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Malaysia launches $3 billion IPO with eye on poll

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The 58-year-old leader released the prospectus for the IPO of Felda Global Ventures Holdings (FGVH) at an event in the capital Kuala Lumpur that was as much political theatre as a financial announcement.

The listing is expected to raise 10.5 billion ringgit ($3.3 billion) based on the price for retail investors of 4.55 ringgit per share, giving it a market capitalization of more than 16 billion ringgit ($5.1 billion).

"The reason for the listing is to create wealth for Malaysians," Najib said in a speech. "There is no other way to create wealth in such a fast pace than listing."

The world's largest IPO this year after Facebook has already attracted a strong cast of cornerstone investors including French agribusiness giant Louis Dreyfus, Fidelity Investments and Middle Eastern sovereign fund Qatar Holding LLC.

That partly reflects strong investor interest in Southeast Asia, which has seen a burst of IPOs since the start of the year despite the protracted euro zone debt crisis, the debacle over Facebook's market debut and shaky IPO markets elsewhere in Asia.

The strong support from cornerstones, which are taking up about two-thirds of the IPO shares, and from Malaysian states in which the plantations are located, means the deal is unlikely to suffer the same fate as the social networking giant or the flurry of Hong Kong share sales that have been shelved recently.

There is also significant political capital invested in the sale, which is set to deliver a windfall totaling more than $500 million to tens of thousands of farmers in what is likely to be an election year.

Malaysia's equity market is dominated by local investors and a large domestic pension fund system that partially insulates IPOs from global volatility.

"So far, there has not been a single major IPO being pulled in Malaysia last year and this year," said Alan Tan, fund manager for Asian equities at Lion Global Investors in Singapore. "Felda is also government-owned, so the chance of it being successfully listed is quite high."

Still, Felda's is being launched amid a slump in global stocks, increased concerns over Europe's debt troubles and worries about slower growth in China. Four major IPOs in Asia Pacific worth nearly $2.5 billion have already been pulled this week, underscoring weak demand for new listings.

London luxury jeweler Graff Diamonds is the latest company to pull its planned $1 billion Hong Kong offering, the fourth major IPO to be called off in Asia in a week as stock markets slide.

MAJOR NEW PLAYER

Felda Global aims to become a major new player in global commodities and plans to use the IPO proceeds to expand into Southeast Asia and Africa.

The government's Federal Land Development Authority (FELDA), the parent firm of FGVH, manages more than 880,000 hectares (2.2 million acres) of plantation. That puts it among the world's largest producers of the palm oil that is used in everyday products from soap to cooking oil and which has tripled in price in the past decade.

The listing of FGVH clubs together refineries, plantation management companies and logistics firms as Malaysia looks to build an agribusiness to rival Singapore's Wilmar International (WLIL.SI).

For the about 1 million FELDA farmers and family members, or settlers as they are known, the IPO is the latest step in a remarkable transformation over a few decades from landless poor to landholders and now shareholders in a global conglomerate.

Najib's father, former Prime Minister Abdul Razak, started FELDA in the 1950s, handing out land to Malays to fight poverty and giving them a crucial role in making Malaysia the world's second-largest palm oil producer.

The farmers hold the key to a likely electoral dividend for Najib, whose ruling coalition faces a tough battle against a resurgent opposition in a national election that the prime minister must call by next March but which is expected sooner.

About a fifth of the proceeds from selling 2.19 billion shares will be handed out to 112,635 landholders, giving them a combined windfall of $553 million or nearly $5,000 each. That is more than the annual minimum salary, adding to the economic feel-good factor that Najib and his ruling UMNO party are trying generate ahead of the polls through a series of social handouts.

Najib announced that a second of three 5,000-ringgit tranches from the IPO proceeds would be handed out to settlers' "wife or wives" on July 7.

ELECTION DIVIDEND

The FELDA settlers form the bulk of the vote in 52 of Malaysia's 222 parliamentary seats, including Najib's base in Pahang state, and they are ethnic Malays - a core support group that has been drifting away from the National Front coalition.

Najib denied that electoral politics played a role in the listing.

"The rumor that the Malaysian government is manipulating the settlers with the IPO is not true at all," he said in his speech.

FGVH started offering its IPO shares to indigenous "Bumiputras" at an indicative price of 4.65 ringgit per share.

Bumiputra, meaning "sons of the soil" in the Malay language, refers to the majority ethnic Malays and other indigenous people who benefit from the decades-old affirmative action policy that favors them in housing, education and business.

Analysts have said Felda Global's aging palm oil trees, which need replanting, could be a drag on its future earnings and profitability. About 53 percent of the company's 323,587 ha of plantations estates in Malaysia are more than 21 years old, according to its draft prospectus filed on April 27.

In contrast, close to 72 percent of Indonesian plantation firm Bumitama Agri Ltd's (BUMI.SI) 119,162 ha of planted area are made up of immature and young trees. ($1 = 3.1630 Malaysian ringgits)

(Additional reporting by Yantoultra Ngui in Kuala Lumpur and Eveline Danubrata and Saeed Azhar in Singapore; Editing by Alex Richardson)

Groupon shares drop as IPO lock-up ends

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At one point the stock dropped more than 10 percent, triggering a circuit breaker that paused trading briefly and limited short sales.

