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   Strategies & Market TrendsSpeculating in Takeover Targets

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From: richardred12/17/2013 11:43:01 AM
   of 7071
Two big year end deals in a rather disappointing year for deals.

Avago to Buy LSI for $6.6 Billion

A.I.G. Sells Aircraft Leasing Unit for $5.4 Billion

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To: richardred who wrote (2740)12/17/2013 11:51:52 AM
From: richardred
   of 7071
Sold position awhile back.

Campbell Seen as Next Buffett Target Post-Heinz: Real M&A.Campbell Soup Co. ( CPB:US), the maker of Goldfish crackers and chicken noodle soup, may be next on acquirers’ grocery lists after the $29 billion takeover of H.J. Heinz Co. this year.

Campbell options contracts surged this month amid speculation the $13 billion company could attract takeover interest. After 3G Capital and Berkshire Hathaway Inc. ( A:US) agreed in February to buy ketchup maker Heinz, investors are eyeing Campbell as the next big target in the packaged food industry, said Edward Jones & Co. Investment firm 3G may be interested because of the benefits of combining Heinz’s and Campbell’s vegetable processing, and Warren Buffett’s Berkshire could help bankroll a deal again, Sanford C. Bernstein & Co. said.

Like Heinz, Campbell has a strong brand, which may appeal to other food makers and financial buyers, said S&P Capital IQ. Even as Campbell faces slowing sales of its iconic soups as consumers turn to fresher foods and competing brands such as Progresso, the company still offers a buyer the biggest share of the soup market at 22 percent. While a takeover would need approval from family members owning more than 40 percent of Campbell’s shares ( CPB:US), the company also is more affordable than 70 percent of food-manufacturing peers based on its price-earnings ratio, according to data compiled by Bloomberg.

Video: Campbell Soup Seen as Next Course for Buffett
Campbell has “obviously got some brands that are really worthwhile,” Jack Russo, a St. Louis-based analyst at Edward Jones, said in a phone interview. After the acquisition of Heinz, “investors tend to think where there’s one, there could be two or three” deals.

Soup Decline Carla Burigatto, a spokeswoman for Camden, New Jersey-based Campbell, declined to comment on a potential sale of the company. A representative for 3G declined to comment, and Buffett didn’t respond to a request for comment sent to an assistant.

A month ago, Campbell reported a decline in first-quarter soup sales and said profit for the year ending in July will be less than previously forecast ( CPB:US). Amid market-share losses to rivals such as Progresso-maker General Mills Inc. ( GIS:US), Campbell has been focusing on bolstering its beverage division.

Story: The German Economics of Chicken Foot Soup
Campbell has made acquisitions since 2011 to catch up with shifting consumer preferences, including the purchases of juice maker Bolthouse Farms and baby food purveyor Plum Organics.

After Berkshire and 3G announced the acquisition of Heinz on Feb. 14, shares of Campbell advanced along with other consumer stocks such as General Mills and J.M. Smucker Co. Campbell rose as much as 6.2 percent that day for the biggest intraday gain since 2008.

Buffett, 3G One thing that drew Buffett and 3G to Heinz was the opportunity to use the acquisition “as a platform to sort of get bigger around the global food industry,” Bill Johnson, former chief executive officer of the ketchup maker, said during a February conference call.

Story: Dear Ma, Dear Pa: Welcome Back ... Watch Your Back
If 3G is seeking to increase its foothold in packaged foods, Campbell “would definitely be next on the list,” Alexia Howard, a New York-based analyst at Bernstein, said in a phone interview. “Heinz’s big businesses are largely vegetable-based. Obviously, they’ve got tomato ketchup here in the U.S., and in the U.K., they’ve got a soup business that’s actually very like Campbell’s. There probably would be a lot of benefits on the vegetable procurement front.”

Campbell saw record volume Dec. 6 in a series of bullish options ( CPB:US) that will pay off if the stock advances more than 5 percent by the end of this week. More than 20,000 contracts of $43 December calls changed hands that day, compared with an average daily volume of about 60, data compiled by Bloomberg show.

