Archived article
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The following is a summary of top news stories Monday.
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COMPANIES
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Vodafone said it has entered into an agreement in principle with Hungarian technology firm 4iG Public and Hungarian state holding company Corvinus to sell its Vodafone Hungary arm for a total cash consideration equivalent to an enterprise value of €1.8 billion, targeting completion by the end of 2022. Vodafone said the combination of the Hungarian business with 4iG is ‘complementary’, with limited overlaps. The addition of Vodafone Hungary's infrastructure to 4iG will create a ‘stronger competitor to the incumbent operator’, it said. Chief Executive Officer Nick Read explained: ‘The Hungarian government has a clear strategy to build a Hungarian-owned national champion in the ICT sector. This combination with 4iG will allow Vodafone Hungary, which has a proud history of success and innovation in the country, to play a major role in the future growth and development of the sector as a much stronger scaled and fully converged operator.’
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Online retailer Amazon.com and US healthcare insurer UnitedHealth are among those competing to acquire health care technology company Signify Health, Bloomberg reported. The highest bid for the company so far has come from UnitedHealth, at over the $30 a share mark, with Amazon believed to be not far behind, Bloomberg reported, citing ‘people with knowledge of the matter’. Based on Friday's closing price, Dallas, Texas-based Signify has a valuation of nearly $5 billion. The stock was up 34% in pre-market trade on Monday. CVS Health and Option Care Health are also in the running.
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Sony is facing a collective action lawsuit in the UK for unfair competition practices relating to its Playstation, according to a legal claim filed at the Competition Appeal Tribunal on Friday. The Japanese electronics company could face up to £5 billion in damages over claims it unlawfully overcharged PlayStation customers. The claim accuses Sony of imposing unfair terms and conditions on PlayStation game developers and publishers, which causes ‘excessive and unfair’ prices for consumers buying digital games or in-game content in the PlayStation Store. It estimates the overcharging could be a figure as high as £5 billion over the past six years. The case is brought by consumer rights expert Alex Neill, who is advised by law firm Milberg London. The action is funded by Woodsford, an environmental, social & governance litigation finance firm.
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Bill Ackman's London-listed investment fund Pershing Square Holdings reported a swing to a $3.04 billion pretax loss in the first half of 2022 from a profit of $718 million a year before, saying the six months were ‘a challenging time’ due to the geopolitical environment and inflation. Net return in the half-year was negative 26.0%. However, performance has improved since, bringing the year-to-date net return to August 16 to negative 10.8%. ‘The investment manager and the board view the decline in the market value of PSHs portfolio year to date as a temporary dislocation resulting from market dynamics,’ Chair Anne Farlow said.
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Credit Suisse announced further changes to its C-suite, appointing a new chief financial officer and chief operating officer. The Swiss lender appointed Dixit Joshi as CFO from October 1. Joshi will take over from David Mathers who previously announced plans to step down after 11 years in the role. Joshi was group treasurer at Deutsche Bank for the past five years. Credit Suisse also named Francesca McDonagh as its new COO, to start on September 19. McDonagh was previously announced as CEO of Europe, Middle East & Africa at the firm. Before joining Credit Suisse, McDonagh was CEO at the Bank of Ireland, having held senior management roles at HSBC Holdings prior to that. In late July alongside its half-year results, Credit Suisse appointed Ulrich Korner as its new CEO. Korner previously had served as head of the firm's asset management business.
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Sumitomo Mitsui Financial is mulling a takeover bid for Bank Pan Indonesia, to rival offers from competitors such as Mitsubishi UFJ Financial, Bloomberg reported. The Tokyo-based financial services company is considering the acquisition of a controlling stake in the Jakarta-based firm known as Panin Bank. This is according to ‘people familiar with the matter’, Bloomberg said. Sumitomo Mitsui's competitor MUFG is currently thought to be the strongest contender, the sources said, but no final decision has been made. Panin Bank shares have almost doubled in value this year, with a market value of around $2.5 billion.
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Keurig Dr Pepper confirmed it is not looking to make an acquisition deal with Vita Pharmaceuticals for its Bang brand, responding to reports over potential acquisition talks. ‘As we have shared previously, our top capital allocation priority is growing our business through M&A and brand/distribution partnerships. Therefore, we are active in evaluating many opportunities that arise, including in the energy space; however, we are not pursuing a partnership with Vita Pharmaceuticals for the Bang brand. We have a strong nationwide omni-channel selling and distribution system, including our company-owned DSD network, and a long track record of leveraging this important asset to drive strong in-market execution and market share growth for our brands and those of our strategic partners,’ the firm explained.
