in operating costs, technical ratios and revenues, are estimated to reach a run-rate pre-tax of more than €80 mn p.a., with cost of synergies €150 mn - €200 mn.


Generali expects the transaction to finalize by mid-November 2021, subject to all necessary approvals and authorizations. There should not be any antitrust issues, as in any of the three main segments, combined market share would be around 20%.


On 31 May, shares of Cattolica closed at €6.97, a 15% increase vs. the prior trading session and 3.2% above the offer. Cattolica trades at 0.7x vs an 0.9x average of Italian insurers.
Fair value on a standalone basis is €6.64/share (average of comparables median implied Fwd P/E and discounted excess returns, WACC = 8.5%, g=1.8%, estimates from Capital IQ).
Synergies, taxed and capitalized, could be worth up to €1.28/share. Assuming that Cattolica's shareholders capture 60% of the PV of those synergies, TP of Cattolica as a target is €7.4/share. This represents 8.7% upside to the offer price.
Although the Board of Cattolica has not yet issued a reply, this situation may follow a script similar to Creval - Crédit Agricole: Playing Hard to Get, CreVal - Crédit Agricole: Grounds for an Improved Offer and Credit Agricole/CreVal: Purchase Obligation. Therefore, a sweetened offer is highly likely, in my view.
Recommendation is long CASS IM, TP €7.4.

Generali/Cattolica: Voluntary Tender Offer

Alpha-Centric ESG Research

Kyle Rudden

More and more, companies are using cryptocurrency (especially Bitcoin) as part of their corporate treasury management strategies, discussed in <a href="https://www.smartkarma.com/insights/bitcoin-on-balance-sheets-indirect-crypto-exposure-considerations-for-crypto-leery-esg-investors" target="_blank" data-smartkarma-citation="insights:52207" rel="noopener">Bitcoin on Balance Sheets: Indirect Crypto Exposure Considerations for Crypto-Leery ESG Investors</a>. That trend is behind the topic of this report.Greater mainstream corporate and institutional use of Bitcoin is driving the growth in demand for cryptocurrency custody services, and banks around the world are rushing to fill that demand. It is a logical and relatively safe foray into the cryptocurrency space, albeit not without some risk.For ESG investors wishing to avoid direct or indirect cryptocurrency exposure, perhaps due to their views on crypto's wretched Environmental footprint, the banks herein will have significant indirect crypto exposure. However, I personally find it hard to be categorically bearish on this theme.Whilst the theme in the first Insight (holding Bitcoin on balance sheets) represents real risk, this is different. It could be argued that crypto custody perpetuates <a href="https://www.smartkarma.com/entities/bitcoin-usd" target="_blank" data-smartkarma-citation="entities:25895:1" rel="noopener">Bitcoin (XBT)</a>'s climate impacts, thus is a bad thing. Perhaps, from a purely idealistic ESG viewpoint, that is partially true.However, the connection from custody service to carbon emissions is so far removed, and the risks associated with entering the crypto custody space are so comparatively minimal, that the opinion on this theme should be "neutral" at worst, and definitely not across-the-board "negative."But really, that is for each investor to decide, because the crypto/ESG issue is highly subjective.

More and more, companies are using cryptocurrency (especially Bitcoin) as part of their corporate treasury management strategies, discussed in Bitcoin on Balance Sheets: Indirect Crypto Exposure Considerations for Crypto-Leery ESG Investors. That trend is behind the topic of this report.Greater mainstream corporate and institutional use of Bitcoin is driving the growth in demand for cryptocurrency custody services, and banks around the world are rushing to fill that demand. It is a logical and relatively safe foray into the cryptocurrency space, albeit not without some risk.For ESG investors wishing to avoid direct or indirect cryptocurrency exposure, perhaps due to their views on crypto's wretched Environmental footprint, the banks herein will have significant indirect crypto exposure. However, I personally find it hard to be categorically bearish on this theme.Whilst the theme in the first Insight (holding Bitcoin on balance sheets) represents real risk, this is different. It could be argued that crypto custody perpetuates Bitcoin (XBT)'s climate impacts, thus is a bad thing. Perhaps, from a purely idealistic ESG viewpoint, that is partially true.However, the connection from custody service to carbon emissions is so far removed, and the risks associated with entering the crypto custody space are so comparatively minimal, that the opinion on this theme should be "neutral" at worst, and definitely not across-the-board "negative."But really, that is for each investor to decide, because the crypto/ESG issue is highly subjective.