‘Classic Example’ Henry Schwartz, president of Trade Alert LLC, a New York-based provider of options-market data and analytics, said it was “a classic example of what takeover speculation looks like in the options market.”

Story: A Lucrative Promise for India's Men: Whiter Skin
While 3G likely lacks the financial resources to acquire Campbell on its own as it digests the Heinz takeover, Buffett could use his deep pockets ( B:US) to help fund a deal sooner, Howard said.

Berkshire also already owns candy maker See’s Candies, and helped finance the purchase of Wm. Wrigley Jr. Co. by Mars Inc. in 2008. Buffett has praised the business model of turning commodity ingredients into premium-priced products.

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To: richardred who wrote (3545)12/17/2013 4:06:15 PM
From: Glenn Petersen
   of 7071
Despite Doldrums in Deal Activity, a Few Highlights This Year

New York Times
December 17, 2013, 3:04 pm

The deal world remained muted this year in terms of big transactions and activity. According to Dealogic, the number of announced takeovers in the United States so far this year was down about 22 percent, while volume was $1.1 trillion, up about 15 percent from last year but still below the level in the years before the financial crisis. . Despite the relative doldrums, there were still some highlights and lowlights. Here are some of them:

THOMA BRAVO FLIPS DIGITAL INSIGHT TO NCR The private equity firm Thoma Bravo receives an A for buying Digital Insight for $1.025 billion then selling it 124 days later to NCR for $1.65 billion. The real loser was the initial seller, Intuit, which lost out on $600 million in profit because it reportedly insisted on a quick sale timetable, which strategic buyers like NCR couldn’t meet. Sometimes it pays to take it slow. Intuit receives an F.

US AIRWAYS AND AMERICAN AIRLINES The merger of the two airlines left US Airways’ management in charge even though American was the larger airline. American’s creditors and shareholders still cheered as they received something almost as rare as a unicorn: a full recovery in bankruptcy. The two airlines’ biggest feat, though, and what warrants an A, was extracting a favorable settlement from the Justice Department, which clearly overreached in a lawsuit brought to halt the combination.

COMMONWEALTH REIT/CORVEX The father and son duo who head CommonWealth — Barry and Adam Portnoy — and CommonWealth’s counsel at Skadden Arps showed little regard for shareholder rights, doing everything in their power to prevent Corvex Management and the Related Companies from removing the Portnoys. The Portnoys banked on CommonWealth’s unique requirement that shareholders arbitrate all disputes with the company to stymie the two hedge funds. It didn’t work, and the arbitration panel ruled against CommonWealth, clearing the way for the funds to begin a campaign to unseat them. The Portnoys receive an F.

JOS. A. BANK’S BID FOR MEN’S WEARHOUSE Jos. A. Bank made a daring $2.3 billion bid for its bigger men’s clothing rival, teaming up with Golden Gate Capital for a significant equity infusion to make the bid credible. Jos. A. Bank’s management, including its chairman, Robert Wildrick, receive an A for cleverly inviting a counterbid from Men’s Wearhouse by saying a combination of the two made sense no matter the form. Men’s Wearhouse took the bait, dusting off the beloved but seldom-used Pac-Man defense. The only thing to sort out now is which set of shareholders receive a premium and who runs the combined company.

ELAN/ROYALTY/PERRIGO Irish takeover laws limited its defenses, but the Irish pharmaceutical company Elan still earned an A by fending off a $6.7 billion hostile bid from Royalty Pharma in time to put itself up for sale, ending with a much higher $8.6 billion bid from Perrigo. Elan showed that a good defense could be played off fundamentals and not simply a poison pill or other defenses that it could have used in the United States.

ADVANTAGE RENT A CAR/HERTZ GLOBAL HOLDINGS./FRANCHISE SERVICES OF NORTH AMERICA Less than a year after Hertz was forced by the Justice Department to sell Advantage to satisfy antitrust concerns stemming from its acquisition of Dollar Thrifty, Advantage filed for bankruptcy. So much for that remedy, which receives a big fat F.