Groupon sold a small amount of its equity in its IPO late last year. Insiders are typically prevented from selling for six months after an IPO.

Groupon's lock-up ended on June 1, making more than 600 million shares available to sell, representing more than 90 percent of its outstanding shares, according to Herman Leung, an analyst at Susquehanna Financial Group.

Expectations of such selling has pressured Groupon stock in recent weeks.

However, Groupon Chief Executive Andrew Mason said in May that he and the company's other founders were planning to keep their shares in the company after the lock-up expired.

Groupon shares were down 9.9 percent to $9.59 in afternoon trading on Friday. The stock has lost more than half its value since it debuted at $20 last year.

(Reporting By Alistair Barr; Editing by Tim Dobbyn)

Pep Boys shares tumble after Gores calls off buyout

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Gores had offered $15 per share for Pep Boys, which also provides auto-repair services, in January in a deal that gave the company an enterprise value of $1 billion.

But earlier this month, it sought to delay the completion of the deal, citing serious deterioration in Pep Boys' business and a breach of covenant under the merger agreement.

Both the parties then tried to negotiate a settlement, a source familiar with the matter told Global Markets.

Gores and Pep Boys, however, never discussed a repriced deal but talked about litigation, the source said requesting anonymity.

They eventually reached a settlement under which Gores agreed to pay Pep Boys a break-up fee of $50 million and merger-related expenses.

Pep Boys intends to operate as a standalone public company and is not actively looking to sell, the source said.

The company has tried to sell itself several times in the past without any success. More recently, it considered a sale after being approached by interested parties, public filings show.

"The real issue was not whether the deal will be terminated, but whether Gores was going to pay $50 million without litigation," said Roy Behner, co-chief investment officer at Westchester Capital Management, which holds shares of Pep Boys.

The auto-repair services industry has been doing badly in recent months as a mild winter led to less wear and tear on vehicles, and thus fewer repairs. Customers have also been deferring purchases in a weak economy.

Pep Boys and peers Advance Auto Parts Inc (AAP.N) and Monro Muffler (MNRO.O) have either reported or forecast weak results.

Pep Boys was founded in 1921 by four friends who pooled together $800 to open a single auto parts store in Philadelphia. It now offers automotive service, tires, parts and accessories and has over 7,000 services centers in the United States and Puerto Rico.

The company's stock has fallen almost 25 percent since Gores warned about cancelling the merger agreement on May 1, a sign that investors did not expect the deal to close.

Tassos Recachinas, president of Sophis Investments LLC, an investment advisory firm and a Pep Boys shareholder, said the stock has the potential to reach $30-$40 over a five-year period.

"We did not want the Gores transaction to close because we believed it substantially undervalued Pep Boys," Recachinas told Global Markets.

Pep Boys' shares fell to $8.31 on the New York Stock Exchange, a level not seen since August 2011. More than 1.4 million shares changed hands by 1520 ET, nearly 10 times their average daily volume.

(Reporting by A. Ananthalakshmi in Bangalore; Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila)

Zumiez's May same-store sales top estimates

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The company, which sells clothing and equipment for skating, snowboarding and other action sports, said same-store sales, or those at stores open at least a year, rose 13.7 percent in May.

Analysts on average had expected an increase of 6.6 percent, according to Thomson Global Markets data.

Total sales in the month rose 24 percent to $37.4 million.

Shares of the Everett, Washington-based company were up 4 percent at $36.13 in extended trading. They closed at $34.77 on Wednesday on the Nasdaq.

(Reporting by Ranjita Ganesan; Editing by Viraj Nair)

F5 says sales boss resigns; shares fall

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F5 Networks shares fell 6 percent at $100.75 in extended trade, after closing at $107.54 on Wednesday on the Nasdaq.

Anderson joined F5 in 2004 and was overseeing all sales activities for the company's application delivery networking product and service portfolio.

"Mark was a key contributor to our growth and success here at F5," Chief Executive John McAdam said in a statement.

F5's revenue has grown in the double-digits for more than two years as a booming market for smartphones and tablets has sparked an exponential increase in data traffic.

(Reporting by Supantha Mukherjee in Bangalore; Editing by Viraj Nair)

Rising legal costs push TiVo into the red

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The company faces rising legal costs as it fights patent lawsuits against a number of companies, including Verizon Communications Inc (VZ.N), Motorola Mobility Inc and Time Warner Cable Inc (TWC.N), related to its video recording technology.

A big part of TiVo's business relies on money it generates from settlements it receives protecting its intellectual property.

TiVo settled a patent lawsuit with Verizon's rival AT&T Inc (T.N) in January, after the wireless operator agreed to pay the company at least $215 million as well as monthly licensing fees.

Legal costs are expected to rise sharply in the second quarter as the company prepares to go to trial with Verizon, TiVo CEO Tom Rogers said in an interview with Global Markets.

TiVo, whose brand is synonymous with digital video recorders, also expects to ramp up spending on marketing as it rolls out a digital video recording product with Comcast Corp (CMCSA.O), Rogers said.