Banks on the Bitcoin Bandwagon: Cashing in Through Crypto Custody Services

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

EURO STOXX 50 Price EUR / Technical Analysis

Our intermediate-term outlook remains constructive with major support levels holding on the broad global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE). Still, we continue to see some reason for caution as various market dynamics have deteriorated, leading us to a more neutral outlook in the near-term.

Our intermediate-term outlook remains constructive with major support levels holding on the broad global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE). Still, we continue to see some reason for caution as various market dynamics have deteriorated, leading us to a more neutral outlook in the near-term.

Lakshmi Iyer, CFA

Credit

There has been substantial news-flow regarding the possibility of a deal between <a href="https://www.smartkarma.com/entities/future-retail-ltd-4b025726-3be6-41e3-9f59-22ab2a17a8b2" target="_blank" data-smartkarma-citation="entities:26799:1" rel="noopener">Future Retail (FRETAIL IN)</a> and <a href="https://www.smartkarma.com/entities/reliance-industries-ltd" target="_blank" data-smartkarma-citation="entities:198:1" rel="noopener">Reliance Industries (RIL IN)</a> .  We feel that the news reports are credible. We also present our thoughts on potential hurdles facing the deal and recommend booking profits on the FRETAI 5.6% bonds due '23 at current levels (69).<div class="content-highlight">Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.</div>

There has been substantial news-flow regarding the possibility of a deal between Future Retail (FRETAIL IN) and Reliance Industries (RIL IN) .  We feel that the news reports are credible. We also present our thoughts on potential hurdles facing the deal and recommend booking profits on the FRETAI 5.6% bonds due '23 at current levels (69).Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.

Future Retail + Reliance - To Be, or Not to Be...

<a href="https://www.smartkarma.com/entities/future-retail-ltd-4b025726-3be6-41e3-9f59-22ab2a17a8b2" target="_blank" data-smartkarma-citation="entities:26799:1" rel="noopener">Future Retail (FRETAIL IN) </a>is beset with liquidity risk, largely on account of the change-of-control covenant in its USD bond coupled with the promoters' pledged shareholding.  We are negative on credit quality and recommend "hold" on its USD bonds. We also recommend a solution for the current predicament.

Future Retail (FRETAIL IN) is beset with liquidity risk, largely on account of the change-of-control covenant in its USD bond coupled with the promoters' pledged shareholding.  We are negative on credit quality and recommend "hold" on its USD bonds. We also recommend a solution for the current predicament.

Future Retail Limited - High Liquidity Risks

Italy

Assicurazioni Generali S.p.A. offers life and non-life insurance and reinsurance throughout the world.  The Company offers life, health, accident, automobile, marine, aviation, transport, fire, general liability, and credit insurance and reinsurance.

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Assicurazioni Generali (G IM)

Generali/Cattolica: Voluntary Tender Offer

Situation similar to bid for CreVal. Assuming that Cattolica's shareholders capture 60% of the PV of synergies, TP of Cattolica as a target is €7.4...

Jesus Rodriguez Aguilar

Banks on the Bitcoin Bandwagon: Cashing in Through Crypto Custody Services

Bitcoin holdings by issuers and investors is driving crypto custody demand. Big banks are stepping. A big opportunity, but some ESG investors might...

Kyle Rudden

Major Breakout For EURO STOXX 50

Our intermediate-term outlook remains constructive with major support levels holding on the broad global indexes (MSCI ACWI, ACWI ex-US, EM, and...

Vermilion Research

Future Retail + Reliance - To Be, or Not to Be...

There has been substantial news-flow regarding the possibility of a deal between Future Retail (FRETAIL IN) and Reliance Industries (RIL IN) . We...

Lakshmi Iyer, CFA

Future Retail Limited - High Liquidity Risks

Future Retail (FRETAIL IN) is beset with liquidity risk, largely on account of the change-of-control covenant in its USD bond coupled with the...

Lakshmi Iyer, CFA

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