HEDGE FUND ACTIVISM The hostile raiders of the 1980s have been reborn as hedge fund activists, with all the ego to boot. The successes are stunning and deserve A’s, including Third Point’s involvement with Yahoo and Pershing Square’s dealings with Canadian Pacific; the failures are real and clearly F’s, like Pershing Square and its involvement with J.C. Penney and Edward Lampert’s running of Sears. Still, there is no doubt that this is the biggest trend of the decade, one that is here to stay. It will continue to inspire even as it borders on the absurd, as Third Point and Carl C. Icahn’s machinations with Apple showed. TWITTER I.P.O. Call it the anti-Facebook. Twitter earned an A by simply doing what a company should do in an initial public offering. Don’t get tricky with pricing or numbers or try to push boundaries. Twitter simply sold shares to the public with great success.

RUE21/APAX Apax agreed to buy rue21, the fashion retailer, including shares held by an older Apax fund. When rue21 announced a sharp downturn in sales, the markets began to wonder whether the deal made sense and whether Apax would try to walk away. Faced with a tough contract and perhaps a different view of rue21’s prospects, Apax completed the deal at the initial price. The lenders lost hundreds of millions of dollars while Apax’s old fund cashed out. It remains to be seen how Apax’s new investors will do. The deal highlighted the conflicts when a private equity firm purchases a company that it already holds shares in. It’s not an F, but a warning for future private equity deals.

SOFTBANK/SPRINT/CLEARWIRE The boards of Clearwire and SoftBank did good jobs as after some initial hesitancy. Clearwire succeeded in pushing Sprint, a controlling shareholder, to raise its final bid while SoftBank was able to hold together its acquisition of Sprint itself. A’s to both companies.

HONG KONG STOCK EXCHANGE/ALIBABA The Chinese Internet giant Alibaba wants to be just like the technology giants in the United States, including having a share structure that preserves control with management after it completes its heavily anticipated I.P.O. Kudos and an A to the Hong Kong Stock Exchange for standing up to Alibaba and refusing to bend its one-share one-vote rule to accommodate Alibaba’s proposal. Alibaba is instead likely to go where the regulations are weaker: the United States.

NEW YORK STOCK EXCHANGE/INTERCONTINENTAL EXCHANGE An American institution is acquired by a company that didn’t exist 15 years ago and is a creation of technology, showing that technology almost always wins these days.

ATLANTIC COAST FINANCIAL/BOND STREET HOLDINGS The Atlantic Coast board receives an F for agreeing to an acquisition in which 40 percent of the merger consideration would be deposited into an escrow, but it neglected to negotiate an escrow agreement. Public shareholders protested and the escrow was eliminated, but shareholders still did the rare thing of rejecting the deal.

DELL MANAGEMENT BUYOUT A Dell special committee negotiated a model management buyout with all the bells and whistles intended to protect shareholders, even going so far as to reimburse the Blackstone Group $25 million to persuade it to bid. The committee stayed cool throughout a process in which shareholders, including Mr. Icahn, nudged and pushed the committee to consider alternatives. Many shareholders still complained that Dell would have been better off as a publicly traded company. We’re going to defer a complete grade on this deal as we wait to see whether Michael S. Dell can succeed in turning around his company outside of the scrutiny of the public markets, but Mr. Dell still gets an A for putting up more cash to buy out the public shareholders when his financial partner, Silver Lake, wouldn’t. A shake of the head also goes to Mr. Icahn for being his wily self and making what appeared to be a hocus-pocus nonoffer, then offering advice for shareholders to seek appraisal before forgoing the remedy himself.

DOLE MANAGEMENT BUYOUT Dole was taken private by its chief executive, David H. Murdock, for the second time in a turnstile management buyout. The $1.15 billion price was just about adequate and had the endorsement of Institutional Shareholder Services, the big proxy adviser, but one was left to wonder whether this wasn’t the case of a controlling shareholder clearing the field. Indeed, shareholder litigation remains because of Delaware’s penchant to avoid enjoining deals for substantive reasons. Meanwhile, shareholders barely approved the deal with a vote of 50.9 percent of the shares not held by Mr. Murdoch, who receives an F.

Happy New Year! Pineapple for all!