The company forecast a second-quarter net loss of $28 million to $30 million, while analysts were expecting a $16 million loss, according to Thomson Global Markets I/B/E/S.

Net loss for the first quarter was $20.8 million, or 17 cents per share, compared with a profit of $139 million, or $1.04 per share, a year earlier.

In the year ago quarter, TiVo's profit included a one-time payment of $175.7 million from DISH Network Corp (DISH.O) related to the settlement of another patent infringement lawsuit.

Revenue rose 48 percent to $67.8 million. Total subscriptions rose by 524,000, or 27 percent, to about 2.5 million. Operating costs more than doubled to $54.2 million.

Analysts were expecting a loss of 15 cents per share on revenue of $54.9 million, according to Thomson Global Markets I/B/E/S.

TiVo sells its own set-top boxes and also licenses its technology to cable operators such as Virgin Media, Charter, DirecTV (DTV.O), Ono, RCN and Suddenlink.

TiVo shares, which have fallen 13 percent in the last year, were down 3 percent at $8.70 in after-market trade. They closed at $8.96 on Wednesday on the Nasdaq.

(Reporting by Chandni Doulatramani in Bangalore; Editing by Viraj Nair)

Kingfishers shares fall to record low on fourth quarter net loss

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Kingfisher lost 11.5 billion rupees ($90.1 million) in the fiscal fourth quarter, compared to a loss of 3.6 billion rupees a year ago.

(Reporting by Manoj Dharra; Editing by Rafael Nam)

Leap shares down on concerns about iPhone subsidies

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Leap said on Thursday that it would be the first U.S. prepaid mobile service to offer the iPhone, and that its contract with Apple would cost it an estimated $900 million over three years.

BMO Capital Markets analyst Peter Rhamey downgraded Leap to "underperform" from "market perform," saying the deal comes on the back of first-quarter results that saw acute pressure on margins and profitability from smartphone sales and upgrades.

Leap, which focuses on cost conscious customers, has been hit by increasing competition in the low-cost market that has forced some service providers to shift their focus toward smartphones.

Leap said it will sell the 16 GB iPhone 4S for $499.99, compared with its rivals' $199.99 price tag. Leap will also sell the older 8 GB iPhone 4 model for $399.99. Leap customers, however, will pay smaller monthly service fees and will not need to sign contracts.

The price may not be compelling enough to drive volumes, which may force the company to cut the price, leading to further margin compression, analyst Peter Rhamey said.

U.S. wireless operators like AT&T Inc (T.N) has long paid hefty subsidies for smartphones but are tightening their policies to temper upgrades after getting hurt by hefty iPhone subsidies in the fourth quarter. The quarter had seen the launch of the latest iPhone model.

AT&T Chief Executive Randall Stephenson wondered about demand for Leap's higher priced iPhone during an investor conference on Friday.

"Moving the entry point by $100 has a dramatic effect on demand. We are going to watch it. It's an interesting model," Stephenson said, adding that he would consider the idea of a lower subsidy and a lower service price if Leap's plan works.

Leap shares were down 50 cents at $5.26 in morning trade on the Nasdaq. AT&T shares were trading flat at $34.11 on the New York Stock Exchange.

(Reporting by Supantha Mukherjee in Bangalore and Sinead Carew in New York; Editing by Sreejiraj Eluvangal)

RIM stock plunges 10 percent after warning of loss

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Shares of RIM plunged C$1.20, or 10 percent, to C$10.31 on the Toronto Stock Exchange. The U.S.-listed shares fell 10.8 percent to $10.01.

(Reporting By Jennifer Kwan; Editing by Jeffrey Hodgson)

Australia's David Jones core third quarter sales fall 3.1 percent

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David Jones (DJS.AX), Australia's No.2 department store chain, warned in March its full-year earnings could fall up to 40 percent as it invests in a costly overhaul of its strategy, adding service staff and beefing up its online offering, to try to turn around flagging sales.

Analysts had expected a fall of 1.9 percent in third quarter same-store sales, according to a Global Markets survey.

"Looking forward to the fourth quarter we note that the first few weeks of the quarter have traded broadly in line with third-quarter trading patterns," said David Jones Chief Executive Paul Zahra.

"We have consciously decreased the depth, breadth and volume of promotional activity," he said.

The non-mining sectors of Australia's economy are struggling under a strong currency, relatively high interest rates, falling home and share values and indebted consumers.

Australia's biggest department store chain, Myer Holdings (MYR.AX), last week cut its 2012 net profit guidance after a sharp decline in April and May sales.

Myer, which reported a 2.1 percent fall in third quarter same-store sales, gave a long list of headwinds, including higher day-to-day expenses for consumers, and worries about job security and the economy. Qantas Airways (QAN.AX) announced a further 500 job cuts a day earlier.

David Jones said total third-quarter sales, including new stores, fell 2.9 percent from a year earlier to A$399.8 million ($388.95 million).

Shares in David Jones closed at A$2.25 on Wednesday after hitting a 2012 low of A$2.16 last week.

($1 = 1.0279 Australian dollars)

(Reporting by Miranda Maxwell; Editing by Richard Pullin)