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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessTapestry (TPR; Baa2, BBB+; double Neg) 3Q24 Earnings Call (3m ending March)
Our screens are unch; €27/31s rich & €25s cheap. Capri Q4/FY earnings later this month worth keeping an eye on.
- Nothing in earnings call that indicates any change in co's confidence to close Capri deal, leverage target of gross 2.5x within 2yrs of close was reiterated.
- For now we continue to price based on Capri equities - the most liquid measure of the probability of success & a effective hedge/arb if drastically different to bonds. We still see it pricing a only ~30% chance of closing.
- Capri FY24 earnings will come this month - arguably more relevant for TPR lines given 1) continuing poor performance may loosen TPR's resolve to close the deal (see LVMH on Tiffany acquisition in '19 a example) & 2) it may move standalone FV of capri equities - we are using current EPS forecast to back out the 30% probability priced.
- If equities move in-line with EPS revisions it won't change anything for us but if there is a skewed reaction - e.g. weak earnings seeing M&A arb. longs exit - it could start screening opps against bonds - e.g. as a hedge for bond shorts.
- As mentioned mids on €27/29s indicate bond investors already pricing a lot more optimism on deal close than equities - though it hard to pinpoint exactly how much as it depends on if investors are looking for excess returns or happy with anything that avoids total (net of carry) losses.
- Final aside, we are pricing to worst case of September call (when court proceedings begin) - latest is Feb 10 2025 before call is enforced - though co may attempt to negotiate that with bondholders (both benefit) if it overruns the date.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.