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Cineworld said its Cineworld and Regal movie theatres across the globe are ‘open for business as usual’ and continues to welcome customers and members, despite the group's financial difficulties. Last Wednesday, Cineworld said it was in ‘active discussions’ with various stakeholders, exploring the possibilities to secure further liquidity or restructure its balance sheet through a ‘comprehensive deleveraging transaction’. It also warned that lacklustre trading was prompting potential financing decisions that could significantly dilute shareholders. On Friday, the Wall Street Journal reported the company was preparing to declare bankruptcy, as it struggles to recover from pandemic lows. The report said Cineworld was expected to file a Chapter 11 petition in the US and is also considering filing for an insolvency proceeding in the UK. In response early Monday, Cineworld said strategic options through which it may achieve its restructuring objectives include a possible voluntary Chapter 11 filing in the US and associated ancillary proceedings in other jurisdictions as part of an orderly implementation process. ‘Any such filing would be expected to allow the group to access near-term liquidity and support the orderly implementation of a fully funded deleveraging transaction,’ it said on Monday, adding: ‘As previously announced, any deleveraging transaction would, however, result in very significant dilution of existing equity interests in Cineworld.’
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MARKETS
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Share prices were lower globally on Monday, as markets priced in continued interest hikes by the US Federal Reserve and other major central banks. The highlight of the week ahead for markets is a meeting of central bankers in the US state of Wyoming. The Jackson Hole Economic Symposium gets underway on Thursday and will conclude on Saturday. Fed Chair Jerome Powell delivers the keynote speech on Friday.
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CAC 40: down 1.7% at 6,388.86
DAX 40: down 1.8% at 13,300.49
FTSE 100: down 0.5% at 7,512.51
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Hang Seng: closed down 0.6% at 19,656.98
Nikkei 225: closed down 0.5% at 28,794.50
S&P/ASX 200: closed down 1.0% at 7,046.90
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DJIA: called down 0.9%
S&P 500: called down 1.2%
Nasdaq Composite: called down 1.5%
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EUR: down at $1.0011 ($1.0035)
GBP: firm at $1.1810 ($1.1790)
USD: down at JP¥136.98 (JP¥137.15)
Gold: down at $1,742.28 per ounce ($1,748.05)
Oil (Brent): down at $95.10 a barrel ($96.45)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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China's central bank cut benchmark loan rates in an attempt to boost an economy battered by the government's strict zero-Covid policy and a slump in the property market. The world's second-biggest economy saw an improvement after some coronavirus restrictions eased in June, but consumer and business sentiment remains weaker than usual. The one-year Loan Prime Rate, which serves as a benchmark for corporate loans, was reduced from 3.7% to 3.65%, the People's Bank of China said in a statement. The five-year LPR, which is used to price mortgages, was cut from 4.45% to 4.3%, it added. The PBOC slashed key interest rates last week, bringing its seven-day reverse repurchase rate a key rate at which it provides short-term liquidity to banks to a new low. Analysts had expected cuts to the LPR rates, but said they may not be enough to rescue the property sector which is estimated to account for as much as a quarter of China's GDP.
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A US governor met Taiwan's president on Monday, days after Washington announced trade talks with Taipei in a show of support following China's military threats toward the self-ruled island. Eric Holcomb, the Republican governor of the US state of Indiana, landed in Taiwan on Sunday for an ‘economic development trip’. US-China tensions have risen since Beijing staged huge military drills in retaliation for US House Speaker Nancy Pelosi's visit to Taiwan earlier this month. Taiwan lives under constant threat of an invasion by China, which claims the democratic island as part of its territory to be seized one day by force if necessary. Beijing lashes out at any diplomatic action that might lend Taiwan legitimacy and has responded with growing fury to visits by western officials and politicians.
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Japanese Prime Minister Fumio Kishida has been diagnosed with Covid-19 and cancelled his planned international travel while he isolates and recovers. The Japanese leader developed a slight fever and cough late on Saturday and a PCR test for the coronavirus was positive, said Noriyuki Shikata, the cabinet secretary for public affairs at the prime minister's office. ‘Prime Minister Kishida is isolated inside his residence,’ he told the Associated Press on Sunday. The 65-year-old prime minister was on summer vacation last week and was scheduled to return to work on Monday. It is not clear where or how he was infected.
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The first of an eight-day workers strike at the UK's biggest container port began on Sunday. Around 1,900 members of Unite at Felixstowe will walk out in a dispute over pay in the first strike to hit the port since 1989. It is the latest outbreak of industrial action to hit a growing number of sectors of the economy. Workers including crane drivers, machine operators and stevedores are taking action after voting by more than 9-1 in favour of strikes. The union said the stoppage will have a big impact on the port, which handles around four million containers a year from 2,000 ships. But a port source said the strikes will be an ‘inconvenience not a catastrophe’, claiming that the supply chain was now used to disruption following the pandemic. ‘Disruption is the new normal. The supply chain has moved from 'just in time to just in case',’ he added.
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