Thomas Cook Share News (TCG)

* Europe's STOXX 600 up 0.2% as defensive stocks gains
* Investec falls after profit warning
* London lags as sterling bounces on renewed Brexit optimism
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Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters and anchored today by Josephine Mason. Reach her on Messenger to share your
thoughts on market moves: josephine.mason.thomsonreuters.com@reuters.net

UK: LIST YOUR U.S. BUSINESS IN NY? (0912 GMT)
Rising share buybacks, M&A and companies not raising money via equity issuance are shrinking
equity supply globally and the UK is particularly one of the prime "de-equitisation" candidates,
Citi equity strategists say.
Companies have increasingly turned to the bond markets for their financing needs in recent
months as falling bond yields mean buying debt is cheap versus equity, leading to less equity
offerings.
The UK has one of the widest financing gaps -- cost of equity versus cost of debt -- in the
world. These factors have led to UK's annual net equity supply to shrink 3% since early 2018,
the sharpest fall in 12 years.




Citi strategists believe more de-equitisation will happen in the UK given the
internationally-exposed FTSE 100's stocks are trading at a steep discount (-30%) to the
U.S., inviting more M&A and potentially de-listings.
"They have used cheap cash/debt to retire listed equity, either their own via share buybacks
or others' through M&A. They are reluctant to issue dilutive new shares," Citi says.
Rising shareholder activism in the UK is another key factor that could drive M&A and
de-listings. Billionaire activist investor Nelson Peltz's Trian urged Ferguson to sell
its UK business and list its U.S. business in New York.
Why would a U.S. listing make sense?
Citi compares price-to-earnings ratio of a UK company to its U.S. sector and the discount is
huge. For instance, cruise ship operator Carnival, which earns 59% of its
revenue in the U.S., is trading at a 12-month forward P/E of 9.8, a 54% discount to its U.S.
sector P/E.
For more such examples see chart below:




"Companies are turning their backs on the UK equity market... Discounted valuations, a high
debt/equity funding gap, weak sterling, and decent shareholder accountability form a perfect
storm, and have provoked widespread corporate action," Citi adds.
The bank points to major M&As in the UK in recent years: Sky by Comcast, Shire by
Takeda, Takeaway.com by Just Eat (pending) and HKEX's offer for LSE
(rejected).

(Thyagaraju Adinarayan)
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OPENING SNAPSHOT: DEFENSIVE GAINS (0739 GMT)
Early selling in euro-zone bourses is easing now, helping Paris, Milan, Madrid and Frankfurt
off their earlier lows and almost lift the euro-zone STOXXE benchmark into positive
territory as cautious investors buy into defensive stocks even as concerns linger about the
health of the bloc's economy and U.S.-China trade talks.
Real estate stocks that benefit from lower interest rates and healthcare, utilities and
retailers are leading the gains.
London's lagging the broader region, down 0.3% as major exporter stocks fall due to the
stronger sterling amid fresh hopes the country can avoid a hard Brexit while Rolls Royce
tumbles after the company delayed again its Trent 1000 engine. In contrast, optimism about
Brexit and the stronger domestic currency are boosting housebuilders and supermarkets.
Among individual moves, a profit warning from Investec has pushed the FTSE
250-listed investment bank down 5.1% and Signify is sliding 6% after Philips announced
plans to sell its remaining stake in the world's biggest maker of lights.

(Josephine Mason)
*****


LONDON ON THE BACKFOOT (0700 GMT)
The major European stock futures are on the backfoot this morning as investors lock in
profits amid broader caution about US-China trade talks, government stimulus and spikes in
overnight lending rates in the United States.
London futures are leading the charge lower, down 0.7% after sterling rallied to a
two-month high as hopes the country will avoid a no-deal Brexit build again after European
Commission President Jean-Claude Juncker said a new Brexit deal could still be reached before
the Oct. 31 deadline and the backstop could be potentially replaced.
Brace for volatility with the expiry of contracts for stock index futures, stock index
options, stock options, and single stock futures, known as quadruple witching day.
In corporate news, Rolls Royce shares are expected to come under pressure after the
company warned of further delays its Trent 1000 engines.
Among the midcaps, shares in Investec could fall as much as 10% after the
investment bank warned that profits for the first-half of the year will be lower than last year
on higher costs as it restructures its business and grapples with "challenging" market
conditions.
Thomas Cook is facing fresh uncertainty after its banks ordered the world's old tour
operator company to find an additional 200 million pounds ($251 million) of funding in order to
guarantee its survival.

Other UK headlines:
Rolls Royce says it's facing another delay to its Trent 1000 engine
Royal Bank of Scotland appoints Alison Rose as CEO
Thomas Cook confirms lenders' request for extra 200 mln stg in rescue deal
Keller CEO Michaelis to step down, reaffirms FY outlook nL3N26B1ME
Rolls-Royce Delays Single-Digit Level Return Of AOGS On Trent 1000

(Josephine Mason)
*****

ON OUR RADAR: SUPERMARKETS, AIRLINES (0558 GMT)
It's relatively quiet on the corporate front, but supermarkets and airlines are catching a
few early headlines.
Casino is in talks to sell its French discount store chain Leader Price to German
low-cost rival Aldi , the latest move by the French retailer to cut debts.
There are more ructions in the airline and travel sector: French budget airline XL Airways
has become the latest example of low-cost airlines running into financial trouble amid sector
overcapacity as it suspended ticket sales and.
Meanwhile a rescue deal for Thomas Cook is facing fresh uncertainty after the travel
firm was hit with a demand for extra funds and a panel of bankers delayed a decision that might
have won credit investors over to a deal.

Here are your early headlines:
Thomas Cook hit with extra funding demand, threatening rescue
Mediaset strikes deal to fend off Vivendi's withdrawal risk
Philips to sell remaining 10.7% stake in Signify for 357 mln euros
Belgian police search home of new KPN CEO - reports
France's CNP and Brazil's Caixa seal $1.7 bln insurance deal
Casino in talks to sell discount chain Leader Price to Aldi
Air France and easyJet drop Aigle Azur bids as liquidation looms

(Josephine Mason)
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ENDING A 'STRANGE' WEEK (0521 GMT)
If it stays under pressure today, the euro-zone STOXXE benchmark will register its
first weekly drop in five reflecting the disquiet from the drone attacks on Saudi Arabia, trade
tensions, central bank stimulus and the spikes in overnight lending rates that roiled bonds
markets and briefly derailed the rally in banking stocks.
The pan European STOXX 600 is proving a little more robust, on track for a 1.2%
rise, its fourth straight weekly gain.
As Michael Hewson, chief market analyst at CMC Markets UK says: "It's been a bit of a
strange week for equity markets."
The lack of any escalation (in Saudi Arabia) so far appears to have tempered a good
proportion of this week’s surge higher, in the oil price, prompting equity markets to recover
from their lows, nonetheless there remains a significant amount of unease as to what might
unfold over the course of the next few days and weeks."
"As a result of this uncertainty equity markets have struggled to push on significantly from
the gains, we’ve seen over the course of the previous three weeks, with US markets struggling to
push on beyond their previous record highs from July."
IG financial spreadbetters expect London's FTSE to open 30 points lower at 7,327,
Frankfurt's DAX to open 21 points lower at 12,437, and Paris' CAC to open 10 points lower at
5,649.

(Josephine Mason)
*****


(Reporting by Danilo Masoni, Josephine Mason and Thyagaraju Adinarayan)