Macro Strategist, Saxo Capital Markets

Kay Van-Petersen

Macro Strategist

Saxo Capital Markets

Thematic (Sector/Industry)

<ul><li>Barring some kind of shock-event, US dollar liquidation will drive markets for the near-term, possibly even a few weeks.</li><li>Already elevated EM equities &amp; currencies just got jet fuel injected into their fires. EUR to gun for 1.15, AUD for 78c…</li><li>So tactically one can focus on being right &amp; comfortable while potentially missing on the potential continuation of the near-term trends, or one can focus on making money &amp; get uncomfortable by playing the melt-up</li></ul>

 Barring some kind of shock-event, US dollar liquidation will drive markets for the near-term, possibly even a few weeks.Already elevated EM equities &amp; currencies just got jet fuel injected into their fires. EUR to gun for 1.15, AUD for 78c…So tactically one can focus on being right &amp; comfortable while potentially missing on the potential continuation of the near-term trends, or one can focus on making money &amp; get uncomfortable by playing the melt-up 

Global Macro Take: WK 12. Dollar Melt-Down = EM EQ + EM FX + CMD Melt-Up

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>La Banque Postale (LBP) has increased its stake in <a href="https://www.smartkarma.com/entities/cnp-assurances" target="_blank" data-smartkarma-citation="entities:21421:1" rel="noopener">CNP Assurances (CNP FP)</a> to 85.25%. Following a €1.0/share dividend payment, the offer price has been adjusted to €20.9/share.</li>
<li>The shares have traded in line with the offer price since announcement (around €10 million traded daily on average), and have returned 45% since publication of my first insight.</li>
<li>
Gross spread is 0.1% and the estimated annual return is 0.89%, assuming settlement on 8 June. LBP just needs 4.75% to squeeze-out. Recommendation is tender.</li>
</ul>


La Banque Postale (LBP) has increased its stake in CNP Assurances (CNP FP) to 85.25%. Following a €1.0/share dividend payment, the offer price has been adjusted to €20.9/share.
The shares have traded in line with the offer price since announcement (around €10 million traded daily on average), and have returned 45% since publication of my first insight.

Gross spread is 0.1% and the estimated annual return is 0.89%, assuming settlement on 8 June. LBP just needs 4.75% to squeeze-out. Recommendation is tender.


La Banque Postale / CNP Assurances: Start of Offer Period

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The European Benchmark Indices (BMI) of the STOXX family are reviewed on a quarterly basis in March, June, September and December. The December 2021 constituent changes were announced recently.</li>
<li>In this insight, we mainly focus on the constituent changes for the STOXX Europe 600 Index and the EURO STOXX Index.</li>
<li>In addition, we also take a look at the timeline, expected Inclusion/Exclusion Parameters for these candidates, historical performance of past rebalance events, and a potential trading strategy for December 2021.</li>
</ul>


The European Benchmark Indices (BMI) of the STOXX family are reviewed on a quarterly basis in March, June, September and December. The December 2021 constituent changes were announced recently.
In this insight, we mainly focus on the constituent changes for the STOXX Europe 600 Index and the EURO STOXX Index.
In addition, we also take a look at the timeline, expected Inclusion/Exclusion Parameters for these candidates, historical performance of past rebalance events, and a potential trading strategy for December 2021.


