Baidu Inc. (NASDAQ: BIDU) Reiterated Buy but target raised to $550 at Goldman Sachs.
Canadian Natural Resources (NYSE: CNQ) Raised To Conviction Buy at Goldman Sachs.
Coca-Cola Hellenic Bottling Co. (NYSE: CCH) Started as Buy at RBS.
Genzyme Corp. (NASDAQ: GENZ) Raised to Buy at UBS.
Kraft Foods Inc. (NYSE: KFT) Raised to Buy at UBS.
Lowe’s Companies Inc. (NYSE: LOW) Cut to Neutral at Goldman Sachs.
McDonald’s (NYSE: MCD) Raised to Conviction Buy at Goldman Sachs.
NASDAQ OMX Group (NASDAQ: NDAQ) Raised to Conviction Buy at Goldman Sachs.
Newmont Mining (NYSE: NEM) Started as Buy at Deutsche Bank.
Quest Software (NASDAQ: QSFT) Cut to Sell at Goldman Sachs.
UBS AG (NYSE: UBS) Raised to Overweight at JPMorgan.
Warner Chilcott (NASDAQ: WCRX) Raised to Outperform at Oppenheimer.
Vale S.A. (NYSE: VALE) Raised to Buy at UBS.

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JON C. OGG
FEBRUARY 3, 2010

The government has been accused of falsifying data about its public finances and allowing political pressures to obstruct the collection of accurate statistics.  In the past Greece could just arbitrarily devalue the currency and declare a ‘do-over,’ but that is not an option now that they are in the Euro.  In fact, the argument that this has happened throughout modern history is now of no relevance.  If you take the issues and make these a norm, it could even lead ultimately to a situation no different from kicking cast members off the island.

Dow Jones reported earlier that the spread between Greek and German bonds was narrowing with the 10-year Greek government bonds under 380 basis points versus a spread of about 405 basis points seen on Thursday.

Portugal

• Portugal Telecom SGPS SA (NYSE: PT) -0.4% at $10.39

In Ireland

• The Bank of Ireland (NYSE: IRE) -0.7% at $7.36
• Allied Irish Banks plc (NYSE: AIB) +3% at $3.60
• The New Ireland Fund, Inc. (NYSE: IRL) +1% at $6.93

Greek Stocks Are As Follows:

• National Bank of Greece SA (NYSE: NBG) +7.5% at $4.57
• Hellenic Telecommunications Organization SA (NYSE: OTE) flat at $6.96
• Coca-Cola Hellenic Bottling Company S.A. (NYSE: CCH) +2.3% at $23.07
• DryShips, Inc. (NASDAQ: DRYS) -1.4% at 45.73
• Diana Shipping Inc. (NYSE: DSX) -0.6% at $13.77

In Spain

• Spain Fund Inc. (NYSE: SNF) -1.6% at $6.93
• iShares MSCI Spain Index (NYSE: EWP) +0.6% at $43.79
• Banco Bilbao Vizcaya Argentaria SA (NYSE: BBVA) +0.05% at $15.36
• Banco Santander SA (NYSE: STD) +1.3% at $14.20
• REPSOL YPF SA (NYSE: REP) +0.15% at $23.78
• Telefonica SA (NYSE: TEF) -0.6% at $72.43

Where these ETFs, closed-end funds, and stocks close today is likely to depend upon how the US market closes and on the international headlines.  None of these gains are stellar nor do they signal any major betting bias that a recovery or resolution of the Greece issue will instantly recover.  But these are still better than some of the losses we have seen in recent days.

