C&C, the drinks group, today announced that it has agreed to acquire the
Gleeson Group for €12.4m.
The company which manufactures Tipperary water and Finches soft drinks
has existing debts of €45.6m.
Liam Igoe of Goodbody commented - - "C&C has announced that it has
conditionally agreed to acquire the Irish drinks group, Gleesons. The cost will
be €58m (inclusive of debt and equity) and the business earned an EBITDA of
€10.2m for the 12 months to June 2012. Gleesons manufactures its own brands in
the soft drinks market in Ireland, including Tipperary water (number 2 brand in
Ireland ) and Finches soft drinks (mainly for the on-trade). In the wholesale
trade, the company is the leading distributor of beverages into the on-trade
with a market share of 30%. It has agency distribution for all the major brands,
including Guinness, Heineken, Carlsberg and Miller as well as the C&C portfolio
of cider and AbInbev brands.
We estimate that the deal will add over 2% to eps initially, though there
will also be synergy benefits to accrue after integration with C&C. The
transaction will accelerate the changing offering of C&C in the Irish market
from a provider of a single cider product to a broad portfolio provider that
includes its Tennents brands along with the soon to be acquired soft drinks and
wholesale brands. The cost of the transaction is 5.7x the 2012 EBITDA."
Banks: ELG to
be phased out in Q1?; Eamonn Hughes and Colm Foley comment - - "The
Secretary General of the Department of Finance yesterday made comments that the
government guarantee for the banks, the ELG (Eligible Liabilities Guarantee), is
likely to be phased out in Q113.
The ELG is renewed every 6 months and there has been much speculation
recently that it will be allowed to lapse at year end. In the past number of
months, the compression in Irish sovereign bond yields, a slowdown in the pace
of decline in property prices, NTMA tapping the market and more recently a
covered bond issue by BOI have all been signs of the improving trends in the
macro backdrop and the financial sector.
Nevertheless, substantial headwinds still face the banks and in our recent
Stand and Delever report we anticipated that the ELG may be phased out early
2013, a timeline which now appears to be on the cards from the latest official
comments. Whilst the Secretary General indicated that no final decision had been
made yet, it appears that "it is the safer course of action" to seek European
Commission approval to extend it to allow time to wind it down. He added that
removing the guarantee on December 31 "creates a sort of deadline you don’t
necessarily need". At the end of September, liabilities covered by the guarantee
Our view that the ELG will be phased out in early 2013 rather than at end
2012 is already reflected in our estimates for the banks. As a reference, we
have the ELG cost at BOI this year, which is estimated at €365m, drop to €125m
Economic View: Health overspend highlights budgetary
difficulties; Juliet Tennent of Goodbody comments - - "With
just two weeks to go until the 2013 budget, the Minister for Public Expenditure,
Brendan Howlin, suggested in the Dail yesterday that a supplementary health
budget may be necessary to deal with the overspend in that area. Exchequer
figures for the end of October showed that current voted expenditure in the
Department of Health was running ahead of profile by €336m or 3.3%. This
overspend was highlighted as an area of concern in the most recent Troika
report. With all other departments, with the notable exception of social
protection, running current surpluses, and the overall voted capital budget 14%
behind profile, aggregate voted expenditure was just 0.2% ahead of target at the
end of October. This means that while the Government is on track to meet the
overall 2012 deficit target of 8.6%, the Department of Health is likely to
exhaust its current budget.
The government is committed to making a further €2.25bn in expenditure cuts
in the forthcoming budget and accurate budgeting in the Department of Health
which accounts for c.30% of the current voted expenditure, is essential. That
the government may need to introduce a supplemental health budget this close to
the full 2013 budget highlights the difficulties that they face finding the
Irish bond yields fall to fresh lows: Conall Mac Coille of Davy comments - -
"Stock indices were little changed yesterday (November 21st) with the Euro Stoxx
50 Pr up 0.4% and the S&P500 up 0.2%. With US markets closed for the
Thanksgiving holiday, trading may be relatively quiet again today. That said,
the HSBC Flash Manufacturing PMI index for China increased from 49.5 to 50.4 in
November. This adds to evidence that growth in the Chinese economy is no longer
slowing, with the PMI index now above the key 50 no-change level.