STOXX Europe Indices: Constituent Changes and Trading Strategy December 2021

In my <a href="https://www.smartkarma.com/insights/cnp-assurances-potential-minorities-buyout" target="_blank" data-smartkarma-citation="insights:59360" rel="noopener">CNP Assurances: Potential Minorities Buyout</a> I mentioned the possibility of an offer to buy out the minorities of <a href="https://www.smartkarma.com/entities/cnp-assurances" target="_blank" data-smartkarma-citation="entities:21421:1" rel="noopener">CNP Assurances (CNP FP)</a>, while the stock was still trading cheap, and recommended to be long the stock.
<div>
Today 28 October, La Banque Postale (LBP) has <a href="https://www.cnp.fr/en/the-cnp-assurances-group/newsroom/press-releases/2021/la-banque-postale-and-groupe-bpce-intend-to-streamline-their-shareholding-relationships-and-strengthen-their-industrial-partnerships" target="_blank" rel="noopener">announced its intention</a> to acquire CNP Assurances’ shares held by Groupe BPCE and to file a simplified public tender offer with the Autorité des Marchés Financiers (AMF) for CNP Assurances’ minority shareholders (21.1%) at the price of €21.90/share, cum dividend, a premium of 36.2% to the prior day closing price, with the intention of ultimately implementing a squeeze-out (for which LBP needs at least c. 53% acceptances from the free float). The offer represents a 40% upside to the closing price of the day of publication of my insight.
The consideration represents an implied equity value of approximately €15,026 million, and 10.0x 22e P/E, in line with the 10.1x median of European peers (vs. 6.9x at the time of publication of my previous insight).
There is not any interloper risk and the transaction will have the green light from regulators and the French state while the premium, optically generous, puts the stock in line with listed European peers.
If you bought following publication of my previous insight, a 40% gross return is enough reason to cash in and look for other opportunities; otherwise, long and tender for a safe 1.8% annualised spread, with closing in about 6 months.
The stock has traded €81 million by 2pm.
</div>

In my CNP Assurances: Potential Minorities Buyout I mentioned the possibility of an offer to buy out the minorities of CNP Assurances (CNP FP), while the stock was still trading cheap, and recommended to be long the stock.

Today 28 October, La Banque Postale (LBP) has announced its intention to acquire CNP Assurances’ shares held by Groupe BPCE and to file a simplified public tender offer with the Autorité des Marchés Financiers (AMF) for CNP Assurances’ minority shareholders (21.1%) at the price of €21.90/share, cum dividend, a premium of 36.2% to the prior day closing price, with the intention of ultimately implementing a squeeze-out (for which LBP needs at least c. 53% acceptances from the free float). The offer represents a 40% upside to the closing price of the day of publication of my insight.
The consideration represents an implied equity value of approximately €15,026 million, and 10.0x 22e P/E, in line with the 10.1x median of European peers (vs. 6.9x at the time of publication of my previous insight).
There is not any interloper risk and the transaction will have the green light from regulators and the French state while the premium, optically generous, puts the stock in line with listed European peers.
If you bought following publication of my previous insight, a 40% gross return is enough reason to cash in and look for other opportunities; otherwise, long and tender for a safe 1.8% annualised spread, with closing in about 6 months.
The stock has traded €81 million by 2pm.


Streetinsider published last July that a large shareholder of French insurance company <a href="https://www.smartkarma.com/entities/cnp-assurances" target="_blank" data-smartkarma-citation="entities:21421:1" rel="noopener">CNP Assurances (CNP FP)</a> was exploring a bid to take the company private. The buyer was working with bankers to present the bid to the company. It is unclear if the proposal will lead to a definitive agreement, it was cautioned. Fast forward until last week, with some recent buying from hedge funds.
The free float of CNP Assurances is 22.1%. The company is takeover-proof as a result of its shareholding structure (essentially state-owned). It is trading at 6.9x 2022E P/E, below the 10.0x median multiple of European peers.
CNP Assurances is forecast to grow earnings by 8.1% in 2021e and 5.6% in 2022e, with a 2022E dividend yield of 6.6%. It offers valuation attractions from a yield and growth perspective in my view. Median TP (capital IQ consensus) is €17.8. I expect consensus EPS upgrades.
Since the pandemic depressed stock valuations, there have been a few deals to buy out the minorities. A few examples are <a href="https://www.smartkarma.com/insights/altice-next-private-takeover-announcement" target="_blank" data-smartkarma-citation="insights:43240" rel="noopener">Altice - Next Private Takeover Announcement</a>, <a href="https://www.smartkarma.com/insights/xavier-niel-iliad-an-offer-shareholders-can-t-refuse" target="_blank" data-smartkarma-citation="insights:55351" rel="noopener">Xavier Niel/Iliad: An Offer Shareholders Can't Refuse?</a>, <a href="https://www.smartkarma.com/insights/otis-zardoya-otis-lifting-the-minorities" target="_blank" data-smartkarma-citation="insights:58060" rel="noopener">Otis/Zardoya Otis: Lifting the Minorities</a>, among others.
An offer with a 20% takeover premium could be launched at €18.12/share, in line with the consensus TP. Also that potential takeover price would still be 14.1% below the comparables median Fwd P/E implied TP of €21.09/share.
At that takeover price, the stock would still yield 5.5%, easily 250 bps above interest if the acquisition were debt-financed. The total cost would be €2,747 million, before any acquisition expenses.
The stock seems a safe long, in my view, with the possible upside of a takeout offer. Recommendation is long CNP FP.