JON C. OGG

While international shipping companies operate globally, international maritime law and domicile has favored Greek flags for where corporate headquarters happen to be located.  There is also a notion that Greeks have been among the world’s greatest seafarers for generations, but here is how these are performing today:  DryShips, Inc. (NASDAQ: DRYS) is based in Athens, its shares are down 1.6% at $6.16.  Diana Shipping Inc. (NYSE: DSX) is based in Athens, its shares are down 3.9% at $14.98.  Excel Maritime Carriers, Ltd. (NYSE: EXM) is based in Athens, its shares are down 3.3% at $6.79.  Navios Maritime Holdings Inc. (NYSE: NM) is based in Piraeus, its shares are down 1.5% at $5.86.  Top Ships Inc. (NASDAQ: TOPS) is based in Athens, its shares are down 1% at $1.02.  Tsakos Energy Navigation Ltd. (NYSE: TNP) is based in Athens, its shares are down 2.7% at $16.01.

Standard & Poor’s put Greece’s A- rating on CreditWatch negative yesterday, and it raised issues with government finances that could lead to downgrades in the future. Fitch referred to “fiscal slippage relative to current plans” could result in a further downgrade, but also noted that the emergence of a much stronger policy commitment and its consistent implementation could see the outlook revised to stable.  This follows new policies the government has committed to and it further outlines some of the risks that the larger European Union members are taking on with each new less developed nation added to the E.U.

This has also driven up credit default swap rates in insuring against Greek default.  Fitch further noted that Greece could now see its government debt burden reach close to 130% of gross domestic product.  Also noted is an aging population and a highly generous and unreformed pension system at 15% of GDP.

Greek banks have a large part of their assets in Greek government bonds, and those bonds are used as collateral for their regular loans from the ECB. The new government increased its forecast this year noting that the budget deficit could be almost double prior targets at a new rate of 13% of GDP.

The top three ADRs are down on the day in NYSE trading: National Bank of Greece SA (NYSE: NBG) is down 9.7% at $5.43, Hellenic Telecommunications Organization SA (NYSE: OTE) is down 3.2% at $7.47, and Coca-Cola Hellenic Bottling Company S.A. (NYSE: CCH) is down 1.9% at $23.49 on thin volume.

There is a lesson here for all nations.  While we have to take care of each other, the real question boils down to ‘at what cost’ and the implications are that paying for every aspect of the generations of today is going to drastically increase the burden on the generations of tomorrow.

Jon C. Ogg
December 8, 2009

Interestingly enough, this could have traders (and investment bankers) looking toward Coca-Cola Bottling Co. Consolidated (NASDAQ: COKE), Coca-Cola Enterprises Inc. (NYSE: CCE), Coca-Cola FEMSA S.A.B de CV (NYSE: KOF), and Coca-Cola Hellenic Bottling Company S.A. (NYSE: CCH)… all of which are tied to The Coca-Cola Company (NYSE: KO).

Under the agreements, Pepsi Bottling Group, Inc. (PBG) holders will have the option to receive either $36.50 in cash or 0.6432 shares of PepsiCo common stock.  That value was $36.50 based on PepsiCo’s closing share price of $56.75 on July 31, 2009.  That is subject to proration such that the aggregate consideration to be paid to PBG shareholders shall be 50% cash and 50% PepsiCo common stock.

In a similar deal, PepsiAmericas (PAS) shareholders will have the option to receive either $28.50 in cash or 0.5022 shares of PepsiCo common stock.  That had a value of $28.50 based on PepsiCo closing share price of $56.75 on July 31, 2009.  It is also subject to proration such that the aggregate consideration to be paid to PAS shareholders shall be 50% cash and 50% PepsiCo common stock.

This is not a small deal at all, particularly considering that these mergers are for the stakes not already owned.  The total value of the shares that PepsiCo is acquiring comes to roughly $7.8 billion.  Based on the recommendations of the Special Committee of PBG and the Transactions Committee of PAS, the boards of directors of both companies have approved the merger transactions.

Pepsi gave the end game numbers here.  It sees annual pre-tax synergies of $300 million by 2012 and expects these mergers to be accretive to PepsiCo’s earnings by about $0.15 on earnings per share when synergies are fully realized in 2012.