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To: richardred who wrote (3527)12/22/2013 10:11:13 AM
From: richardred
   of 7071
Oracle to Buy Responsys for $1.5 Billion By DAVID GELLES
Justin Sullivan/Getty Images Lawrence J. Ellison, the chief of Oracle, has struggled with shareholders opposed to his $78.4 million compensation package.
Updated, 12:02 p.m. |

Oracle said on Friday that it had agreed to acquire Responsys, an enterprise software company, for $27 a share in cash, or about $1.5 billion, not including debt.

It is the latest acquisition for Oracle, run by Lawrence J. Ellison, and further extends the company’s reach into the realm of online marketing. Responsys makes software that allows brands to coordinate their email, mobile, display and social advertising across the web.

The price amounts to a 38 percent premium above Responsys’ closing stock price of $19.52 on Thursday.

“Responsys has always been focused on helping marketers realize their largest opportunity — coordinating their marketing touch points across channels, across the customer lifecycle, and across industries,” Dan Springer, chief executive of Responsys, said in a statement. “As a part of Oracle, we will only accelerate our efforts.”

The board of Responsys has approved the transaction, but shareholders will have the opportunity to vote on the deal early next year.

“Our strategy of combining the leaders across complementary technologies signifies Oracle’s overwhelming commitment to winning and serving the C.M.O. better than any other software company in the world,” said Oracle’s president, Mark Hurd, referring to chief marketing officers.

Oracle is one of the most prolific acquirers in Silicon Valley. Including Responsys, it has bought at least seven companies this year. Earlier this year, it struck a deal for Acme Packet for $2.1 billion.

Although 10 years ago, its purchases were established software companies with a large customer base, in recent years it has turned to newer-style cloud computing companies that offer their products on a per-use basis, rather than outright sale.

The acquisition of Responsys follows its $871 million purchase a year ago of Eloqua, a company that made software for managing the cost and performance of marketing campaigns. Marketing is a particularly hot area, since companies now use the Internet to run ads, send emails and communicate directly with customers. The large amounts of data captured in these campaigns are analyzed by increasingly math-oriented marketing managers., a cloud-based company that competes with Oracle in sales and marketing software, has in recent years also acquired several ad purchasing and marketing companies.

But Oracle has had a few rough quarters recently, missing analyst expectations twice earlier in the year before posting good quarterly results this week. Those results sent Oracle stock to its highest levels since the dotcom bubble burst more than 10 years ago.

In October, Oracle shareholders opposed Mr. Ellison’s compensation package, objecting to his $78.4 million payday for the 2013 fiscal year.

Responsys was part of first wave of technology companies to go public after the financial crisis, debuting on the Nasdaq market in early 2011. After opening near $15, the stock slumped as low as $5.70 about a year ago. But over the last year, the business has strengthened and shares have rallied. Thursday’s closing price was near the all time high.

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To: Glenn Petersen who wrote (3549)12/22/2013 11:28:04 AM
From: richardred
   of 7071
On the Private Equity end, IMO It's more advantageous for private equity to cash out through (IPO's, private sales & taking public again)in these market conditions. Inorganic acquisition growth minded corporations being the customers. RE: B&L by Valeant and US foods by Sysco, a few examples coming to mind. If market conditions stay positive. I expect more of the same from that avenue In 2014. On the corporate side. If economic activity continues to pick up the pace with more certainty. I'd expect some more activity in the corporate side. Both bolt on, and big deals. I still think there's still a lot of Fortune 500 companies with cash burning a hole in their pockets.

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From: richardred12/22/2013 12:37:08 PM
   of 7071
Investors push companies to flex M&A muscle...carefully
Investors want companies to put money to work and not to hoard cash

For firms worth $1 billion and more, JPMorgan puts that hoard of cash or cash equivalents at $5.3 trillion globally, up from $5.2 trillion in 2012. Photo: Mint