Streetinsider published last July that a large shareholder of French insurance company CNP Assurances (CNP FP) was exploring a bid to take the company private. The buyer was working with bankers to present the bid to the company. It is unclear if the proposal will lead to a definitive agreement, it was cautioned. Fast forward until last week, with some recent buying from hedge funds.
The free float of CNP Assurances is 22.1%. The company is takeover-proof as a result of its shareholding structure (essentially state-owned). It is trading at 6.9x 2022E P/E, below the 10.0x median multiple of European peers.
CNP Assurances is forecast to grow earnings by 8.1% in 2021e and 5.6% in 2022e, with a 2022E dividend yield of 6.6%. It offers valuation attractions from a yield and growth perspective in my view. Median TP (capital IQ consensus) is €17.8. I expect consensus EPS upgrades.
Since the pandemic depressed stock valuations, there have been a few deals to buy out the minorities. A few examples are Altice - Next Private Takeover Announcement, Xavier Niel/Iliad: An Offer Shareholders Can't Refuse?, Otis/Zardoya Otis: Lifting the Minorities, among others.
An offer with a 20% takeover premium could be launched at €18.12/share, in line with the consensus TP. Also that potential takeover price would still be 14.1% below the comparables median Fwd P/E implied TP of €21.09/share.
At that takeover price, the stock would still yield 5.5%, easily 250 bps above interest if the acquisition were debt-financed. The total cost would be €2,747 million, before any acquisition expenses.
The stock seems a safe long, in my view, with the possible upside of a takeout offer. Recommendation is long CNP FP.

CNP Assurances: Potential Minorities Buyout

France

CNP Assurances offers group and individual life, health, accident, disability and credit insurance, and pensions.  The Company markets its products for individuals through banks.  CNP operates in parts of Europe and South America.

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CNP Assurances (CNP FP)

Global Macro Take: WK 12. Dollar Melt-Down = EM EQ + EM FX + CMD Melt-Up

Barring some kind of shock-event, US dollar liquidation will drive markets for the near-term, possibly even a few weeks. Already elevated EM...

Kay Van-Petersen

La Banque Postale / CNP Assurances: Start of Offer Period

The offer period to acquire the minorities of CNP will kick-off on 2 May. The offer should succeed, as the offeror just needs 4.75% to squeeze-out...

Jesus Rodriguez Aguilar

STOXX Europe Indices: Constituent Changes and Trading Strategy December 2021

A discussion of the constituent changes for the STOXX Europe 600 Index and the EURO STOXX Index in the December 2021 Quarterly Index Review and...

Janaghan Jeyakumar, CFA

36% Takeover Premium

The premium, optically generous, puts the stock in line with listed European peers. If you bought following my previous insight, a 40% gross is...

Jesus Rodriguez Aguilar

CNP Assurances: Potential Minorities Buyout

CNP Assurances offers valuation attractions from a yield and growth perspective, with the possible upside of a takeout offer. There has been some...

Jesus Rodriguez Aguilar

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