In contrast, there has been little evidence thus far that confidence and
activity in the European economy have shown any significant improvement to
reflect the recovery in stock market sentiment through August and September,
sustained into Q4. Today's release of euro area PMI indices is expected to show
that the November composite survey remains at the 45.7 reading recorded in
October, consistent with negative GDP growth. Similarly, the release of the
European Commission's consumer confidence survey is expected to show a modest
decline in November following the abrupt deterioration in the survey since June.
Irish bond yields fell sharply yesterday. The bid yield on the 9-year bond
maturing in October 2020 fell by 17 basis points to 4.49%, its sharpest one-day
fall since October 12th. There were similar declines across the curve. The
mid-yield on the Irish bond maturing in 2025 fell below 5% for the first time,
with the bid yield just 5.002%. The catalyst appeared to be a realisation that
new bond issuance may not be forthcoming until 2013, squeezing short positions
and increasing demand for existing Irish paper."
Irish Economy: Debt sales with interest rates at
lowest levels since Babylonian Empire
Wolfgang Schäuble of Germany is the FT's 2012 top
finance minister in Europe
Markets are closed Thursday for Thanksgiving Day.
In New York Wednesday, the Dow gained 48 points or 0.38% to 12,837.
The S&P 500 added 0.23% and the Nasdaq advanced 0.34%.
The MSCI Asia Pacific Index rose 0.9% Thursday.
Japan's Nikkei 225 closed up 1.56%; China's Shanghai Composite
Index lost 0.72%; South Korea's Kospi rose 0.85%; Australia's S&P/ASX 200
gained 1.00% and in Mumbai, the Bombay Stock Exchange's Sensex 30 climbed
In Europe, the Dow Jones Stoxx Europe 600 is up 0.35% in morning
The ISEQ has risen 0.53%.
C&C is up 1.25%.
Key Index Performance
Bank of Ireland Daily Report
The euro is trading at $1.2856 and at £0.8050.
For live currency updates, check the
right-hand column of the
Finfacts home page.
The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008
- an-all time record.
The Baltic Dry
a measure of shipping costs for dry commodities,
hit an all-time High of 11,771 on the 21st of May, 2008.
From that time it reversed and on the 5th of December, 2008 it hit a low of 663
- - close to a 1986 low.
On Thursday, July 15, 2010, the index fell for
the 35th straight session, by 9 points, or 0.537%, to 1,700 points,
On Wednesday this week the BDI closed up 7 points or
1,073 - -
the BDI is down 38.26% in 2012.
Freighter Oversupply Weighs on Shipowners and
Banks - -
Jan 26, 2012: The New York Times says vessels bought during the global commodity
boom are only now being delivered, putting pressure on the European banks that
financed the purchases.
The skyscrapers and immaculate beaches of Singapore's seaport
look out on one of the world’s largest parking lots: mile after mile of empty
cargo ships, as far as the eye can see.
Similar fleets bob at anchor, with empty cargo holds, off the
coasts of southeast Malaysia and Hong Kong. And dozens of newly built ships
float empty near the giant shipyards of South Korea and China, their owners from
all over the world reluctant to accept delivery during one of the worst markets
ever for the global shipping industry.
As recently as six weeks ago large freighters that can carry
bulk commodities like iron ore or grain were fetching charter rates of $15,000 a
day. Now, brokers and owners say, the going rate is $6,000 a day. If any
customers can even be found.
Crude oil for January 2013 delivery is
currently trading on the
Chicago York Mercantile Exchange (CME/Nymex)
at $87.58 up 20 cents from Wednesday's close. In London, Brent for January
delivery is trading on the
International Commodities Exchange at
$110.69. The North
Sea benchmark accounts for two-thirds of the global market.
The margin between the US benchmark WTI (West Texas
Intermediate) used on the New York Mercantile Exchange and Brent is at $23 - -
The Globe and Mail says that for the past 10 months, Canadian producers - -
whose prices are tied to WTI - - have been taking steep discounts for their oil
compared with international crude prices that are benchmarked against North Sea
Brent, which can be shipped more readily. In the past, WTI tended to trade at a
small premium to Brent, because it is easier to refine.
That spread hit a peak of $28.08 (US) on Oct. 14, but has fallen
dramatically since then. After plans for more pipeline capacity at Cushing,
Oklahoma, the differential narrowed.
Gold spot price
The spot price of an oz of gold is trading in New York at
$1,729.10, down 10 cents from Wednesday's close in New York.
Gold had hit a record high of $1,921.05 a troy ounce on Sept 06,
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