London: Investors have received billions of euros from European companies so cautious about the economic outlook they could find nothing better to do with spare cash, but many now want boards to snap up rivals instead - and are rewarding them when they do.
Years of financial crisis meant companies used any surplus first to pay down debt and then keep shareholders sweet with dividends and share buybacks. They spent nearly $3 trillion on buybacks globally since 2008, Thomson Reuters data shows, a rise of more than $150 billion from the 2002-2007 period.
Now the pressure is on firms to put excess cash to work.
European M&A (merger and acquisition) is down nearly a quarter on last year to $511 billion, according to Thomson Reuters data. But globally, the shares of active buyers have enjoyed their best run since the financial crisis kicked off, beating quiescent peers by 4.7 percentage points, say consultants Towers Watson.
UK engineer Kentz, for example, rose 13% after buying US firm Valerus Field Solutions, and French retailer Carrefour beat its sector, up 1.9%, on the day it announced plans to buy 127 malls from real estate group Kleppiere.
While the share price of the target company usually rises to reflect the attractive premium a suitor typically has to pay to secure a deal, it is less common for the buyer’s stock to gain.
“The share prices of buyers have generally reacted positively to the announcement of acquisitions this year. That shows that investors want companies to put money to work and not to hoard cash,” said Wolfgang Fink, head of investment banking at Goldman Sachs in Germany and Austria.
For companies worth $1 billion and more, JPMorgan research puts that hoard of cash or cash equivalents at $5.3 trillion globally, up from $5.2 trillion in 2012.
Swedish telecom Ericsson, for example, was carrying net cash of 24.7 billion Swedish crowns ($3.75 billion) at the end of the third quarter, while carmaker Volvo had 20.8 bilion crowns.
And in a sign that a broader range of investors expect more deals, hedge funds that bet on the outcome of M&A - and need a healthy stream of deals to make money - have pulled in $16.4 billion this year after seeing $6.6 billion take flight last year.
Christer Gardell, co-founder of Cevian Capital, one of Europe’s largest activist investors, told Reuters last month he expected rising corporate confidence to spark a burst of deals.
Sensible deals
The dilemma for many firms is what to buy.
Executives remain wary after being forced to write down the value of assets bought pre-crisis, and while the economic outlook is improving, it is patchy and slow.
“Assuming the economy is getting better, there are a fair number of companies sitting on cash that should be employed more gainfully,” said Nick Williams, head of Baring Asset Management’s small and mid-cap equity team, which has 1 billion pounds in assets under management.
Recent earnings suggest buyers will be well served by a sceptical eye when assessing value.
European companies lagged expectations on both revenues and profits in 2013, and many analysts said earnings growth needed to improve in order to see European share indexes add much to the double-digit gains many are sitting on this year.
While some firms will invest in upgrading existing assets, still-weak demand in many sectors means companies have to be careful not to add capacity where it is not needed.
“Investing and adding capacity can be dangerous in times of relative economic uncertainty because you don’t really know if there is enough demand to absorb this extra capacity,” said Hernan Cristerna, global head of M&A at JPMorgan.
“But if you keep returning cash to shareholders, you then take the risk of compromising the future.”
The safest bet for many boards looking to hit the spot for investors would be to focus on smaller deals, said Ed Shing, global equity portfolio manager at BCS Asset Management.
“People are prepared to stump up money for a sensible deal where you’re not paying a ridiculous multiple - big taking over smaller, where the valuations are still reasonable, particularly in Europe.”
And when pitching the financial logic of the deal, boards had better focus on more than just earnings, said Bertie Thomson, senior fund manager at Aberdeen Asset Management.
Picking a point when the merged company finally contributes to the bottom line is a favoured point of reference for executives looking to justify a deal, but as most deals should boost earnings, investors are more concerned with the return on each pound, euro or crown spent by the company.
Deals should improve your return on capital, Thomson said.
“Some companies do it better than others, but it’s still quite amazing how many focus more on earnings accretion than on returns.” Reuters

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To: richardred who wrote (3148)12/23/2013 9:34:48 AM
From: richardred
   of 7071
Bullseye today in XRTX-Christmas Gift If completed. This makes 5 successful takeout picks this year. IMO a good chance for a higher bid.

Seagate to buy Xyratex for $374 mln

Dec 23 (Reuters) - Hard-disk drive maker Seagate Technology Plc said it would buy network and storage equipment maker Xyratex Ltd for about $374 million in cash.

Seagate's offer of $13.25 per share is at a premium of 27 percent to Xyratex's closing price on Friday.