We have yet to see much action in the rival play here in an investor Pepsi vs. Coke taste challenge.  Coca-Cola Bottling Co. Consolidated (NASDAQ: COKE), Coca-Cola Enterprises Inc. (NYSE: CCE), Coca-Cola FEMSA S.A.B de CV (NYSE: KOF), and Coca-Cola Hellenic Bottling Company S.A. (NYSE: CCH) are all tied to The Coca-Cola Company (NYSE: KO).  Our sources have noted that there is not the same appetite to make this sort of transaction that Pepsi has embarked upon, although that was back in April and May and anything could have changed by then.

JON C. OGG
AUGUST 4, 2009

Coca-Cola Bottling Co. Consolidated (COKE), Coca-Cola Enterprises Inc. (NYSE: CCE), Coca-Cola FEMSA S.A.B de CV (NYSE: KOF), and Coca-Cola Hellenic Bottling Company S.A. (NYSE: CCH) are all affiliated companies.

Pepsico (NYSE: PEP) shares are down over 4% at $50.02 today.  A $6 billion buyout compares to a new market cap of almost $78 billion.  The Coca-Cola Company (KO) is down 2.4% with the broad market today and in sympathy with Pepsi.  It would be a kid’s game to only hang your hat on the 17% that Pepsi is offering to see if Coke would do the same, but this is somewhat uncharted and has to start at least somewhere.  We wanted to take a look at what an implied 17% gain would like for Coke’s affiliated entities.

Coca-Cola Bottling Co. Consolidated (NASDAQ: COKE) is based in Charlotte, NC and is into the production, marketing, and distribution of carbonated nonalcoholic beverages primarily of Coca-Cola.  Operations are throughout the Central East Coast and parts of the Southeast. Its shares are up 1% at $54.28 and its market cap is just shy of $500 million.

Coca-Cola Enterprises Inc. (NYSE: CCE) is also based in Atlanta, GA and is in the manufacturing, distribution, and marketing of nonalcoholic beverages and offers its products principally under the Coca-Cola classic, Sprite, Dasani, POWERade, Coca-Cola, Diet Coke/Coca-Cola light, Fanta, Coca-Cola Zero, and Capri-Sun brand names.  It sells through wholesalers and retailers primarily in North America, the U.K. and Europe.  Its shares are up 3% at $15.39 and its market cap is $7.5 billion.

Coca-Cola FEMSA S.A.B de CV (NYSE: KOF) is based in Mexico, City which is a bottler of Coca-Cola trademark beverages in Latin America.  If you have forgotten, this is one of the rather large Bill Gates holdings.  FEMSA’s market cap is $6.73 billion and its shares are down 3.5% at $36.47 today.

Coca-Cola Hellenic Bottling Company S.A. (NYSE: CCH) is based in Athens, Greece and it produces, distributes, and sells non-alcoholic beverages under a franchise of the Coca-Cola name serving approximately 550 million people in 28 countries throughout Europe, Eastern Europe, and Russia.  Hellenic’s stock is off almost 4% at $15.32 today and its market cap is $5.6 billion.

Pepsi has said that this will become accretive to earnings and will streamline its operations.  It is very possible that the same could come true for Coca-Cola.  The problem is that this would come with a much larger price tag.  Just like Pepsico, it also holds interests.  That means that it would not all be entirely add-on capital to the market caps with a 17% premium in simple math.  But if you tally up the US-equivalent of the stated market caps of the Coca-Cola bottling and distributing its goods comes to a whopping sum in excess of $21 billion.  That is before backing out the company’s interest, but that is also before lumping in a premium to the share prices.

Coca-Cola’s market cap is just north of $102 billion.  That would put the entire tab at a much higher price nominally.  Both Pepsi and Coca-Cola are still closer to their 52-week lows than they are to their respective highs.  Both should easily have access to the capital markets, particularly if the deals can be financed as a streamlining of operation or for more efficiency.  It looks like it is just a lot cheaper for Pepsi to do this over what it would cost Coca-Cola.

Stay tuned.

Jon C. Ogg
April 20, 2009