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To: richardred who wrote (3551)12/23/2013 12:49:02 PM
From: Glenn Petersen
   of 7071
I think that your assessment is spot on. DealBook thinks that we will be seeing a lot of ill-advised tech deals:

Why Older Technology Companies May Attempt Desperate Deals

New York Times
December 23, 2013, 11:57 am

Beware of old tech seeking the fountain of youth.

Hardware makers including Cisco Systems, IBM and Hewlett-Packard – with a combined two centuries of life among them – are increasingly falling prey to natural selection in Silicon Valley. They’re devouring smaller, newer firms to keep pace, but weaknesses are getting harder to hide. That could lead to bigger, desperate deals for richly valued business software and big data companies.

The signs of carnage can’t be missed. In October, IBM reported falling sales for the sixth quarter in a row, led downward by its hardware businesses. For H.P., it is nine straight quarters of a shrinking top line. Cisco recently said revenue would decline until mid-2014. Even established software and web companies like Oracle and Google are suffering when it comes to sales of servers and smartphones.

Apple is an exception, but its model of peddling highly desirable gadgets with cheap or free software isn’t so easy to duplicate. Further, competition from commoditized mobile devices running Android is biting even the iPad maker. Its sales growth is slowing.

The struggles are notable because financial statements reflect past innovation. Consistently falling sales are hard to reverse and often mean a company’s best days are behind it. BlackBerry is the latest case study. Its revenue actually kept growing even after it brushed off the introduction of the iPhone in 2007. Eventually, that changed – and swiftly.

Acquisitions, combined with cost cutting, tend to be a popular way of trying to rejuvenate. It’s often a losing proposition, though. Control premiums and purchase accounting typically muddle matters. Tech takeovers also have a habit of failing. H.P. alone has written down about $18 billion worth of M.&A .since 2011.

That won’t necessarily be a deterrent, however. Data analyzers like Splunk and Tableau Software, and cloud purveyors such as Workday and NetSuite, are among those with much brighter prospects. NetSuite, at $7 billion, is the “cheapest” among them, trading at nearly 400 times estimated 2013 earnings. Splunk and Workday, with a combined market value of over $20 billion, each fetch over 25 times estimated revenue. Slowing the aging process may prove irresistible to technology behemoths, but it would come at a hefty cost.

Robert Cyran is a columnist for Reuters Breakingviews. For more independent commentary and analysis, visit

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From: richardred12/26/2013 1:37:32 PM
1 Recommendation   of 7071
Good tool for finding TT. The hunters and the hunted.

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To: richardred who wrote (3342)12/29/2013 11:59:44 AM
From: richardred
   of 7071
Interesting statement by the leader of a global company.

snip>"With the low interest rates, hardly anyone wants to swap businesses for money," the Handelsblatt business daily quoted Rorsted as saying in an interview to be published on Monday.

"Opportunities will yet emerge over the coming three years," the CEO said.

Henkel CEO dampens prospects for acquisitions - paper December 30, 2013, 2:38 am

Reuters Flags of consumer goods group Henkel are pictured before its annual news conference in Duesseldorf March 8, 2012. REUTERS/Ina Fassbender BERLIN (Reuters) - German consumer goods group Henkel dampened expectations it was looking at acquisitions soon, saying the market currently offers few takeover opportunities, Handelsblatt reported, citing Chief Executive Kasper Rorsted.

Rorsted's comments contrast with remarks made by Henkel's supervisory board chairwoman, Simone Bagel-Trah, who was quoted three weeks ago as saying that the time had come to focus on takeovers again.

"With the low interest rates, hardly anyone wants to swap businesses for money," the Handelsblatt business daily quoted Rorsted as saying in an interview to be published on Monday.

"Opportunities will yet emerge over the coming three years," the CEO said.

Last month, Rorsted himself said the group was looking at takeover opportunities if they were a good strategic fit and that it had a 4 billion euro ($5.5 billion) war chest for purchases.

In its last major acquisition, Henkel bought National Starch in 2008 for 3.7 billion euros to expand its adhesives division. ($1 = 0.7258 euros)

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